So let me see if I understand this latest round of eurozone mania. The crack dealers and the police have gotten two junkies onto methadone and we are supposed to celebrate? The junkies are still hooked. The dealers are still peddling their poison. The cops are still unable to address the core issues that are key to solving the long-term bigger drug problem. There's no political leadership to speak of the question. And therefore, no real progress has actually been made. Yet, down at Delancey's bar and stock exchange it's drinks all around.

What the heck, folks? Do we need to shove markets into a cold shower of perspective every day now? They veer from irrational fear to irrational exuberance with such regularity that I am starting to think that the solution to Europe's financial problems -- for which the above was an ever so subtle metaphor -- may actually be drugs. Like lithium maybe.

Today, the markets swing back to hope because Italy has taken steps to embrace austerity, Don Bunga Bunga is headed his next career as a professional defendant, and the Greeks and Italians both seem to be opting for technocrats to right their capsized economies. That these same technocrats bought into the mainstream delusions and misrepresentations and miscalculations that led to these problems in the first place is no matter. All that markets care about is that it seems like they will follow the banks' prescriptions for preserving bank cash flows at the expense of the people of their home countries. Or as it was put in my favorite tweet of the morning, from Dave Johnson retweeted by Markos Moulitsas, founder of the Daily Kos, "Greek PM says let PEOPLE vote, immediately booted, replaced by a BANKER."

(It's remarkable that the "moral" obligation of countries to repay debt that never should have been made available to them in the first place is actually so immoral -- both because it rewards enabling malefactors and because it penalizes innocents. The banks again make money coming and going as they did playing both sides on the volatile trading in between. Wouldn't the world be a better place if those who underwrote government debt couldn't also engage in trading it -- which creates the opportunity to profit from deals they might not otherwise do? I'm just saying...)

Meanwhile there is still no progress on the eurozone's larger structural issues. There is still no consensus about how to restore growth to the damaged economies of the south and those nearby who they are dragging down. There has really been no change ... except for the worse ... with regard to the financial soundness of many of Europe's big banks. There is still no orderly path by which a country can opt out of the eurozone ... even though the existence of such a path would have helped nip this problem in the bud even before it began. There is still no clarity about whether or not the countries of Europe want the ECB to have the resources and regulatory tools needed to actually effectively play the role of lender of last resort. And frankly, it seems ever less likely that the IMF will actually get the additional capital it needs to play the role for which it was envisioned.

Look, I've dated people who were more or less bipolar. I learned a few things from the experience. One was that while you were in the relationship it made sense to try make the most of the highs. They could be great. But I also learned that the lows were when you had moments of real clarity about the unsustainability of it all. The highs would always be a lie until you fixed the core problem. I also learned that took time and patience and often a radical restructuring of the relationship...by which I mean I discovered how healthy an exit can be for all interested parties. (On this point, see Paul Krugman's very good piece today entitled: "Legends of the Fail.")

I also discovered that you can't live on the roller coaster forever. It's just too damn exhausting. That's how I'm starting to feel about this problem in the Eurozone. And I am inclined to think that's how the world is starting to feel too. Patience with authorities who don't deal with the big issues and seek to frame every minor triumph as something larger than it is will wear thin. It won't just be the Papandreous and Berlusconis who won't survive all this. Absent real progress on the bigger issues, Eurocrisis fatigue will soon start doing in the Merkels, Sarkozys, and Camerons. That's the one thing that is clear. One way or another, as far as this crisis goes, it's probably best to stand clear of the door marked "Exit."

Please don't tell anyone. I'm not a spoilsport. I don't want to ruin anyone's weekend.

I know we are all celebrating. The European Union has a deal! This could be the biggest month in almost 80 years at the New York Stock Exchange. The U.S. economy grew at a sizzling 2.5 percent last quarter. Pop a cork! Time to order your Maserati from the same place the broke Italian government seems to be buying theirs.

Happy Days are....

Ok, enough snark. Our little secret is that there is actually not much to celebrate in all this. Yes, the European Union struck a deal to deal with some of its immediate problems. Of course, when you look at the deal, you see that there are plenty of loose ends. And that the deal doesn't address the fundamental structural problems the EU face. And that the deal doesn't address the impact austerity programs and tightening capital flows will have on countries like Spain and Italy ... or what they may mean for their debt problems and how it may make future problems more likely. Nor does the deal reduce many of the fault lines in the foundations of European banking ... under-reported risk, faux-stress tests, debts soon to go bad. Nor does it address the problems in global derivative markets that have existed since well before the crisis of 2008-2009 and about which serious measures have yet to be taken.

While the deal does have the advantage of finally getting the banks to recognize they have to pay a price for their lending recklessness ... for being the pushers that helped get these crack-addict countries hooked on easy debt and look-the-other-way terms, it simply is the latest last-ditch halfway measure to be cooked up by the financial wizards of Europe. Remember when some among their numbers they were called the Gnomes of Zurich? Garden gnomes would do a better job.

As for the good month on the stock market, we all know better than reading too much into that, don't we? Don't we? There are schools of fish that are more rational than the stock market. Further, while they look all beady-eyed and serious, Wall Street players are as deeply biased toward childish optimism as they are toward over-reaching greed. We all need regular reminding of this. That's why I keep on my desk, as I have said before, a little cartoon given to me by a very smart Wall Street guy that shows Peter Pan flying out the window with Wendy and her brothers and Peter says "We're going someplace where everything is wonderful and nothing has anything to do with reality" and the littlest boy whispers to his brother, "You mean we're going to Wall Street?"

