Globalization varies between EU, America

The summit was highlighted by forceful renewed demands from German Chancellor Angela Merkel that Greece and other members hold to austerity measures. Germany is by far the largest and strongest economy on the European continent, providing powerful leverage. The IMF urges a more flexible approach.

Writing from Paris for decades, Pfaff is an extremely knowledgeable observer of the European scene, putting contemporary developments in wide historical contest. He personifies a rich tradition of literary expatriates from the United States, who find valuable professional perspective living on the other side of the Atlantic.

Pfaff argues in his column that characteristic Germanic rigidity threatens Europe, and is counter-productive in today's political and policy environments. By contrast, he describes with approval the “quantitative easing,” relatively flexible and expansionist monetary policies, of the United States Federal Reserve under Chairman Ben Bernanke. He declares the Europeans should go and do likewise.

However, there are important structural differences which continue to distinguish the economies of Europe and North America, even in today's increasingly integrated global economy. The United States remains remarkably successful in drawing foreign investment, unique in scale and duration among major nations. The U.S. dollar also is the dominant global currency, freely convertible and the only truly universal monetary unit.

Even as the U.S. dollar has retained a distinctive global role, which dates from World War II, the nation's credit markets continue to enjoy unprecedented diversity as well as depth. The American economy compared with Europe on balance is less dependent on commercial banks for loans, and those banks are also generally better capitalized than those across the Atlantic.

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