Ireland forces Europe, Europe forces the United States

Is this a race to the top or a race to the bottom?

“The Europeans not only provided a blueprint, but forced our hand,” said Kenneth S. Rogoff, a professor of economics at Harvard and an adviser to John McCain, the Republican presidential nominee. “We’re trying to prevent wholesale carnage in the financial system.”

Here is much more on today’s events.  In the current version of globalization the equilibrium seems to be that non-guaranteed banking systems are swiftly penalized and turned into zombies.  This suggests, by the way, that undoing current bank guarantees, when recovery comes, won’t be as easy as we might have thought.

Addendum: Here are the opinions of many economists.