It’s Really a Global Crisis

It is time for Asian countries to encourage government spending, domestic investment, domestic consumption to increase GDP. Doing so also helps stablizing the world income and economy by helping other nations' export; which in turns will ultimately raise all countries' export . United we prosper; divided we falter. China alone has 2000 billions of dollars of foreign reserve
( compared with 70 billions for the US) to do that.

Asian countries are in an advantageous economic position. Proof is below:

Economists use purchase-power-parity adjusted GDP ( Not exchange-rated GDP or nominal GDP) as one realistic indicator to compare national economies. It is simply because a Big Mac (or cost of living for that matter) could cost, for instance, 3 times in NY compared with that in Beijing in a specific currency.

To truly compare three current (2008) largest national GDP, we need to look at several indicators:

Current 2008 Purchase-power-parity adjusted GDP (top 3 countries; in trillions of dollars): US 14 / China 8 / Japan 4.5
(https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html)

PPP GDP 2013 projection (in trillions of dollars): US 17 / China 14 / Japan 5
( http://en.wikipedia.org/wiki/List_of_countries_by_future_GDP_estimates_(PPP)

Current export (in billions): US 1377 / China 1465 / Japan 777
Current external debt ( in billions): US 12300 / China 400 / Japan 1500
Current foreign reserve ( in billions): US 70/ China 2033/ Japan 954
Stock of money ( in billions): US 1374 / China 2300 / Japan 4370
Current deficit (-) or surplus (+) (in billions): US -568 / China +368 / Japan +188

If we divide by a factor of billion; a more useful comparison goes like this:

The US currently earns $14,000 (projected $17,000 in 2013) and shortfalls $568 a year; owes $12,300; and has $1,374 in the bank
China earns $8,000 (projected $14,000 in 2013) and surpluses $368 a year; owes $400; and has $2,300 in bank
Japan earns $4,500 (projected $5,000 in 2013) and surpluses $188 a year; owes $1,500; and has $4,370 in the bank

Pell Grants to college students enable them to go to school while working less or not at all. By thereby making their work hours available to others, the grants increase the number of available jobs by enabling present workers to withdraw from the labor market. From the standpoint of number of jobs and number of jobseekers, now out of balance, isn't it really the same thing?

If we hired people to computerize the land records of the United States, this would create jobs and be an investment that pays off by decreasing the cost of title searches and title insurance by making title searchers more productive so that some of them would have to find other ways to earn a living after the computerization was up and running (we would hope that during this time the economy would improve so the ex-title searchers would be able to find employment).

If we hired people to paint decorative murals on blank walls, this would create jobs and leave us with perhaps a more attractive environment.

If we hired people to go to school (another way of looking at Pell Grants, I think - please tell me why if it isn't), we would create something for these people to do that would leave the country with a greater supply of workers with more supple minds, knowing more about how to learn and being better at it, and perhaps knowing something (such as preventing bedsores) potential employers (such as hospitals) would be able to use directly. Some people think that the US is setting the stage for its own decline by not making sure that enough investing of this sort is taking place.

True, Pell Grants to college students do not create jobs, but have you considered how many students could join the ranks of the unemployed if forced out of school?

Nationalize the sick, mammoth banks at least for next few years.. Credit will start flowing, Taxpayers will benifit. Stop hiding your head under sand and consider this option seriously. Also, get tough with China and other export driven countries ( dont know whether it is going to work, but sending strong signals is essential)

It was repeated so many times, it is like theorem now: spending "stimulus" pakages NeVER EVER worked. And now those idiots around "Obama the saviour" are still trying the same harmful remedy.
Recovery has already started, even very slowly. Real-estate has rached the bottom, houses started selling in higher rate, after long decline. This is a direct result of those $350 billion which Paulsopn wisely ilended banks instead of wasting them on so-named toxic papers. Banks started giving mortgages, houses will soon have established value, and those "toxic" mortgage bonds will not be so "toxic" and worseless any more. With Obama 'help" this process will most likely hit the breaks.

