Refocusing the Debate on Sustainable Economic Redevelopment

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This is a guest note by Daniel Mandel. Daniel is a Program Associate for the New America Foundation/Next Social Contract Initiative.
(Photo Credit: Samuel Sherraden)
There has been no shortage of hand-wringing about America’s current unemployment crisis, which is unprecedented in modern times. But what has been lacking is a set of concrete proposals to address the jobs crisis in concert with other significant problems facing the United States: creaking infrastructure, climate change, and massive current account and fiscal deficits.
A new paper by New America Foundation/Economic Growth Program Director Sherle Schwenninger and Policy Analyst Samuel Sherraden explains what Washington needs to do to get serious about doubling U.S. exports:

Expanding exports can help offset weak domestic demand caused by household deleveraging, allowing us to work out of debt without a loss in output and a fall in our living standards. But like other Obama administration initiatives, the strategy the president articulated falls short of the goal…Does one really think that the promotional efforts of an Export Promotion Cabinet will result in a $1.6 trillion dollar increase in the sales of U.S. produced goods and services abroad?….
If the Obama administration is serious about its goal of doubling exports over the next five years, it will need 1) a currency policy to ensure a fair and competitive playing field; 2) an international strategy to promote global growth and the rebalancing of the world economy; and 3) a coherent manufacturing strategy to onshore more investment and production so that increased external demand results in increased U.S exports.

New America Foundation, Economists for Peace & Security (EPS) and Bernard Schwartz are hosting “Jobs, Investment and Energy: Meeting President Obama’s Challenge,” a symposium that will bring together leading politicians, academics, and policy thinkers to offer recommendations for the economic redevelopment of America.
Speakers include Governor Edward G. Rendell of Pennsylvania, EPS Chair and University of Texas-Austin Economist James K. Galbraith, who has outlined a series of innovative job-creation proposals; Lisa Margonelli, Director of the New America Foundation/Energy Policy Initiative; and SUNY College of Environmental Science and Forestry Professor Charles Hall, a leader in the burgeoning field of biophysical economics.
This event will be held this Tuesday in the Rotunda Room of the Ronald Reagan Building and International Trade Center and will STREAM LIVE here at The Washington Note.
Event details are available here.
— Daniel Mandel

Comments

23 comments on “Refocusing the Debate on Sustainable Economic Redevelopment

  1. WigWag says:

    “Wig, so what? A downgrade will sharply raise the cost of credit to the Treasury, which if you hadn’t noticed, is using credit by the trillions. We finance the debt mostly in short-term bonds, which must be renewed at market rates.” (Nadine)
    In the extraordinarily unlikely event that the ratings agencies carried through with their threats and downgraded U.S. Government debt, the tempest in the teapot that we would see would last about 24 hours; then it would be back to business as usual.
    The only currencies that are equipped to serve as reserve currencies are the dollar, the Euro and to a far lesser extent the Pound, the Yen and the Swiss Franc. Nations like China still have no where else to go. Regardless of what the ratings agencies do or don’t do and regardless of what the Fed does or does not do, interest rates both short and long term are still basically set by the market. Only the nations I mentioned above have sufficient enough inventories of debt and sufficient political stability to meet world demand.
    It’s simply not about what the ratings agencies say except around the margins; it’s about supply and demand. The demand for U.S. currency is enormous; in fact, in the current climate it’s actually growing; this will keep interest rates at incredibly low rates for the foreseeable future.
    But let’s say that you’re right Nadine; let’s say a loss of the AAA rating on various Treasury instruments caused short term rates to rise.
    I actually think this would be a good thing; it would provide a significant inducement for the U.S. to reign in its profligacy which, by the time the economy recovers will be exactly what’s called for.
    By the way, if you want proof of what I’m saying, I suggest you look at what’s happened to Japan. That country has a sovereign debt to GDP ratio that is the second worst in the world. As a percentage of GDP, its debt is more than twice the debt of the U.S. Government’s. About a year ago, Moody’s downgraded the bonds issued by the Japanese Government from AAA to Aa2. What has been the effect on the borrowing costs of the Japanese Government? Answer none. The Japanese refinance their debt at approximately the same cost as the United States which has a far smaller government debt and still maintains its AAA rating. In short, the impact of the Moody’s downgrade on Japan has been non-existent.
    For the past 4 years the Yen has never reached 5 percent of world currency reserves; during the same period of time, the dollar has ranged from 66.4 percent to 64.0 percent. If the ratings downgrade that Japan experienced hardly affected its borrowing costs, what would a ratings downgrade mean to American borrowing costs? During the month or two after the initial shock it might cause a blip; in the intermediate to long term it would mean nothing.
    None of this is to say that in the long term a replacement won’t be found for the dollar; the Chinese currency or even the Indian currency might some day fulfill that role. But that won’t occur for decades if ever.
    As for the idea that the international community will create some type of “super-currency” based on SDRs to serve as the world’s new reserve currency; you would have to be completely dimwitted to believe that.
    My guess is that an SDR based “super-currency” will come into being at just about the same time that Esperanto becomes the lingua franca of the world or the nations of the world unite on a common approach to halt global warming. That new super-currency should come into existence at just about the same time that the United States and Russia destroy the last remnants of their nuclear arsenals.
    All of those things could happen; but the chances that they will during the lifetimes of anyone reading these words is pretty small.
    ps: I really do hope that your currency trade works out for you. Personally, I’m long the Canadian dollar. The Canadian economy is solid; Canada has enormous oil reserves. The Canadian banking system is far more secure than the banking systems in the rest of the developed world and the debt and deficit situations of both the Federal and Provincial Governments in Canada are quite strong from a comparative perspective. Canada is like the North American Norway and even the recalcitrant Quebecois have been quiet recently. I’m really quite bullish on Canada. Prime Minister Harper may be a jackass, but he’s a jackass who’s done a very credible job. The Canadian dollar is approaching par; par with the U.S. dollar is a real psychological barrier for traders, but in time, as the world economy improves and demand for energy resources increases, I think that the Canadian dollar breaks it.

