The American Interest
Analysis by Walter Russell Mead & Staff
Week in Review

The news this week was dominated by the tragedy at Monday’s Boston Marathon. We wrote on Tuesday that the gap between the crime and the politics of the culprits’ capture gave us an opportunity to see the bombing for the inexcusable, evil act it was. Boston’s finest lived up to their name and the whole ordeal came to a close on Friday. But this crime is a reminder that the US cannot wall itself off from the world.

In other news, did you know that on paper Spaniards, Italians, and Cypriots are much wealthier on average than Germans? Wolfgang Münchau wrote a must-read piece in the FT this week on what that means for the euro, and we responded with an essay:

The median German family is worth €51,000 whereas the median Cypriot household is worth €267,000…But even if one were to look at the mean, Germans are worth €200,000 per household, while Spanish net wealth is somewhere around €300,000…

But anybody who’s traveled in Europe understands that these numbers have something wrong with them. Germans are significantly richer than Italians and Greeks. The answer, says Münchau, must be that varying price levels across the eurozone are responsible. [...]

Prosperous Germany has lower prices than the dead broke Club Med countries. In American terms, imagine that real estate in Manhattan was cheaper than in Detroit, or that prices in Buffalo, New York, far outstripped prices in Silicon Valley.

There are two ways to solve this problem within the eurozone: Germany can let its prices inflate to match Club Med levels, or the Club Med countries can deflate to match German prices. But the first option is closed: since the Germans are dead set against inflation, prices in the south will have to come down. [...]

As Münchau points out, this situation means that Europe’s single currency has in effect already failed. €300,000 in Germany is not the same as €300,000 in Italy or Spain, and there is no way to equalize values without years of wretched and ruinous pain.

News elsewhere in Europe was just as bleak. In Italy, there is still no sign of a government that will be willing or able to adjust to European realities. And European leaders refused to resuscitate the EU’s keystone green policy, its carbon emissions trading scheme.

The Chinese and US militaries are opening new channels of communication and becoming more transparent with their strategic goals in the region. But while China appeared to be warming its relations with the US, it hasn’t stopped bullying its neighbors: it scolded Japan for scrambling its jets whenever Chinese aircraft violated its airspace. Meanwhile, Chinese local government debt is reportedly out of control. But news that China spent more on clean energy than any other country in 2012 was a bright spot in China’s smoggy skies.

Ahead of upcoming elections, suicide bombers bathed Iraq in blood. Obama’s poorly conceived and loosely controlled Middle East policy is having unfortunate consequences. File the next two stories under strange and stranger: three Emirati men were deported from Saudi Arabia for being too sexy, while Oman’s religious leaders rejected Justin Bieber for similar reasons.

There was good news for nosy bosses and lonely teleworkers this week in the form of a new video chat service called Sqwiggle. Meanwhile, medium-sized business owners should be heartened by a study that showed significant increases in revenue for telecommuting businesses. And, if you needed reasons to ask your boss to telework, a study was released linking commuting with obesity and higher rates of early death.

Published on April 21, 2013 3:15 pm