The US Federal interest rate is almost zero. The EU just cut interest rates to 2%. My question is, in the face of a dearth of credit why peg interest rates so low. I myself am reluctant to lend money (that is, make bank deposits) when the interest rate is so paltry. Would not a *raise* in interests rates be conducive to expanded credit?

Germans save 11% of disposal income. You cannot say that they save four times more than Americans because they do not have a safety net. In fact they have a much more elaborate safety net than Americans.

It is the mercantilist policies in Germany and Asia that suppress their domestic consumer spending and encourage growth by exports.

You are correct harry, there is no silver bullet. i am an engineer. There are many angles to look at and I think we should all be vigilant as citizens, and watch them closely, learn the facts, and raise our voice when politicians become incompetent. How many on this blog called there congressman when Paulson gave 350 Billion out with no strings? I did! Everybody should not be expecting someone to bring them change on a silver platter. We should do our part in our communities and our lives to improve what we can. It was a very good article.

I agree, this mess was culminating long before Obama took the office. ....even as far back as NAFTA, when hundreds of thousands of jobs left this country to help other countries and American businesses at the expense of American jobs and our economy. I want Obama to do well as we all do. But allowing further mistakes on top of already made mistakes, like Paulson giving 350 Billion to the finical industry without scrutiny is absurd. Continuing to borrow from the Asians without laying ground work, for them to do their part to boost the global economy would be irresponsible.

We need to rediscover the optimum balance between free market economics and vigilant government regulation. Eight years of GOP and Bush shut off the regulators. It was not Barney Frank and Nancy Pelosi that cheered while derivatives became a $60 trillion bubble. It was not them who legislated the explosion of collaterized debt obligations which have now buried the lending industry. It was not them who neutered the SEC to the point where they refused to investigate a $50 billion fraud even when credible sources brought the evidence to their attention several times. I live in Texas, and what we've had is Texas' good ol' boy approach to government regulation on a national scale. I voted for Obama, but I cringe at the hype he has gotten, because hype brings inflated expectations.

So, you free market types, if government intervention is not the answer right now, what is? One-sided tax cuts to inflate the deficit even further when we are still trying to finish Bush's wars? A hands-off approach so the banking industry can complete its total collapse? The ideology of a self-regulating free-market economy has failed. Markets do not self-regulate. Standard Oil proved this a century ago. The Depression proved it. The Depression was not the product of excessive government regulation, which was relatively non-existent in the 1920's. History 101: Private investment is needed for a high standard of living, and vigilant government regulation is needed to keep markets stable.

Thanks for telling me the problems but what are the solutions? It seems there should be a criteria for Obama's handing out money. (1) If it goes to the banks it must be lent out to the citizenship not buying other assets (2) If the governement spends money it must be directly related to projects(roads, buildings, etc) that create the most jobs and the quickest (3) give business investment credits,etc to encourage them to spending money again for investment and hiring new positions and (4) give the people enough money (ie not $500) so that they will be encouraged to spend it on new items (maybe a $7500 credit to buy a house) or pay off debt. We must do these things before we take on health care, social security, the environment, immigration, etc because if we don't there will be no govenement left. Lastly, bring our men and women fighting iin Iraq home and if we need to keep them working givie them governement jobs working on our country's infrastructure.. God bless America and its people.

Obama will not solve the problem by throwing $825B at the economy after the govt just threw $700B at Wall Street! The real answer is for the government to do nothing at all and just let this thing play out by itself. The govt can be an answer of sorts but in this case, the govt will only make the problem worse with high deficit spending adding on to the national debt.

The long term solution is for the govt to learn to live within its means, to keep taxes and govt spending low, to eliminate the national debt, to let failed companies go into bankruptcy. etc. We need to re-discover free market economics.

Give the Pres. A chance do his job. The negitive posts on here are largely made by illinformed blowhards who have no clue.