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Jewish World Review
June 11, 2012/ 21 Sivan, 5772
Obama's fate could be in Europe's hands
Some think that Ohio will decide the presidential election. Others are watching Florida or North Carolina or Wisconsin.
But if you really want to know who will win the White House in November, you should ask the Europeans. They aren’t eligible to vote, but they may well cast the deciding ballot — and for President Obama, it’s looking grim.
I took a break from American politics to spend a week across the Atlantic, where I worked as a correspondent for the Wall Street Journal in the 1990s. This wasn’t an ideal time for a European holiday: Germany and France are warring, and smaller European states are taking sides — while England sleeps.
Thankfully, it’s not a military conflict this time but an economic one. Yet Britons, and Europeans in general, find themselves in a familiar state of discord and denial. However they resolve their troubles, it will be bad news for Obama.
At worst, a severe downturn here will send the U.S. economy back into recession. Even at best, the inaction here may still cause enough drag on the U.S. economy to doom the incumbent’s reelection.
For all the chatter at home, the election won’t be determined by fundraising, or Bain Capital, or Obamacare, or Mormonism, or birth certificates, or even crucial issues about taxes and spending. In the end, Obama will win if voters perceive the economy to be improving — which it was until Europe’s troubles stalled the recovery in recent months.
On this, Obama is helpless — as evidenced by the White House statement Wednesday regarding his phone calls with European leaders. They “agreed on the importance of steps to strengthen the resilience of the euro zone and growth in Europe and globally, and agreed to remain in contact,” the White House disclosed.
In other words, they agreed to keep talking — which is just the opposite of the action Europe desperately needs. Much of the continent is already in recession, with manufacturing and services contracting and unemployment climbing to 11 percent. Banks across Europe are reeling, and even some of Germany’s have been hit with downgrades.
Greek elections on June 17 are expected to produce a government that will abandon the euro, putting more pressure on Spain, which has already said that its banks need a bailout. The Spanish troubles have aggravated a standoff between Germany, which demands more austerity in exchange for a bailout, and France, where the new socialist prime minister favors more government spending. The German newsmagazine Der Spiegel observed in recent days that Europe has moved “a little closer to the abyss.”
Europeans are in a stalemate — paralyzed by disagreement and unable to act on the dire problems all around them. The denial is palpable here in Britain, where, in response to the crisis in the neighboring euro zone, manufacturing is plunging and growth has slowed almost to zero. Britons’ disposable incomes are declining for the third straight year. A report this week found that British banks are sitting on $62 billion in undeclared losses. The same public discontent that has toppled governments on the continent has forced the conservative government here to reverse various austerity measures.
Yet I found Britons enjoying some of their biggest festivals in years: Millions lined the Thames and filled the Mall for, respectively, a boating pageant and a concert and a royal procession to celebrate Queen Elizabeth II’s 60 years on the throne. The newspaper coverage typified the contradiction. Wednesday’s Times of London was packed with 14 pages of rapturous reporting on the queen’s jubilee before Page 15 brought the headlines “Germany must take action to save world economies, warn finance ministers,” and “Spanish prime minister pleads for bailout.”
The queen’s Diamond Jubilee celebrations brought only passing reference to the misery of the moment. Prince Charles, at a concert outside Buckingham Palace on Monday night, noted with pride that, even while many Britons “are suffering such hardships and difficulties,” they still thronged to the Thames to greet the queen’s flotilla last Sunday.
There’s nothing wrong with a bit of pageantry. But these “hardships and difficulties” threaten to overwhelm Britain, which is our sixth-largest trading partner, and Germany, the fifth-largest. U.S. companies are sounding alarms about declining sales in Europe, and distress in Europe’s financial sector is rippling through American markets.
Obama has begun to blame weak employment reports in the United States on the troubles in Europe, arguing that the growth will resume once there is a “sense of stability in the world economy.” Unfortunately for Obama, there’s no sign here that Europeans will come to grips with their problems before November.
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