Matthew Yglesias has an interesting new post on Hard Keynesianism. It was succinct enough for me to be able to read the whole thing in between my tactical trades this morning and write a brief response.
After much denial Europeans are coalescing around a financial plan and seem to have taken on board the psychological dimension of the battle they are in. It is important that the world now steps up to provide its full support.
As I write, financial leaders from around the world have assembled in Washington, DC for a long weekend of hard thought. The initial signs are not encouraging.
The market had been hoping there would be some cohesion coming out of Europe in the wake of the Geithner meeting; but none materialized. The grands lignes of what could be a plan are there, but the political hurdles in Germany seem still too high.
Europe has to leapfrog the phase of thinking the unthinkable and start doing the unthinkable. It begins with those on the inside admitting that the EU, as currently conceived, failed. It is not a liquidity crisis. It is not a leadership crisis. It is a failure of design.