Hi Billy, I agree 100% with this. Including the implicit statement that we should use our understanding of the future to act, not just talk.
E On Apr 15, 2012, at 8:36 AM, [email protected] wrote: > > > Via Meadia > Walter Russell Mead > > April 14, 2012 > The World Economy: Back on the Brink? > > Via Meadia isn’t an economic forecasting site; if I knew what the world > economy was going to be doing tomorrow I would be too busy making zillions by > trading exotic financial instruments the rest of you bozos know nothing about > to share my secret insights with the rest of you. (Indeed, one useful thing > to remember about all economic talking heads and pundits: these are people > who think they can make more money by giving their opinions rather than > acting on them. If you knew what markets were going to do, you would have no > incentive to share that knowledge.) > > But for what it’s worth, the world economy is beginning to look a little > shaky again. The two problems: Europe has papered over its euro difficulties > but hasn’t solved anything, and China is reaching the limits of its old > development model without having found a way to shift to something new. > > In past decades, the relative health of the US economy might have provided > enough of a global stimulus to overcome these problems, but the train is too > long and the hill is too steep for the old locomotive to pull the world > economy to the top of the mountain on its own. In Pharaoh’s dream, the seven > lean cows devoured the seven fat ones and that is our fear today: that the > parts of the world economy will bring down the successful ones. > > The danger is greater because the US is in the middle of its transformation > from a blue model, industrial economy to something postindustrial that we > don’t yet understand. The interaction of Asian, European, Latin American and > Anglosphere economies also confounds policy makers. We’ve never had anything > quite like the global economy in view today, with its mix of huge surplus and > titanic deficit economies, with its fiat money and globally integrated > financial markets. The experts and pundits stroke their chins very > convincingly on TV, but neither they nor anybody else really grasps either > the big picture or all the moving parts that make up the world economy today. > > The immediate problem is that Europe’s latest dose of pain meds is beginning > to wear off. Investors are looking at the Portuguese, Spanish and Italian > economies and they don’t like what they see. Nor should they. Bond yields are > rising sharply across Europe as people think more clearly about just how > unlikely it is that the current mix of fiscal austerity and financial market > life support can generate the kind of growth Europe needs. > > News that China’s GDP growth has slowed more dramatically than expected also > has investors worried. The political turmoil over the Bo Xilai scandal isn’t > helping; China’s model requires a strong, technocratic economic management > team that is able to act decisively. China’s leaders look more embattled than > usual, and its not clear if the government will be able to stick to its > economic playbook as it seeks to keep the population sweet. > > How all this plays out in the world’s volatile stock markets is not something > Via Meadia can predict, unfortunately. And the long term outlook in our view > remains bright. > > There is a vital truth about the economy that doomsayers often forget: People > want to make money, are constantly looking for ways to make money, and are > creative and adaptive. More people than ever before live in countries where > they are allowed to try to improve their situation in life, and where > governments are more focused on creating conditions favorable to growth. We > have more scientific and technical knowledge than ever before, and the > information revolution in particular is creating new industries and new > opportunities with breathtaking speed. > > Given all that, optimism about the medium to long term seems like the right > approach. But with the potential for rapid, transformative growth also comes > the danger of growth pains. Between the Civil War and 1910 the US became the > world’s largest and most advanced economy and huge new cities and industries > sprang up across the country. That was also a time of painful depressions, > sudden economic crises that ruined investors and bankrupted companies, and of > social conflict and economic inequality. > > Good news for the big picture does not translate automatically into smooth > and predictable economic progress in the short term. In fact, the better the > big picture looks, and the more powerful are the forces pushing the world > economy toward major growth and change, the more market turmoil we are likely > to experience — and the harder it is for policy makers to know what to do. > > Growth hurts. Change brings risk. Welcome to our brave new world. > > > -- > Centroids: The Center of the Radical Centrist Community > <[email protected]> > Google Group: http://groups.google.com/group/RadicalCentrism > Radical Centrism website and blog: http://RadicalCentrism.org -- Centroids: The Center of the Radical Centrist Community <[email protected]> Google Group: http://groups.google.com/group/RadicalCentrism Radical Centrism website and blog: http://RadicalCentrism.org
