World markets, so depressed and beaten down last week that any news not catastrophic perked them up, rallied for a few days on more European promises to come up with a grand solution to the euro-mess by the end of this month.Those promises were, of course, well meaning lies. Germany and France are so far apart, and political pressures are pulling the members of the EU in so many directions, that the EU is in no position to solve its problems anytime soon. The French are busily developing schemes to spend as much of Germany’s money as possible to bail out French banks; the Germans know they have to do something but cannot bring themselves to guarantee all the debts of the euro-zone; the rest are all calculating how to use this moment of European crisis to their own national advantage.Today Angela Merkel sent world markets into yet another tailspin by sending forth her spokesman to announce the obvious: “Dreams that everything will be resolved and dealt with by next Monday cannot be fulfilled.” Truer words were seldom spoken; the biggest question is why anybody ever thought otherwise. There is no workable solution to the euro problems at this time and one is unlikely to materialize any time soon. Unless we get unexpectedly lucky, we will just have to ride out the storm.Since the 1950s the West gradually built up confidence that the answers to all important social and economic problems were known, and that policy consisted of identifying and then applying the correct technical solution. This was a radical change from the first half of the twentieth century; from 1914 until the 1950s the West’s leaders were frequently overwhelmed by unexpected and insoluble problems. They weren’t riding history; history was riding them, and leaders struggled, and often failed, to hold catastrophe at bay.The technocratic confidence of the world’s business and political elite peaked in the 1990s and has been slowly unraveling since. The European crisis and its potential to send the world spinning downhill once again is the tipping point. If the Europeans manage to cobble something together in time to prevent a meltdown, then the davoisie may calm down for a bit. But if the Europeans fail, and the euro falls apart or in some other way the bottom falls out of the European experiment, look for a psychological shock as profound as the economic consequences of a euro disaster.This is more than an ordinary recession or financial crisis. This is a test of the basic institutions and of the foundational political and economic assumptions of our world; the test isn’t over and so far our institutions and our assumptions are not doing that well.