Reluctant as I am to criticize anyone who stands in direct opposition to the President and his "War On Commerce", Mitt Romney said something silly that he can't possibly hope to fulfill:
"We're not going to send checks to Europe. We're not going to bail out the European banks. We're going to be poised here to support our economy," Romney told CBS television's "Face the Nation" program. Now don't get the wrong idea, this is technically correct. We won't be "bailing anyone out" like we did with the T.A.R.P. program. But if Europe goes off the cliff the US federal reserve will pump ... I don't know... potentially Trillions of new dollars into the global economy to keep things afloat whether President Romney thinks it's a good idea or not. And that will no doubt be portrayed by his less economically literate political opponents (and their totally economically illiterate supporters) as a "bailout for Europe".
The European crisis is not over. In some ways it's just starting. And it is an existential crisis for the unelected Government that is running the European Union. Those people will do absolutely anything they have to in order to preserve the political status quo. And in the end, the only thing that is going to get Europe from "today" to "tomorrow" is cash; lots, and lots, and lots, and lots, of cash. Germany and the (more) stable EU members will have to come up with most of it. And it will be fascinating to guys like me to see what kind of Rube Goldberg political device the pols come up with to produce that cash without their domestic voters realizing it's their pockets it's coming from. If things calm down for a while it's possible that's all that will be necessary.
But if things get really desperate, the Fed WILL be coming up with additional liquidity, and will in effect be transferring a credit derivative to Europe, only to have it re-sliced and portioned out to the more troubled members by the ECB. It won't be a question of carefully thought through economic navigation, it will be a question of yanking the wheel to keep the car from going off the cliff. President Romney can plan all he likes, but in the end his crisis management skills are about the same as anyone elses.