    Reply

  2. Sweetness says:

    Wig, I think you have it right…
    “Nations like China and Germany keep their reserves in currency that they think is most stable, most safe and most likely to sustain their purchasing power. Encouragement has nothing to do with it; it’s all about market forces.
    The other thing that you are neglecting is that it’s not just about trade, bilateral or otherwise. In fact, the cost of pricing oil for example in dollars, is so incredibly low that most nations have no incentive to do otherwise; they save next to nothing by not pricing oil in their own currencies. Most nations actually prefer dollars to their own currencies.
    As consequential or more consequential than trade is what nations like China do with their enormous surpluses. They have only two choices; invest those surpluses in tangible assets or buy debt instruments denominated in any currency they choose.
    Do you really think China, for example, could buy hundreds of billions of Brazilian debt or Iranian debt? Even if they could, is that what you would do with your wealth?
    As long as China pursues a mercantalist policy and underconsumes, and as long as it is one of the few nations in the world that sets the value of its currency by fiat, it will continue to generate enormous surpluses. Remember, JohnH, the Chinese could do exactly what you propose; they could convert their dollar reserves into Iranian currency or Israeli currency or Brazilian currency and then use that currency to purchase products produced by those nations. But that’s not what China wants to do; it wants to keep its currency reserves intact. As long as China chooses to leave its population far more impoverished than they need to be by saving too much and spending too little; it will continue to have little choice but to accumulate U.S. Government debt.
    There just isn’t any other game in town except for the Euro. And as we know, it’s not even clear that the Euro will survive.”
    Besides which, weren’t European currencies OVER valued in the 1960s rather than undervalued. I have some memory that sterling was a constant $2.40 until the late 60s, or maybe it was the 70s, when they cut it in half. We had a neighbor (a tea trader) who kept his money in sterling and took a huge bath when that happened…

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  3. nadine says:

    “In the meantime, Nadine, don’t worry about S&P and Moody’s and don’t rely on them either. If you find yourself tempted to take them seriously, remember the great job they did rating the debt of AIG, Lehman Brothers and Bear Stearns.”
    Wig, so what? A downgrade will sharply raise the cost of credit to the Treasury, which if you hadn’t noticed, is using credit by the trillions. We finance the debt mostly in short-term bonds, which must be renewed at market rates.

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  4. Neo Controll says:

    …, Nadine is simply acting like a scorned, privileged, right wing nut case, who doesn’t exactly have a place to vent her ire at the moment. Had she a gun, and Obama in sight, I wouldn’t bet against her.
    You’d think the Congress had actually taken some radical step. Or that Hillary had actually told AIPAC to shove it. Or that Rush had overdosed.
    -NCHQ

    Reply

  5. WigWag says:

    Net short the dollar hasn’t paid off too well the last few months, but depending on when you got in, gold has done quite well.
    Good luck!

