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While the world has been transfixed with Japan, Europe has been struggling to avoid another financial crisis. On any Richter scale of economic threats, this may ultimately matter more than Japan’s grim tragedy. One reason is size. Europe represents about 20 percent of the world economy; Japan’s share is about 6 percent. Another is that Japan may recover faster than is now imagined; that happened after the 1995 Kobe earthquake. It’s hard to discuss the “world economic crisis” in the past tense as long as Europe’s debt problem festers — and it does.

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Just last week, European leaders were putting the finishing touches on a plan to enlarge a bailout fund from an effective size of roughly 250 billion euros (about $350 billion) to 440 billion euros ($615 billion) and eventually to 500 billion euros ($700 billion). By lending to stricken debtor nations, the fund would aim to prevent them from defaulting on their government bonds, which could have ruinous repercussions. Banks could suffer huge losses in their bond portfolios; investors could panic and dump all European bonds; Europe and the world could relapse into recession.

Unfortunately, the odds of success are no better than 50-50.

Europe must do something. Greece and Ireland are already in receivership. Private investors won’t buy their bonds at reasonable rates. There are worries about Portugal and Spain; Moody’s recently downgraded both, though Spain’s rating is still high. The trouble is that the sponsors of the bailout fund are themselves big debtors. In 2010, Italy’s debt burden (the ratio of its government debt to its economy, or gross domestic product) was 131 percent, reports the Organization for Economic Cooperation and Development; that exceeded Spain’s debt ratio of 72 percent. Debt ratios were high even for France (92 percent) and Germany (80 percent).

As these numbers suggest, there’s no automatic threshold beyond which private investors refuse to buy a country’s debt. Germany and France are considered sound investments, deserving low interest rates, because their economies are judged to be strong. But investor perceptions and confidence can dissolve in a flash. If private markets lost faith in, say, Italy or Belgium, even the enlarged bailout fund probably wouldn’t be big enough to rescue them. The whole scheme is debtors lending to debtors. It could collapse if investors conclude it’s unworkable, dump bonds and demand higher interest rates.

What would happen then is anyone’s guess. Would defaults occur? Would a banking crisis follow? Would some countries abandon the euro? (This sounds simple; in practice, it would be hugely complex. A country would have to convert all its money into a new national currency. It would be legally impossible to switch some debts from euros. The country would probably have to impose capital controls — restrictions on money entering or leaving the country.) Would the European Central Bank — the continent’s Fed — buy vast amounts of government bonds? Would the International Monetary Fund organize a bailout, financed heavily by China, to rescue Europe?

Europe has arrived at this dismal juncture driven by three forces: (a) large welfare states that were too often financed with debt; (b) the financial crisis that led to recession and has pushed some countries (Ireland, Spain) to aid their banks; (c) the perverse side effects of the single currency, the euro.

The euro’s role is especially ironic. Adopted in 1999 — and now used by 17 nations — the euro was intended to promote prosperity and political unity. Countries could enjoy similarly low interest rates and the convenience of common money. It seemed to work for a while. But low interest rates in Greece, Spain and Ireland encouraged unsustainable booms or housing bubbles that, when burst, aggravated their recessions and budget deficits. Now unity has turned to discord. Countries that back the debt bailout — particularly Germany — resent the possible costs; countries being bailed out resent the harsh austerity that’s imposed as a condition of aid.

There is a fragile debtor-creditor consensus that could crumble, posing yet another danger to economic recovery. Already, unemployment rates in Greece and Ireland hover around 13 percent. How much budget stringency (spending cuts, tax increases) will countries accept before social unrest or national pride cause politicians to say “enough”? Even European countries not facing an immediate debt problem need to reduce budget deficits to retain market confidence. All confront a common dilemma. Too much austerity too quickly could create a recession, widening deficits. Too little austerity too slowly could unnerve investors, raising interest rates and deficits.

It’s understandable that the human suffering, physical destruction and nuclear hazards in Japan compel our attention. But we ought to remember that a greater menace to global stability and prosperity lies halfway around the world.

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Nearly six in 10 Republicans replied with a resounding “don’t know” when asked their opinion of Tim Pawlenty, the former Republican governor of Minnesota who is poised to form a presidential exploratory committee Monday afternoon.

