Although most nations boast of their valour, for sudden reckless courage you really need a Frenchman. This courage is not the everyday steadiness of the Briton – indeed, it may only occur erratically – but, when it appears out of the blue, it is spectacular: France is the nation of Roland, du Guesclin, Joan of Arc, Bayard, Cyrano de Bergerac, d’Artagnan, Murat, Danjou at Camaron, and a rugby team that stood up bravely to the All Blacks.

It is also the nation of Nicolas Sarkozy, who had his own moment of insane courage last week when he admitted that it was a mistake to let Greece join the euro in the first place.

Since this an obvious truth, an objective observer might ask why he deserves any credit for stating it. Yet the Western political Establishment is now being held together only by a complex network of fantasies. The markets are buying into these illusions – literally – because the alternative is collapse. For a President of France, a country whose economy has been based on illusion for decades, to question just one of these lies is to question the whole structure.

That the euro is, was always, and remains conceptually flawed is obvious, but that is just one of several basic truths our leaders are incapable of accepting, at least in public...

1   The latest “deal” on the euro is no deal at all: it depends on the Greek and, now, Italian voters and their representatives agreeing to serious reforms, which they currently have no incentive to accept.

2   In exactly the same way, the “deal” on the US government debt that was agreed earlier this year is unravelling, as this blog predicted, because referring the matter to a committee was only postponing the problem. 

3   Government debt, not growth or employment, remains the real problem in the West. The latest American GDP figures confirm another of this blog’s predictions, that, although growth will remain sluggish, a double-dip recession is avoidable. Yet politicians and central bankers have lost focus: in their obsession with “jobs”, they are pushing still more money into the economy – which is the problem, not the solution.

4    Inflation is now a serious danger, again as we predicted.

5   The solution to unemployment is not more injections of cheap money but improving business competitiveness. That, however, is a long, painful, unspectacular process that does not appeal to politicians.

6   The crisis of 2008 was due, first and foremost, to the bankers, but it ended very quickly and the markets recovered from it; the crisis that is now brewing is a new one and one entirely of the politicians’ making.

We have been reluctant to post over the last week or two out of a very real fear that anything we said would be out-of-date a few hours later.

However, this does not mean that anything that has happened is at all surprising or incredible, as some in the media have claimed. On the contrary, we were not the only ones to predict that there must be severe consequences if European politicians did not face facts about the euro and Americans did not get real about their debts.      

Being proved right, again, gives us little pride and no pleasure – little pride because it was all so obvious that we do not deserve much credit for spotting it, and no pleasure because it is frustrating that such an avoidable disaster was not avoided.

It is doubly depressing that the politicians still have not learnt their lesson. The response of the European Central Bank, buying debt from badly run countries, is treating the symptom not the disease. Greece must be kicked out of the eurozone. Such a display of resolution might be enough to keep other failing members in. If not, the euro cannot continue as it is. Everyone knows this.

Everyone also knows that the American “debt deal” is nothing of the sort. It is full of holes. Referring the real decisions to a committee is a politician’s way of avoiding his duty. At best, it simply postpones the problem – like kicking the ball to touch in a rugby match so that both sides can catch their breath. At worst, it means that the big crisis is yet to come: the real fighting will start when the committee reports – if it ever does.

Given this prospect, Standard and Poor’s decision to strip the United States of its AAA credit rating is fair, albeit perhaps a little premature. The politicians who are complaining about it are in a state of denial. It was rude of Mr Putin to call America a parasite on the global economy for sucking up so much of the world’s available credit – but he was factually correct. It is shameful that the USA has now surrendered the moral high ground to a past KGB Colonel.

All that said, too much should not be read into the current market turbulence. For one thing, the big players agree that most businesses are slightly over-valued by the markets, so some readjustment is necessary. It should also be noted that it is summertime, when the players themselves are away, and nervous juniors are running the office.

Things will calm down soon – but only until the players get back to their desks and find that the politicians have not done anything in the meantime to solve the problems that are now all too obvious.

The markets are very nervous – and rightly so – about the debt crises in Europe and the United States.

Yet the frustrating thing about both crises is that they should be relatively easy to avert. They are not mega-tsunamis or planet-killing asteroid strikes that are beyond all human control. Nor are they mysterious: there is no need for a new Keynes to tell us what is happening, because anyone who can read a newspaper and do basic arithmetic knows exactly what the problems are. They are foreseeable and were foreseen, and indeed have both been rather unmissable for some years now.

Above all, they should be very easy to solve, given the political will. The solutions are not rocket-science. Everyone knows what needs to be done, and what will eventually have to be done.

In the United States, the government must stop spending as much as it does. The federal deficit is unsustainable. Sooner or later, there must be cuts, and there will be. Delaying the evil hour only makes it worse. Even the flawed Class of 2008 understood that there comes a time when unpleasant decisions cannot be put off.

In Europe, there is a limit to how much the more prudent nations can prop up the more feckless in order to maintain the pretence of a single currency. Does anyone, even the most sincere European federalist, really believe that Greece can and will remain a member of the eurozone indefinitely?

Everyone in the business world knows what has to happen. So – at least privately – do most politicians. So why delay? Everyone is agreed on the decisions that need to be made, so the sooner they are made the better.

Yet the political class seems paralysed with indecision. President Obama, obsessed with his re-election next year, has failed to take control of negotiations with Congressional leaders by advocating bold measures: once again, he has shown himself to be a reactive President, rather than one who seizes the initiative. Meanwhile, across the Pond, the European Establishment is terrified that suspension from the euro of Greece – and then probably Portugal and Spain, and maybe Italy and Ireland – will undermine the credibility of their whole cherished project of European integration.

It is tragic that in the whole pack, there is not one real leader with the guts to say, “We all know what we are going to have to do. Let’s just do it.”

For the real tragedy is that nothing magical is required here, only the courage and honesty to do what clearly needs to be done – in other words, leadership.