The answer is both.  But I think the nominal aspect may be greater than people realize.  First let me concede that there are severe real problems in the heart of the eurozone.  Here is Wolfgang Munchau:

What is the size of the problem? International Monetary Fund estimates suggest that the eurozone is well behind the US in terms of writing off bad assets. I have heard credible reports suggesting that the underlying situation of the German Landesbanken is even worse than those estimates suggest. Last year, a story made the rounds in Germany, according to which a worst-case estimate would require write-offs in the region of €800bn – about a third of Germany’s annual GDP. If you were to add this to Germany’s public debt, you might jump to the conclusion that Greece should bail out Germany, not the other way round. While that is probably a little exaggerated, there are serious questions about whether the eurozone is still in a position to issue such massive guarantees. So, given what happened to those subprime CDOs, what hypothetical rating should we then attach to that €440bn eurozone SPV? A triple A?

By they way, I found this in an excellent Arnold Kling post, which also links to a rather astounding aspect of our new health care bill.
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I feel like a character in Invasion of the Body Snatchers.  No sooner do I knock one critic down, then here’s another.  This will teach me that I have no business criticizing Paul Krugman. 
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It annoys me when someone claims I made a mistake that I didn’t make, and then forces me to waste lots of time showing that I am right. 
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Paul Krugman replied to my critique of his comments on neoliberal reforms after 1980.  First a couple quick points:

1.  Krugman’s right that I didn’t really refute his specific point—that these reforms were associated with a slowdown in real income growth.  Indeed I agree with that observation.  I thought it would be more interesting to explore an implication that I believe 99.9% of his readers drew from the post—which is that the reforms did not boost growth in real incomes relative to the alternative of maintaining the 1945-80 economic model.  I strongly disagree with that view.  It would be interesting for Krugman to indicate whether or not that is his view.

2.  It seems to me that he also changed the subject a bit with his discussion of hourly wages.  His initial post looked at annual incomes, which is how I responded.  In addition, I did concede at the end of my post that increasing leisure time in Europe explains part of the differences.  I would point out, however, that part of that “leisure” is a much higher natural rate of unemployment among the young and immigrants than in America.  And I seem to recall that liberals don’t like it when conservatives call unemployment “leisure.”  In addition, if the leisure is triggered by tax distortions, it may simply encourage more inefficient home production, and less efficient market production.  But yes, the extra leisure does have some bearing on the comparisons, as I conceded.  And to be fair, Krugman refers to the working hours and retirement age differences, not the unemployment gap.
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My grandmother died at age 79 on the very week they landed on the moon.  I believe that when she was young she lived in a small town or farm in Wisconsin.  There was probably no indoor plumbing, car, home appliances, TV, radio, electric lights, telephone, etc.  Her life saw more change than any other generation in world history, before or since.  I’m already almost 55, and by comparison have seen only trivial changes during my life.   That’s not to say I haven’t seen significant changes, but relative to my grandma, my life has been fairly static.  Even when I was a small boy we had a car, indoor plumbing, appliances, telephone, TV, modern medicine, and occasional trips in airplanes.
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