With the American economy at the epicenter of the crisis, it is going to be a difficult paradox to look at the United States as the savior of the world at large. That is the question most of economic experts are asking after the last London G-20 summit in April.
That being said and before President Obama can hope to save the world economy, he must address its own country obvious problems of the still-raging unemployment. He must clear the cloud-covered zone where giant banks navigate right now. He must lead on the new green economy. And more importantly, he must find a way to revive the American consumption
But after being through this near-depression episode, will the American consumer recover from that trauma? In the mean time, it’s important to keep in mind that the world economic growth since the Asian crisis in the 1990’s has been sustained thanks to the voracity of US consumers. They have been the best customer for everything from toys and toilet paper made in China and Turkey to plasma televisions, cars and various furniture from South Korea and Japan in recent years, just to name a few. And the last but not the least, the long-lasting scare as a result of that trauma is that Americans lost $11.2 trillion in wealth last year and are in no mood to go on a big spending spree.
In the middle of this situation, what should be expected from other countries around the world, looking for leadership, is something like a bold result… Some statement saying…Well…After assessing the current world economic situation (I mean…the current economic mess) here is what we have finally agree on:
Number One…Put regulation in place and monitor giant banks global activities
Number Two…Let’s engage in a responsible path to green economy because there are not only great opportunities and unexploited wide segments there; but also, we can R-E-A-L-L-Y save the environment that way without mortgaging the future of the Human Kind
Number Three, we have been on the moon, we can go from one place to another in a plane, we can communicate via cell phone, we can cure some many diseases…we can do all these things we nowadays take for granted…We can do all that and all of the sudden we cannot agree on a new way to live in a more peaceful world, cleaner planet, get wealthier and healthier in the same time?
Come On Guys!!! What’s up G-20? The group of 20 major economies…
Can’t you (political leaders and central bankers) put aside your divisions and embittered policies to revive the world economy, revive the mechanism of global growth and prevent the world from another economic calamity?
Now that the US administration is operating from an obvious weaker position -compared to previous crisis, all the new kids on the table added to France, the British Government and especially China, are pushing their own issues. 85% of the world economy is worrying about the fate of…let’s see…20 countries? Don’t you think that you…the 20 major economies would be better off if you put in place a strategy that allows you to share the burden with another…let’s see G-5 or G-10 countries from around the world? Are you looking for a solution for what I just underscored?
First step: Find a viable and honest solution to the Israel-Palestine ageing conflict. And force both parties to abide by the general rule
Second Step: Progressively and hardly bring to an end the current economy based on the voracious consumption of oil. And in the same time, implement the resolution from the next Copenhagen Summit on the Environment.
Third Step: Stop the bigotry towards cultures from around the world. Stop the dishonesty towards poor countries. Stop foraying, plundering, ransacking, looting ”Poor” countries lead by dictators who, most of the time, happen to be the G-20 best friends.
Now, even though the last series of arguments appear to be obvious for any kind of leader, let alone a G-20 leader, this blog is not a place where naïveté is a motto. It is therefore obvious that the Obama administration has been working on seeking a commitment by the other 19 leaders to address global economic imbalances between debtor nations led by the United States, and nations with trade and current account surpluses – China, Germany and Japan. But, as you can easily imagine, a gang of nations like China and Germany are again such an idea. They see it as a mechanism to attack their trade surplus policies. Considering the fact that the IMF is the new monitoring body; and since the United States continue to dominate that international body; the gang has also criticized that proposal. And By the way, even if the IMF is the new Cop, what enforcement measures can they really put in place for the good of the world economy? Honestly?
Is the Obama administration going to have the guts to challenge the top wealthiest American consumers by adding taxes? Otherwise, how would his administration create revenues for the employment financing of the working middle class that is going to lag. Can he afford to cut social services without losing his political base?
On the other hand, can Germany and other G-20 European economies afford to put in place the structural changes they have promised to follow up without creating more working-poor people?
On the financial front, the Obama’s request for more stringent capital by the banks by the end of 2010 and the implementation of this measure by the end of 2012 is also seen as an attack by America. France and Germany are willing to take advantage of the current Wall Street decline in prestige and promote their own banking systems, instead.
As to China, American propositions continue to be seen as an underhanded ploy to shift attention from the US massive fiscal deficit.
All in all, what is to be expected from this last week Pittsburg G-20 Summit? In other words, what’s up G-20? Are you definitely going to take us out of this mess? Apart from appointing the IMF for monitoring your little capitalistic games,
First, is there a basis for an internationally coordinated response to any eventual economic crisis without ripping of tax payers?
Second, since we are living in a more interconnected world and given the fact that the current capitalist system is rooted in a nation state system that firmly stands in contradiction with other countries interests, how is the G-20 going to prevent the world from more frustrations and setbacks? Feel free to make us know the outcome as soon as possible.
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