America is no Greece -- for now
By Fareed Zakaria
WashPost
Monday, May 24, 2010
Everyone seems to agree that America is in bad shape these days. The recent elections have been interpreted as more evidence of the public's anger. Large majorities continue to believe that we are on the "wrong track." Commentators and business leaders are almost unanimous in fretting about deficits and debt. Comparisons between America and Greece abound.
Meanwhile, evidence mounts that the United States has emerged from the financial crisis of 2008 in better condition than anyone predicted 18 months ago. The economy is surprising most forecasters with growth across the board, much of it now led by the private sector. In the first four months of this year, companies have hired half a million people. Exports are up 20 percent over the same period last year. (Exports to China are up 50 percent.) The consensus forecast for this year's growth is edging up to 3.5 percent, and many economists believe that it could go higher. Businesses across the country have been reporting stronger-than-expected first-quarter results.
The recent downturn in most stock markets is a product of nervousness about the Greek bailout and Europe's future. This is entirely justified, since no one knows how the crisis will end and how painful its consequences will prove over time. But the result, in the short term at least, will be to strengthen the United States. The image of a Europe that is hesitant and divided contrasts with an America that acted speedily, comprehensively and with ample resources. Washington's shock and awe worked; Europe's has not, so far.
Money that was invested in Europe is now flowing into America. This might be a momentary "flight to safety." But there are longer-term implications. The loose talk about the euro replacing the dollar as the global reserve currency has ended. Recent events have vividly shown that the euro -- the only viable alternative to the dollar in the medium term -- is structurally flawed and cannot be banked on. The most significant effect of the Greek crisis might be to enshrine the dollar's reserve role for another generation -- a role that brings with it huge benefits to the United States.
(More here.)
WashPost
Monday, May 24, 2010
Everyone seems to agree that America is in bad shape these days. The recent elections have been interpreted as more evidence of the public's anger. Large majorities continue to believe that we are on the "wrong track." Commentators and business leaders are almost unanimous in fretting about deficits and debt. Comparisons between America and Greece abound.
Meanwhile, evidence mounts that the United States has emerged from the financial crisis of 2008 in better condition than anyone predicted 18 months ago. The economy is surprising most forecasters with growth across the board, much of it now led by the private sector. In the first four months of this year, companies have hired half a million people. Exports are up 20 percent over the same period last year. (Exports to China are up 50 percent.) The consensus forecast for this year's growth is edging up to 3.5 percent, and many economists believe that it could go higher. Businesses across the country have been reporting stronger-than-expected first-quarter results.
The recent downturn in most stock markets is a product of nervousness about the Greek bailout and Europe's future. This is entirely justified, since no one knows how the crisis will end and how painful its consequences will prove over time. But the result, in the short term at least, will be to strengthen the United States. The image of a Europe that is hesitant and divided contrasts with an America that acted speedily, comprehensively and with ample resources. Washington's shock and awe worked; Europe's has not, so far.
Money that was invested in Europe is now flowing into America. This might be a momentary "flight to safety." But there are longer-term implications. The loose talk about the euro replacing the dollar as the global reserve currency has ended. Recent events have vividly shown that the euro -- the only viable alternative to the dollar in the medium term -- is structurally flawed and cannot be banked on. The most significant effect of the Greek crisis might be to enshrine the dollar's reserve role for another generation -- a role that brings with it huge benefits to the United States.
(More here.)
Powered by Blogger
0 Comments:
Post a Comment
<< Home