Opinion: (Michael Khazin, an economist, from newizv.ru): “Neither the U.S. nor the EU can cope with the crisis. The U.S. are more tenacious than the EU not least because they have a stronger currency. The EU has already partially used its ability to print currency; they printed money in December, equivalent to one trillion USD. In addition, the EU has chosen a strategy that the American economist and Nobel laureate Joseph Stiglitz called suicide. And Stiglitz is a highly insightful person.
“The fact is that rather than supporting the demand, the EU starts tightening its belt. That is, it supports the banking system, but people have to tighten their belts. De facto thus the demand weakens even more. As a consequence, most likely, the European economy will start to collapse this year, and quite quickly. This may be partly glossed over by inflation, and recession will not be expressed so obviously. Even different statistical tricks may be used to understate inflation and represent growth, but the essence will not change.
“The Americans still have reserves. I think that they will hold out until summer and then begin the recession, following the simple logic, and that will allow Obama to be re-elected. Although this recession will be expressed only by inflation by the end of the year, yet they will still be at zero balance. However, we need to keep in mind that in contrast to Europe, the U.S. aggressively supports the demand.
“Obama has increased the budget deficit by more than one trillion USD a year, and this whole trillion went to support the demand, unlike Europe, where the same amount went to the banks. In this sense, if it were not for the increase of the budget deficit, the U.S. economy might have already fallen by 8-10% over the last 2-2.5 years.
“Here is the picture of the world: As long as the U.S. will support the demand, they will hold on, balancing at zero. Once the resources are exhausted, they will begin to fall. It will happen, most likely, a little later than in Europe.”
My Comment: Khazin is right, although we have always made mistakes in dates: The world was late all the time, finding new tricks not to manifest the crisis. I would push everything one half to one year forward. Besides, politicians have a game in store called the “international situation.”