The Stewardship of Wealth: Successful Private Wealth Management for Investors and Their Advisors, + Website

Conclusion: A World At Risk

As this is being written, everyone's attention is riveted on Europe—and rightly so, because what happens there is very likely to affect the already shaky global economy in a powerful way. Will a major European bank go down, precipitating a global banking crisis? Will a major European economy default on its debt, sending Europe and probably the rest of the world into a double-dip recession or worse? Will Europe throw in the towel and reatomize into something that looks like the Europe of the 1980s?

These are urgent questions, of course, but as I've tried to show at great length in this chapter, Europe's immediate problems are only the symptoms of far deeper maladies. If Europe somehow navigates its current shoals, it can then turn its attention to the entitlement tsunami that is about to inundate the Continent.

But the problem is even worse: Whatever steps Europe takes to deal with the immediate crises of bank and sovereign insolvency are very likely to make the already Gordian long-term challenges even more intractable. For example, what the European states need more than anything else is vigorous economic growth, but what they are getting is more austerity. What the European banking system needs is to get out from under its crushing debt load, but what it is getting is more debt.²⁹

Still, judged according to its original goals the Great Experiment in Europe has been an extraordinary success. Never in human history have so many wealthy countries coexisted ...