...registered with Washington, or for that matter with the European capitals, notwithstanding the proven incapacity of Israel to knock out that movement. For a while, during the recent assault on Gaza, Sarkozy created the impression that he was looking for an opening. He visited Cairo three times. But there was no sign of that anymore in Munich. In the eyes of the American government European preparedness to support it in Afghanistan has become the touchstone of European loyalty. Washington is preparing a ‘surge’, a (perhaps temporary) strengthening of its combat troops over there, after the Iraqi example. As Biden sees it: “The result must be a comprehensive strategy for which we all take responsibility that brings together our civilian and military resources that prevents a terrorist save haven, that helps the Afghan people develop the capacity to secure their own future.” In this matter European support comes with conditions. The German government in particular does not appear to have the slightest intention to cooperate by fighting against the Taliban in the southern part of the country. The Bundeswehr is in a relatively comfortable position in the North. (The ethnic factor of the minority position of the Pashtun, giving the Taliban...

...to delude yourself with misunderstandings. A favorite comparison has been with the “bubble economy” of Japan and its aftermath from 1990 onward. And with that we are in the presence of blind men who have been told that they are examining an elephant, but who in fact are blindly fumbling a rhinoceros. In one among plenty of examples I just came across, two specialists working for the IMF talk about lax financial regulation in their first line. But Japanese banks are not “regulated” in the common understanding of the term, they operate under signals of the finance ministry. It was through these signals that they had changed their lending practices, which brought about the bubble. The authors picture a government struggling with orderly deleveraging while limiting moral hazard. But moral hazard implies a consciousness of risk and the conviction that someone else will bear it. Japan’s banks never acted as if they were at risk (at least not until much later in the mid 1990’s), and the ministry did not want them to act as if they were at risk. The IMF document speaks of a Japanese strategy in the aftermath of the bubble, but the officials did not know...