>
> There can be twin collapses of Japan and USA,
given their politico-economic interdependency, no? To what extent is the
European economy dependent on the US being the consumer of last
resort? Peter Gowan says that "The final
implementation of the Euro in July 2002 will supply a very substantial shield
for Western Europe, particularly when it is combined with an integrated deep
and liquid EU financial system. The strength of this shield will be all the
greater in that, despite all the talk of
economic globalisation, the European economy is becoming an increasingly
closed one, less and
less reliant upon transatlantic trade."
Some of this depends upon how "twin" the twin collapses are. If a banking crisis in Japan pulls down the dollar (as the Japanese liquidate US debt), it would be one thing. But even then, this might not be bad middle term for the US--it would be favorable for both debt and exports. (Though again, where the demand is going to come from is the big question.) Europe's banks are in worse shape than the US's, with lower reserves and returns on equity--Commerzbank and CSG are in horrible shape. (See yesterday's WSJ.) And growth has been anemic--Germany, its largest economy, is also its weakest. In the short term, it's hard to see how Gowan's picture plays out.
To ask the obvious: will anything change substantially until American military power gets delivered as serious setback? Isn't it the republicrat way to have gov't spending (keeps down unemployment) and your imperial outposts of progress, too?
Christian