Will Everyone Grab a Bucket? This Thing is Sinking

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from OurFuture.org:



Will Everyone Grab a Bucket? This Thing is Sinking
By Robert Borosage

March 11th, 2009 - 9:40am ET


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Last year we worried about homes below water; now it is the economy itself that is sinking.

Warren Buffett says the U.S. economy has "fallen off a cliff." And, as bad as the U.S. is, the rest of the world is worse. Germany's exports have collapsed; Japan is in free fall; much of Eastern Europe may join Iceland in bankruptcy. The Asian Development Bank estimates the loss to financial assets worldwide at $50 trillion dollars —the equivalent of a full year of annual global output. It's not for nothing that National Intelligence Director Dennis Blair announced that the economic collapse trumps terrorism and catastrophic climate change as the greatest threat to U.S. security.

After slogging through the stimulus, the banking mess and the foreclosure crisis, our besieged president now must turn his attention to organizing global cooperation to lift the world economy. Finance ministers of the group of 20 countries (G-20) meet near London this week; the heads of state gather on April 2. The agenda: whether to expand national stimulus plans, how to forestall a banking collapse and how to help the weaker countries that can't help themselves. Rhetoric won't cut it; real commitments have to be made. As the anti-Bush, Obama has been celebrated by much of the world as if he walks on water. Now, we'll see if they will follow the savior rather than crucify him.

We need every major economy—particularly those like Germany, Japan and China in the best position to do so—to help boost the global economy with bold national, deficit-financed, recovery plans. We can't do this alone. Our own stimulus—about 2 percent of GDP in 2009—is too small even to lift this economy. Everyone has to grab a bucket and start bailing.

Moreover, gaining this consensus will help put the world on notice that the old ways are gone. We're not going back to an economy in which the U.S. borrows $2 billion a day from abroad, while serving as the world's consumer of last resort. The Chinese, Japanese, Germans and other nations have to move away from export-led growth. The unsustainable trade imbalances—with the U.S. absorbing 70 percent of the world's savings—provided the flood of cheap capital that eventually capsized the global economy. .........(more)

The complete piece is at: http://www.ourfuture.org/blog-entry/2009031111/will-everyone-grab-bucket-thing-sinking