As if the economic ramifications of a full-blown Greek default were not terrifying enough, the political consequences could be far worse. A chaotic euro-zone breakup would cause irreparable damage to the European integration project, the central pillar of Europe's political stability since World War II. It would destabilize not only the highly indebted European periphery, but also core countries like France and Germany, which have been the architects of that project.

Next year will mark the 100th anniversary of Milton Friedman’s birth. He will be remembered primarily as the visionary who provided the intellectual firepower for free-market enthusiasts during the second half of the century, and as the eminence grise behind the dramatic shift in the economic policies after 1980.

Egypt and Tunisia have just sent a sobering message to China and other authoritarian regimes around the world: Don't count on economic progress to keep you in power forever.

Putin and other authoritarian leaders understand the reputational risk of their policies well. What they understand less well, however, is that their politics also compromise their countries’ economic future and global economic standing.

Since few can predict market sentiment, steering the economy by the dictates of market confidence is a fool’s errand.