 The broad unfamiliarity among potential GOP voters in the latest Washington Post-ABC News poll is an early challenge for Pawlenty, who will become the first major candidate to formalize his interest in running for the White House.

 Some 28 percent of Republicans and GOP-leaning independents said they have favorable views of Pawlenty, 15 percent unfavorable ones. Most, 58 percent, opted out on the matter.

 In the poll, Pawlenty fares significantly better among Republican men than he does among GOP women. Among GOP men who expressed an opinion, Pawlenty runs about 4 to 1 favorable, but among women, there’s a narrow six-point gap between the percentages expressing favorable and unfavorable views (19 to 13 percent, with 67 undecided). Forty-eight percent of Republican men expressed no opinion.

A late February NBC-WSJ poll had President Obama thumping Pawlenty in a hypothetical 2012 match-up, 50 to 31 percent. In that poll, the president was up by 22 -points among political independents.

How much of Obama’s advantage in that poll had to do with the public’s not knowing much about Pawlenty, a two-term governor, will start to clarify after Monday’s announcement.

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Montgomery County’s pension and retiree health accounts are facing a long-term shortfall of more than $4.8 billion, and officials repeatedly have pulled back from difficult decisions needed to close the gap.

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JOHN BRIGHT / THE WASHINGTON POST – Montgomery County Fire Rescue Lt. Jeremy Gruber, right, tells Cleveland Evans where to take Leafy House resident Clarice Haudensheild during an evacuation of the nursing home.

The pension programs for the county and the school system are underfunded by about $1.3 billion, and retiree health funds are short by $3.5 billion, county records show.

County agencies have set aside just 3 percent of what they will need to cover health care for retirees. The pension funds, which have been in place much longer, are significantly underfunded.

Faced with these burgeoning shortfalls, Montgomery County Executive Isiah Leggett (D) has taken the dramatic step of ignoring the collective-bargaining process with the public employee unions, rejecting the results of binding arbitration.

With a labor arbitrator recommending no change in the amount that county workers contribute to their pensions and health insurance, Leggett is proposing significant new pension contributions for workers and a sizable cut in county health-care contributions.

The move prompted tough rhetoric from union leaders in the wealthy, liberal county, which employs some of the Washington region’s highest-paid, most generously benefited employees. County firefighters are planning to appeal Leggett’s labor and budget decisions this week, formally accusing the county of engaging in an unfair labor practice.

In rejecting the arbitrated rulings, Leggett proposed that workers increase their pension contributions by 2 percent of their salaries and that the county cut its contribution to current health-care costs from 80 to 70 percent.

One union leader responded to Leggett by suggesting that the county executive might don a cheese head, a dismissive reference to Republican Gov. Scott Walker of Wisconsin, whose fight against collective bargaining rights has made him a union villain. Another called Leggett a lawbreaker for ignoring binding arbitration.

“Let my membership operate outside the law, and they’d be fired on the spot,” said Gino Renne, head of the county’s government employee union, who said Leggett’s negotiators had been unyielding. “He drew a line in sand, pretty much like the radical Republicans in Wisconsin. Nothing good is going to come from that.”

Leggett said he supports collective bargaining but must, under the county’s charter, do what is fiscally responsible for taxpayers, binding arbitration or not. “It’s not as if it has no meaning, no impact. It does,” Leggett said of the arbitration process.

But, he said, the public interest and county’s financial health take priority, and his proposals will produce “real, sustainable savings.”

The County Council will most likely have the final say when it passes a budget in May. Leggett proposed a $4.35 billion budget.

The county’s options for getting out of this jam are all painful:

l?Cut county services and divert the money to pay for pensions and health care.

l?Impose significantly higher employee contributions for those benefits.

l?Chop benefits to retirees.

l?Sharply raise taxes.

Montgomery has set aside about $110 million in special accounts established to cover its $3.6 billion, long-term retiree health-care liability. The shortfall is serious, but could be worse; many local governments have set aside nothing at all for the future and simply pay a yearly bill.

