OpEdNews Op Eds

Will Everyone Grab a Bucket? This Thing is Sinking

By (about the author)     Permalink       (Page 1 of 1 pages)
Related Topic(s): ; ; ; ; ; ; ; ; ; ; (more...) , Add Tags  (less...) Add to My Group(s)

View Ratings | Rate It

opednews.com Headlined to H3 3/11/09

Published on OurFuture.org (http://www.ourfuture.org)
Created 03/11/2009 - 9:40am

Summary:

After slogging through the stimulus, the banking mess and the foreclosure crisis, our besieged president now must turn his attention to organizing global cooperation to lift the world economy. Real commitments have to be made, and we'll see if those around the world who celebrated Obama as a savior will call for his crucifixion.

Last year we worried about homes below water; now it is the economy itself that is sinking.

Warren Buffett says the U.S. economy has "fallen off a cliff." And, as bad as the U.S. is, the rest of the world is worse. Germany's exports have collapsed; Japan is in free fall; much of Eastern Europe may join Iceland in bankruptcy. The Asian Development Bank estimates the loss to financial assets worldwide at $50 trillion dollars--the equivalent of a full year of annual global output. It's not for nothing that National Intelligence Director Dennis Blair announced [1]that the economic collapse trumps terrorism and catastrophic climate change as the greatest threat to U.S. security.

After slogging through the stimulus, the banking mess and the foreclosure crisis, our besieged president now must turn his attention to organizing global cooperation to lift the world economy. Finance ministers of the group of 20 countries (G-20) meet near London this week; the heads of state gather on April 2. The agenda: whether to expand national stimulus plans, how to forestall a banking collapse and how to help the weaker countries that can't help themselves. Rhetoric won't cut it; real commitments have to be made. As the anti-Bush, Obama has been celebrated by much of the world as if he walks on water. Now, we'll see if they will follow the savior rather than crucify him.

We need every major economy--particularly those like Germany, Japan and China in the best position to do so--to help boost the global economy with bold national, deficit-financed, recovery plans. We can't do this alone. Our own stimulus--about 2 percent of GDP in 2009--is too small even to lift this economy. Everyone has to grab a bucket and start bailing.

Moreover, gaining this consensus will help put the world on notice that the old ways are gone. We're not going back to an economy in which the U.S. borrows $2 billion a day from abroad, while serving as the world's consumer of last resort. The Chinese, Japanese, Germans and other nations have to move away from export-led growth. The unsustainable trade imbalances--with the U.S. absorbing 70 percent of the world's savings--provided the flood of cheap capital that eventually capsized the global economy.

That world is over. U.S. consumers are already tightening their belts. Exports have collapsed. If we ever begin a recovery, the U.S. should seek more balanced trade. That means we will have to sell stuff beyond toxic financial paper to the rest of the world. Obama anticipates this with his drive for new energy, an industrial policy that may allow the U.S. to gain an edge in the green markets of the future.

At the same time, China, Germany, Japan and the mercantilist nations will have to stop relying on exports for their growth. For Germany, the world's largest exporter, exports made [2]up an estimated 41 percent of GDP last year. That can't go on. The first step is for the countries to stimulate internal demand to help get the global economy going once more, and thereby begin the wrenching journey they will have to make to more balanced growth.

Here as elsewhere in this economic debacle, the leaders remain behind the curve. On Monday, the European finance ministers announced that they had no plans to add to recent stimulus plans, dismissing U.S. pleas for expansion as, in the words [3]of the European Chair, "not to our liking."

The Chinese initially trumpeted a large internal public works stimulus, much of which turned out [4] to already be in the five-year plan. Now Chen Deming, the commerce minister, declares [5] China plans to subsidize exporters and lower export taxes, saying that we "should increase our share of the global market. We must transform ourselves from a big export nation to a strong export nation." Nightmare.

G-20 conferences have generally been for show. The stakes are real this time--and the odds going in are against the president in gaining the bold action needed. And once more he'll be out there virtually on his own, taking on the real deal in stark contrast with his opposition here at home. The conservative claque is ranting about socialism. Blue Dog Democrats like Sen. Kent Conrad of North Dakota are mobilizing to defend agribusiness subsidies, while the Republican leaders simply don't get it. Rep. John Boehner, the perpetually tanned House minority leader, last week called for a freeze on all spending over the next year, something like putting a pillow over the mouth of someone suffocating to death. And Sen. John McCain, the Republican Party's nominee, woke to deliver one of his dyspeptic lectures against earmarks; the patient is hemorrhaging blood, but the senator is worried about the pimples on his face.

The Europeans want to wait and see. The Chinese are subsidizing exporters. The Republicans are railing about earmarks and socialism. Obama's call for a new responsibility hasn't exactly taken hold.
 
Links:
[1] click here
[2] click here
[3] click here
[4] click here
[5] click here

 

http://www.ourfuture.org

Robert L. Borosage is the president of the Institute for America's Future and co-director of its sister organization, the Campaign for America's Future. The organizations were launched by 100 prominent Americans to challenge the rightward drift in (more...)
 

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon

Go To Commenting
The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact Author Contact Editor View Authors' Articles

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Whose Side Are You On: The Moral Clarity of Occupy Wall Street

Symbolic Blather: Washington's Congenital Disease

Taking Back The American Dream: Us, Not The Politicians

Was Bernie Madoff the Exception or the Rule?

The end of the middle class?

The Austerity Trap and the Jobs Deficit

Comments

The time limit for entering new comments on this article has expired.

This limit can be removed. Our paid membership program is designed to give you many benefits, such as removing this time limit. To learn more, please click here.

Comments: Expand   Shrink   Hide  
1 people are discussing this page, with 2 comments
To view all comments:
Expand Comments
(Or you can set your preferences to show all comments, always)
Is Obama president of the world, or of the US?Chin... by UncleSim on Thursday, Mar 12, 2009 at 12:45:05 PM
What am I, a click-happy freak?  A little des... by UncleSim on Thursday, Mar 12, 2009 at 12:56:29 PM

 

Tell a Friend: Tell A Friend


Copyright © 2002-2014, OpEdNews

Powered by Populum