    Reply

  6. nadine says:

    “Nadine, would you bet your retirement savings on the Yen?”
    Actually, I’m betting them on gold, commodities and foreign markets. I am net short the dollar.

    Reply

  7. WigWag says:

    “The dollar was the tallest pygmy in the crisis of 2008. Nonetheless, it has declined against a basket of currencies by 37% since 2002.” (Nadine)
    That’s true Nadine, but it doesn’t mean much. In 2002 the Euro (which at that point was only 3 years old) was just coming into its own; as it matured as a legitimate currency and as the supply of Euro denominated debt reached critical mass; the Euro had no where to go but up. Japan was just emerging from its decade of disaster; the Yen also had no where to go but up.
    During the recent financial crisis of last year, the dollar surged against the Euro and declined modestly against the Yen.
    The dollar is king and almost certainly will continue to be for the next few decades. Yes, it will move up and down in a trading range and smart traders will know how to profit from that, but the dollar will continue to be far and away the most important and widely held currency in the world.
    In 2008, the dollar represented 64 percent of all currency reserves held in the world; in 1995 the dollar represented 55 percent of all currency reserves held in the world. In modern times the dollar reached its peak in terms of how widely held it is in 1999 when it represented 70 percent of all the currency held in the world. That was the year the Euro was introduced; the Euro is the only formidable competitor that the dollar has. In 2008 the Euro represented 26.5 percent of worldwide currency reserves; it has never reached as high as 30 percent. While the data is not out yet, since 2009 the percent of world currency reserves represented by the Euro has almost certainly fallen.
    JohnH says,
    “How to devalue the dollar? It’s simple. Encourage other countries to price their trade bilaterally, instead of using the dollar as an intermediary. Instead of having to keep lots of dollars on hand to buy everything from soup to nuts, countries simply keep reserves of the currencies that they actually use. Iran already did this with its energy exports. Brazil, I believe, did the same with its China trade. And North African countries are moving to trade in each others’ currencies without dollar intermediation. This is not rocket science.”
    I guess it must be “rocket science” JohnH. Nations are not going to hold reserves in currency that they don’t want any more than you are going to put your retirement account into investment vehicles you don’t think are promising merely because I “encourage” you to do so.
    Nations like China and Germany keep their reserves in currency that they think is most stable, most safe and most likely to sustain their purchasing power. Encouragement has nothing to do with it; it’s all about market forces.
    The other thing that you are neglecting is that it’s not just about trade, bilateral or otherwise. In fact, the cost of pricing oil for example in dollars, is so incredibly low that most nations have no incentive to do otherwise; they save next to nothing by not pricing oil in their own currencies. Most nations actually prefer dollars to their own currencies.
    As consequential or more consequential than trade is what nations like China do with their enormous surpluses. They have only two choices; invest those surpluses in tangible assets or buy debt instruments denominated in any currency they choose.
    Do you really think China, for example, could buy hundreds of billions of Brazilian debt or Iranian debt? Even if they could, is that what you would do with your wealth?
    As long as China pursues a mercantalist policy and underconsumes, and as long as it is one of the few nations in the world that sets the value of its currency by fiat, it will continue to generate enormous surpluses. Remember, JohnH, the Chinese could do exactly what you propose; they could convert their dollar reserves into Iranian currency or Israeli currency or Brazilian currency and then use that currency to purchase products produced by those nations. But that’s not what China wants to do; it wants to keep its currency reserves intact. As long as China chooses to leave its population far more impoverished than they need to be by saving too much and spending too little; it will continue to have little choice but to accumulate U.S. Government debt.
    There just isn’t any other game in town except for the Euro. And as we know, it’s not even clear that the Euro will survive.
    As Paul Krugman suggests, now is precisely the right time for the United States to go toe to toe with the Chinese on their currency manipulation. Even if the Chinese abandoned the dollar, something that is laughably improbable, there is plenty of other worldwide demand of dollar denominated debt. And what’s the worst thing that would happen?
    The dollar would fall in value.
    That’s the best thing that could happen for American exports and for American jobs.
    It’s the worst thing that could happen to the Chinese.
    Sounds like a win-win to me.

    Reply

  8. nadine says:

    “The crisis was born and bred in the United States, but in spite of this, what happened to the dollar?
    It surged, especially against the Euro (to be fair it was relatively flat or declined slightly versus the yen).”
    The dollar was the tallest pygmy in the crisis of 2008. Nonetheless, it has declined against a basket of currencies by 37% since 2002.