Finally as for that caffeine jolt of 2.5 percent growth last quarter let's remember the following: First, we have a recent track record of over-estimating our quarterly growth and then adjusting the numbers downward when no one is looking. Second, I was just kidding about that being a caffeine jolt. It will have precisely the same stimulative effect on job-creation as the average episode of "Two and a Half Men" will have on your cerebral cortex. It's a big dubious nothing burger ... or to be fair, a not-so-much burger ... like one of those black bean things you get a health food restaurant, you know, the kind that looks and tastes as if its last owner was a dyspeptic cat.

Which is not to say that you shouldn't enjoy the little economic sugar rush if you want. Go for it. There's no reason to dwell on the fact that on other fronts, the economy is sclerotic, leaders in Europe, the United States, and Japan don't know how to play well together, the banking system is still the same old casino full of hucksters, egomaniacs and some folks who just plain belong in the slammer. Why ruin your weekend thinking about how we still aren't dealing meaningfully with the big problems on the either side of the Atlantic? Or in Japan. Or in the emerging world.

Go on folks, let a smile be your umbrella. You know just how dry that will keep you, right?

While America sleeps, I awake early this morning on the banks of the Isis River, here in Oxford, England. Outside my window are the dreaming spires of the university has been here for the last 12 centuries or so dominated, from where I sit, by the weatherworn dome of the Radcliffe Camera. The Rad Cam, as it is known, is a massive, round library built by John Radcliffe, physician to William & Mary, and a man known as much for his fondness for good drink as he was for his medical accomplishments.

Another thing for which old Radcliffe was known was his apparent allergy to reading which led him to actually keep an alarmingly small library for a doctor thus creating some considerable amusement among his friends and colleagues when he endowed the library that ultimately became the russet-colored landmark I can see outside my window at the moment.

This phenomenon of making a bold gesture in the opposite direction of your fundamental impulses is known in the psychological line as reaction formation. It is what causes people who hate to fly to get their pilot's licenses and people with a fear of big cats to become lion tamers. It may also be to the old "there's no zealot like a convert" phenomenon or the fact that many people who were once fat become the most intolerant sort of fattists.

I can check at least two of those boxes and, although I haven't piloted a plane for years, I still have more than the usual intolerance for fatsos. This is due to the fact that up until two years ago I weighed 75 pounds more than I do today and if I didn't allow myself the privilege of being critical of those who are unable to push away from the table at the proper moment, than I fear I will be sucked back into the gravitational pull of my old midsection -- which, as it happens, bore a remarkable resemblance to Radcliffe's monument to himself over there in the shadows of the Bodleian. (In terms of roundness and prominence ... not orangeness.)

As a consequence of this particular one of my many defects ... and six years spent on the advisory board of the Johns Hopkins Bloomberg School of Public Health ... I am acutely aware of the threat posed to America's health, finances, and general appearance by the obesity epidemic that has swept the country. Today the obesity rate in the United States is ten times that what it is in say, Japan. Fully a third of Americans are obesity and the costs to the country of caring for these self-indulgent loads is breaking us as surely as would giving them all piggy-back rides. In fact, that's what we are doing ... because they will require more doctor's care, medication, time in hospital, treatment for diabetes, for heart disease, cancer and countless other maladies brought on by over-eating ... we're all going forced to carry them on our fiscal backs for the next few decades.

For this reason, it was with great admiration and delight that I read of Europe's latest innovation that America should immediately and unhesitatingly adopt. As usual, it comes from the smarter half of Europe (the cooler, northern portions) which, while not necessarily the half where I would prefer to spend my summer vacations, does regularly come up with good ideas that are worth adopting (the Magna Carta, the location of the ignition on the Saab, many kinds of herring, that kind of thing). In this case, it is the Danes who have made the latest breakthrough. It is described in an article in the Guardian entitled "Body blow for butter-loving Danes as fat tax kicks in."

As of today, "Danes who go shopping today will pay an extra 25p on a pack of butter and 8 p on a packet of crisps, as the new tax on foods which contain more than 2.3% saturated fats comes into effect. Everything from milk to oils, meats and pre-cooked foods such as pizzas will be targeted. The additional revenue raised will fund obesity fighting measures." Apparently ... and without a hint of irony ... the country that led the way on this was Hungary, land of my grandmother's matzoh balls, which "recently imposed a tax on all foods with unhealthy levels of sugar, salt and carbohydrates, as well as goods with high levels of caffeine."

This resonates here in Britain, which is the tubbiest country in Europe with, according to estimates cited in the article, 70 percent of the country destined to be obese or overweight by mid-century, which does not bode well in the looks department for a country that is already known for bad teeth and fly-away hair. And it should resonate in America, land of the Fat Burger and KFC's double down sandwich consisting of two pieces of fried chicken on either side of a bacon cheeseburger.

We love you Chris Christie. We feel your pain. And we have to help you. The United States needs new taxes like it needs about an hour a day in the gym. This is a place to start. It is good public health policy. It is good fiscal policy. And it resonates with the words of one of England's great thinkers, worth recalling as I look out over dawn at the world's greatest university. It was Kate Moss, I believe who said, "nothing tastes as good as being thin feels."

