In the News (from the Financial Times): “In Washington they are arguing about a debt ceiling; in Brussels they are staring into a debt abyss. But the basic problem is the same. Both the US and the European Union have public finances that are out of control and political systems that are too dysfunctional to fix the problem. America and Europe are in the same sinking boat….
“The idea that Europe and the US represent two faces of the same crisis has been slow to sink in because, for many years, elites on either side of the Atlantic have stressed the differences between US and European models….
“Yet the similarities between the two regions’ dilemmas are now more striking than the differences – mounting debt, a weak economy, an increasingly expensive and unreformable welfare state, fear for the future and political gridlock are the common points….
“In Europe, the idea that tax rises might be part of the solution to soaring debts is uncontroversial. In America, Republican opposition to the very notion of tax increases is at the centre of the political argument.
“Fixated by their own problems and differences, Americans and Europeans have been slow to see the connections between their twin crises. But analysts in the rest of the world are much more likely to spot the common trend. Among Chinese leaders and intellectuals, it is now standard practice to suggest that westerners of all sorts should stop trying to ‘teach China lessons’ – given the depth of their own political and economic problems….
“If the western illness worsens, there will be a temptation to try new and more radical cures. Those may include a drive towards protectionism and capital controls. If globalisation goes into reverse then China may experience its very own economic and political crisis.”
My comment: Finally! The idea of complete interdependence and total deadlock is beginning to sink in. But those who are thinking according to an old scheme don’t know what to do next. Yet, the recognition of this fact is a step forward. Further, there is a path toward a war and a new world or directly toward a new world.