... the real European economy is condemned to many years of austerity. That, in turn, means prolonged high unemployment, further weakening the bargaining power of wage earners vis-à-vis corporate capital. Europe’s economic elites also get new leverage to shrink Europe’s welfare state. Notably missing from the deal is any improvement in the regulation of finance, whose abuses caused the crisis in the first place.

In fact, if all this sounds vaguely familiar, it is exactly the grand bargain that has been promoted for two decades by the likes of Peter G. Peterson, Robert Rubin, the members of the Bowles-Simpson Committee, and kindred millionaires who want an enforceable hammer to compel a balanced budget and shrink social spending. The only difference is that on the other side of the Atlantic, the euro crisis gave elites the leverage to pull off this deal.

In the U.S., miraculously, we have dodged this bullet mainly because Republicans have refused to include taxes in the deal. Many Democrats, until lately, have been all too eager to give away the store and sacrifice broadly cherished programs like Social Security and Medicare that have nothing to do with the current financial or fiscal crisis.

... financial elites have won a major victory. The pity is that the press has largely interpreted this in terms of saving the euro and calming capital markets rather than a question of who really benefits and who suffers. A very different strategy could have saved the euro, spared ordinary Europeans the pain of such extensive austerity, and reined in banks to prevent the next crisis from recurring. But that sort of policy change will first require a massive shift in political power.