As for the funding levels of Montgomery’s school and government pensions, 69 percent and 77 percent, respectively, they “fall on the low side of average,” said David Matkin, an assistant professor at Florida State University in Tallahassee.

“They’ve got a lot of company,” Matkin said. “It’s sort of like being in a danger spot together with others. Just because you’ve got company doesn’t mean you’re in good shape.”

The severe economic downturn that began in December 2007 helped reveal the extent of Montgomery’s problem. But the promise-making started years before.

In 2005, firefighters won an agreement that allowed full retirement, no matter their age, after 20 years of service rather than 25. The agreement took effect two years later, just months before the recession started. It was one of a string of enhancements to firefighters’ retirement benefits, which union leaders said had lagged behind.

By 2006, an election year, it was the teachers’ turn. Legislators in Annapolis voted to give teachers a dramatic bump in their pensions, which the state funds. Teachers had complained that Maryland’s benefit levels were behind those in other states. The state paired its increased spending with a requirement that teachers pay in more as well.

But the package included an additional generous element, something of a time-machine provision. Legislators, pushed by the state teachers union, voted to have the improvements kick in retroactively, to 1998, for working teachers. And for those eight earlier years, teachers would not have to pay in anything extra.

In Montgomery, the costs were amplified by local policy. Montgomery schools provide their employees with a supplemental pension to what the state pays. School officials say they know of no other Maryland county that does that. Despite warnings about the financial risks, school and county officials voted to adopt the enhancements locally, including the time-machine provision.

Rising benefits, mixed with market losses, have hit the pensions hard. And things are primed to get worse. Powerful state lawmakers are pushing to off-load hefty teacher pension costs to counties.

Jeremy Gruber, 45, worked for 20 years as a Montgomery firefighter and paramedic, rescuing the trapped, dousing flames and transporting the injured. He had been planning to retire after 25 years. But when the opportunity came early, he jumped on it. “I got there right at the wire,” he said.

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People say they would apportion blame about evenly between the Obama administration and the Republicans in the event of a government shutdown. Some 36 percent in a new Washington Post poll conducted with the Pew Research Center say they’d blame Republicans and 35 percent Obama, with 17 percent volunteering that they’d blame both.

These numbers differ from those in 1995 when then-president Bill Clinton and the Republican Congress squared off on the budget. Today, independents divide their blame between Obama and the GOP, by 37 to 32 percent. A little over 15 years ago, in Nov. 1995, independents were more clearly behind the president, blaming the GOP over Clinton by 46 to 24 percent.

In 1995, Republicans were less unified in blaming the opposition: 57 percent assigned fault to Clinton. In the new poll, 69 percent of Republicans say they’d blame Obama if the two sides can’t come to terms. By contrast, Democrats are somewhat less apt to blame the GOP today than they did in the early stages of the 1995 fight (63 vs. 71 percent).

Half of all those polled say Obama is playing politics with the issue and 43 percent say he is trying to resolve the dispute. Slightly more – 59 percent – say Republicans in Congress are playing politics vs. 33 percent who say they are trying to resolve the issue. These are roughly the same reactions people had in 1995.

The partisan splits on these questions are very similar. Sixty-one percent of independents say Obama is playing politics, but 63 percent also say this about the GOP. Among Republicans 70 percent say Obama is playing politics. Among Democrats, slightly more – 81 percent – say Republicans are playing political games.

The political consequences of a shutdown are daunting for either side and the economic conditions are quite different now than they were 15 years ago. In November 1995 the unemployment rate was 5.6 percent. Today it is hovering at 9 percent. The prospect of shutting more people out of work could be a tough political pill to swallow.

Blame more for a government shutdown? Obama GOP Both (vol.) All 35 36 17Democrats 11 63 17Republicans 69 8 17Independents 37 32 17Liberal Dems 7 72 16Mod-Cons Dems 13 60 17Cons Reps 76 5 14 Obama administration: Trying to resolve Playing the budget issue politicsAll 43 50Democrats 72 24Republicans 24 70Independents 33 61 Liberal Dems 76 23Mod-Cons Dems 71 23Cons Reps 21 74 Republicans in Congress: Trying to resolve Playing the budget issue politicsAll 33 59Democrats 15 81Republicans 68 27Independents 30 63 Liberal Dems 13 86Mod-Cons Dems 16 78Cons Reps 74 23By Peyton M. Craighill  |  09:37 AM ET, 03/01/2011

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David Lienemann/Associated Press John Strong of West Des Moines, Iowa, held signs protesting Hillary Rodham Clinton, then a Democratic senator from New York, at the Ames straw poll in 2007.

