Great ‘toon from the  Economist which we hope motivates the Eurocrats to get something done.   The U.S., U.K, and Japan should not be so smug and take warning as the Four Horsemen of the debt apocalypse will be coming their way if they don’t get their fiscal house in order.

We’re going to come up with a Four Horsemen watch for Europe similar to our exercise during the U.S. government credit downgrade.   Any suggestions and what indicators they should be?   France-Germany bond spread?  European Bank Equity Index?  Euro/dollar?  Italian/Spain-Germany bond spread?   German bond yields?

Money quote from the Economist piece:

Europe needs an all-encompassing deal to save itself. The crisis is now about the survival of the euro, so it requires a big response; nobody will be spared if the euro collapses. A sensible compromise would be to impose greater discipline now, in exchange for the eventual introduction of conditional Eurobonds. A paper by the Brussels-based think-tank Bruegel adds the need for a euro-zone finance ministry, with power to raise its own taxes and to oversee the banking system.

With time running short, an all-encompassing deal might take too long to negotiate. That said, a limited German-style treaty would also take time. A balanced deal is more likely to be accepted by voters, in both creditor and debtor states, and to assuage markets. It may need to be done in phases. In the short term, it must be enough to free the ECB to intervene without limit, by assuaging fears of moral hazard. In the long term it needs to signal to investors that the euro’s problems are being fixed for good. Only then might the apocalypse be cheated.

(click here if cartoon is not observable)