Attempts at austerity and deleveraging in Europe have converted an economic problem into a political dilemma, with leftist governments rising against Germany's austerity-laced rescue packages. Germany now faces a tough economic decision that will involve choosing between a breakup of the current euro system and a movement toward a common fiscal policy in Europe.

Gerhard Schroeder and Jacques Chirac are in the pangs of the most humiliating defeat and repudiation in recent European politics. Who says there's no justice in the universe?

We willprobably witness a major turnover among European leadership; younger, more pragmatic leaders will see that, ultimately, Europe’s monetary arrangements need to change.

The damage of prolonged exogenous forces is already great enough to justify a rapid move to additional stimulus on both the monetary and fiscal fronts, both in the United States and abroad.

The future role of the International Monetary Fund is today in doubt.