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Europe is making Obama look good, but it could break him in his second term

Americans should praise Obama for holding the US economy at a stable rate given the European economic debacle.

Obama economy smile indicator 2012 11 02Enlarge
LOS ANGELES, CA - OCTOBER 07: President Barack Obama speaks at the '30 Days To Victory' fundraising concert at the Nokia Theater L.A. Live. (Kevin Winter/AFP/Getty Images)

If it hadn't been in the pocket yet, Sandy cast Obama’s victory in stone (unless he really screws up Staten Island, perhaps, or Diebold goes nuts). Not that he really needed it anymore, the economic numbers are simply not bad enough. Or perhaps we should say the public perception of the numbers isn't bad enough. Not for America to go against a long running historical trend that says incumbents with relatively good numbers get re-elected, no matter how much further the country has been plunging down the absurd theater scale from bi-partisan to bi-polar in the past four years. Or eight, 12, 20, take your pick.

All those close neck-and-neck polls you read and hear about only seem to serve the purpose of the political establishment and the media, both of which stand to profit greatly in credibility and in monetary terms. They create the illusion that the system functions, and get people to spend billions in ads. The last thing anybody wants you to think is that it's decided way before election day.

Until recently it looked as if perhaps Friday's BLS Employment Report could make a difference for the election, but it won't. Too late in the game. A Greek or Spanish default, followed by an impending dissolution of the EU could have done it, but the union will stay together till Tuesday, though perhaps only narrowly.
It’s a bit of a surprise that Obama never pointed to what's happening in Europe to make himself look good. Because it does. Maybe it's because his campaign team feels that not enough Americans could find Europe on a map even at gunpoint.

A major issue in the US election campaign has been Obama's salvation of the auto industry. And Romney resisting the policies that prevented the industry from collapsing. At the time, at least; he's mostly trying to deny it today. And draws the ire of the industry itself by suggesting Obama killed 15,000 or so Detroit jobs to ship them to China. Not only will this get Obama a lot of votes in the US, it also makes him look "all the more better" when we look at what is going on with Europe's carmakers. GM, Ford and Chrysler are doing very well, thank you, compared to Europe's auto industry. And what problems they do have — mind you, at the moment — largely come from their European affiliates.

In a few choice words: Europe's car industry is a godawful mess. Many European countries have their own car industries, and they are often associated with all kinds of separate patriotic ideals. That has led to a huge slowdown in restructuring measures, though there was a huge overcapacity in production even in the good years. As sales have fallen 10-20-30 percent just in the past year (Holland came in at -38 percent yesterday), depending on what country you look at, panic mode sets in.

The last thing French President Hollande needs is for his "own" carmakers to close down factories and throw thousands of workers out on the street. But even Hollande can't stop the plunge in sales, and continued overproduction will only serve the exacerbate the situation. So the president sees himself forced to eat his words and the foot in his mouth, and throw out a paradox: the French government provides Peugeot Citroen with a $7 billion bank guarantee (subject to EU approval), while at the same time the company announces the closure of a factory near Paris that will cost thousands of French workers their jobs.

Hollande is scared to death of the proverbial French protests, but he also knows this is just the start. Rock and a hard place indeed. The reality is that more than half of Peugeot Citroen's sales market is/was in southern Europe, and the firm's shares are down more than 60 percent since the beginning of the year.

And then on top of that S&P downgraded the major French banks; poor monsieur President doesn't know where to look first anymore. He's thinking about if only his predecessor Sarkozy had taken the necessary measures when he could. But for Sarkozy, like for Hollande now, there was far too much political and patriotic capital at stake, and he was fighting

Original Source URL: 
http://www.businessinsider.com/europe-makes-obama-look-good-2012-11

http://www.globalpost.com/dispatch/news/regions/americas/united-states/121102/barack-obama-elections-economy-euro-zone-debt-crisis