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September 07, 2012 10:36 AM Help From An Unlikely Source

By Ed Kilgore

Even as Republicans seek to exploit the “meh” August jobs report to convince Americans to forget everything they heard at the national political conventions and just join the Referendum, there was other economic news this week. Here’s Matt Yglesias’ summary:

It’s a bit of a cliché at this point to note that events in the Eurozone may have a bigger impact on U.S. politics than anything at the conventions, but it’s true nonetheless. And so far this week has brought some very good news. Mario Draghi’s plan for potentially unlimited conditional bond purchases by the European Central Bank has sent stocks soaring and yields plummeting on peripheral bonds even as German debt yields rise slightly on economic optimism….
Some will dismiss this noting that we’ve seen ECB rallies before. And so we have. But these rallies are telling us something important. Market participants are firmly convinced that the ECB can solve this problem if it wants to. Not solve all problems. Not turn southern Europe into a magical paradise of unicorns and prosperity. But solve the particular problem that’s been afflicted Europe for the past few years. Whenever it looks like the ECB has decided definitively to solve the problem, markets soar.

Matt goes on to note that ECB’s “solutions” may not be accepted by its supposed southern European beneficiaries, and there are many other long-term pitfalls of an approach that makes central bankers a daily player in decisions normally made by democratically-elected governments. But for the short-term—i.e., for American political animals who tend to view history as ending on November 6—this week’s developments in Europe probably mean stable and/or rising financial markets there and here, and a significantly lowered possibility of some negative economic “October Surprise” that will change what is a very close U.S. national election.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

Comments

  • c u n d gulag on September 07, 2012 10:47 AM:

    Mario Draghi’s now done more to help President Obama's reelection chances, and more importantly - the American economy, than Ben Bernanke.

    Why is it that I'm not surprised?

  • ComradeAnon on September 07, 2012 10:56 AM:

    Although Draghi's plan was good news, day to day market action is noise.

  • c u n d gulag on September 07, 2012 11:01 AM:

    Also too - since we're in a largely symbiotic economic relationship with Europe - and what helps one, helps the other - maybe Ben 'Der Banker' Bernanke can reciprocate, and help his pal Mario Draghi?

    Maybe 'Der Banker' wasn't counting on this, hoping for the status quo to "quo status," and (real) "uncertainty" to still plague Europe, and that that would help Mitt win, and help his uber-rich friends?

    Right now, that small (96,000) job increase, is more of an indictment on 'Der Banker,' his uber-rich friends, and their Congressional Republican puppets, than it is on President Obama, and his administrations policies.

    'Der Banker,' slow growth, but growth none-the-less, is being accomplished WITHOUT you.

    Don't don't you feel that you owe it to the American people to at least TRY to do what you can to help us get jobs?

    Or, is everyone at your exclusive Country Club still determined so spread the "serf-ification" of the 3rd World here to our shores?

    Yeah.
    That's probably the answer.

    President Obama should have "Mitted" this motherfecking guy a long, long, time ago.

  • c u n d gulag on September 07, 2012 11:11 AM:

    Hey, I just thought of a new term:
    DisMitt.

    Unlike when you "dismiss" someone, when you need some cause (at least in states that aren't 'Right To Be Fired' ones), to 'disMitt' someone, means you do if for personal gain or profit - or, the gain and profit of like-minded people invested in same interests.

    For example:
    "CRAPTCHA, we've called you into the WaMo office to disMitt you - don't let the door hit you in the ass on the way out, an' split you."
    See?
    It works!

    So, President should 'disMitt' Ben Bernanke.

  • boatboy_srq on September 07, 2012 11:43 AM:

    Given recent history, it would be interesting to know whether a) Merkel is becoming more amenable to rescue efforts in part to avoid more embarrassing moments with a GOTea pResident; or b) whether Morsi, Rajoy, Samaras et al are going to BLEEP with the EU just to tinker with the US election prospects and make Merkel uncomfortable.

    Who says history isn't personality-driven?

  • bigtuna on September 07, 2012 12:23 PM:

    While the discord between European nations, and the lack of fiscal unity reveals weak elements of their system, they are not stupid. They have to figure that a Romney presidency is way worse for Europe than re-election of Obama. Policy differences are part of it, but so is stability of policies.

    When Willard, or his surrogates, do say something about foriegn affairs, or foriegn financial affairs, it is so remarkably naive and stupid that I want to hurl.

  • Daddy Love on September 07, 2012 2:01 PM:

    Do you really think Obama's people (and the president himself) aren't working the refs over there too?