The early morning news from the financial markets is even more alarming than usual. Asian markets dove on fears of a European meltdown, the euro plunged, and European stock markets opened down as well. US stock futures fell and the yield on ten year treasury notes was one basis point (one one hundredth of one percent or .0001) above its record low. Prices for commodities also swooned; European bank stocks are now trading at levels last seen at the height of the post-Lehman Brothers panic back in 2008.What is worrying investors worldwide is the evident intellectual and political bankruptcy of Europe. The Europeans are not stupider than other people, but they face deep structural economic and political problems that their institutions are hopelessly inadequate to solve. Creating a monetary union without a true federal government is looking more and more like the biggest European policy mistake since Britain and France let Hitler have the Sudetenland.The current crisis is the result of a decade of policy failure. Greece should never have been allowed into the euro; prudent leaders would have checked its statistics, discovered the blatant frauds with which the Greeks sought to conceal the true state of their affairs, and told the country politely but firmly to come back when it was ready. Following that initial blunder, Europe failed to take note in any serious way of the serious distortions that were caused by suddenly reducing interest rates in Greece and other peripherals to near-German levels. Beyond that, alarm bells should have been ringing as it became clear that Greece and a number of other countries were treating their suddenly lower interest costs as found money. They were spending the windfall rather than taking advantage of the once in a lifetime opportunity to reform their economies in preparation for life under a monetary union with countries like Germany. If Europe’s institutions were up to the job, the warning signs would have been noticed and corrective steps taken years ago.Europe has failed test after test since the crisis began. None of its bailout plans have been adequate to the circumstances; none have done more than bought a few months or even weeks of peace on financial markets at an eye-popping cost. National governments have repeatedly put short term and parochial interests ahead of any true solutions to the growing problem. The complex and expensive nest of EU institutions and procedures has failed the test; the euro crisis continually gains on the slow and confused gaggle of bureaucrats and politicians endlessly debating among themselves.What makes all this so urgent now is a growing sense that time has run out. The latest European bailout of Greece has unraveled so fast, and Greece’s economic and political situation has worsened so dramatically, that the smart money increasingly discounts the possibility that Europe can keep the crisis under control.Optimists have always said that when the crisis was bad enough, Europe would get its act together. We will soon find out if they are right; hold on tight as history is made before our eyes.