The eurozone crisis is now at its worst point with Italy’s interest rates at unsustainable rates and quite possibly past the point of no return.

Berkeley economist Brad DeLong says radical measures are required to stave off a second Great Depression:

I have been complaining for some time now that Reinhart and Rogoff think that the time is always 1931 and that we are always Austria—that the great fiscal crisis is about to erupt and send us lurching down toward Great Depression II.

Well, right now guess what? The time is 1931, and we are Austria.

The Federal Reserve needs to buy up every single European bond owned by every single American financial institution for cash before the increase in eurorisk leads American finance to tighten credit again and send us down into the double dip.

Meantime, the Journal notes that Italian bonds would have likely gone much higher were it not for the European Central Bank’s huge bond-buying program.

— Edward Harrison of Credit Writedowns has more on 1931 from the book “The World In Depression,” and Harvard’s Dani Rodrik warns of the devastating potential consequences of a European collapse:

The nightmare scenario would also be a 1930’s-style victory for political extremism. Fascism, Nazism, and communism were children of a backlash against globalization that had been building since the end of the nineteenth century, feeding on the anxieties of groups that felt disenfranchised and threatened by expanding market forces and cosmopolitan elites…

As in the 1930’s, the failure of international cooperation has compounded centrist politicians’ inability to respond adequately to their domestic constituents’ economic, social, and cultural demands. The European project and the eurozone have set the terms of debate to such an extent that, with the eurozone in tatters, these elites’ legitimacy will receive an even more serious blow.

Europe’s centrist politicians have committed themselves to a strategy of “more Europe” that is too rapid to ease local anxieties, yet not rapid enough to create a real Europe-wide political community. They have stuck for far too long to an intermediate path that is unstable and beset by tensions. By holding on to a vision of Europe that has proven unviable, Europe’s centrist elites are endangering the idea of a unified Europe itself.

— In happier news (I kid!), Matt Taibbi has more on Mayor Bloomberg’s false claim that “it was not the banks that created the mortgage crisis”:

You remember that notorious Abacus deal that Goldman Sachs was involved with, the one in which a pair of European banks, the Dutch bank ABN-Amro and the German Bank IKB, lost a billion dollars buying a portfolio of designed-to-fail mortgage-backed instruments hand-picked by a short selling billionaire named John Paulson?

Well, that portfolio that Goldman and Paulson dumped on those two banks was not, in fact, a portfolio of real subprime home loans. It was a synthetic CDO - a giant package of bets on subprime home loans.

Mike Bloomberg wants you to believe the banks didn’t want anything to do with those unworthy borrowers. Yet in reality, the banks not only went to every conceivable length to take on the home loans of those subprime borrowers, they actually invented new technology to make clones of those Barney Frank debtors.

And there were thousands upon thousands of those synthetic deals, meaning each and every one of those deadbeat subprime borrowers have been Xeroxed by the banks fifty or a hundred times over, and are flying around the globe to this day as toxic assets.

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Ryan Chittum , a former Wall Street Journal reporter, is deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.