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How many times can one country come of age?
http://www.metronews.ca/toronto/comment/article/573192--how-many-times-can-one-country-come-of-age
John Mazerolle
08 July 2010 11:00
Canadians are full of it.
The media slant of this year’s Canada Day was that
we are a shy country, which now — at long last —
believes in itself.
What a load of hockey pucks. We’re downright
delusional.
This notion that we are a country that “finally”
found its national identity is a story we’ve told
ourselves a dozen times.
Confederation, Vimy Ridge, entering the Second World
War, Expo ‘67, the 1972 goal by Paul Henderson. And
all those things happened before I was born. How
many times can a country come of age?
It’s a myth that Canadians are not patriotic. I was
recently at a bar sitting next to a guy who was
waxing nostalgic about Sidney Crosby’s overtime
Olympic goal. He said he had been “everywhere,” but
Canada is the best. When I said I had travelled a
lot and enjoy New Zealand and Austria as much as
Canada, he looked at me like I had strangled a
beaver.
Canadians are not arrogant in the American way, but
we are incredibly smug. We’re as likely as Americans
to say our country is better than everybody else’s
(whatever that means), and surely we’re the only
nation in the world that boasts about being humble.
We’re proud of how we pronounce the last letter of
the alphabet, for God’s sake.
We love to believe we’re the withering wallflower
who bursts onto the dance floor after years of
longing gazes toward the world-class girl. But, in
reality, we’ve always been the self-satisfied guy,
who smirks to himself and wonders when everyone will
notice how awesome he is.
We cling to our “humility” and then claim we’re
newly proud every time anything noteworthy happens,
like joining American military missions, staying out
of American military missions, getting mentioned on
The Daily Show, or winning Olympic gold.
Clinging to the myth of humility makes it too easy
to pat ourselves on the back for things that don’t
really matter, like our geography and our hockey
medals. Our worth as a nation will never be
determined on the power play.
I don’t do Canadian stereotypes. I’m sorry. |
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World economic recovery driven by global imbalances
http://www.washingtonpost.com/wp-dyn/content/article/2010/07/08/AR2010070806177_pf.html
By Neil Irwin
Washington Post Staff Writer
Friday, July 9, 2010; A01
The catastrophic economic downturn that began two
years ago was supposed to shake up the global
economy, ending an era in which Americans consumed
too much and saved and exported too little.
But the recovery is being driven by a return to the
very global imbalances that were a major cause of
the crisis. Americans' savings rates have fallen
over the past year, imports are rising faster than
exports, and countries around the world are again
turning to Americans to be the consumers of last
resort.
"Despite all the good words and good intentions, I'm
afraid we're going back to the same conditions that
led us into this mess to begin with," said C. Fred
Bergsten, director of the Peterson Institute for
International Economics.
That's partly because countries around the world
view those old ways, while dangerous over the long
term, as the quickest option to power out of the
deep economic decline. For China, Japan and Germany,
that means exporting vast volumes of goods, saving
too much and spending too little; for the United
States, and to varying degrees Britain and other
European nations, it is the reverse.
These trends are deeply ingrained in countries'
policies and individual decisions by their citizens,
such as the lack of a social safety net in China
that causes people to save more and the
mortgage-interest deductions in the United States
that encourage people to take on more debt.
World leaders have pledged to guide the global
economy away from those imbalances. Just this week,
President Obama renewed his call for a doubling of
U.S. exports. But that has been made more difficult
given that the value of the dollar has risen 7.5
percent against other major currencies this year,
making American exports more expensive.
Meanwhile, leaders in Germany and Japan have turned
their focus to reducing budget deficits, but the
rest of the world would benefit if those countries
spent more aggressively, increasing their
consumption.
The United States has been like a customer who
outspends his paycheck by receiving store credit.
The store -- in this case, China, which buys vast
quantities of U.S. Treasury bonds -- essentially
funnels its profit back to the customer in the form
of more credit. Everybody is better off for a while;
the customer gets more stuff, and the store does
more business.
But that relationship can't go on forever.
Eventually, the customer owes more money than he can
pay, and the whole arrangement collapses. In the
years before the financial crisis, it was that risk
-- of a collapse in the value of the dollar and of
U.S. government securities -- that kept many
economists up at night.
Many had concluded that the crisis would shock the
system into a fundamental change.
"The growth model that has been in place over the
past 10 years -- where excess savers around the
world, namely in Asia, allow us to live beyond our
means, namely by buying products from those places
-- that model is broken, and it's not coming back,"
Tim Adams, a Treasury Department official in the
George W. Bush administration, said in congressional
testimony in early 2009.
For a time that prediction seemed to be coming true,
as the gap between spending and income narrowed. The
U.S. savings rate, which was less than 2 percent of
disposable income before the crisis, spiked to 6.4
percent in May 2009, as Americans chose to hoard
cash rather than spend it, largely out of fear. But
in the year since, spending has risen faster than
incomes, and the savings rate has edged back down to
4 percent.
At first glance, Americans seem to be cutting back
on their debts. Total household debt has fallen 2.7
percent, or $374 billion, since peaking in the
second quarter of 2008. But, as the Wall Street
Journal recently noted, U.S. banks and lenders have
written off almost exactly the same amount of loans
as unrecoverable. That means, on balance, that
Americans are not paying down what they owe in any
meaningful way.
The broadest measure of the gap between savings and
consumption, known as the current account deficit,
was about 5 percent of total economic output before
the crisis in 2007. It shrank to 2.9 percent last
year as U.S. consumers cut back and saved more. But
based on current trends, the International Monetary
Fund now expects that measure to climb back to 3.3
percent this year and to 3.6 percent in 2013.
China's current account surplus, by contrast, fell
from 11 percent in 2007 to 5.8 percent last year.
But as the Chinese return to their high-saving ways,
this surplus of income over spending is forecast to
rise to 8 percent in 2015.
In the United States, policies to deal with the
economic crisis have contributed to the trend:
deficit spending on government stimulus programs,
incentives to buy automobiles and various subsidies
for borrowing money to buy a house. China,
meanwhile, is continuing to encourage its exports by
keeping its currency cheap, though Beijing said last
month that it could allow a gradual adjustment of
the value.
This problem of global imbalances was high on the
agenda when leaders from the world's 20 largest
economies met late last month in Toronto. But their
joint statement dealt with the issue only in vague
terms, promising to seek "strong, sustainable and
balanced growth." There was no specific agreement on
how governments would do this.
The recent financial tremors in Europe could
aggravate the imbalances further. Some European
countries have responded to the debt crisis by
slashing government spending and reducing
consumption. Germany, the continent's largest
economy, was already producing more than it
consumed, and its move toward austerity could reduce
demand for American products just as the United
States is pushing to expand exports.
World leaders trying to grapple with these issues
face a clash between what is best for the world
economy in the long run and the immediate interests
of their respective countries. The risk: that the
seeds of the next crisis are already in the ground.
"These imbalances weren't accidental," said Robert
Shapiro, chairman of the economic advisory firm
Sonecon and head of the globalization initiative at
think tank NDN. "They solved large political and
economic problems for a lot of countries and were
the result of successful political arrangements.
That's why they're so hard to untangle." |
