unless it can find other consumers for its exports, these exporting countries like india, china, brazil etc.. will like the USD to be overpriced compared to their currency.

but its also true that it hurts when things go too far….when all the money china made by exporting is becoming a burden and the future looks bleak due fall in consumption buy usa.

i can gaurantee that china would have continued their increase USD collection as long as USA continued to buy stuff from them.

but now china is facing falling exports due to this recession and the pain gets worse when you add loss of value in its reserves.

its a sad thing that it is so hard to create consumption habits…..why do these countries with so much population not able to generate local consumption??

as soon as they make some money….they make real estate touch the sky…instead of spending on stuff they like to buy hard assets at high prices.

The US is. Pretty much every nation in the world has some US subsidary in it somewhere.

Redmond: Unfortunately, we’re facing the crisis of an entire economic model, not a one-time speed bump.

That’s happened before. It’s a pendulum swinging. Things get fixed, it works for a few years, things eventually go too far, it gets broken, the pendulum moves back.

Redmond: The rot began with Reaganomics — after 1980, the US began to raze its industrial base, smash its unions, slash real wages, immiserate its middle class, throw money at the rich, and waste taxpayer funds on a corrupt military-industrial complex.

Personally, I think that Reagan was a great man. One of the best Presidents in US history, because the country was a mess in the 1970’s and needing fixing. In 1980, the US really *did* need deregulation and tax cuts, but eventually you run to the point where you deregulate too far and cut taxes too much, and that is where we are right now. All of Obama’s changes, even if they work, people will carry them too far, and things need to change. Two party systems are good at adjusting to this.

Real wages did rise in the 1980’s and 1990’s, but you didn’t have these huge differences in wealth until the W’s administration.

Redmond: Our problems today are the result of thirty-five years of market fundamentalism

And a lot of good things came out of it. I think we found a happy medium under Clinton.

Redmond: The US can still rebound, but it’s going to take a fundamental shift away from market fundamentalism and Cold War megalomania.

The Cold War ended a long, long time ago. As far as market fundamentalism, that’s a theory that was flawed because it never really described how the US economic actually worked. The notion that markets can completely self-regulate is totally dead, and the big fight is how going to over how deep the changes need to be in order to get things to work. I’m in the Geithner, Summers, Bernanke, Rubin camp that thinks that the changes that need to be made are relatively small.

If it works, great. If it doesn’t, it will be obvious, and then the US will try something else, and keep trying different things until it finds something that works.

Redmond: social democracy and multipolar diplomacy

I don’t think at the end of this the US will look anything like Europe. There are lots of ways that work, and lots of ways that don’t work.

It’s hardly true that anyone is forced to buy US debt, and it’s even less true that the China, Saudi Arabia, or Japan find a powerful US military fundamentally objectionable, and by funding the US military, they get some influence over how it is used. The US military protects Saudi from Iran and China and Japan from each other.

Also there is no particular interest in Beijing to create a confrontational policy with the US in either economics or military spheres. Beijing’s only issue with the US, is Taiwan, and people have come to agreements with that.

The US has been mismanaging its economy for only about a decade, and I think people that look at the current economy crisis as the end of US power are in for a major shock. The US will bounce back from this crisis stronger than ever.

Unfortunately, we’re facing the crisis of an entire economic model, not a one-time speed bump.

The rot began with Reaganomics — after 1980, the US began to raze its industrial base, smash its unions, slash real wages, immiserate its middle class, throw money at the rich, and waste taxpayer funds on a corrupt military-industrial complex. What kept the consumption machine going: gargantuan current account deficits (yesterday from Japan, today from China) and a vast credit bubble (yesterday S & Ls, today housing). Our problems today are the result of thirty-five years of market fundamentalism — exacerbated by the extreme malice and stupidity of the Bush crowd, to be sure, but hardly created by such.

The US can still rebound, but it’s going to take a fundamental shift away from market fundamentalism and Cold War megalomania, and towards social democracy and multipolar diplomacy. That’s why it’s so important to negotiate with China, Russia and other creditor nations as equals. We urgently need negotiated solutions to the imbalances of the world economy. Hopefully the G-20 is working on this overtime…

Personally I think that Geithner *did* rather badly mishandle the 97/98 and most of the criticisms that the article makes are perfectly valid. That’s why I’m quite happy that for the most part Geithner is doing completely the opposite for the United States the policies that were undertaken for Indonesia. Big deficits? Flood the banks with capital? Sure thing. Just about every single thing that was done for an emerging market financial crisis, Geithner is doing the total opposite now.

People aren’t perfect. If you look for saints and saviors in this game, you are just setting yourself up for disaster. What you want is someone that has made mistakes (i.e. is human) but has learned from them. Given that the Geithner plan is basically 180 degrees from what the IMF proposed for Indonesia, I think this is what has happened.

Which employ about 5% of the population and are extremely information dependent. Agriculture, horiculture, mining, and basic industries are all based on information, where and what to plant and mine and how to plant and mine.

gilles: It does not invert the pyramid. a town with 99 estate agents (realtors) and 3 bricklayers is in trouble.

The world that I hope to leave to my grandkids has 95 artists and philosophers, five people to maintain the robots, and robots and machines doing all the heavy work.

We live in a world in which there are 30 people for each farmer and no one is starving. As you improve technology, there is less and less need for factory line workers.