Tuesday, June 26, 2012

Don't Blame Europe Without Including the U.S. for our Global Mess ... We're the Engine

Don't Blame Europe for Global Weakness puts it this way:

"European Central Bank President Mario Draghi delivered a message to those outside of Europe who may be tempted to lay the weakness in the global economy at Europe’s front door: don’t go there. . . .

“It seems that [with all the] problems of a country with high and rising deficits, high public debts and so on… all the problems depend on Europe?” he said in what appeared to be a reference to the U.S.

The ECB head can be excused for getting a little defensive when it comes to the amount of blame Europe must shoulder for the weakening global economy. . . .

Some non-European members of the G20 are concerned about “the potential consequences of a crisis in the euro zone, particularly a banking crisis, [and the] effect on the rest of our economies,” Canada’s finance minister Jim Flaherty said . . . . Japan’s finance minister said that Europe “must act properly and responsibly to deal with the crisis.”

U.S. President Barack Obama said recently, in response to a grim U.S. jobs report, that Europe’s problems were part of “some serious headwinds” that are “having an impact world-wide — and it’s starting to cast a shadow on our own [economy] as well.”

Mr. Draghi acknowledged that as the world’s second-biggest economy, the euro zone has an economic effect that may be amplified through financial markets.

Still, his message . . . was clear to those outside the euro bloc: look in the mirror, and not at us.

“Europe may have some responsibilities but these countries have their own policy problems which are still unaddressed,” he said, without naming them.

Referring to the U.S., and whether its economy will take a big hit from Europe, Mr. Draghi said: “if we carry this reasoning too far we end up saying the United States is a closed, small economy, which I never thought it was.”"

Summing Up

Makes sense to me. We're the little engine that must. The rest of the world, including China, depends on our consumer for its own economic growth, at least in substantial part.

When we resume solid and sustainable growth, the world will as well.

Until then, the rest of the world will probably continue to suffer.

So will we, just not as much as they will.

But that won't make us feel any better about things.

We simply need government to stop kicking private sector companies, including energy companies, in the teeth.

Thanks. Bob.

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