We are not living at a moment of particularly glittering leadership on the international stage. Mediocrity, timidity, and poor performance are found from continent to continent. Even setting aside those leaders of the developing world who face the special challenges associated with poverty, failed or struggling states and related social and political tensions, we find the world's larger and more prosperous countries rudderless and with plenty of room for improvement at the top.

There is a leadership void at a moment when strength, vision, and executive deftness could not be needed more.

But among the lackluster crop at the helm of the world's major economies -- the G20 countries for example -- there are several classes of mediocrities. There are the leaders of promise for whom we still may have high hopes but who have yet to find their footing on a regular basis. The best example here is Barack Obama. There are leaders who are too new in their jobs to judge, such as Japan's brand new Prime Minister Yoshihiko Noda and Brazil's Dilma Rousseff. There are the mixed bags who have had flashes of strength but who have revealed themselves as too flawed in character or ideology to be likely to ever ultimately ascend to a higher level -- France's Nicolas Sarkozy and Britain's David Cameron are good examples here.  Angela Merkel might also be seen to be in this group, compromised by her indecisiveness. There are even those who have done well by many important measures but who have been compromised by lingering problems at home or who have not assumed a highly effective leadership role on the international stage. Manmohan Singh, among the most distinguished of the bunch, might fall into this category. Hu Jintao's China has performed well ... but no man whose government must resort to oppression and censorship, that still gives in to police state impulses, can be considered a first class leader.

There are also those who are just mediocre, not great, or worse. You can fill in the names. You can designate who might fall into each category or make up other categories of short-comings and reasons for frustrations with their performance.  But I suspect very few people will step up with a vigorous defense for any of the current class of top dogs.

And then, among this group there are those at the bottom of the barrel: The ones who have actively been bad for their countries or their regions or the world at large (which is not to say the shortcomings of even the better leaders have not produced bad consequences for some on the planet). For my money Saudi Arabia's King Abdullah certainly falls in this group, an autocrat who has exploited his people, resisted needed reforms, presided over the systematic mistreatment of women, and offered wink and a nod (and more direct) support for dangerous extremists. It is still not clear to what degree Dmitri Medvedev is his own man, but certainly the Russian government has been no champion of democracy or due process.

Now Silvio Berlusconi has not sought to crush the people of Italy to his will nor has he, despite an impressive rap sheet, underwritten terrorists. That said, he has, over the years really made a good case that among the world's most important leaders he is perhaps the biggest embarrassment to his country.

It is not enough that the business empire he built has been demonstrated to have engaged in a wide range of unsavory practices. It is not enough that he has been at the center of a steady string of sleazy scandals. It is not enough that he has regularly made public statements that were racist, undiplomatic or just plain inappropriate to the office with which he has been entrusted. It is not even enough that he has run Italy into the ground, to the brink of an economic calamity that literally threatens not just the futures of his people but the fate of the Eurozone and indeed, of the entire international economy. (Although, you'll have to admit, all that constitutes a pretty compelling case for including him at or near the bottom of our list.)

But now comes word of Berlusconi being overheard during a conversation which was taped by police involved in a blackmail investigation. That investigation, into one Giampaolo Tarantini, a man who has said he supplied 30 women for some of the Prime Minister's famous parties, is focused on payments he reportedly received from the Prime Minister. While the arrest of Tarantini and his wife in one of Rome's poshest neighborhoods was dramatic enough, it turns out that in the course of the investigation the Prime Minister, was taped venting his frustration over his perceived mistreatment by the country that enabled him to become a billionaire and the head of its government.

According to press reports, Berlusconi was overheard to say in mid-July, "They can say about me that I screw. It's the only thing they can say about me. Is that clear? They can put listening devices where they like. They can tap my telephone calls. I don't give a fuck. I ... In a few months, I'm getting out to mind my own fucking business, from somewhere else, and so I'm leaving this shitty country of which I am sickened."

Imagine how long a president of the United States would last in office after referring to the U.S. as a "shitty country." Of course, it's hard to imagine how a leader with Berlusconi's personal and professional track record could remain in office long in most countries. But, all that aside, the comments add yet another crowning turd on top of the steaming pile of Italy's Prime Minister's political career. And they make us wonder: Could it be, that among the current class of compromised, faltering, average, unproven, undistinguished and sometimes much worse leaders of the planet's major powers, Berlusconi is actually the least of them?

Do you think somewhere in the mind of Christine Lagarde, the newly appointed head of the International Monetary Fund, there is a voice that recognizes the truth?

Lagarde is, as noted here before, a good if not optimal choice for the job, and it is certainly about time that a woman held the post. She also understands the players and the stakes and will no doubt work tirelessly to avoid the potential new global financial crisis that is the first item of business awaiting her at her new desk. Indeed, she has already started to do so.

But do you think that, despite a career that has seen her excel in the centers of orthodoxy and the established financial system, she is aware that there are other legitimate options besides those currently being proffered to Athens? Other ways to go that deviate from the conventional wisdom about what the system will and will not tolerate?

Do you think she recognizes that there are some perfectly credible reasons that Greece should consider defaulting and taking its chances as the first state to vote itself off the euro-island?

The pressure on the Greek leadership is enormous. From the other leaders within the eurozone and from the financial community, the relentless refrain is to tighten the national belt, to take the pain, to accept 40 lashes for their profligacy. From the people of Greece, the pressure is to protect their lifestyles, the services they count on, their jobs, their futures.

