Obama's political woes: made in Greece?
The Federal Reserve assures us that the economy is on the mend. Financial regulation reform seems on its way to some sort of resolution in the Senate. But given what’s happening in Europe right now, there is a part of me that worries we’re all fiddling while Rome -- Athens, actually -- burns.
“The Greek debt crisis is now morphing into something much broader,” writes Mohammed El-Erian in today’s Financial Times.
How much broader? Listen to Megan McArdle:
Not that I think we're going to get another Third Reich out of this, or even another Great Depression. But it means we should be wary of the infamous "double dip" that a lot of economists have been expecting. The United States is in comparatively good shape, but the euro is in crisis, and already-weak European banks seem to be massively exposed to Greece's huge debt load. They're even more exposed to the debt of the other PIIGS, which is far too large for it all to be bailed out. The size of the rescue package that Greece needs is already going to take a fairly substantial chunk of the IMF's war chest.
I agree with McArdle that another Third Reich emerging from the ruins of Southern Europe’s economies is not likely. However, we have only begun to see the potential political fallout from the tensions within the Euro zone.
Simply recall that German-Greek animosities have deep historical roots, and that the Greeks have an ancient historical affinity with Orthodox Russia -- and you begin to sense the potential for geopolitical mischief in this situation. And does anyone think that Britain’s zany election is the prelude to a sober assault by the winner on that country’s screwed-up public finances?
President Obama is not to blame for the mess in Europe. But to the extent it grows worse on his watch and the effects spill over into the U.S., it could threaten his political prospects and those of the Democrats in November and beyond.
| April 29, 2010; 11:01 AM ET
Categories: Lane | Tags: Charles Lane
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