    Reply

  9. JohnH says:

    “Expanding exports? Of what?” Exactly. That’s why America needs to get the currency priced right. Otherwise, no one will invest in American manufacturing or in anything American that is traded on competitive international markets.
    And then there’s Wigwag. “If there’s one culprit; it’s the incredibly undervalued Chinese currency.” Right. In the 1980’s it was the incredibly undervalued Japanese currency. And in the 1960’s it was incredibly undervalued European currencies. See the pattern here? America’s problems are always somebody else’s fault.
    How to devalue the dollar? It’s simple. Encourage other countries to price their trade bilaterally, instead of using the dollar as an intermediary. Instead of having to keep lots of dollars on hand to buy everything from soup to nuts, countries simply keep reserves of the currencies that they actually use. Iran already did this with its energy exports. Brazil, I believe, did the same with its China trade. And North African countries are moving to trade in each others’ currencies without dollar intermediation. This is not rocket science.
    Imagine what would happen if the US offered Treasuries in foreign currency! Of course, it’s really not that unimaginable. If the US international financial position deteriorates much further, the Treasury may be forced to borrow in yen, renminbi, rubles, and Iranian rials or Saudi riyals. The rest of the world has been borrowing in foreign currencies for decades, so this is not something unprecedented.

    Reply

  10. Carroll says:

    Posted by Don Bacon, Mar 22 2010, 3:36PM – Link
    Expanding exports? Of what?
    Synthetic collateralized debt obligations?
    A third of America’s manufacturing has moved abroad with the strong assistance of the US government in order to increase corporate profits.
    Are the politicians suddenly going to take an anti-corporate stance?
    I don’t think so.
    >>>>>>>>>>>
    Yea, that’s my question.
    Expand exports of what?
    Try to find a single textile product for example in a US store made in the USA.

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  11. Don Bacon says:

    Expanding exports? Of what?
    Synthetic collateralized debt obligations?
    A third of America’s manufacturing has moved abroad with the strong assistance of the US government in order to increase corporate profits.
    Are the politicians suddenly going to take an anti-corporate stance?
    I don’t think so.

    Reply

  12. WigWag says:

    “Moodys and S&P are warning us that we will lose our AAA ratings, which will destroy the budget even more “(Nadine)
    Respectfully, Nadine, I don’t think I’d lose alot of sleep about Moodys or S&P downgrading American debt.
    Did you notice what happened last year when the cumulative mistakes of all American Administrations from Reagan to George W. Bush finally resulted in a world-wide economic calamity?
    The crisis was born and bred in the United States, but in spite of this, what happened to the dollar?
    It surged, especially against the Euro (to be fair it was relatively flat or declined slightly versus the yen).
    It’s miraculous really; the United States faced an economic and financial crisis the likes of which hadn’t been seen in more than 70 years and what did people all over the world do?
    They stampeded into the dollar. Long term rates on Treasuries took a nose dive.
    The number of currencies on planet earth is finite. What exactly are holders of large surpluses supposed to do if they don’t want to invest those surpluses in tangible assets?
    If they don’t want dollars what exactly are they going to buy?
    Euros? That currency may not even exist in five years. The European Union has proven to be so dysfunctional that they can’t even bail out a nation like Greece. The GDP of the entire nation of Greece ($357 billion) is less than the GDP of the City of Boston ($363 billion) or of the city of Philadelphia ($388 billion) yet the Europeans are fighting over whether to rescue this Euro based nation. What’s going to happen to the Euro when a serious problem occurs; you know, like the collapse of Italy, Spain or Ireland?
    Would you buy the Euro right now? Do you think it’s a good long term bet?
    Yen? If you’re alarmed at the U.S. debt to GDP ratio, you’re just going to be horrified at the debt to GDP ratio of Japan. According to the CIA, Japan has the poorest ratio of any nation in the world except for Zimbabwe. Japan’s debt to GDP ratio is 192.1 percent; more than double that of the United States. Economic growth rates in Japan have been mostly abysmal for the past decade; unemployment has risen significantly and the population continues to be one of the oldest in the world. Despite the rapidly declining number of people of working age, the Japanese won’t import workers; they hate immigrants even more than the Europeans do. If you were a betting person, Nadine, would you bet your retirement savings on the Yen?
    By the way, as bad as the Japanese economy has been, have you noticed that its debt to GDP ratio has been largely irrelevant to its economic woes? Despite it’s huge public debt; because it’s enormously wealthy, Japan easily handles it’s debt with little to no effect on its real economy. Those who obsess about U.S. debt levels (which despite the spending of the Bush and Obama years is far below Japanese levels) should ponder this and take solace from it.
    Swiss Francs? While the Franc has always been considered to be something of a reserve currency, compared to the demand for global currency and debt instruments, the Swiss economy is just far too small and the inventory of its debt instruments is far to meager to meet world demand. The surpluses China alone generates in a few short months would be enough to buy up all the outstanding Swiss debt in no time flat. In 2008, the U.S. dollar made up 64 percent of all foreign exchange reserves held by nations in the world. By the way, this is ten percent higher than it was in 1995 and will undoubtedly be higher still when the 2009 figures come out. The Euro was introduced in 1999; in 2008 it made up 26.5 percent of world foreign exchange reserves. Despite its rock solid status, what percentage of world reserves was held in Swiss Francs? One tenth of one percent.
    Between them, the dollar and the Euro represent 90.5 percent of foreign exchange reserves; add Sterling and Yen to the equation and you get up to 98 percent.
    If the ratings agencies were to “downgrade” the dollar, precisely which countries would offer debt instruments that surplus generating nations would want to buy?
    Would there be a rush to buy Israeli Shekels? Brazilian Reals? Indian Rupees?
    Nothing lasts forever and that includes the dominance of the U.S. dollar. But for the time being the reality is clear; at the first sign of crisis, everyone begs to buy dollar dominated debt instruments. That won’t be changing any time soon. It won’t change if the U.S. keeps running current account deficits; it won’t change if the ratio of sovereign debt to GDP continues to deteriorate, it won’t change if U.S. unemployment rates remain stubbornly high.
    I have no doubt that someday the Renminbi might be a reserve currency. But of course, if that’s ever going to happen the Chinese Government will have to let the market determine the Renminbi’s value not some Communist bureaucrat. So far, the Chinese communists have chosen mercantilism over capitalism. We will just have to wait and see if they change their minds.
    In the meantime, Nadine, don’t worry about S&P and Moody’s and don’t rely on them either. If you find yourself tempted to take them seriously, remember the great job they did rating the debt of AIG, Lehman Brothers and Bear Stearns.
    ps: if anyone wants to see Dan Drezner’s response to the Paul Krugman article that I linked to in my above comment, you can see it here,
    http://drezner.foreignpolicy.com/

