A EUROPEAN NOSEDIVE
The prospect of a Greek anti-austerity party winning new elections in June has sparked widespread fear that Greece will default on its debt and exit the eurozone, which could spread contagion in southern Europe and plunge the global economy back into recession. But there's a debate about the extent to which the European debt crisis will influence the U.S. election.
If a Greek exit precipitates the collapse of the eurozone, Brookings Institution scholar William Galston argues in the New Republic, it will be disastrous for Europe and the United States. But he adds that U.S. GDP growth would probably slow and the unemployment rate would likely stagnate even if the European monetary union remains intact after Greece's departure. "These developments would make it harder for Obama to argue that we're heading in the right direction, and ... I suspect that economic growth at these depressed levels would mean victory for Mitt Romney," he writes. Or, as the Washington Post's Ezra Klein noted earlier this year, Obama's reelection "will be largely decided by the state of the economy. And the state of the economy will largely be decided by events in Europe. And Europe's not looking so good."
But others argue that Greece won't drop out of the eurozone before November, if it does so at all, or that the American financial system isn't particularly vulnerable to a Greek exit.
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