Posted on

US-global economic nexus (AS I SEE THINGS)

Dr Brian Francis

US-global economic nexus (AS I SEE THINGS)

Social Share

EVERY COUNTRY on the face of planet Earth has had to struggle immensely to cope with the 2007-2008 global financial and economic meltdown.
The unfortunate reality is that most countries had nothing to do with the misguided economic policies and events that subsequently unfolded. But that scenario didn’t matter and apparently still doesn’t.
The fact remains that most countries’ economies took a beating – an experience that lingers on as an inescapable danger of living in an increasingly globalized world.  
For reasons unknown, the government of the country where all the mayhem began still does not seem to get it. The United States is not only the world’s leading or wealthiest economy but also the largest by a huge margin – and
the data do not lie. A quick glance at the World Bank’s World Development Indicators would bear this fact out.  
In 2008 to 2010, China’s gross domestic product (GDP) in current United States dollars was $4.5 trillion, $5.0 trillion and $5.9 trillion, respectively.
In constant 2000 prices, the size of the Chinese economy for the same three-year period was US$2.7 trillion, US$2.9 trillion, and US$3.2 trillion.
For Japan, figures on the current side were US$4.9 trillion, US$5.0 trillion, and US$5.5 trillion, respectively.
Real GDP figures were US$5.1 trillion, US$4.8 trillion, and US$5.0 trillion, respectively.  
Amazingly, current GDP for the United States during the same period was US$14.3 trillion, US$14.1 trillion, and US$14.6 trillion, respectively. On the constant side, the figures were US$11.7 trillion, US$11.3 trillion, and US11.6 trillion, respectively.
What these data show, unambiguously, is that whether current or constant, the United States economy is larger than both China and Japan combined and has been so for some time.
This is extremely important because China and Japan are the second- and third-largest economies in the world.
Clearly, therefore, financial and economic developments in the United States must have a huge impact on economies throughout the world.
Hence, every country has to take seriously the economic policies implemented by the federal government in the United States and consider carefully the potential effects for the global economy.
The same should be true for our Federal Government, because the administration must know that in a highly globalized environment, a powerful country like the United States can hurt or help the global economy through misguided or prudent financial and economic policies.
Why, then, is the Obama administration so determined in its pursuit of economic policies that from all logical perspectives pose serious dangers not only to the local economy but also the global economy?     The basis for this question lies in the fact that the American government has proposed a new budget with US$1.3 trillion in additional deficit spending at a time when the country’s debt exceeds US$15.0 trillion.
Now, let’s turn to a possible answer to the question.
In his talking-points memo of February 14, 2012, entitled Are We A Welfare Nation Now? Bill O’Reilly said: “So let’s all do the math. President Obama continues incredible government spending yet tax revenues remain low. It’s obvious Mr Obama is rolling the dice.
“He understands the situation. And apparently believes that a massive federal debt is not going to harm the country anytime soon.
“Also, he’s calculating that the American voter has changed into a person who wants free stuff from the government and is willing to sacrifice some freedoms in order to get the free stuff.”
The world is watching you closely, Mr Obama.
In the interim, I can only hope that Bill O’Reilly is wrong in his assessment of the rationale behind your budgetary allocations!