Tuesday, 2 August 2011
When America sneezes...
Americans are waking up to the cold hard fact that they are broke. Their debt, as a percentage of GDP, is on a par with Italy’s, a country that was told to tackle its economic crisis as a matter of urgency. But America’s debt crisis has much further reaching consequences than does Italy’s. America’s problems affect us all.
America is a society of consumers. Many Americans live well, surrounded by the best products that money can buy, and that has been essential to the economies of the rest of the world, where those products are made. If Americans have no money, they stop buying, and if they stop buying, the rest of the world goes into decline. Germany has already experienced a 14.4% rate of decline, while in Japan the fall was 15.2%.
Developing countries suffer most harshly. Cambodia’s growth has declined, from 10% in 2007, to zero today, and Kenya’s rate of growth has halved.
Someone once said, “If America sneezes, the rest of the world catches cold.” They were wrong. When America sneezes, it starts a plague.