CHARLESTON, SOUTH CAROLINA – Early in the financial crisis, a major emerging-market investor told me: “This is not a global, but a semi-global financial crisis.” He was right: it really was a crisis of the United States, Europe, and Japan. Among emerging markets, only Eastern Europe was badly hit. Indeed, the crisis marks the emerging economies’ overtaking of the major Western countries, with huge consequences for global power, finance, politics, and economics.
The eurozone sovereign-debt crisis appears to have been the worst-managed financial crisis since Argentina’s default in 2001. The European Union and eurozone leaders have seriously discredited themselves. Europe requires institutional changes that are much more fundamental than anything discussed so far.