http://www.morganstanley.com/GEFdata/digests/20041104-thu.html
excerpts:
And that [Bush's policies], of course, spells an equally chronic US current-account deficit problem and all of its associated stresses and strains -- namely, foreign financing imperatives, dollar risks, and protectionist perils.
The only hope for meaningful relief from such daunting imbalances is for the US to grow its way out of this mess....
As I see it, there are three key requirements for the world to execute such a strategy:
First, America must stay the course of rapid productivity growth....
Second, the rest of the world will have to remain content in its role as suppliers and financiers of excess American consumption....
Third, the world must up the ante in embracing a pro-trade growth strategy....
How realistic are these assumptions? Not very, in my view....
it will require a new "coalition of the willing" to pull it off -- the Fed and other major central banks, as well as a broad consensus of politicians and policy makers around the world. With such a likely pro-growth gambit, the US is implicitly sending a very strong message to the rest of the world that it has no choice other than to go along for the ride. That puts Asia and Europe in the uncomfortable position of perpetuating their subservient position as suppliers of goods, services, and capital to saving-short Americans.
All this paints a tough picture of a new world order. In the years immediately ahead, the United States will be asking more and more of the rest of the global economy to keep America's magic alive. I don't think we in the US and those in the world at large truly appreciate the significance of this sea change. But America is now different and so is the global dynamic that spins out of a deeply entrenched US-centric paradigm. The election verdict of November 2 solidifies that conclusion beyond the shadow of a doubt, in my view. Maybe it will all work out perfectly, and those of us worried about deficits and imbalances will finally be put out to pasture. Anything is possible, but something tells me it's not time for grazing just yet.
On Mon, 8 Nov 2004 15:21:58 -0500, Doug Henwood <dhenwood at panix.com> wrote:
> Dennis Redmond wrote:
>
>
>
> >Doug Henwood wrote:
> >
> >> It's hard to forecast how this could play out - there are too many
> >> variables.
> >
> >True, but 99% of the outcomes of those variables are ugly, ugly, ugly. All
> >the euro needs to do is stabilize right where it is, and all that East
> >Asian capital will start flowing to the Euromarkets anyway. It was going
> >to happen anyway, but the colossal stupidity, viciousness and sheer
> >malevolence of this Empire has accelerated the time-table of its doom.
>
> Well not necessarily. A high euro could crush euroland exports,
> leading to stagnation or worse. A low dollar could impel the U.S. to
> get its foreign accounts back into balance, by making imports
> expensive and exports cheap. Who knows how it'll play out?
>
> Doug
>
>
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