President Obama’s visit to China prompts me to write this:
By far the most important topic of discussion between the two governments is the trade relationship between China and the US. It’s simple: America has gone into hock to sustain a living standard far beyond its means. China now owns nearly two trillion US dollars, and its surplus continues to grow by a quarter of a trillion a year.
Soon, Americans - the taxpayers, the consumers, the government, i.e. all of us - will only have money left for one thing: to finance our debt. Just like what would happen to you if you owed so much on your credit card that you’d have to spend your entire paycheck on the finance charge.
Of course, China is also in a fix. Lender and borrower are inseparably joined at the hips, like Siamese twins. The devaluation of the dollar is bad for both sides. As the value of the dollar declines, Americans become poorer and inflation is soon to follow. At the same time, China’s investment in the US loses much of its value. So both sides lose, just like the banks who recently made all those bad sub-prime loans and the borrowers who shouldn’t have borrowed. The borrowers lose their homes and the banks don’t get their money back. Everyone is screwed.
I have no idea how President Obama, the Chinese leadership and the rest of the world are planning to fix things, i.e. to change course from the catastrophic direction in which the world economy is headed. But catastrophe is the only word which aptly describes the situation which President Obama inherited.
And that is what I want to emphasize: Every one of the staggering problems which are threatening our very survival were created by decades of economic mis-management and societal breakdown.
President Obama has inherited the worst conditions ever handed down to a newly elected US President: The worst economic recession in three quarters of a century; two wars; out-of-control deficits at all levels of government and in our trade with nearly every country; a collapsing dollar; a rapidly growing number of uninsured, unemployed, uneducated, unhoused; a seemingly irreversible polarization of income, with both poverty and opulent wealth still skyrocketing, while the middle-class vanishes; a brainwashed population which renders even the discussion of the only remedy - raising taxes - anathema, and which has put it its head that somehow the government, and not Wall Street, is the problem.
I am not so simple-minded as to blame the Bushites for everything (although they sure didn’t help). I understand that the seeds of our undoing were sown over a much longer period of time than the eight years of neo-conservative mismanagement. Maybe the problem is cultural. Maybe we are like ancient Rome. Maybe we are failing as a society. But I don’t want to believe this.
All I know is that it is obscene to blame the new President for these problems. His, and his team’s, efforts so far are nothing short of heroic. I don’t know whether they will succeed, but the problems they are facing are so daunting that it is miraculous to even see them try.
My French friend Paul said this to me, in a joking way, immediately after Obama’s election last fall: “You Americans drove your country into a ditch, so now of course you turn to a black man to bail you out. Figures.” leave comment here
