The following is an excerpt from MICHAEL J. CASEY | August 22, 2012 | Smartmoney.com |
Good news is so hard to find in the global economy that we must search for it in bad news.
In fact, the most encouraging developments lie in China’s slowdown, the euro’s declines, Asia’s waning exports, and even in the stubborn refusal of U.S. wages to keep pace with inflation. These are all necessary, if painful, elements in a much-needed global rebalancing. Only with such changes can the debt-laden economies of Europe and the U.S. become more competitive while China and other export-dependent nations increase their consumption of foreign-made merchandise. Only through this pain can the world return to sustainable growth.
But the process has a long way to go. And it could easily be derailed. If policy makers allow currency misalignments to arise, for example, or fall back on the policies that created the global savings and spending imbalances in the first place, the adjustment will merely be postponed at greater cost to all.
But first, the “good” news.
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