The International Monetary Fund issued a warning that will no doubt send deflation hawk Paul Krugman into a #facepalm. The Washington Post reports:

Europe could suffer a dangerous bout of deflation if regional officials, including those at the European Central Bank, do not move quickly to support the continent’s banks and the wider economy, the IMF  warned Wednesday. Using some of its most ominous language yet, the usually understated IMF called the euro zone “unsustainable in its current form.”

In testimony to Congress last month, Fed Chairman Bernard Bernanke explained how the Eurozone crisis acts “as a drag on our exports” and weighs heavily on U.S. financial institutions. And this week Reuters reported on National Association for Business Economics survey data that suggests “American companies are scaling back plans to hire workers and a rising share of firms feel the European debt crisis is taking a bite out of their sales.”

Meanwhile, at his Foreign Affairs blog, trade deficit watchdog Clyde Prestowitz writes today:

The weaknesses of the whole global system are now becoming excruciatingly apparent. China has been urged by the G-20 and has committed to rebalancing and focusing on domestic consumption led growth. But consumption accounts for only 35 percent of China’s GDP and is not large enough to be an engine of growth in the short term.

Over here we’re conducting a farcical debate in which “rugged individualists” are apparently resettling the Wild West (with no damned federal government handing out land grants or confiscating property on behalf of railroad companies or subsidizing transoceanic cables, of course!).

Sure, guys, another round of tax cuts will fix this.

It’s at once pathetic and deeply frightening.