The European Picture.

1. THE ELEPHANT IN THE ROOM

   It is hardly a secret that eurozone monetary policy is on autopilot, perhaps for as long as the next five years. True, there were concerns at the September 12 European Central Bank Council meeting that negative interest rates and quantitative easing bond-buying have not yielded the expected macroeconomic results. But out of loyalty to ECB President Mario Draghi, a majority of the Council agreed to lock in the central bank's long-term financing operation.

   But the real discussion didn't take place in the official meeting, but in the hallways after the meeting. The chatter centered on one question: What if the eurozone falls into a deep recession? ECB strategists concede the likelihood is that policymakers would have no choice but to resort to the "nuclear option." The central bank essentially would become an agent of the finance ministries. Fiscal and monetary policy would become the same. Noted one participant in these discussions: "That's the real elephant in the room for the ECB."

2. LAGARDE'S EFFECTIVE SKILLS

   During the recent IMF/World Bank meetings in Washington, D.C., Christine Lagarde presided as the great savior of the European project. That is not because of the incoming ECB president's intimate knowledge of monetary policy. It is because of Lagarde's international political skills and knowledge of fiscal policy.

   Lagarde is described by colleagues is having "a huge reputation of respect in Germany." Indeed, they say, Lagarde was shrewdly chosen by the heads of state precisely for her political skills and charmingly persuasive personality. Her task, of...