The formula being offered by the rest of the eurozone is to restructure, forcing Greece to borrow more to meet obligations and then using the new funds to pay lenders. There will no doubt be some restructuring and postponing of some debt. But the real question is this: Should the borrowers be the only ones on the hook here? Should the lenders bear any responsibility for the situation? Should they also accept a burden of pain?

And that then leads to another question: What is the best path for the people of Greece? Do what the lenders want, and the result will be years of recession and deprivation. Is that the only possibility? Can Greece dare default and not pay the debt and break away from the eurozone and not feel as much pain? Can they do it and recover faster?

The conventional "wisdom" is no. Default is too costly. But very often in the past, the warnings about default have proved to be much like the warnings of parents who threaten their children by counting to three. The approach is effective. The threat of what might come after three is too great to contemplate. The children usually give in before discovering that the vast majority of parents have little plan for what happens after three and would never do anything too grievous to their children under any circumstances.

Ask the people of Argentina. They ignored warnings and told the financial community to stuff it when they were too deeply underwater to breathe anymore. The warnings were dire. And the country faced tough times … before recovering far more rapidly than was considered possible.

So long as the lenders do not agree to take a haircut, there are very good reasons that many among the Greeks will argue that they should do nothing. Borrowers bear liability in lending. That is, of course, standard. But they do not bear exclusive liability, especially in cases where lending to those borrowers is clearly and obviously excessive and the lenders should know better. That is the case not only with Greece but with many other nations right now. The borrowers counted on the "nations do not go bankrupt" principle to pile on. And the eurozone financial gurus watched as excess put the entire euro experiment at risk, often in violation of underlying terms of the European agreements -- and they did nothing. Greece bears huge responsibility for its waste and excess. But so too do its enablers, whether from the financial community or the policy community.

Greece could default and might possibly be able to eke out a recovery somewhat more rapidly and without the domestic political costs were it to do so. And because it is a real possibility (unlike the insanity of America not lifting its debt ceiling), the new IMF chief needs to consider the forces that might bring it to pass carefully: to think beyond the numbers to the politics and the human costs and the reasons that perhaps a growing number in Greece will feel abused by the system.

Not because that's the right way to go for anyone. But because it is a set of concerns she is likely to face again and again in her new post as she seeks to help stabilize an international system in which the very system that produced her is far more responsible for the excesses and abuses that are currently troubling it than most among its leaders are willing to acknowledge.

Thomas Straubhaar, a top economist from Germany, attacked U.S. credit agencies after they lowered Greece's credit rating to junk status, down there with the Pakistans of this world. In fact, in the spirit of Greek street protesters, Straubhaar called for the "violent overthrow" of the credit rating companies like Moody's or Standard & Poor's, arguing that these companies actually undermine stability in markets.

Come on, Thomas, don't shoot the messenger. The problem isn't the credit rating agencies -- although one does wonder if they don't have itchy trigger fingers after having been late with their warnings during the 2008-2009 phase of the current protracted economic crisis.

The problem isn't the Greek finance ministry. The problem isn't the Greek legislature. The problem isn't the Europeans who are being dragged kicking and screaming toward helping Greece. The problem isn't even Goldman Sachs and the other banks who lent Greece more money than they could afford and even helped them hide a bunch of the financings off the books.

Nope, the problem is Greek nuclear scientists and radical terror groups affiliated with the Greek intelligence services -- or rather, the lack thereof.

Because if Greece had nuclear weapons and crazed terrorists hiding in every luxury housing development, you can bet we wouldn't be going through this long drawn-out process of figuring out whether the country was going to default or not.

We know this because of Pakistan. Pakistan is an absolute financial basket case. It is in many respects in as bad a shape as Greece -- and in some it is even much worse off. But do you hear anyone talking about Pakistan's financial problems? Heck no.

Of course, talking about Pakistan's financial problems is like talking about whether Anthony Weiner's socks match. It's not exactly the first issue that comes to mind. Having said that, the reason we are not sweating the meltdown of Pakistan's financial markets is that there is no way the United States or the world would let it happen. Because a financial collapse could trigger the kind of unrest that would put Pakistani nukes at risk, and that's just not tolerable. So the United States pumps billions into Pakistan knowing full well that it is this aid that helps keep the ship of state afloat. (And, money being fungible, if it also pays for expanding Pakistan's nuclear arsenal … well, apparently we're willing to look the other way. Again.)

Once again, one of the main messages of modern international affairs comes through loud and clear: Nukes pay. From Pyongyang to Tehran, enterprising leaders know that the easiest way to boost your country's profile, gain political leverage, and win cash and prizes is to toss a little enriched uranium in the old Cuisinart, let the satellites take a few snaps, and start rattling your radioactive saber.

The problem with Greece is that if the economy collapsed, if the government collapsed, if the country descended into chaos, no one is worried that a nuclear catastrophe would follow. An ouzo-induced hangover maybe -- which can be a pretty horrific thing -- but it's the specter of a mushroom cloud that really is the attention grabber.

Admittedly, if Greece goes down and takes a few big French banks with it (as the ratings agencies warned this week) and markets get jittery and the firewall around Spain gives way and then a bunch more French and maybe German banks fail and a new global banking crisis and maybe a depression ensues -- well, that would be bad. And would produce instability in many corners of the world, including, possibly, in Pakistan. And if the downturn is bad enough it might force the U.S. and others to give less the next time Club Nuke comes to extort. So, well, yeah, that would be worse.

