WHY IT MATTERS: Europe's Economic Crisis

EDITOR'S NOTE _ An introduction to The Associated Press' "Why It Matters" series, which explores top issues confronting the nation in this presidential campaign season and their impact on Americans.

When you vote for Democrat Barack Obama or Republican Mitt Romney in November, you'll be voting for more than a president. You'll be casting a ballot for and against a checklist of policies that touch your life and shape the country you live in.

It can be hard to see, through the fog of negative ads, sound bite zingers and assorted other campaign nasties, that the election is a contest of actual ideas. But it is always so. A candidate's words connect to deeds in office.

Roll back to 2008. Obama was the presidential candidate who promised to get the country on a path to health insurance for all. He delivered. If you haven't noticed one way or another, soon you will.

And back to 2000. George W. Bush ran on a platform of big tax cuts. That's precisely what the country got. A decade later, taxes are lower than they otherwise would have been.

That's not to say you can count on Romney's checklist or Obama's to come into full being. You sure can't.

By nature and necessity, the presidency is in large part a creature of compromise and improvisation. The unforeseen happens (the terrorist attacks), or circumstances change (the December 2007-June 2009 recession), or things that the candidate sets out to do run into a buzz saw in Congress (way too many examples to mention). That's why promises are broken, priorities shift and intentions get swept away by the fistful.

Even so, you get what you vote for, probably about as often as not. And a lot of what you get, you will feel in a personal way, for better or worse, no matter how distant Washington seems from your world.

The wars called away people in your orbit, if not in your family. The spending that each candidate wants to do — Romney vows military expansion, Obama would put more into education, for starters — is bound to benefit many livelihoods in some fashion, at the risk of even deeper national debt. And read their fine print: Medicare won't be the same in the years ahead. Perhaps not Social Security, either. (There's that national debt, after all.)

Across the spectrum of issues, Obama and Romney have drawn contrasts and telegraphed divergent ways for the nation to go.

You can't believe everything you hear. But you can believe enough to know that Tuesday, Nov. 6, is a true day of decision.

In this series, Associated Press writers who cover subjects at stake in the election look at the positions of the candidates, the underlying issues — and why it matters.

The issue:

Europe is struggling to control a debt crisis, save the euro currency and stop a repeat of the 2008 financial crisis that sent the world spinning into recession. The continent's troubles are the No. 1 threat to the fragile U.S. economy. If the crisis spreads to the U.S., Americans could find it harder to get loans and the country could slip back into recession.

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Where they stand:

Neither President Barack Obama nor Republican presidential candidate Mitt Romney has offered plans for Europe. The U.S. government lacks the cash and the will to rescue European countries struggling with huge debts. Obama has urged Europe to act more decisively. Romney has used the crisis to warn that the United States will face its own day of reckoning if it doesn't reduce the federal debt.

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Why it matters:

Europe buys 22 percent of the goods America exports. U.S. companies have invested heavily in Europe. So any economic slowdown in Europe dents U.S. exports and corporate profits. But the biggest fear is that a European financial crisis will flare up and move west across the Atlantic — the way Wall Street's 2008 crisis moved east to Europe — with dire consequences for the U.S. economy.

Europeans are struggling to repair a system that was flawed from the start. The euro, introduced in 1999, makes it easier to do business across Europe; no more changing francs to deutschemarks when French and German companies do business. But the common currency joined countries with vastly different economies and political cultures — and each got to keep running its own budget. During the 2000s, banks were willing to overlook the differences and lend at low rates to countries like Greece with dubious records of fiscal discipline. Lenders knew they'd be repaid in euros, not local currencies that could be devalued by inflation. Greece and other countries took advantage of the easy money. Their debts proved crushing after the recession hit.

To fix their finances, European countries have cut government spending and raised taxes. Greece, Portugal and Ireland had to tighten their belts to qualify for bailouts. But the austerity has taken a toll. Europe is sliding into recession. The pressure might force Greece to abandon the euro and revive its old currency, the drachma. Other countries — notably Italy and Spain — might follow Greece out of the eurozone.

Abandoning the euro would free countries from an economic straitjacket. When they joined the eurozone, they surrendered control of interest rates to the European Central Bank, so they cannot cut their own rates to boost their economies. Nor can they push down their currencies to give their exporters a price advantage and trade their way out of trouble.

But breaking up the eurozone would be dangerous. Borrowers in countries that left the eurozone would struggle to produce enough money in their weak local currencies to repay old debts denominated in much stronger euros. As debts soured, Europe's banking system would freeze. Its economy would follow. The pain would spread. Worried about a crackup, investors are demanding higher rates on Italian and Spanish debt, driving those countries' borrowing costs to unsustainable levels.

Is there any way out? European Central Bank President Mario Draghi has promised to "do whatever it takes" to save the euro by buying government bonds, pushing down interest rates and providing relief to Italy and Spain. Some economists call for eurozone countries to assume joint responsibility for the weakest countries' debts. Germans oppose so-called eurobonds, arguing they would give strapped countries less incentive to put their finances in order and would raise Germany's own borrowing costs.