After all their self-defeating austerity efforts, a few European economic policy makers are noticing that they’re having a problem with growth. The UK and other economies are falling back into recession; Greece is in a depression. But they still haven’t acknowledged they’ve got the solutions backwards.

MItt Romney, who’s been pressed to release his tax returns, effectively conceded today that since most of his income in the last ten years comes from capital gains, his effective tax rate was “closer” to the 15 percent on capital gains, one of the main factors driving America’s income inequality. He then argued that rate should not be reduced or eliminated because of budget impacts.

Euro nations are facing a tough economic year in 2012, driven by Euro leaders’ insistence on austerity programs that are depressing their economies but not solving their debt problems. A broad recession seems likely.

I don’t think growth will rebound, certainly not to a level that would lead to a rapid reduction in the unemployment rate. In fact, if the economy improves and more people return to the labor force, the result could be an uptick in that rate. We’re still moving at stall speed, not enough to return growth to trend, though not so slow to sink into recession. And then a European bank could fail and cause ripple effects that put us right back into the pit. We have the tools to solve this crisis, but the best we can hope for in Washington is that they don’t do anything actively harmful.

According to some forecasts, the Eurozone crisis, continued fiscal cutbacks at the state level, and a potential fiscal drag from the expiration of stimulus measures, would actually sag growth and probably increase the unemployment rate in early 2012. That would put 8% completely out of reach.

The Eurozone deal laid bare the fact that national sovereignty in Europe is a thing of the past.

But if that was that price paid for a stronger Europe, a safe currency union and a stronger economy, maybe we could have a reasonable argument about the costs and benefits. But the countries on the periphery, like Italy, Spain, Portugal and Greece, who gave up the ability for their governments to make decisions in the interests of the people they represent, in favor of unelected bureaucrats led by the nose of the markets, don’t even get the exchange of greater economic opportunity.

The 17 countries of the Eurozone formally backed a new deal for fiscal management, one designed to “save the euro” but which can only help if a host of other measures fall into place, including any plan to actually boost growth on the southern periphery.

The new plan to save Europe includes a condition that, says Felix Salmon, private bondholders cannot take losses on any future eurozone bail-outs. This is merely an invitation for recklessness by the bondholders, with a giant safety net put under them by Europe.

The Bureau of Economic Analysis downgraded GDP growth for the third quarter back to 2% from 2.5%. This follows a 1.3% second quarter. The slow growth is simply not enough to catch up to trend growth and increase demand to a level that can reduce unemployment.

The Federal Reserve took no new action after its November meetings today, continuing on the same path, using some minor monetary easing and announcing that the federal funds rate will remain at its current level until at least mid-2013. Charles Evans of the Chicago Fed, who has been calling for a bigger intervention to maximize employment, bravely dissented from the left, becoming the first FOMC member to do so since 2007.