Bailouts and BS have reached the end. It’s time to work harder.
Globally, 2008 kicked off an earthquake that hasn’t quite ended. American prosperity seems to be returning at last, but it remains a precarious thing indeed. The sovereign debt crisis abroad and at home rollicks on, as the United States comfortably settles above 100% debt-to-GDP and most of its creditor nations begin posturing for a new international trade system.
They’re damn right to demand that.
The obvious and ugly truth is that Europe, America, OPEC, and the emerging post-Soviet Eastern bloc spearheaded by Russia and China are racing to the bottom. China has long manipulated its currency downward to spur its famous “world’s workshop”, but it found that trade quite crowded in the post-2008 grab for export share. Despite the lack of an obvious “consumer of last resort” sovereigns desperately debased their countries, issuing trillions in debt to stimulate foreign demand to jump-start their moribund domestic economies. What happens when everyone’s a seller? Exactly.
So we settled into a pecking order of sorts. Europe suffered the worst because of a weak political hand as confused citizens vigorously protested Germany’s export-motivating strategy of weakening debtor nations with in the EU. America was able to manufacture demand by purchasing its own debt and leveraging it toward its citizens while loosening credit requirements on everything from automobiles to mortgages. China acted autocratically and looks like a tottering domino right now; OPEC is wondering what they’re going to do about their starving citizens if we plunge back to 2008-esque petroleum demand.
This is madness, created by currency manipulation. Currency manipulation replaced protectionism and the protectionist foolishness that turned a global recession in the 30’s created by a banking crisis into a full-blown depression. Now, instead of slapping tariffs or duties on American steel, the likes of China artificially sustain irrational currency prices that favor their economic strategies. The West is no better, and is in fact every bit as savvy a manipulator; this is why the dollar is worth 7x less than it was a few scant decades ago.
So it’s time to fix this problem, which also means fixing the debt problem and pulling back the global economy from a self-inflicted return to the scary calculus of the 2008 crisis. Trade relations have to return to globally-negotiated, fair terms that mandate less severe current account surpluses and deficits in real terms, protecting the global economy from the imbalances that riddle it today. We’ve got to stop currency manipulation and the associated debt-bubble economics once and for all, for the benefit of all the world’s citizens.
Currency manipulation must be arrested so the debt bubbles stop bursting in English banks, Chinese real estate, Dubai skyscrapers, Iranian petroleum, and American industry. Or else we’ll be back here in a few short years with another “bailout” step in our journey to economic abyss, time and again, much poorer for this latest failure.
