Obama, in Europe, Faces Big Challenges to Agenda

LONDON — For nearly 30 years, American presidents have arrived at economic summit meetings with nearly identical talking points: the solution to most ailments lies in more economic integration, unleashing free markets and using a light touch to tame capitalism.

As President Obama landed here Tuesday night to attend the Group of 20 summit meeting, almost every one of those principles appeared up for debate.

Economic integration is in retreat. Some countries have tried to wall themselves off from the troubles sweeping the world, noting that those less tied to the global economy have suffered less. Heavy regulation is back, this time with Washington’s agreement. On Tuesday the French hinted they would walk out of the Thursday Group of 20 summit meeting if other nations did not agree to set up a robust international financial regulatory agency.

For all of Mr. Obama’s early optimism that the rest of the world would follow his lead on big stimulus packages, there is no clear move in that direction. By last weekend the White House was signaling that it would not confront the nations, notably Germany, that resisted more deficit spending.

All of this suggests a rebuke of American economic leadership. Yet Mr. Obama is still likely to dominate the discussions here. And there is no clear alternative to his strategy for reviving the world economy.

Many in Europe and Asia who depend heavily on the United States market favor Mr. Obama’s spending, hoping an American rebound will revive their economies — and ease the pressure on them to spend more.

“Here’s the central paradox,” said Jeffrey E. Garten, a professor at the Yale School of Management and a former top Commerce Department official in the Clinton administration. “Everyone has lost confidence in the U.S. system because the more that is revealed, the more it feels as if we pursued capitalism in a very irresponsible way. But everyone is now waiting for the U.S. to bail them out.”

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The system's broke. Needs fixing, not patched up. Otherwise it will become leaky again. And this time it would gush out its innards on the Plaza del Magnifico Collapso...

From the Guardian

France and Germany drew the battle lines tonight ahead of tomorrow's G20 meeting, demanding stricter banking regulation than that being proposed by America and Britain, and vowing to speak with a united voice at the summit.

The French president, Nicolas Sarkozy, insisted tighter financial regulation of banks, executive bonuses, hedge funds and offshore tax havens was a "red line" for France and Germany, and rejected US suggestions of further fiscal stimulus packages to pull the world out of its worst economic crisis since the 1930s.

The Franco-German stance, reviving an alliance that dominated Europe in the past, raises the stakes for Gordon Brown and Barack Obama, who earlier played down an apparent rift with their European counterparts. The prime minister had said a deal was just hours away.

"France and Germany will speak with a single voice," Sarkozy told a joint news conference in London with Angela Merkel, the German chancellor. "Of course we have to make compromises ... but compromise has to be engaged in by all regions of the world, especially as the crisis didn't actually spontaneously erupt in Europe, did it?"

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That last remark is below the belt but allowed.

The world economic loose cannon is US made. The US need to fix it. There will be tears and bankruptcies, but the system cannot be brought back to health otherwise, or trade barriers will sprout up till the US come to terms with its disastrous momentum under its previous regime(s). The US need to stop filling the gap by printing valueless money (they are trying to convice that everyone should do the same so they do not get the blame if it does not work or devalue the system some more).

The US NEED to do the hard yards...

The money already in the system needs to be accounted for and not swallowed up by "confidentiality" of derivative black holes. The US need to feel more of the pain they've inflicted on the rest of the world. 

The Europeans were more frugal even till the US started to splash around with obese cash... Now is time to tighten the belts and carefully defuse the time-bombs of unregulated derivatives and CDSs... It has to be done. The Casino needs to be shut down and the tax heavens wiped out. Big ask but necessary otherwise it will blow up again and this time the populace won't be so pleasant about it.

Tough titties sure, but in the long run, should the French and the German hold their grounds (they could be "made to compromise" still with a bit of arm twisting) they will do the world — and the US — a great favor.

Leaner and healthier... ready to tackle the real challenge: global warming...

LONDON — Pax Americana, unlovely but effective, has endured for more than 60 years, the consequence of the post-war development of the United States as a European and Asian power. It has averted the worst, but it is safe to say that it is closer to the end than the beginning of its life.

I say this with no enthusiasm. As a beneficiary of America’s far-flung garrisons, and a member of a generation blessed (as the Germans say) with late birth, I have few illusions about what greater disasters might have befallen Europe and Asia without the offsetting presence of U.S. power.

But, as General Motors has discovered, history moves on.

G.M., in fact, is not a bad emblem for this moment when the world’s tectonic plates are plainly on the move. No corporation ever symbolized American might with greater vividness. It topped the first “Fortune 500” list in 1955, the year I was born, and was in the top three by revenue every year until 2007. Now it is all but bankrupt.

There are many reasons for this debacle, including GM’s failure to adapt to the shift to a low-carbon economy, the general decline of manufacturing in the United States, and global competition. G.M. lost out as America changed. Emma Rothschild noted recently in The New York Review of Books that U.S. consumers spent less on new cars in 2007 than on brokerage fees and investment counseling!

Where that debt-driven American investment binge led is now clear: to financial meltdown, tens of millions of lost jobs and a global hunt for fat-cat scapegoats paying themselves bonuses for failure. Anglo-American capitalism is on trial, the Thatcher and Reagan revolutions exhausted.

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see toon everywhere...