Economic trouble has spread far beyond the United States to major countries in Europe and Asia, threatening businesses around the world with the loss of the international sales and investment that have become increasingly vital to their sustenance.
Only a few months ago, some economists still offered hope that robust expansion could continue in much of the world even as the United States slowed. Foreign investment was expected to keep replenishing American banks still bleeding from their disastrous bets on real estate and to provide money for companies looking to expand. Foreign demand for American goods and services was supposed to continue compensating for waning demand in the United States.
Now, high energy prices, financial systems crippled by fear, and the decline of trading partners have combined to choke growth in many major economies. The International Monetary Fund expects global growth to slow significantly through the end of this year, dipping to 4.1 percent from 5 percent in 2007.
“The global economy is in a tough spot, caught between sharply slowing demand in many advanced economies and rising inflation everywhere,” the IMF said last month in its official World Economic Outlook.
Notice they say GROWTH is slowing. It is not good news but this is not a recession either.
Mmmpf. The Fed kept the ’20s boom going by pumping enormous quantities of money into the US economy, which led to the Great Bust of ’29-30, which even more inept Federal policies managed to prolong into a decade of Depression. The Fed kept the ’90s boom going by pumping enormous quantities of money into the US economy, which fed the dot-com stock market, which busted in 2000 flooding money into the housing boom, which busted in ’06. Now the excess money is working its way into the economy, causing inflation. The US is the 900-pound gorilla of world finance and trade; of course the recession will spread.
The only question is whether Washington will handle it correctly — basically by doing nothing — or will make the problem even more serious by screwball economic policies. Its record is not encouraging.
You would think that some of the powers that be in Washington would remember the 1920-1930’s. I grew up in the 30’s. There are those that say the only thing that got the US out of the depression was the outbreak of WWII. Nuff said!!