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Europe won’t doom Obama’s re-election bid

at 05:29 PM ET, 03/07/2012

Once upon a time, the big worry was that the euro zone would implode and spark a global financial panic. But Jacob Funk Kirkegaard lists several reasons why that’s no longer likely to happen — at least not until after this year’s U.S. elections:

[T]he looming risk of a “European Lehman moment,” in which a large European bank would suddenly collapse and cause widespread systemic turmoil — and possibly have required a federal bailout of another US bank — has been dispelled for the foreseeable future. No large European bank is going to go bust... as long as it enjoys the benefits of the ECB’s long-term liquidity injections. This fact takes us well beyond November 2012. As a result, neither the Fed nor the Treasury needs to worry about an intervention that would be exceedingly unpopular.

There’s still plenty that could go wrong in Europe. Greece, say, could refuse to follow the IMF’s austerity plan and leave the euro. But even that wouldn’t happen until November or later.

 
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