2009/03/12

Media comments on the economic problems

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Robert L. Borosage
Co-Director of the Campaign for America’s Future
"Will Everyone Grab a Bucket? This Thing is Sinking"

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% 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 US 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 US absorbing 70% of the world's savings - provided the flood of cheap capital that eventually capsized the global economy.

That world is over. US consumers are already tightening their belts. Exports have collapsed. If we ever begin a recovery, the US should seek more balanced trade. That means we will have to sell stuff beyond toxic financial paper to the rest of the world.
(Btw; I disagree with his later assertion that we need to use lots of deficit spending everywhere.)

The connection between world trade imbalances and the colossal waste of resources in the U.S. with the subsequent initiation of the world-wide economic turmoil is still quite rare in the mass media.
Most people still seem to believe that except some extinct brands the world will return to the pre-2008 economy in a few years (it won't).
I find articles like this one every few days now.

Most people still seem to think that the problems are about housing and financial markets even though the removal of these symptoms wouldn't cure the economy.

Let's face it; economic science won't digest what happens now until late in the 21st century, our politicians are walking or running in the dark. Published opinion asserts to know what we need to do although this is pretty much impossible to "know".

We don't know for sure about medicine, let's at least not fail in the diagnosis.

Sven Ortmann

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