U.S. stocks opened low on Monday as fears of spiraling European debt crises had investors holding their breath. Meanwhile, the U.S. political implications of Europe's troubles continue to percolate.
Last week, Glenn Hubbard, the dean of the Columbia business school and Mitt Romney's chief economic adviser, wrote an oped article for a German business publication urging Europeans "not to learn from America." He drew fire from President Barack Obama, who is urging stronger European countries to bail out their Mediterranean miscreants.
"I would point out that we have one president at a time and one administration at a time," Obama said at a G-20 press conference in Mexico. "And I think traditionally the notion has been that America's political differences end at the water's edge."
Financial blogger Bruce Krasting cited the obvious political conflict in Hubbard's argument, namely that austerity in Europe might result in short term economic contraction, which could ripple quickly to the U.S., slowing the economy before the election.
"The issue here is not the merits of Hubbard’s arguments. It’s Hubbard’s motivations for writing it, and putting it in a German newspaper. If Germany were to follow Glenn’s advice, it would precipitate a big recession in Europe and the inevitable blowback in the USA. The economic adjustment would happen pretty quickly. It would arrive in time to influence the presidential election," Krasting said.
Romney isn't the only candidate who has a stake in Europe's decisions. Obama has been aggressively pushing Germany to commit to the bailouts in order to boost the world economy ahead of his re-election battle in November.
Reuters reports that "Germany's Finance Minister Wolfgang Schaeuble is telling President Barack Obama to get his own house in order rather than pushing Europe to speed up its efforts to ease the debt crisis. 'Mr. Obama should first of all take care of reducing the American deficit, which is higher than in the euro zone,' he told a broadcaster interviewer."
Handesblatt's editor Gabor Steingart pushed back at Obama late last week in a video statement, arguing that debt is "not an American issue alone, and debt addiction is an illness which has affected all of our societies."
"Our ability to create growth and to promote new and better jobs is shrinking. Today, America has pushed the debt ceiling 81 times. And the debt/GDP ratio far exceeds the European level. The U.S. deficit is growing by about $3.5 billion every single day. Imagine the federal budget would be a Cadillac, and now imagine how debt/GDP ratio of 50 percent would translate into a speed of 70 miles per hour. Under President Nixon, the Cadillac would have driven smoothly at around 50 miles per hour. Under President Reagan, the Cadillac would have increased speed to about 75 miles per hour. Under President Bush Jr., 100 miles per hour. But Obama would appear to have been the worst driver of them all: 145 miles per hour, and he is speeding up. That's not cool, that's dangerous," Steingart said.
Eric Schulzke writes on national politics for the Deseret News. He can be contacted at [email protected].