Barack, Angela, Nicolas and the Euro

Barack Obama is worried about the fate of the Euro. He spends, in his own words, a lot of time on the telephone with European leaders, especially Angela Merkel. We understand how the prospect of the single currency failing scares him: It would cause, or aggravate, a recession of which the United States would be among the primary victims. We also understand why his calls are primarily addressed to the German chancellor: In the debate over the way out of the crisis, it isn’t Sarkozy that must be convinced, but Merkel. There is a kind of understood axis between Washington and Paris, founded on the common belief that, faced with a monetary collapse of unpredictable proportions, any injuries to financial traditions are a lesser evil.

The United States has provided such an example: They are the ones who opened the widest budgetary floodgates at the beginning of the storm, and they are resorting to a largely “unconventional” monetary policy today. The recommendation they are giving Europe is to also to use every possible “firewall” to avoid an escalation of the crisis.

This message, difficult to sell in Germany, would be more convincing if the United States, to whom the international role of the dollar confers the “exorbitant privilege” of cheaply financing their enormous public debt, agreed to support the rescue of the euro by contributing to the reinforcement of IMF resources. But this isn’t likely because of the virulent campaign waged by the Republicans on this issue, in the name of defending the taxpayer, which strikes home with the American public.

The fact is, in the United States as elsewhere, it is easy to encourage the voter’s refusal to “pay for others,” but more difficult to make them admit that the bankruptcy of these “others” would cause damage that would be disproportionate to any discomfort caused by agreement for everyone, including themselves.