Greece’s turmoil could mean political challenge for U.S.
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The roller-coaster ride that the New York Stock Exchange took on Thursday creates a new set of political and economic problems for the Obama administration.
The Dow Industrial Average took an Olympic-sized swan dive, falling like a stone by more than 900 points through 10,000 before economic friction caught up and the index started to rise enough to be down in the 2% to 3% range. It then continued its up-and-down ways. While the exact numbers are still pending, it appears the Dow has at least taken a major psychological hit -- in part because of the Greece financial crisis.
As reporters during the afternoon briefing questioned Robert Gibbs about U.S. policy, the press secretary said that the financial team was monitoring Greece’s situation. But as the questions became more specific, Gibbs said that he would have to find out more information and bemoaned not having a pipeline to stock quotes that the reporters did via Blackberries and such devices.
The current crisis couldn’t have come at a worse time for an administration that was waiting for Friday’s jobless numbers, expected to show job growth but only a slight change in the overall rate. Any positive sign on the employment front would have been helpful since polls show that the economy and jobs issues remain the overwhelmingly top issues in this midterm election year.
That good news could easily be swamped by the Greece crisis, which hurt stocks and sent voters’ antennae quivering.
But the comparison goes further.
Two presidential administrations have argued that strong government intervention was needed to save the U.S. financial system and imperiled institutions. If a bank is too big to fail, what of a country?
If Greece can’t be allowed to fail, who will save it?
Europeans have been urged by the United States and others to move quickly to prevent the panic from spreading. The IMF, whose largest shareholder is the United States, has been involved as well.
At some point, the fear is that the problems from Greece will spread to the United States, perhaps even requiring the United States to get more heavily involved in supporting Europe, a major trading and political partner.
Is it possible that if Greece sneezes, the United States will catch a cold?
In the current interconnected world, anything is possible. After all, it was the U.S. housing crisis in 2008 that battered Europe and helped send the world’s economy into a tailspin.
Gibbs said that anything that affects the global recovery is of concern to the Obama administration.
To return to solvency, Greece has been forced to do two things that every financially-challenged municipality faces in these tough financial times in the United States: cut spending -- particularly pensions and salaries in the public sector -- and consider raising revenue through a consumption tax.
Neither is something that any politician wants to face in an election year.
--Michael Muskal
