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Re: <nettime> Is the US declining too fast?
Keith Hart on Sun, 21 Sep 2008 06:03:37 +0200 (CEST)

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Re: <nettime> Is the US declining too fast?

Thanks for your reply, Felix. I am on the road in California and get to read
the latest news in the small hours when I can't sleep for jet lag. My
original post was sent on Monday after Lehman had been cut loose and Merill
Lynch taken over, but before the nationalisation of AIG and certainly long
before the SEC forced short-selling hedge funds to buy back investment bank
shares, thereby producing a bounce whose consequences could mean even less
credit being available than before. Any attempt to assess winners and
losers, including the US, Europe and China, under these circumstances would
obviously be foolish.

I would never say that is just about funny money, while the real economy
chugs along unaffected. But equally the financial doomsayers who say that
blowing up the banks would be the end of the world economy are exaggerating.
And the medium-term future of the relative strength in global terms of the
US, EU and China is moot (which was the point of my original post).

My reference to the US presidential election was meant to highlight the
scope to rapid change there in response to this economic crisis. And while I
pen this note, I learn that Mbeki has been forced to resign, showing that
politics in South Africa has the capacity for brutal change comparable to
Paulson's measures. The first of these contrasts starkly with say Labour in
Britain or the schlerotic public instiotutions of Europe in general. The
second may have had something to do with the timing of the ANC's move, even
if it was triggered off by a judge's decision. It remains to be seen whether
China's politburo has the flexibility and means of acting decisively when
faced with real economic pressure. Certainly their actions this week have
been reactive, insecure and possibly mistaken. This could be said of Paulson
too. But I still believe that the US has the ability to come out of this
more strongly than its competitors for reasons that include its real economy
and its political institutions.


On Wed, Sep 17, 2008 at 9:39 AM, Felix Stalder <felix {AT} openflows.com> wrote:

> Keith Hart wrote:
> > My bet is that the US economy has the best chance of recovering
> > storngly from this crisis. That was the conclusion of the OECD only last
> > week when they revised their growth forecast for the US. And before the
> > latest dip, the dollar improved dramatically against the euro.
> I think the mid-term implications are really severe. George Soros called it
> the end of a 60 year cycle of credit expansion and it comes on top of
> giant fiscal and trade deficit, two wars running with no end in sight and
> a deep neglect in public infrastructure. Now, by taking on massive amounts
> of debt, the federal government will further reduce the resources which it
> could use to get things on track.

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