After the American Century
As the Obamas go on a 9 day vacation, one can look back at eight months in office. Given the enormity of the economic crisis he faced, it is remarkable that even as he takes a well eared rest, bankers around the world are announcing that the crisis seems to be easing. Mærsk, which runs one of the world's largest container ship operations, also sees clear signs that the economy has turned. And who would have imagined, back in December, that the virtually bankrupt American International Group Inc (AIG) would announce here in August that it would be able to repay its massive government loans?
It is tempting to give Obama all the credit, and certainly he deserves much of it. He boldly pressed through a large deficit spending plan, stabilizing the banks. He also made some hard choices about the American automotive industry, radically reshaping General Motors and Chrysler in the process. While unemployed has risen, this is characteristic of all such crises, and cannot be expected to fall again just yet. Overall, Obama can be given high marks for preventing a meltdown in the US economy that would have had severe repercussions around the world.
One must also recognize, however, that the structure of the world economy as a whole is shifting, and in the future it will not be quite as focused on the success or failure of the United States. Unlike Europe and the US, China and India have not suffered shrinkage in their economies, only slightly slower growth. The Economist forecasts a rather robust 8% growth for China in both 2009 and 2010, and it will maintain a large trade surplus with the rest of the world. India is growing almost as fast, at a rate of over 6%. In other words, Obama and the Democrats have stopped a slide in the American economy, which may regain the ground it lost in a year or two. But China and India are forging rapidly ahead, increasing their importance to the world economy as a whole.
In short, Obama's programs seem to be working. The American economy is reviving. But the real story, once we have some decades of perspective, will almost certainly be that the crisis of 2008 was the last time that the United States mattered so much to the world economy as a whole.
As the Obamas go on a 9 day vacation, one can look back at eight months in office. Given the enormity of the economic crisis he faced, it is remarkable that even as he takes a well eared rest, bankers around the world are announcing that the crisis seems to be easing. Mærsk, which runs one of the world's largest container ship operations, also sees clear signs that the economy has turned. And who would have imagined, back in December, that the virtually bankrupt American International Group Inc (AIG) would announce here in August that it would be able to repay its massive government loans?
It is tempting to give Obama all the credit, and certainly he deserves much of it. He boldly pressed through a large deficit spending plan, stabilizing the banks. He also made some hard choices about the American automotive industry, radically reshaping General Motors and Chrysler in the process. While unemployed has risen, this is characteristic of all such crises, and cannot be expected to fall again just yet. Overall, Obama can be given high marks for preventing a meltdown in the US economy that would have had severe repercussions around the world.
One must also recognize, however, that the structure of the world economy as a whole is shifting, and in the future it will not be quite as focused on the success or failure of the United States. Unlike Europe and the US, China and India have not suffered shrinkage in their economies, only slightly slower growth. The Economist forecasts a rather robust 8% growth for China in both 2009 and 2010, and it will maintain a large trade surplus with the rest of the world. India is growing almost as fast, at a rate of over 6%. In other words, Obama and the Democrats have stopped a slide in the American economy, which may regain the ground it lost in a year or two. But China and India are forging rapidly ahead, increasing their importance to the world economy as a whole.
In short, Obama's programs seem to be working. The American economy is reviving. But the real story, once we have some decades of perspective, will almost certainly be that the crisis of 2008 was the last time that the United States mattered so much to the world economy as a whole.
