The National  Memo Logo

Smart. Sharp. Funny. Fearless.

Monday, December 09, 2019 {{ new Date().getDay() }}

The situation in Europe is looking increasingly dire, posing a grave risk to the global economy.

In the past day alone, the Greek government shut down because civil servants are protesting austerity measures, Moody’s has downgraded Italy’s debt, and France and Belgium had to act to save European lender Dexia. Even those without a good grasp of the intricacies of the European Union and its financial institutions — a category that admittedly includes most people both within and outside Europe — realize that the euro crisis bears a disastrous potential for economies throughout the world.

The impact of the worsening situation in Europe is already being felt in the stock market, but it could have more lasting effect on U.S. economic recovery. Ezra Klein writes in The Washington Post:

[Recent events in Europe] point to two things that could happen over the next year that would crack the American recovery and reshape the 2012 election: Some European countries could default on their debt and the European debt crisis could undermine the continent’s financial system and lock credit, much as happened here after the fall of Lehman.

On Monday night, Goldman Sachs sent out a research note that sounded less like an analysis and more like a warning. Their European arm, they said, “now expect the Euro area to fall into recession beginning in the fourth quarter, with full-year 2012 growth at only 0.1%.” Ouch. But they tried to be as clear as possible: this is our problem, too. “The European crisis threatens US economic growth via tighter financial conditions, reduced credit availability, and weaker growth of US exports to the region. This impact is likely to slow the US economy to the edge of recession by early 2012,” they continued.

The fact that it’s our problem doesn’t mean we have much say in the solution. Talk to government officials and they’ll tell you that the United States has three points of leverage over the Europeans: 1) They care what we think. 2) They need the International Monetary Fund’s assistance, and we have a major voice in that organization. 3) They want the Federal Reserve to continue providing liquidity and support to the global financial system in ways that work with their rescue plans. Put together, that’s more than enough to make us heard. It’s not nearly enough to make us decisive.

The IMF is trying to re-work its strategy to prevent a total EU collapse, but the crisis continues to worsen and cause market turbulence. The United States might not be able to directly intervene and prevent a disaster in the EU; it can, however, create a plan to help Americans if our economy is significantly damaged by the situation. Meanwhile, GOP presidential hopefuls in the United States seem to be avoiding the European issue entirely. Given the severity of the associated risks, the euro crisis warrants closer attention from the American public — and especially from American politicians.


Start your day with National Memo Newsletter

Know first.

The opinions that matter. Delivered to your inbox every morning

Jeff Danziger lives in New York City. He is represented by CWS Syndicate and the Washington Post Writers Group. He is the recipient of the Herblock Prize and the Thomas Nast (Landau) Prize. He served in the US Army in Vietnam and was awarded the Bronze Star and the Air Medal. He has published eleven books of cartoons, a novel and a memoir. Visit him at DanzigerCartoons.

Participants hold placards as they mark Martin Luther King Jr. Day in Washington D.C. on January 17, 2022

Washington (AFP) - Members of Martin Luther King Jr's family joined marchers Monday in Washington urging Congress to pass voting rights reform as the United States marked the holiday commemorating the slain civil rights leader.

King's son Martin Luther King III spoke at the march, warning that many states "have passed laws that make it harder to vote" more than half a century after the activism of his father.

Keep reading... Show less
{{ }}