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Barack Obama toured Iraq with Gen. David Petraeus in July of this year.

Barack Obama toured Iraq with Gen. David Petraeus in July of this year.

American elections are a powerful drug: they bring delusions of omnipotence. All that talk of “change” and “hope” brings demands for swift action: “Do it now,” “first six months,” “hundred days.” The economic crisis may indeed demand speed, but in foreign policy the reality is that, on the afternoon of Jan. 20, President Obama will face the same challenges that President Bush did that morning. And none presents much opportunity for bold new initiatives.

That’s fortunate. Incoming presidents making big decisions in a hurry is a surefire recipe for error. Think JFK and the Bay of Pigs. More recently, George W. Bush’s reflexive ditching of the Clinton administration’s strategy on North Korea was a misstep it has taken years to retrieve.

The foreign-policy and national-security inbox shows that, even on pressing issues, Obama has the luxury of time. A quick overview:

Iraq. Obama has pledged to withdraw U.S. troops. But that’s already getting under way. At issue still: the pace of the drawdown, a date for final disengagement and the number of U.S. troops who should then remain as last-ditch guarantors of a democratic government in Baghdad. No Iraqi politician is going to be able to engage seriously on those topics until after their own elections next fall.

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Men in Tokyo look at an electronic board displaying share price movements on Oct. 6, the day that Japan's Nikkei share average sank to a four-and-a-half-year closing low

Men in Tokyo look at an electronic board displaying share price movements on Oct. 6, the day that Japan's Nikkei share average sank to a four-and-a-half-year closing low

For the most part, Asian banks have remained unscathed and economies relatively robust compared with other parts of the world. But tumbling Asian stock markets, marked on Monday by near-panic selling, is signaling just how little confidence there is among bankers and investors that the $700 billion bailout of U.S. banks will end the financial crisis.

Instead, worries are growing that a severe economic downturn in the U.S. and Europe could hurt export-driven Asian economies more than originally thought. Turmoil in Europe as governments scramble to cobble together their own bailout packages has convinced Asia that the contagion will spread far from Wall Street. “We felt pretty good that our economies are stronger,” says Song Seng Wun, an economist at CIMB-GK Research in Singapore. “Problems seemed to be other people’s problems.” But recent events “have made us realize that we aren’t entirely safe. It looks like the problem might be closer to home.”

That’s because credit markets, which affect the ability of businesses and governments to borrow to fund day-to-day operations, continue to tighten in Asia as banks become more nervous about lending. In Hong Kong, the one-month interbank lending rate has doubled in the past month to 4%. Central banks are trying to pump liquidity into financial markets to avert a credit crunch. India on Monday cut the amount of cash that banks must deposit with the central bank in an attempt to loosen credit. “Credit markets are quite global,” says Kirby Daley, senior strategist at financial services firm Newedge Group in Hong Kong. “It is inescapable, if the credit crisis continues to worsen, that Asia must be affected.”

Source: TIME