As I wrote after Cyprus, I moved from a not-at-all-certain belief that the euro would make it, for political reasons, to a just-as-uncertain suspicion that it would not (also for political reasons). Recent events continue to widen the gap between the “make it” and “not make it” conclusions.

When Greece first defaulted, the narrative was all about irresponsible Greek borrowing, with the clear implication that they had it coming. News coverage focused on early retirement, state pensions at 50, and low tax compliance. In fact, when default hit, imports of necessary goods such as medicines also essentially stopped for most of the population. Very little of that made it into mainstream coverage.

“Margaret Thatcher RIP,” I tweeted yesterday, but in retrospect, that’s probably the least likely outcome. Wherever she ends up, peace is the last thing I would expect. If heaven, she’ll be offering God suggestions for how to run the world better; if hell, she’ll be planning a revolt. Love her or hate her, there’s no doubt that Margaret Thatcher changed Britain and, to a much lesser extent, the world.

I say “to a much lesser extent” because, as the current European situation plays out, it is becoming increasingly apparent that we’re reaching a Thatcherite breakpoint. To paraphrase one of my favorite quotes of hers, the problem with socialism is that eventually you run out of other people’s money. Europe, especially the periphery, is now at that point.

With all of the focus on Cyprus over the past couple of days, the refrain has gone something like this: what really matters isn’t Cyprus itself but the bigger picture and what that might mean for Europe. No one has really gotten into what happens and how, so I thought I’d give that a shot.

Cyprus is an even smaller piece of Europe than Greece was. The banking system, which was seven times the size of the economy, is also small in the larger scheme of things. The amount of money required to bail out the system was a rounding error; there was no financial reason not to simply write a check.

This will be a short post because I’m down in New Orleans at the Chairman’s Retreat conference. Commonwealth’s conferences offer absolutely wonderful content—my “Good Habits” post a while ago was based on an earlier one—and are a great deal of fun because of the people who attend.

I can’t focus on this right now, though, because Europe has come back with a vengeance as a risk factor. A bailout for the Cypriot banking system has been proposed, one that would whack individual depositors for the first time ever.

I want to do something today that I do not do that often: make a specific case for something. Ordinarily, economics is very much a nuanced “on the one hand/on the other hand” subject—to the extent many wish for a one-armed economist. Today, though, I want to make the case for a strong U.S. recovery.

Let me be clear. I am not pounding the table on this. I still don’t consider it the most probable case, and there are certainly enough factors out there that could derail it. The news keeps surprising to the upside, however, and I think it makes sense to look at how we could continue to be pleasantly surprised as the recovery starts to gear and turn really strong.

Markets take a roller-coaster ride

First of all, an apology—I didn’t post yesterday. I was in New York at a Morgan Stanley conference, and I blithely assumed that Wi-Fi connectivity would be available. For some reason, which was not the fault of the venue or the sponsor, I could not connect with my laptop. Even on the train home, the Wi-Fi was out for the first hour of the trip, and by that time, it was too late in the day to post.

It is surprising how dependent I have become on connectivity. I have a Mac Air laptop, which I love, and it usually works seamlessly with all sorts of connections, but not yesterday. And trying to connect with only an iPhone, which was heaven just a couple of years ago, was instead incredibly frustrating. How quickly we get spoiled. It was not all that long ago that I refused to even carry a cell phone.

Yesterday, I posted an update on the rising risks in Europe. After I wrote that piece, I spent some time thinking about other risk areas that have fallen off the radar screen a bit and decided that today would be a good time to address those as well.

The market hiccup yesterday was widely attributed to Europe, which raises the question—what’s happening in Europe? I haven’t written about Europe for a couple of months. The last time, just after Thanksgiving, I noted that the situation was normalizing but we could certainly expect storms ahead. Two months later, the storm warnings are starting to sound.

Economic improvement has continued since then, with a start at recovery in the northern tier of the European Union. The southern tier, however, has continued to weaken—not so much economically as politically. Greece, for a change, isn’t the driving factor this time. Instead, two of the largest countries in the EU, Spain and Italy, are now showing cracks.

When I saw the above headline in today’s New York Times (page A3), I have to admit I was taken aback. All of the discussions I have heard about nuclear war recently have been metaphorical, typically centering on how Congress is dealing with something. This one isn’t. Reading the article is scarily reminiscent of civil defense drills that I am just old enough to remember—when we stood in the central hallway of the school, facing the wall with our hands over our heads.

I couldn’t have asked for a better reminder that even as economic risks recede—and they are receding—there are a number of geopolitical risks that will come back to fill that worry-space. The relationship between India and Pakistan is certainly one risk; another is Japan and China, where, as of yesterday, both countries were sending fighter jets to the disputed Senkaku/Daioyu islands.