The EU's prescription for slow Europe is austerity. The thinking is that if Italy and Greece cut government spending, they'll achieve a primary surplus and investors will feel more comfortable lending to them. But if everybody engages in fiscal tightening in a recession with a credit crunch at the same time, the result could very well be a deepening recession.

The irony is that what Italy and Spain and Portugal and Belgium and all the members of "slow Europe" need right now is a little dose of a little of what got them into this mess. More borrowing. Lower interest rates. More (possibly shortsighted) confidence in the financial constitution of slow Europe to buy the EU time to make long-term adjustments.

The first solution falls to the lender of last resort. The European Central Bank has an opportunity to act like a central bank and unleash all monetary hell by gobbling up bonds and "printing" money to drive down borrowing rates to avoid default while Europe works out a long-term solution to its homemade disaster.

The alternative is so horrible to contemplate that the assumption is that it cannot happen. The disintegration of the euro isn't a handshake followed by an easy currency depreciation. It's a domino of defaults and bank failures that ends with a continental depression.

In the next few years, the U.S. has some adjusting to do. Washington will have to borrow much less. Families will want to save more. Businesses would do well to open their services to exports. But this is nothing compared to the reforms needed in Europe. Above all, slow Europe needs to grow. There is a time-tested solution to trading your way out of recession and into growth. You cheapen your currency so that more foreigners buy your cheap stuff and businesses get the money. Slow Europe will want to learn to run on its own dime rather than get dragged around the race track by fast Europe and a strong euro.

But this transition is almost too complicated to dwell on. It's the first question that has the easiest answer. What should Europe do right now? It should bang down the door of the European Central Bank and demand it start living up the last two words of its name.





