Election may have kept US on euro sideline

The US presidential election, now just three days away may have played a role in keeping the United States from jumping aboard the latest rescue effort to prop up the ailing euro.

But if so, it was just one of several factors that kept the US Treasury and Federal Reserve on the sidelines.

Analysts said the United States didn't have a good reason to join in this time, as it did six weeks ago on September 22nd when a much broader co-ordinated euro bailout was started by major economies around the globe.

"Clearly we will do it for our friends in Europe if there is a crisis but in general, a US administration is going to be very cautious in these matters," said economist Mr Pierre Ellis of Decision Economics Inc.

A US intervention to help the euro, which essentially would mean weakening the dollar's value against it, could potentially raise questions in the final days of intense campaigning about why a US administration would want to drive down its own currency.

The US Treasury Secretary, Mr Larry Summers, issued a brief statement hours after the ECB's move, saying the United States stood by "our long standing dollar policy" but said he also shared Europe's concern "about the implications of the broad movements in the euro for the world economy."

Some economists said the impending US vote was not a consideration in staying out of the intervention, noting that Japan also stayed out and there were sound reasons to doubt it would work anyway.

"I don't think there was an election-related spin to the US staying out," said economist Mr Carl Weinberg of High Frequency Economics in New York, describing it as a European initiative that was unlikely to brace the euro for long.

"I think the US was an unhappy participant in the last one [in September] and with no G7 confab on the horizon to force its hand the United States likely would take the same decision a week from today as it has today," he added.

Mr Summers had said after the September intervention that the United States helped because there was a glaring market imbalance that was driving the euro down.

But there was no sign of market panic in recent days in the euro's slow slide in value, leaving the United States room to stay on the sidelines.