    Reply

  13. nadine says:

    Sweetness, Britain, Poland and the Czech Republic are in NATO. Britain is by far the most important as a military power. France and Germany, who are now worried about Iran, are not pleased with Obama’s total lack of action, (Sarkozy was furious that Obama wouldn’t announce the discovery of Iran’s hidden facility in Qom in his UN speech) but I haven’t noticed any gratuitous insults towards them. Yet.

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  14. nadine says:

    “Yes, WHY would any president who wants to get re-elected and
    who wants to go down in history as a great president (as they all
    do) PURPOSELY plan the decline of America.
    What would the motivation be?” (Sweetness)
    That’s a good question. My answer is that the motivation is part ideological and part political.
    Ideologically, Obama is a leftist who believes that American imperialism is at fault for most of what’s wrong with the globe today. So naturally, he wants to unwind it as much as circumstances allow. He was too cautious to just pull out of Iraq or Afghanistan (tho it was obvious he really, really didn’t want to send more troops), but he set deadlines for withdrawal and will try to meet them. But the unrequited deference to rivals and enemies, combined with gratuitous insults to allies, tell you how much he doesn’t want to maintain the status quo of American alliances.
    Politically, I’ll answer you with another question: who is more likely to vote Democrat, someone who provides for himself, whose relationship with the government is to pay taxes, or someone who is dependent on some government benefit – unemployment, welfare, foodstamps, or healthcare? See how important government healthcare is in the scheme of increased dependency?
    The next group of new dependent voters will be amnestied illegals. I don’t think La Raza’s big demonstrations in DC yesterday were by accident. Looked at this way, depression is not such bad news — all those new clients — so long as you can blame the previous President for it. Hey, it worked for FDR, didn’t it? He got 40 years of Democrat domination out of it.

