Smug About Europe?

Bret Stephens in the Wall Street Journal has a witty, barbed piece about the recent cruise ship sinking as a metaphor for the sinking of a politically mismanaged Europe.  Readers of this blog know that I've been a skeptic on the notion of European political leaders Merkel and Sarkozy being able to rescue the flawed euro concept.  However, my approach has been to look at it through the regular analysis of political economy.   Unlike Stephens, I don't see what's happening as an indictment of the welfare state or of the flawed economic model there.  We seem to be evolving in a similar direction. We have no reason to be smug, given our lack of any political leadership and our failing institutional memories.

Four years into the global meltdown, we haven't reformed our financial system, and the leaders of the system which brought world markets to their knees continue in place with the healthiest compensation among all public company executives. Instead of any meaningful reform, we have the regulatory spaghetti of Dodd-Frank. Our state government finances are a mess, and the issue of their pension liabilities remain unresolved.  We haven't figured out how to regulate derivatives.  Things are so bad in housing that the Federal Reserve is coming up with a white paper on how to fix an economic sector.  No, whatever is happening in Europe was quite predictable, but we have absolutely no reason to cackle.  Our financial markets are doing better mainly because they continue to profit from being a safe haven as participants try to insulate themselves from a European currency meltdown.