The broader context of the fiscal and political problems of Europe and the US is long-term economic decline.
For more than a thousand years until the early 19th century, Asia's share of the world economy was well above that of Europe. At the beginning of the 19th century - as the West began to benefit from its development of science and technology - Asia's share of global GDP plummeted.
Asia finally began to recover in the mid-20th century. Measured at purchasing-power parity Asia's share of global GDP was 18% in 1980, 27% in 1995 and 34% in 2009. Currently Western Europe and the US are in precipitous relative decline and Asia is on the rise - to the extent that The Economist has suggested (Feb. 27, 2010, pp. 71-2) that Asia's economy will probably exceed the combined sum of America's and Europe's within four years.
Yes, everybody knows about the rise of Asia and the relative decline of Europe and America, but the extent and speed of these changes and their profound implications (largely unpredictable of course) are generally not appreciated.
I remember thinking during the Asian financial crisis of 1998, when Europe and America seemed so stable and strong, that predictions of Asian dominance were premature. How things have changed in 12 years!
I hope to say a few things about the implications of these changes in future posts.