The Fear Factor.

Felix Salmon had a good column the other day on fear gripping the Davos elite. "Europe," he wrote,"risks falling apart — and there’s nothing that anybody here can do about it, if it happens."

If you talk to people who circulate at gatherings like the World Economic Forum, what you find is that many if not most of these policy-makers and globo-bankers believe that Europe falling apart is an even bet.

The prospect terrifies them. As well it might. The consensus seems to be that it would make the collapse of Lehman Brothers in the autumn of 2008 look relatively tame by comparison.

It was interesting to note that President Obama, in his State of the Union address, said not one word about the crisis of the eurozone and the possible collapse of the European Union. It is, I suppose, a subject best avoided in a nationally televised address to a sullen and depressed electorate.

But the day is finally approaching when the crisis will hit its inflection point and muddling through with half-measures and kicking the can down the road apiece will no longer suffice. Greece cannot meet its obligations. Neither can Portugal. Neither can Spain, really, when you do the math.

When the day comes, President Obama will be faced with a choice: participate in a global bail-out or inherit the wind. At least $2 trillion USD in sovereign contributions and guarantees will be required to do the job. The President, having promised in a nationally televised address just two days ago, "no more bailouts," will face a choice between catastrophic policy and a combo package of hideous policy and breaking his word.

To make matters more acute, President Obama's prospects for re-election hinge on the outcome of the Euro crisis, in much the same way that Senator McCain's prospects for winning the presidency hinged on the Bush Administration's final decision on what to do about Lehman Brothers.

If Europe goes down, the president will go down with it. If he decides to rescue Europe, he stands an even chance of keeping his job, but at a not inconsiderable cost to his integrity and standing as a national political leader ("I meant no more bailouts here at home..." isn't a credible defense).

You would think that one of the many political geniuses (about whom so much has been written) advising President Obama would have said to him: let's leave the "no more bailouts line out of the SOTU. Keep our options open on Europe." That would have been sound advice.

Instead, they sent the president out there with a SOTU address that blithely ignored the most pressing and important global economic issue of our time and positioned the president in such a way as to insure maximum political damage to his credibility as a leader (should the eurozone crisis escalate, which it almost surely will).

Remember that the next time you read about the political geniuses managing the president's re-election campaign.