The Idea of Europe

This week we return to Europe, as what is happening there is one of the most important questions of the day. It is every bit as critical to our long-term world economic future as the valuation of the Chinese currency or US trade deficits or Fed policy.

Let me set the stage with this note. I am not happy about and take no pleasure in what is happening in Europe. For a variety of reasons, I view it with some concern. A united Europe is simply better for the world at large, even recognizing the problems associated with unity. I recognize the polarities and difficulties. But I had always hoped (and still do), that somewhat like Massachusetts and Texas, or California and Alabama, a political union could emerge.

Even so, we cannot make investments based upon what we might wish the world to look like but upon what the facts are. And the facts suggest some problems. We will look at several of the more significant ones today.

The Idea of Europe

The United States, it is often said, is more of an idea than a place. It is an idea that has compelled millions of people from…