Behind the downgrades and the doubt: A crisis of growth
If, within the space of the coming month, the Eurozone sees the first developed country default since World War II, and combined with that the US loses its AAA credit score, something's up. But what?
In the first place, we are experiencing the tail-end shocks of the global financial crisis.
The bad debt in the system has not been written off, but the liabilities assumed instead by states - through bank bailouts, fiscal stimulus, and a huge regulatory forbearance that has left many institutions, from corner shops to central banks, adopting the "extend and pretend" strategy. That is, extend repayment and pretend the losses do not exist.
The result of letting states, rather than banks, take the pain is that states are starting to go bust. Greece is effectively bust, Ireland and Portugal cannot borrow and we will see today whether the European Central Bank (ECB) has to step in to provide short term support to the Italian bond market.
On top of that, all parts of the state and supra state machinery that were too weak are collapsing under the strain: the Eurozone - convergence revealed as a fiction, its decision-making paralysed by the naked pursuit of national interest by the north European countries who have benefited from the penury of the south.
Bi-partisan politics in America could not survive the large-scale entry of the state into the economy: the two parts of political America despise each other and would rather destroy their country's credit rating separately than stand together in its defence.
One dictatorial or authoritarian regime after another is falling, or teetering: Libya, Egypt, Tunisia in spring; Malaysia, Uganda…
But all this is the problem we know: we've been able to see the basic outlines since 2008.
The new problem is the absence of an economic model emerging from the wreckage of the old, credit-based one.
So Italy's fundamental problem is its 1% growth, its huge trade deficit with China, its paralysed institutions and organised crime.
Britain's problem is its lack of manufacturing and high-skilled industry, combined with the low skill base of its workforce: when the one-time kick of £200bn quantitative easing and 20% currency depreciation wears off, we will begin to feel this.
And in the US the problem is writ even larger: even with $1.7tn of money pumped into the banking system by the state - and make no mistake, central banks, with one exception in the world, is part of the state - the jobs market has not recovered; growth is poor; house prices are still declining, although as the ever-optimistic rubbish that comes into my inbox from analysts constantly reminds me "at a slower rate".
And that is before austerity. Much of Middle America already looks like a museum of the 20th Century. The stimulus has succeeded only in averting a slump; it has not pump-primed growth. When austerity comes, even if the pro-austerity economists are right, and the medicine eventually revives the patient, in the interim it should provoke a second dip, or a flat line.
2011 is turning into the year when the unabsorbed shocks of the credit crunch collided with the failure to find new sources of growth.
And the weak link is the Eurozone. For the ECB is not backed by a state but by a fiction. If the ECB tries to save Greece through a permanent liquidity operation - like doing CPR forever on somebody in a coma - it can probably go on for quite a long time. It cannot do the same thing for Italy or Spain.
Sooner or later Greece will default: quietly, amid the Murdoch furore, it missed yet again its deficit reduction target on the quarter.
Some fantasise that the shock will, Naomi Klein-style, trigger the mass, voluntary adoption of a common tax base and a trans-national state in Europe.
So it might if the electorate of Europe consisted only of the well-heeled types who flit between Brussels, Luxembourg and Strasbourg on regional jets.
But the more likely outcome is the collapse of solidarity between the peoples of northern and southern Europe. I have not come across a single European politician that has annunciated a convincing vision and narrative to bind Europe together in the face of crisis.
The European strategy is to "kick the can down the road", but let's deconstruct this lazy metaphor: it means to delay the moment of reckoning until the banks have enough capital to cope with a Greek default.
But that means somebody else has to take the bad debt off the banks - unless new capital grows on trees. This is going to take years, especially in a period of low growth. So it's not a meaningful strategy.
What we're seeing is, relentlessly and without transparency, the trans-national mechanisms (ECB, EC, IMF) managing the transfer of north-European taxpayers' money into the breach the private sector cannot fill.
We are left with the two big economic powers of the Western world in a strategic mess: America losing its dominance, its political class at war with each other. Europe rapidly losing the trans-national solidarity that underpinned the Eurozone. And in both places a growing crisis of consent.