But, that's all speculation. What we know for sure is this: If there were a centrifuge or a hundred under the Parthenon, the Greek government would right now be sitting on piles of cash and not squirming, knowing that their fate depends on the famously warm hearts and generosity of the German people (among others).

I will be happy to tell you how a host of the world's current problems will work out if you answer one question for me: How far will Germany go to solve other countries' problems?

From the European debt crisis to its knock-on consequences for Japan, the United States, and the World Economy, from stabilizing the Middle East to promoting lasting reform in that part of the world, from the future of environmental policy to the future of multilateralism, a very substantial factor in the outcome of each will be whether or not an overburdened, increasingly introspective Germany is willing to play the role of global leader.

Recently, the hints from the German electorate and from that country's political leadership have been that after the stresses and strains associated with recent problems from Greece to Libya, Berlin is once again divided. This time, however, it is not a wall but an idea that divides the German people. As the most important country in the world's largest market, just what are the limits of Germany's responsibilities to preserve the European experiment.

I sat today at lunch with a renowned economist and we discussed the fate of Spain. "That is the $64 billion question," he mused. If Spain falters a la Portugal, Greece, and Ireland, then the issue will be will Germany help foot the bill to bail them out? His sense was that they would ... reluctantly. However, he also felt that Spain would be the last straw and a bitter pill for the Germany people to swallow. Therefore, he felt, should a financial quake in Spain rattle Italy, which he did not feel Germany would or could dig down deep enough to help, that global debt markets would be in deep trouble. Japan and the U.S. would all of sudden look much riskier and while certainly the IMF and the G20 would circle the troops to try to solve the problem ... the damage done to global confidence would be huge and the consequences potentially far reaching.

Read on

While it is too early to assess the long-term outcomes of the uprising in Egypt, there are nonetheless a number of important conclusions to which we can reasonably come.

First, something profound has changed. It did not change because of the uprising in Tahrir Square. It changed and the uprising was the result; the power has shifted in the region. We have passed a generational and technological tipping point. While the dinosaurs cling to the levers of power in virtually every country in the greater Middle East, the under 30 majority is now the great force to be reckoned with. While the establishment has done almost everything conceivable to keep them down from denying them education to curtailing the spread of information technologies to gutting the economies, nonetheless, new information sources and technologies and ways of connecting and collaborating seeped in to these societies through every one of the cracks spreading across the Ozymandian edifices of the elite.

These changes are irreversible. They are seen in the cell phones that even the poorest carry with them, in the broadcasts of Al Jazeera, in the burgeoning Twitter feeds, the apps young Arabs create to provide work-arounds every time a government tries to curtail Internet access, and even in the technological use of some of the region's worst players.

These changes have remade the social and political fabric of the region. What they have yet to do is what they have done everywhere else in the world and that is to fuel economic change.

That is the second inescapable conclusion we need to consider. The great challenges before this under-30 majority are economic, they are about opportunity. They are not about Israel or battles between Shiites and Sunnis or tribal divisions. Those problems still fester, but the unifying challenge for this generation is even more basic: They need jobs. They crave opportunity. And the failure of their leaders to provide them with these basic sources of sustenance and dignity is what has fueled the revolutions of 2011.

A corollary to this conclusion is that we in the United States have been sending the wrong people with the wrong approaches to solve the wrong problems in this region for decades. The problems of this region will not be solved by negotiators or generals. They require investors and entrepreneurs and educators. To the extent that we can contribute, we must do so by supporting the creation of economic opportunity. It is a massive undertaking but it is the only true peacemaker.

A third conclusion is related to the second, however. The role for the U.S. government in all this is very, very limited. We would do well to redirect what aid we provide to address this core challenge of creating jobs for the under-30s. We would do well to put our best economic minds in charge, perhaps even appointing a special economic envoy of real stature. But the only people who can ultimately solve this problem are in the Middle East. In fact, in the hierarchy of those who can help, if the people of the Middle East are first and by far foremost, it is the people of Europe, not the United States who must be second. They are the natural economic neighbors of the region and they must answer the question whether they want those under-30s employed in the Middle East or seeking employment in Europe. After the Europeans, it may even be the Chinese or Indians and others dependent on oil in the region and closer to its problems who should take more prominent roles in helping to solve the problem than the United States, which is a lightening rod and has problems of our own at home.

A fourth conclusion is that the hardest part is clearly still ahead of us. Egypt must make the transition to democracy and that means the military must really step aside after six months. Friends of mine who have met with them believe they understand the implications of the political earthquake that has taken place during the past month and that they will do so. But there are dinosaurs among their leaders so it is by no means a sure thing. Even beyond establishing a democracy is actually keeping one, and beyond that is addressing successfully the economic challenges alluded to above. Further, there are the problems of all the other countries of the region. They will be difficult to handle but we in the United States need to be confident enough in our core beliefs to let them work them out among themselves. There will be fights and setbacks and people we don't like will periodically gain the upper hand. But give me a duel between two guys armed with the Internet, Facebook, and Twitter feeds and let one offer the people the 11th Century and another offer the 21th and I know who I will bet on.

