Greek elections on June 17 are expected to produce a government that will abandon the euro, putting more pressure on Spain, which has already said that its banks need a bailout. The Spanish troubles have aggravated a standoff between Germany, which demands more austerity in exchange for a bailout, and France, where the new socialist prime minister favors more government spending. The German newsmagazine Der Spiegel observed in recent days that Europe has moved “a little closer to the abyss.”

Europeans are in a stalemate — paralyzed by disagreement and unable to act on the dire problems all around them. The denial is palpable here in Britain, where, in response to the crisis in the neighboring euro zone, manufacturing is plunging and growth has slowed almost to zero. Britons’ disposable incomes are declining for the third straight year. A report this week found that British banks are sitting on $62 billion in undeclared losses. The same public discontent that has toppled governments on the continent has forced the conservative government here to reverse various austerity measures…

[T]hese “hardships and difficulties” threaten to overwhelm Britain, which is our sixth-largest trading partner, and Germany, the fifth-largest. U.S. companies are sounding alarms about declining sales in Europe, and distress in Europe’s financial sector is rippling through American markets.