Why Obama Wants to Rescue the Euro

Tim Geithner will become the first U.S. Treasury Secretary to attend a meeting of the EuroGroup. This weekend, finance ministers from all 27 members of the European Union will assemble in Poland. Why has Barack Obama sent Geithner on a mission to Warsaw? Because the United States is in dire need of its European neighbors avoiding a banking crisis, which would result in a long recession that would more than likely result in the same disorderly failure as Greece.

The U.S. economy is much too fragile to withstand a possible European recession — both because the old continent absorbs 27 percent of U.S. exports and because many U.S. multinational companies, which are well established in Europe, desperately need this market to thrive. It is estimated that the European market accounts for 53 percent of total sales outside of the U.S. for large American multinational companies, including Ford, IBM, Coca-Cola, Altria, DuPont, Microsoft and Intel, etc.

It has been somewhat of a cliché to say to the French that the euro was a means of protection from the “Dollar King.” First, the euro does not protect anything. This can be seen today with the terrible crisis of sovereign debt and an ever-looming recession. Secondly, the euro has been justified by the construction of a European block, where scaled economies become significant, thus permitting the Europeans to take the upper hand over the North American dollar zone.

It is not at all contradictory that America has announced the urgency of saving the euro. Nor would Europe rejoice at the collapse of America; the two poles need each other more than ever.