Finally, my fifth conclusion is that of all the big challenges ahead for U.S. foreign policy associated with this period of upheaval, the greatest by far lies with Israel and the Palestinians. Personally, I am not sure why the Palestinians have not yet unilaterally declared independence. The world would surely support them. But imagine what would happen if, perhaps on the road to such a declaration perhaps following it, a hundred thousand Palestinians took to the streets peacefully demanding real self-determination. With memories of Tahrir Square fresh in the minds of the world, how could the Israelis respond as they might have in the past? On what side of history would they appear to be as President Obama might put it? And in that vein, on what side of that history would President Obama and the United States want to be?

Until now, the fact that Israel was the region's only democracy was its "get out of jail free" card. It was used to excuse ... or attempt to excuse ... a multitude of sins. For this reason, no Arab military offensive could be as effective in undermining Israel's strategic advantages as real democracy taking root elsewhere in the region. The Netanyahu administration would be flummoxed if people power came to the West Bank and Gaza. They would be cast involuntarily with the dinosaurs. They would have no pages in their playbook indicating how to handle this. They would have very few good choices.

Actually, they would have only one. They would have to get out of the way. They would have to do what Mubarak did. They would have to step within the 1967 borders and let the Palestinians begin the job of building Palestine. And they would have to hope that the United States, Europe, and the rest of the world helped the Palestinians do it because once that happens, it will be of the utmost importance for Israel that its new neighbor produce real opportunity for its people ... because we have seen the alternative and it, for this generation who have both nothing and nothing to lose will not be contained by the tactics or the rhetoric of the past.

With the news this week that the Fed pumped money into European institutions during the darkest hours of the recent and continuing economic crisis without so much as a press release or a demand for better cheese prices, it is clear that even with all those big geopolitical shifts we have been hearing so much about, the United States remains the world's sole Schmuck Superpower.

Oh sure, whoever it was that was stamping "Approved" on all those requests at the Fed's "Foreign Banks Only" teller window no doubt thought it was in the self-interest of the United States to keep the global economy from imploding. But look at all the grumbling that Europeans do when asked to help preserve their own common currency and the economic health of their own neighborhood. Or, if you wish to look in the other direction, consider the not exactly Kumbaya spirit of the currency "wars" that define trans-Pacific monetary relations. In the end, you've got to wonder, what're we thinking? After all, if China is the country sitting on the biggest pile of cash and the EU is China's number one trading partner, shouldn't they have responsibility for footing the bill for all those overly cushy European pension plans that promised retirement seemingly within weeks of graduating from college?

Beijing appears to have enough money to commit $1.5 trillion dollars to prime the pumps for seven "strategic" industries (as they announced they were considering doing this week)… while we don't seem to have enough cash to pay for extending unemployment benefits for victims of the economic downturn. Mull that one over for a second: We have enough money to bail out big European financial institutions and their fat, happy shareholders, but not enough to help out struggling American families? We're paying for euro problems and unwinnable wars in the Middle East and China is saving its yuan for other activities -- like figuring out how to clean our clocks in the global marketplace of five minutes from now?

We are not just the uncontested Megapower of Schmuckdom, we are a deeply confused nation led by people with profoundly twisted priorities -- who clearly believe they report to higher powers than mere American citizens.

Today we discovered that U.S. unemployment is at 9.8 percent, that we have broken the 1980's record for most consecutive months of unemployment above 9 percent, and we are nonetheless forced to stomach the current charade on Capitol Hill in which the Republican party fights for tax cuts for millionaires while callously allowing Americans in need twist in the wind. All this, while it turns out that across town in the Fed's corner of Foggy Bottom it doesn't even take a vote to provide handouts for rich foreigners in want?

Where are the pitchforks and torches people? Where is the outrage? Don't tell me that's what the Tea Party was about. The Tea Party was clearly all tiny plastic tea cups and doilies when it comes to the real issues America faces. Otherwise, wouldn't all those champions of average Americans actually be championing the interests of average Americans right now?

On a separate point, what does it say about the idea of "European Union" that as soon as troubles bubbled to the surface in a couple countries, the discussion turns to a question of whether the Germans are likely to bail on the whole idea? Or see today's New York Times piece on the North-South divide in Europe. The reality is that the "European Union" might be a nice branding idea, but it's purely an aspirational one and seems to actually be getting farther away from a reality every day.

It took the United States 100 years and the bloodiest war in the history of mankind to finally buy into the idea that we were all in it together. The Europeans have had plenty of wars, but since around the time of Charlemagne, none of the battles were won by those fighting for the principle of unification. (Given the goals of the unifiers, from Napoleon to Hitler, that's not such a bad thing.) In fact, it was always those who wanted to unite Europe that were defeated. Ultimately, when they accepted the idea of knitting themselves closer together it was based primarily on the idea that finding shared economic interests might keep them from each others' throats and it came, even in its most advanced forms, with multiple caveats, exclusions, and protestations that real independence laid beneath the fragile superstructure of links.

So we are faced with the prospect that the wheels might come off the eurozone cart sometime soon and what do you think we'll see when that happens? Do you think we'll see the Chinese volunteer to come in and help clean up the mess? No? Not even as a way of thanking the Europeans for siding with them recently in Seoul when they decided to make the G-20 meeting about U.S. monetary policy mistakes rather than Beijing's manipulations? Or, alternatively, do you think we'll see a call for the United States to help out again, to dig into our own pockets to help solve European economic and social problems, while we fail to take even the minimum required steps to take care of our own?

