How is it possible that the EU and America have fallen foul of these huge deficits. These are countries which between them and in history have been the super-power of the world. I think it is good that we have countries such as Brazil, India and Russia have risen up to the challange and expanded their economy. But the EU and America seriosuly need to to think long and hard about where they are and how they can start adding some value again. seo kent

None of these major problems come as a shock, and the downgrading of the US credit rating might be the only way people take notice. The economic policies that never work from home will not work abroad, and the US needs to finally address its serious structural problems.

Nobody will really do anything. People may complain about the economic crisis and what not but really in America people have too much to lose. Do we really want to lose our LED tvs and our cool cars with gps? Probably not. In the end we will go back to the ballot box and continue to participate in the same system that got us here.

http://www.newsbrink.com

Maybe in the grand scale of things this is just natural progession? the West first with England and Norhern Europe via the Industrial revolution then Japan, as the workforce prosperred and living conditions improved the demand for material wealth increrased, wages increased and the cost of producduction soared, hence the move to the east for cheap labour, China and India anyone!

Twitter Signs

The word that forms the foundation for all of the above is "growth" which has two very different meanings. It typically and in this case means growth in the number of zeros added to the dollar price of things while the non-monetary amount of goods and services is something quite different.

As long as they move more or less together no great harm comes to the working class -- although damage is done to those who save their dollars for a rainy day -- but somewhere along the line, say around 1970, these two kinds of growth began to separate and that's what we have today: lots of dollars, less and less non-monetary goods and services.

This of course is way to simple but I do believe it's the bottom line.

The US is the sole supplier of global public goods? Anyway global ratings agencies certainly don't recognise key political considerations such as global public goods, however defined and evaluated.

The cost of such goods? Unknown of course, but the top holders of US treasuries at the end of June were China [$1166 bn], Japan [$911bn] and the UK [$350 bn] .

What's stopping the United Nations, as a matter of urgency, getting agreement on global public goods?

Two things: the author completely ignores the proven ability of the parasitic consumer rich to bleed any advances in surplus output from the system and secondly, he ignores the effects of global warming in an article about future economics.

Fail.

The shape of the global economy is already changing fundamentally - but the real culprit is free trade unlike what Mr. El-Erian postulates.

It is precisely the free trade that has allowed China to keep amassing ever increasing foreign exchange reserves that China successfully uses to bail out many a companies and many a countries around the world. That in turn allows China to have ever increasing political influence.

Before long China will be able to dictate economic policies to many countries. China will become a monopolistic village trader who lends to everybody and hence dictates to everybody in the village.

The world has to thank so-called free trade for this coming economic juggernaut that China has already become.

How long can this one way trade in favor of China with so many countries in the world continue?

How long can China continue to amass foreign currency reserves before the world says enough is enough?

China is already redistributing wealth, pace of which will only increase with China increasing its forex reserves.

Sooner or later the trade-deficit countries have to put a stop to this one way trade and erect trade barriers. That is the only way to save them from utter ruin that cheap Chinese products have brought.

This is justthe latest phase of an equalisation process that has been underway for the past century.
That there is more equality in the World cannot be a bad thing.

The "take off countries" you mention - Brazil, China, India - are able to thrive in regard to Gross Domestic Product because they tolerate having huge numbers of incredibly poor and left out people. They make no attempt really to alleviate this gross domestic poverty but focus on making their already OK middle class and, to some extent, their working class, more prosperous. Everybody leaves this dirty little secret out when discussing these countries.

The US has poverty which, at the moment, is OK. Certainly not great, but not miserable either. I say for now because the status of poor people in the US may well deteriorate into misery. But the remaining middle class will be dto very well.

The US now has a high unemployment rate - for the US - but a rate that may go up to 20-25% without political instability. After all, the large number of the poor and left out in India, China, and Brazil does not cause instability. As long as a large enough middle and professional class thrives.

Once the US gives up on social justice and comes to accept the everlasting nature of a large number of poor - including many debt ridden unemployed who fall into homelessness and eternal joblessness, then it too will thrive in a manner similar to China, India, and Brazil.

That's what globalization is really all about - evening out both great prosperity and vast poverty around the world.

What about the $16 trillion the US, under Tim Geithner, has distributed to banks around the world? Isn't that figure larger than the US national debt? And where did the money come from? And how has it been used, since it certainly did not benefit any country's economy? It did make a lot of bankers richer and more contemptuous than ever toward the taxpaying fools who pay them this tribute.

P.S. The $16 trillion figure is from an audit recently conducted by the US General Accounting Office. Why isn't that $16 billion figure as thrilling to the media as the US national debt figure of $14 trillion?

Just like Bob Dylan sang way back when. We no longer live in that Norman Rockwell world that existed in the past. Our children's financial future has been swindled by the big banks, and the foxes are still guarding the henhouses.

In the past 10 years, Americans passively watched as global corporations shipped out 57,000 American industrial plants and over 6 million jobs to China and other cheap labor places to enable the globalists to profit from cheap monthly wages of $100. European and Japanese global corporations committed the same folly. Now the formerly rich countries are poor and dependent on borrowing trillions of dollars annually and importing even necessities.

Without industry, there are not enough taxpayers to support the huge bloated American and European Union governments. 51% of American households are too poor to pay income taxes. The bottom 50% of American households own just 2.5% of national wealth. 70% of the American economy depends on consumer purchasing of mostly imported products and services, but there are not enough consumers left.

It's long past the time to go back to national industrial economies based on free market competitive capitalism that is based on competition among companies that pay wages that can support families. It was impossible for American and European companies to compete with cheap labor global corporations. Maybe now that we are hitting the bottom of the barrel, people will wake up and demand that we nation build our own country.

The total value of all corporate stocks listed in the American stock exchanges was just $15.3 trillion six months ago. This is not enough to pay off the American national debt. The European Union is in the same economic state of affairs.

The politicians have no plans other than the status quo. In my blog, I explain how we failed and offer a 28 point program to rebuild America before we become another Haiti, Mexico or Somalia failed state.

Roman Gil
http://roman-gil1.blogspot.com

Ever-shifting paradigms of the global economy are making it difficult for the so-called established nations to overlook the importance of the emerging countries like China and Indonesia. There’s a lesson or two to be learned from these nations about how they have managed to climb higher in spite of their limited resources, and huge population. Measures like Debt consolidation, simple budgeting and frugal spending will work like antiinflammatory herbs in healing the financial erosion experienced by the advanced countries and save their economies from tumbling down. Whether it’s America or Greece, they all need fiscal re-organization to bail them out of debt and to attain some amount of stabilization in their economic situation.

The article raises interesting questions but may be building the foundation of the article on a bed of sand. China has manipulated it's currency while providing a source of cheap labor to gain it's financial standing.

Large corporations have aided in this process by manipulating future and currency markets to drive up prices, increasing their profits. Forex traders and future traders have made fortunes from these actions.

ChangS

Once they exercise their options, no great harm involves the significant class -- although damage is performed to people who save their dollars for any day you need it -- but somewhere across the line, say around 1970, both of these types of growth started to separate and that is what we should have today: plenty of dollars, much less non-monetary products or services.