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  15. Sweetness says:

    Nadine writes: “Obama is unwinding the Pax Americana, the
    network of American alliances that has kept the peace since the
    1950s. Just look how he treats allies: Honduras, Poland, Czech
    Republic, Britain, Israel.”
    Hmmm. I wasn’t aware these countries formed the backbone of
    Pax Americana since the 1950s. The Czech Republic didn’t even
    exist then per se, and both it and Poland were behind the Iron
    Curtain. And what, pray tell, did Honduras help keep the peace?
    This is a real question; I don’t know.
    Surely, you’d have to add in a few more NATO countries at a
    minimum…

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  16. nadine says:

    Tax increases can’t cure the debt while spending gallops up by 100s of percent. If the Federal Budget were only reduced to 2000 levels, there would be no deficit. Instead it has doubled to 4 trillion dollars. Without spending cuts, no tax increases can cure the deficits. Instead, Obamacare is going to spend trillions we don’t have.

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  17. WigWag says:

    The United States will never double its exports, restructure its economy or solve its unemployment problem until the dysfunctional trade and financial relationship between the United States and China is resolved.
    American profligacy and Chinese hyper-thrift are two sides of the same coin and the Americans and Chinese are both villains in perpetuating a bizarre system that actually hurts other nations far more than it does the Americans or Chinese.
    Neither the Europeans or the Japanese have much of a roll to play in this; the Japanese economy is surprisingly sclerotic and resistant to change and the Europeans are so pathetic that they can’t even agree on whether or how to rescue a tiny economy like Greece’s.
    Enormous American debt (which should be cured mostly through tax increases)coupled with enormous Chinese surplusses, which helps make American debt affordable, are a major cause of much of what ails the world economy.
    If there’s one culprit; it’s the incredibly undervalued Chinese currency.
    Fix that, and much of what ails the American economy and the world economy would begin to dissipate and be replaced by budding prosperity.
    Paul Krugman has an interesting take on all of this; he thinks its time to get tough with China. Others, like Dan Drezner disagree.
    Here’s the Krugman op-ed that spells out his views,
    http://www.nytimes.com/2010/03/15/opinion/15krugman.html

    Reply

  18. nadine says:

    Nutty? I don’t think so, Dan. Obama is unwinding the Pax Americana, the network of American alliances that has kept the peace since the 1950s. Just look how he treats allies: Honduras, Poland, Czech Republic, Britain, Israel. Back of the hand stuff. Gratuitous insults.
    He is obsequious to Iran and Syria, though they increase in defiance daily. Iran is helping Al Qaeda, according to Gen. Petraeus, and we take no offense. Russia is building an Iranian reactor, we smile and take their lectures. American influence is waning daily around the world.
    The Gulf Arabs are terrified, and well they should be. Who can trust that Obama will defend them from Iran? With all the trillions of new spending he has planned, he’s going to need to cut back the military, just as he always wanted to do.
    Moodys and S&P are warning us that we will lose our AAA ratings, which will destroy the budget even more (he was already on course to double the national debt in four years) — see if Obama cares, see if he will change course even one inch.
    Did I miss something here? I truly think Obama is the first anti-American American President. He wants to be thought of as President of the World.

    Reply

  19. Sweetness says:

    Yes, WHY would any president who wants to get re-elected and
    who wants to go down in history as a great president (as they all
    do) PURPOSELY plan the decline of America.
    What would the motivation be?

    Reply

  20. Dan Kervick says:

    “But I don’t think the English decline was on purpose, unlike Obama’s plans.”
    C’mon Nadine. This is loony rightnut territory.

    Reply

  21. nadine says:

    Yes, John, I think you’re onto something: Obama wants to manage an American decline, very similar to the English decline. But I don’t think the English decline was on purpose, unlike Obama’s plans.

    Reply

  22. JohnH says:

    Nadine’s right! Devaluing the dollar would help exports. And that is in fact about the only real long term stimulus available to the American economy.
    Funny that Nadine would mention it when conventional Washington wisdom (like Mandel) won’t.
    But of course Nadine is opposed. Better to pile on more corporate tax breaks and regulatory concessions to stimulate the economy. But we’ve been there and done that for 30 years, and it hasn’t worked. The main result has been more corporate fraud, waste and abuse.
    As for Soros, England suffered short term but then began a long period of sustained prosperity after he forced them to bite the bullet. And it’s precisely what the Washington Consensus has long prescribed to other countries to solve their ills. Time for Washington to take some of it’s own medicine.

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  23. nadine says:

    Crushing the dollar may help exports. Is that Obama’s plan? Both S&P and Moody’s are warning that US Treasures will soon lose their AAA rating if deficit spending isn’t checked. Won’t that really help the economy! Already, Warren Buffet pays lower rates on his paper than Treasuries do.
    Perhaps George Soros plans to do to the dollar what he already did to the pound sterling. That might explain his strong support for Obama. And the Center for American Progress.

    Reply

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