Fareed's Take: Governments doing almost nothing to fix debt crisis

By Fareed Zakaria, CNN

This was U.N. week and there was some drama over the issue of the Palestinian bid for statehood. But the real action is taking place now - as the world's finance ministers and leaders meet to talk about money.

I think it's fair to say that we are confronting the worst economic moment since the days after the collapse of Lehman Brothers in 2008. Growth has slowed in Europe and the United States - and is slower even in the bubbling emerging markets. Some European countries now have problems with their debt burdens that appear unmanageable and that problem is spreading to...

major European countries like Italy.

Europe's banks have too little capital and too much bad debt on their books; they are poised for a Lehman-like event. And here's the worst part, in light of these problems, key governments are doing - almost nothing.

The real culprits here are the leaders of Europe. They have kicked the can down the road for two years. They now have got to face the fact that the euro was badly created - mixing together economies of very different characters - and fix it.

That could mean a smaller, stronger eurozone (which is to say, letting a country like Greece exit). Or figuring out a way to let Greece default and shore up Italy and Spain. I've argued that the best solution would be to have the IMF get money from countries like China and use it to structure a long-term reform program for Italy and Spain. There are other ideas - like euro bonds, which would allow countries like Greece to borrow at German-subsidized rates. But Europe's leaders need to do something to deal with these problems.

In the United States, we talk a great deal about the jobs issue but who's doing much about it? President Obama's jobs plan, which is pretty good, is going nowhere in Congress. (And he hasn't helped matters by presenting a gimmicky and inadequate plan to fund that program). The market keeps telling us by the ever-falling interest rate that it fears another recession, not inflation.

Everywhere leaders all seem to assume that if they just keep things steady, something will miraculously happen to solve the problems and jumpstart growth. It won't. The problems are actually getting worse and by sticking their heads in the sand, leaders are only deepening the inevitable crisis.