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Biggest Issue in 2012? Could Be Europe

A European Union flag and Greek national flag fly near the Parthenon temple; Photo by Angelos Tzortzinis/Bloomberg via Getty Images

There have been Rick Perry’s “What’s number three?” gaffe and the allegations against Herman Cain. But the biggest story in the 2012 campaign may be unfolding on the other side of the Atlantic Ocean.

It’s tempting to look over at the current European debt crisis and simply see a problem for Greece or Italy or Germany. After all, the United States has its own set of economic troubles. But Europe’s current economic drama is intricately tied to American politics. And if things go bad in Europe — really bad — voters and candidates will suddenly be getting acquainted with talking points centered on the fate of the euro.

There are the long-term economic implications of a collapse — in areas like currency exchange and European geopolitics — and there are the more basic American political calculations. Simply put, if Europe’s debt crisis gets too big it will rattle the investment portfolios of wealthy swing-voting communities — places we call the Monied Burbs in Patchwork Nation.

And if that happens, the tone of the 2012 race will change from being about how to speed up any U.S. recovery to how to handle a powerful economic downdraft.

On the Horizon

In recent weeks there has been a definite trend in economic news. The broad measures have looked better and the reports out of the Thanksgiving holiday shopping kick-off have been very good. The theme building into 2012 is one of slow but seemingly steady growth — particularly in the Monied Burbs, where the unemployment rate is sitting at about 8 percent. The Monied Burbs are the beige counties on the map below.

The Burbs are beginning to feel a bit better and that’s critical to how 2012 unfolds because those 286 counties will play a huge role in determining who wins the next election. They hold some 70 million people and as Patchwork Nation has shown in more in-depth reporting, voters there tend to base their votes more on economics than other issues. They are less tied to any specific ideology.

That’s where Europe comes in. If the debt crisis grows and say Italy or Spain requires help from their European partners — or the United States — the actual immediate impact might not be terrible. The struggling countries might actually stabilize.

But alarms about the broader economic health of Europe will go off and that could set off a panic in the Burbs.

The Monied Burbs, as we have noted before, are the most heavily invested in the stock market, but the households there are more plugged into big economic issues in a host of other ways as well. Patchwork Nation has partnered with Ad Age magazine and worked with the firm Experian Simmons to examine a host of attitudes about finances and financial markets.

People in those communities are the most likely to have money invested in a variety of ways — from mutual funds to bonds to stocks, according to the Experian Simmons data. They are the most likely to read the financial pages of the newspaper. They are the most likely participate in online trading. They are, in other words, the money intelligentsia in Patchwork Nation and, as such, they see Europe’s problems as a serious and direct problem for them. The kind of problem they’ll vote on.

Psychological Impacts

In 2008 Patchwork Nation was visiting a Monied Burb community at one of the harshest moments of that year’s fall economic crisis. Talking to voters there you could almost hear Sen. John McCain’s support eroding. People mocked him for suspending his campaign and going back to Washington. They talked about their money in the market and how their retirement had just been postponed.

The point is the stock market averages are more than just numbers to many in the Burbs, the rises and falls in the indices equal personal rises and falls, at least psychologically.

In 2008, the impact of those economic earthquakes was fairly straightforward — the incumbent party took the hit in part because it had a nominee with weak economic credentials. In this latest round of trouble, the “winners” and “losers” would be less clear because the situation is so complicated. Who would take the blame for Europe’s mess? Who would or could come up with a palatable set of options or proposals?

Those questions are impossible to answer and they bring this warning for the 2012 campaign. The bumps so far have been minor compared to what is sitting out there now. And despite how calm things look on the surface, just underneath the conditions are roiling.

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