It is good fun to be associated with an organization that is willing to challenge the position of a "monopoly newspaper."
Globalization is the very same phenomenon that has done more to end poverty in the world than all the well-intentioned aid programs have ever done. Millions of Chinese and Indian workers have ridden the production of stuff for world markets to a level of affluence undreamt of only a decade or so ago. Millions of Russians and residents of former satellite nations are increasingly prosperous and free to travel and spend.
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The sovereign debt of the American government has been downgraded — not last week by Standard & Poor’s, which merely put it on negative watch, but last November by Dagong. China’s rating agency downrated it from AA (its highest rating) to A+, and rated its outlook “negative.” Of course, the folks at Dagong had special reasons of their own: The Chinese regime, sitting on $1.2 trillion of U.S. government IOUs, wants to warn that it might stop buying Treasuries if we threaten to pay our debts in depreciated dollars.
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The president and his team have one goal: re-election. Nothing ignoble about that. They know their chances of achieving that goal depend heavily on lowering the unemployment rate and leaving enough time for the feel-good factor to take hold before November 2012. Nothing ignoble about that either. And they have to persuade voters that the president is focused on that above all else.
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The disaster at Japan’s Fukushima Dai-ichi nuclear plant, and the upheavals in the Middle East are the sort of events that send economists back to their forecasters’ drawing boards. As usual, there is a tendency to confuse the long run and the short run, and to blame developments that were due to occur anyhow on the most recent events.
This brings us to the U.S. sector most analysts are expecting to bear the brunt of the upsets in Japan and in the Middle East: Energy and in particular the nuclear power industry.
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That headline should be the policy mantra of sensible politicians. Unfortunately, President Barack Obama believes he has to do something to get prices down lest he pay a terrible price at the polls. Equally unfortunate, Republicans are using high gas prices as a stick with which to beat the president.It’s certainly true that high gas prices get voters’ attention. Gasoline is a repetitive purchase. Its price is displayed on the multiple signs that commuters pass going to and from work. And when drivers fill up, they watch the spinning dials at the pump with mounting horror.
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This is a tale of two printing presses.
It is the best of times, the worst of times. The U.S. government will continue spending more money than it is taking in from taxes, despite a warning from the president’s budget commission that the situation is unsustainable and risks a blow-out in the market for U.S. IOUs. The worst of times. So the first printing press well be put to work printing Treasury bonds, or IOUs, promises to repay the loans at some future date, and interest until then.
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America runs large and persistent trade deficits. Our partners figure out how to make lots of things we want, and we can’t figure out how to produce an equal amount of stuff they want or are permitted by their governments to buy.
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We Americans needed this weekend, with something to celebrate — our independence from overseas oppressors. Indeed, the tea party movement is attempting to recapture the attitude of the Founders toward overweening government, in this case our own. Most Americans want to see spending reined in and taxes cut.
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Passage of the health care bill has focused investor attention on the runaway deficit situation and its long-term consequences.
The deficit, which ran to around 3 percent of gross domestic product in President George W. Bush’s final year, is already exceeding 10 percent.
Government debt held by the public has gone from 40 percent of GDP when Bush was in the White House to 63 percent now and, according to the nonpartisan Congressional Budget Office, will hit 90 percent by 2020. That’s the level at which new studies say debt begins to reduce growth and jobs.
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Think beneath the headlines about trade deficits, unemployment rates, budget deficits and health care. Consider, instead, what all of this means for what’s even more important than the fact that we are willing to leave our children an ocean of red ink that they will have to drain — the position of America in the world in which they will live.
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‘The world is too much with us,” lamented Wordsworth more than a century ago. He had in mind too much “getting and spending,” of which we could use a bit more of these days. Workers would be happier getting a bit more, and businesses would cheer at additional spending.
But in a different sense, the world is indeed too much with us. Iran proceeds with the development of nuclear weapons, no matter how many olive branches and outstretched hands President Barack Obama offers.
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So you think you’ve got troubles? A president determined to wrest control of your health care from you? Taxes that are certain to go up? Banks that won’t lend? A shaky economy?
For what it’s worth, you — we — are the envy of Europe, a fact I learned during a quick visit.
Europeans are comparing their close-to-zero growth rate in the last quarter of 2009 with our nearly 6 percent growth. Never mind about details like the effect of the inventory buildup in the last quarter and other stuff of pedants’ comments.
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So all is coming right. Sales of existing homes in the final quarter of last year were 27.2 percent higher than in 2008.
Retail sales and home construction rose in January; the mining, manufacturing and utilities sectors grew at satisfactory rates; and several companies reported profit growth in excess of what markets expected.
But it seems that every silver lining has a cloud — and in the case of the U.S. economy, several.
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President Barack Obama’s idea of bipartisanship is less evident in his general statements of affection for that process than in the specifics of each proposal he makes to persuade the Republicans to become accomplices in his transform-the-American-economy project.
Consider only his protestations of a willingness to cut deals on energy in order to save his cap-and-trade bill, and green subsidies programs.
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URL: http://www.sfexaminer.com/people/irwin-stelzer
