EU

Markets are reeling because Europe's leaders have only offered up half-measures to resolve the crisis. Not until Brussels, Paris, and Berlin realize the fundamental flaw in their current approach -- a lack of real political and economic integration across the eurozone -- will there be an end in sight.

As the eurozone's biggest economy, it was Germany's job to stabilize the system when the first signs of financial trouble appeared. Instead, it did precisely the opposite. Whether the euro survives depends on Frankfurt finally assuming its role as leader.

The euro crisis is not a simple story of Greek sinners and German saints. In fact, imposing austerity on the eurozone's periphery alone will accomplish little. To save the continent, its richer countries and private investors must share in the sacrifice.

Most pundits argue the eurozone has only two options: break up or create a fiscal union to match its monetary one. In fact, there's a third, and better, path: adopt tighter market discipline, bailing out illiquid countries while letting truly insolvent ones go bust. The result would be a collection of fitter economies and a Europe strong enough to play a big role on the world stage.