The Wages of Fear
Here we go again. After a relatively placid summer, European debt woes resurfaced dramatically in the past week, with Ireland assuming the role of the main protagonist. The concern isn't new. In the spring, the prospect of the Greek government's defaulting on its debts raised the specter of a financial pandemic. That led to scrutiny of other European countries that were deemed vulnerable, including Spain, Portugal and Ireland. The Greek crisis was settled by a partial intervention and bailout by the European Union, led by a disgruntled Germany, which resented having to rise to the aid of a Greece it deemed undisciplined and profligate. Then came the summer holidays, but now the markets are again being roiled by the fear of European debt and its contagion throughout the global financial system.
Obama's G-20 Misfire
President Obama hoped to leave the Group of 20 trade summit boasting a free-trade agreement with South Korea and a host of accords with other countries, but he looks to leave Seoul empty-handed. A trade pact between the U.S. and South Korea, first negotiated by the Bush administration, failed to materialize after Obama and South Korean President Lee Myung-bak couldn’t agree on protections for American workers. Major disputes erupted between the U.S., China, Britain, Germany and Brazil, as each country rejected Obama’s strategy to focus on economic growth before deficit reduction. The international community, joined by former U.S. Fed Chief Alan Greenspan, accused the U.S. of intentionally devaluing its currency to give an edge to American exports. The tone of the summit was a stark departure from recent meetings on the global economy, in which leaders largely came to agreement on economic policy.
The Robosigning Scandal: Foreclosing on Recovery?
Over the past few months, it has become more common to speak of the housing and financial crises in the past tense. The National Bureau of Economic Research recently announced that the recession ended in June 2009. While 2010 has hardly been a banner year, the pace of job losses has slowed and home prices have begun to stabilize. It's a tepid economy, yes, but on the road from perdition.
It's Not the Economy
A recent story on the daily peregrinations of the stock market concluded that, at least for the day, "U.S. stocks erased their losses to finish in positive territory, as investors weighed an improving domestic economy against heightened global concerns." That seems an innocuous enough statement. The markets did well because investor concerns about the economy were allayed by some data or shift in sentiment. Pretty simple, right? Yes, but also pretty wrong.
G-20 Lesson: Why the U.S. Must Lead by Example
Rarely has a trip by an American President overseas gone quite as badly as Barack Obama's swing through Asia. Yes, visits with Indian and Indonesian leaders were productive and the U.S. cemented its position as a vital element in East Asia's balance of power. But these were not enough to offset the trip's centerpiece, the conclave of the G-20 group of leading economies in Seoul, where U.S. dominance in global economic affairs was questioned, challenged and rejected.
Debt Doesn't Matter
As the campaign season showed, a considerable portion of Americans believe that the gravest impediment to future prosperity is government spending and its twin accomplices, debt and deficits. The Tea Party built a populist insurgency on this premise. Said Peter Boyce, a Tea Party congressional candidate from New Jersey: "Federal spending must be drastically reduced. To ignore this issue is a crime against our children and grandchildren."