Matt Strawn, the chairman of the Iowa Republican Party, on Thursday offered an upbeat assessment of the party’s position in his state, where the nation will hold its first 2012 presidential caucus in less than a year.

“The state that President Obama will encounter, looking to the general election, will be dramatically different than the state he carried in 2008,” Mr. Strawn told reporters at a small gathering at the Washington headquarters of the Republican National Committee.

“We picked up a net gain of over 100 county-level Republican seats in our county courthouses, our boards of supervisors,” Mr. Strawn said.

For Republicans, he noted, there has been change, too. The emergence of the Tea Party movement has the potential to shift the presidential caucus conversation away from the state’s traditional focus on social issues to the group’s concerns about debt, deficits and spending, he said.

So has the Iowa political landscape shifted since the last caucus season in a way that could benefit Republicans? Here’s a look at some key indicators and how they’ve changed. Do Republicans have cause for optimism?

Registered voters: As you would expect, Iowa saw a drop in active registered voters from  2009 to  2011, since there was no presidential election. But according to the Iowa secretary of state, the G.O.P. has about 3 percent more active registered voters in March 2011 than it did in March 2009, while the Democrats are down nearly 8 percent.Big gains in small places: In Carroll County, which has 14,000 total active voters, Republican registration is up 27 percent. In Keokuk, with only 7,000 voters, Republicans are up by 20 percent.Trending Republican everywhere: Even in the state’s largest areas, like Linn and Johnson Counties, Republican registrations are up nearly 4 percent while Democratic registration has dropped.Gains in the Legislature: Republicans picked up 14 seats in the Iowa House last year, seizing control of the chamber by a wide margin. In the Senate, Republicans gained five seats but still trail Democrats there by four.Taking back the statehouse: Terry Branstad, a Republican, won the executive mansion back from Chet Culver, a Democrat, in 2010, giving Republicans control over the executive branch during the presidential campaign.Presidential ratings game: Mr. Obama stands at 48 percent approval in the latest Des Moines Register poll, an improvement over his ratings during the last year. Meanwhile, Iowans blame Republicans and Democrats in Congress just about equally for the nation’s economic problems, but also blame corporations and Wall Street banks, according to the survey.Better than the average: The economic situation in Iowa is better than it is in the rest of the country. As of the end of January, the unemployment rate in the state stood at 6.3 percent, compared with 9 percent for the nation. That could mean a bit less of the anger that fueled the electorate in 2010.

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CHICAGO – With less than two weeks to the mayoral election, a poll released on Wednesday shows Rahm Emanuel, the former White House chief of staff, with a commanding lead, drawing support from 54 percent of those surveyed.

Polls have shown Mr. Emanuel, who faces five competitors in the race to replace Mayor Richard M. Daley, ahead before, but the new poll, conducted for the television station ABC7, suggests that it is conceivable he could win outright on Feb. 22 without needing to go to a runoff election in April. If a candidate wins more than 50 percent of the vote this month, there is no need for a runoff; if no one gets more than 50 percent, the top two vote-getters run against each other on April 5.

Political analysts here have said that a runoff is likely. With six candidates – at least four of them well known in Chicago — a widely split vote would seem inevitable, some have said. And by some calculations, Mr. Emanuel could face his strongest challenge in a runoff, a head-to-head match-up with one other person. Avoiding a runoff altogether would be a best-case scenario for Mr. Emanuel’s campaign.

According to the ABC7 poll, Gery Chico, a former chief of staff to Mr. Daley, received support from 14 percent of those surveyed. Following him were Miguel del Valle, the city clerk and a longtime legislator, with 8 percent; and Carol Moseley Braun, a former United States Senator, with 6 percent. About 15 percent of those surveyed said they were still undecided. The poll’s margin of error was plus or minus 4 percentage points.

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