The Nation: Europe's Fear of the Shock Waves

Europeans find New York City's problems hard to understand because they cannot imagine a national government on the Continent allowing one of its major cities to go bankrupt. Amid the puzzlement, however, Europeans were deeply disquieted as they read of President Ford's New York policy.

The greatest worry was that default would retard American—and hence international—economic recovery. Said a high West German official: "President Ford obviously does not understand the implications. A bankruptcy would, at the very best, endanger the U.S. economic rebound and most likely erode faith overseas in the American Government's economic seriousness. The question is whether, after a default,...