"The Danger for Obama Is Huge"

European assessments of the U.S. budget agreement vary widely, but they are united on one thing: America’s deep-seated economic problems have only been temporarily postponed.

El Pais (Spain):

“The last minute agreement between Democrats and Republicans to raise the debt ceiling (…) assures the normal functioning of the U.S. economy until 2013 under Obama, but it also sends the message that the tea party movement’s radical policies will become a hurdle for Washington’s no-crisis policies. The agreement saves the country for the present since it avoids a national default. But it also places the future in danger.”

La Repubblica (Italy):

“Ungrateful Wall Street. President Obama avoids a default and markets react by collapsing. The day after the compromise was reached, Wall Street discovered to its surprise that it was in agreement with progressive public opinion in the United States even agreeing with economic Nobel laureate Paul Krugman who castigated the agreement saying, ‘It will damage an already depressed economy.’

“A grotesque coincidence: On the day Obama had to sell his compromise to enraged Democrats in Congress, the realities of the market showed that industrial production hit a new low, indicating that the nation was at a standstill — one step away from again falling into recession.”

La Stampa (Italy):

“Does this revolt of liberal forces against the compromise mean that Obama has been written off? The reality is that the boss in the White House has another target in mind and will undertake a risky adventure. Surveys show that a majority of Americans wanted this compromise. Now that Obama has satisfied them, he is also laying claim to the political middle that was abandoned by the tea party extremists. His hope now is that moderate voters will bear that in mind when they go to the polls next year and that the liberal base will have no alternative other than to return to the fold.”

The Times (United Kingdom):

“This compromise is unsatisfactory and does nothing to address the structural weaknesses in the U.S. economy. A major portion of the huge foreign exchange surplus in China is invested in American capital markets. But if the U.S. doesn’t get control of its debt, international investors could begin drifting away from U.S. investments. The U.S. position is compromised, and the Washington government has to be aware of the limits to its financial possibilities. Perhaps the banking collapse was only the first phase of the financial crisis. America’s international status is dependent on its wealth and its diplomatic and military weight. The debt burden is redefining that status.”

Die Presse (Austria):

“After two years in office, Barack Obama has been unsuccessful in bringing change to Washington. His defiant ‘Yes, we can!’ became ‘We can, if the Republicans give us permission.’ The danger is great for Obama that voters in 2012 will decide to elect a Republican president since Republicans are already making national policy.”

Neue Zürcher Zeitung (Switzerland):

“The real problem in the United States is that the politicians have decided on ever-increasing expenditures without bothering to finance them. Clearly, there’s a lack of political will for cuts in spending as well as for increasing taxes. That doesn’t bode well for the future. A debt limit such as exists in Switzerland would be preferable. The United States urgently needs an instrument that forces politicians and the government to plan for balanced budgets beyond just the current economic cycle.”

Hospodarske Noviny (Czech Republic):

“The drama is over — now let’s forget it as quickly as possible! But the compromise Democrats and Republicans struck to raise the debt limit didn’t do anything to solve America’s basic problem. It doesn’t answer the question how the United States can stop another debt spiral in the future. The compromise prevented America from defaulting on its loans, something that would have had a disastrous effect on the stability of U.S. and global financial markets. But that’s all America can pat itself on the back about. Apart from that, the situation in Washington leaves a rather gloomy impression.”