I am moderating a conference today here in Chicago for a group of large institutional investors. Needless to say, I will report back on what I learn unless it is really valuable information, in which case I will keep the information to myself, move my chips to the right number on the roulette table and cash out.

That said, I wanted to leave you with the answer to a burning question on your minds: Who emerged from Tuesday's elections as the most important political voice in the United States?

No, it's clearly not President Shellacking. He may re-emerge, but that will take new ideas. Speaker-to-be John Boehner (R-OH)? Nope, same reason. First of all, he is a workhorse and not a show horse. That's not a bad thing. But he's no limelight-hogging Newt, nor is he a creativity engine. Mama Grizzly? Ha -- although she will probably remain an energizing force for a large cross-section of Republican voters…

Might it be Mitt Romney, who just by happenstance had an op-ed in the Washington Post Wednesday almost as if to say, "Gentlemen, start your engines…"? Could be -- Republicans tend to pick the runner-up from the last election cycle, and he has many attributes that could make him a front runner in the current environment. Congressman Paul Ryan (R-WI)? One could only hope. New York Mayor Mike Bloomberg? I light a candle every night.

No, the most important political voice in U.S. politics today is … British Prime Minister David Cameron. Listen to the new Republican agenda or at least the new Republican rhetoric -- cut entitlements, be courageous, battle the deficit, and make the hard choices. While this language has been batted around before by the party of big deficits that the GOP became as far back as the Reagan era, you see a glint in the eyes of the new leadership when they speak these words (viz. Tim Pawlenty today on "Morning Joe"… in a pretty impressive performance).

Why the glint? They have seen the blueprint and they have seen it can work. At least that's the sense that's in the air. Cameron … and to some extent French President Nicolas Sarkozy … are the new heroes of courage, and of speaking truth to special interests. This is not to deny their flaws … it is to recognize their accomplishments to date and the resonance they have.

Having said that, I must acknowledge again, misreading Cameron ranks high atop the long list of blown calls I have made here in this space … and who knows, I could be wrong about him twice. I underestimated him. And every day I must live with that -- most recently watching with admiration the one-two punch of his bravely cutting defense budgets and then, just as bravely, compensating for it in a historic way through diplomacy with an ancient enemy via the recent and innovative defense cooperation agreement with France. But it would also be a serious mistake for Democrats in the United States to underestimate the power or appeal his budget-cutting, fiscally responsible, courageous approaches might have here in this country.

By a vote of 246 to 1 the French Senate voted Tuesday to excise the word's liberté, égalité, and fraternité from the country's soul. With the vote to ban the wearing of burqas in public, France took a step back into the Dark Ages. Furthermore, the country revealed a deep seated insecurity about the strength of its culture… while at the same time weakening that culture by reinforcing intolerance.

It is estimated that fewer than 2,000 Muslim women in France would be affected by this law. This only underscores the degree of fear driving French lawmakers. Do they really believe these 1,900 or so women can actually undermine thousands of years of national culture or threaten France's national identity? If so, the problem isn't burqas. It's paranoia. Or it's a sense that French culture is soufflé -- so fragile it will fall at the sound of the first whisper.

Combine this with the French government's recent treatment of Romas and you have a pattern of behavior that echoes many of the darkest motifs in European history. Forcing my father to wear a yellow star on the streets of Vienna when he was a boy is the flip side of this coin. Protecting social "purity" by identifying an ethnic minority or by denying that minority -- in this case members of France's second largest religious group -- the right of self-expression is the same appalling thing. (For this reason I would encourage every Jew or Jewish group to stand alongside Muslim leaders opposed to these actions, but I fear it would only further coalesce the supporters of the ban.)

If there is a place for intolerance in civilized society it must be limited to intolerance of intolerance itself. President Nicolas Sarkozy and the people of France should indeed be on their guard. There is a dire threat to France within their midsts, but it does not wear a burqa.

Washington is a city of oxymorons. It is a city of garden variety morons, as well. On the oxymoron side we have old favorites like "military intelligence," "compassionate conservative," and "government organization." On the moron side...well, in U.S. politics we have morons on both sides. 

Now we have something new however, as in Washington the oxymorons and the morons are coming together in the form of America's latest reality television extravaganza (we really needed another): "Real World Washington." This is a unique double oxymoron in that it calls itself real but, like most reality TV, it is not...and because it is suggesting, fancifully, that there is somehow a connection between Washington and the real world. As for the morons, well you need only visit the bars around the DuPont Circle neighborhood location of the Real World set and you can view for yourself the cast in all their beer-soaked glory.

At first I wondered to myself how it was that a show like "The Real World" could have become MTV's longest-running hit, now in its 17th year. After all, it's pretty formulaic. Semi-attractive young adults including at least one or two with deep psychological problems are put together in a house in which they: drink, puke, appear to grope one another in grainy night-vision camera shots, and then fight about who groped whom.

Of course, thinking of it that way, I naturally started to wonder why it took so long for the show to come to the home of American politics which have been featuring all these activities for years. (For those of you who are more insensitive than I, insert Teddy Kennedy joke here. And for those of you who don't have the stomach for such humor but still want a laugh at the expense of all that Kennedy family groping, see this link about a new book on America's zany royal family.)

