Dear rss free blog,
I spent almost two decades at CNN, first covering economics and business news, then traveling the world, covering world affairs in the days when founder Ted Turner still owned the network. Turner, the visionary billionaire, had banned the word “Foreign” from our lexicon. We could not say the F-word on the air or in internal communications. He was serious about it. We could be fined $50 for violating a rule aimed at nudging us to do away with the “Us and Them” view of the world.
Still, there was no getting away from global divisions. Everywhere I landed with my trusted American passport in hand I would carry a pile of US dollars to pay our bills in war zones, revolutions or presidential summits. Everyone preferred muscular dollars.
Then I arrived in Bosnia in the mid-90s. When I tried to place greenbacks in my Bosnian driver’s hand he drew back and looked up at me. “Don’t you have Deutsche Marks?” he asked. This was one war zone where the people did not want American money.
One of my European colleagues gleefully explained this as a sign that America’s role as the most important economy in the world would soon end. America looked less omnipotent — although it was America that stopped that Balkan slaughter.
Only a few years ago, the relative decline of American power and perhaps of its economic influence fueled a new topic. “Decoupling” became the hot subject among financial cognoscenti. The American economy was slowing, but investors wanted to believe that the US could go into recession and the rest of the world, decoupled from America, would continue to prosper. As it happened, Wall Street went into freefall and a deep recession washed over the globe.
A few days ago, Warren Buffett, an American legend, announced his biggest purchase ever. His Berkshire Hathaway is buying railway operator Burlington Northern Santa Fe for $44 bn. He called the deal “an all-in wager on the economic future of the United States.” But then, a few savvy observers noted that Burlington’s routes put it in an ideal position to ship large quantities of cheap American coal to booming China. (It can also help bring Asian goods to American consumers, the opposite side of the equation.)
America remains by far the world’s largest economy – still 25% of world GDP. But there is no question other economies are growing faster. Expect “decoupling” to re-enter the debate after the recession fades.
For the foreseeable future, world exporters will find it difficult to make hefty profits when American consumers stop spending. Regardless of what happens to the behemoth that is the US economy, it is good news for everyone if the global middle class expands, if the poor in China and India become consumers; if they become part of “Us” the people who keep the global economy moving. Ted had a point.
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