Once I started thinking about politicians and groping and the real world, however, my thoughts immediately drifted eastward, out over the Atlantic, and in the direction of the world's most famous aging libido, that of the host of this week's G8 Meeting, Silvio Berlusconi. This in turn led to a thunderbolt of inspiration akin to that which struck another famous Italian in the Berlusconi mold, Michael Corleone, when he first saw the ill-fated Apollonia Vitelli. What about the Real World Berlusconi-style? What about Real World L'Aquila? Once we get the G8 leaders to Italy, why don't we lock them in a room until they actually produce something productive? And let's put it all on video! Big Brother for Big Brother! 

And to keep it interesting we can add elements of other reality shows. For example, how about a taste of Real Housewives Berlusconi-style, while we're at it. Just locking Silvio and his really (justifiably) angry, estranged wife Veronica Lario in a house for the enjoyment of tv audiences everywhere would be irresistible.But throw her in with a bunch of other world leaders? See what happens when Silvio shoots an ill-considered glance in the direction of Michelle Obama? Who's wailing on him first? Veronica, Barack or Michelle? (My money is on Michelle.) Sadly, of course, Veronica is passing on the G8 Summit, forcing the Italians to turn the wife of their president to be the hostess for the affair.

We still have plenty of fun cast to choose from, however, given that the meetings in Italy will actually be attended by more than 25 countries, including all the G20. Just think of the potential gang we could feature in the house that meet the Real World formula for diversity and mayhem. 

• Of course, we start with the hard-partying Berlusconi. He may be 72 but he has the judgment and appetites of a 19-year-old frat boy and is certain to end up in the money shots that MTV needs. For example, see the recently released photos of him enjoying two women locked in a girl-on-girl kiss in front of him at a party at his estate in Sardinia. 

• Barack and Michelle Obama add the diversity element. In fact, this week they will actually break the color line at the G8 Summit, making it the first to actually feature a person of color sitting in one of the principal's seats. But they are also fun-loving, party people. Barack danced on the Ellen show and in Dreams from My Father he admitted to the kind of recreational drug use that one has to believe is an off-camera Real World specialty. Michelle would, of course, be the serious one in the house, the good girl who MTV clings to as a sign of the redeeming social content of the series.

• Carla Bruni knows how to party like a rock star from having partied with so many rock stars and because she is so telegenic she will be allowed to bring along her little guy, who will undoubtedly end up being the "Spencer" (to mix reality TV metaphors) of the show, mouthing off to everyone and likely getting into a fight with some of the bigger, more athletic members of Real World L'Aquila.

• One of the more dangerous of "jock" contingent will be former member of the Japanese Olympic team, Taro Aso, who competed in the shooting competition. Perfect for TV, Aso is even more dangerous when shooting off his mouth than when using a weapon. For instance, there was the time that he said sketched out his vision for a better Japan, suggesting that he wanted to help make it a country in which "rich Jews" would like to live.

• Another of the "jocks" with a professed love of weightlifting early in his life is Russian President Dmitry Medvedev. More appealing however to producers at MTV will be his tastes in music which include Black Sabbath and Deep Purple. So, two birds with one stone...he's the muscle (he still swims a mile twice a day) and the requisite head-banger of the crowd. (Perhaps this will create fireworks others in the group who were firebrands in their youth, like former secretary for Agitprop of her chapter of the Free German Youth socialist youth group, Angela Merkel. Maybe after a few beers with vodka chasers they might break out in a Karaoke performance of "99 Luftballons" or, from the Deep Purple songbook, "Smoke on the Water.")

• Sadly, this being television, some thought may have to be given to kicking Canada and Great Britain out of the G8 due to the fact that Stephen Harper and Gordon Brown are so boring. At least, there is nothing in their youths that suggests they would ever indulge in the kind of hijinks that make for good reality television. Harper and Canada even managed to take the drama out of the global financial meltdown by actually properly managing their financial systems (something that can't be said for Brown who manages to achieve a paradoxical blend of boring and yet somehow terrifying at the same time.)

Given the fact that Berlusconi will be joined in Italy by members of the G20, the cast can be expanded to included a diverse enough group of lively characters to make this one version of Real World actually look a lot more like the real world than its many predecessors. South Africa's Jacob Zuma is, for example, a party all by himself with four wives, three other fiancés, perhaps as many as 18 children, and a list of run-ins with the law that would allow him to play the bad boy role. China's Hu Jintao was reportedly fond of singing and dancing in his teen years and therefore might add a little lift to those party nights out. And although Brazil's President Lula and Zuma may only have achieved the fourth and fifth grade in school, respectively, this actually makes them educationally over-qualified by Real World standards. 

Sadly for the Real World premise...and for the real world...not many of the visiting leaders are women so we will have to rely on host Berlusconi to add a few of his close personal friends to add a little sexual tension to the show.  But what with party credentials of the crowd gathering in L'Aquila and the help of Il Cavaliere it's clear this could make for fine viewing.  If we wanted to make it something more than that...and something more than the bland communiqué machine G8 meetings typically are...we could add a different reality show twist, à la say "Big Brother" or "Survivor," in which participants are voted out after each week. Except in this instance, what we could do is rely on the general odiousness of hanging out with pols around the clock to motivate the cast to want to leave the house, but then not let them out unless they actually get something done in their negotiations. Think how that system would change the nature of summits. Although my fear is that rather than producing more productive meetings of government leaders, the requirement that they get something done would actually lead to the end of summits altogether.

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