The American borrow-and-spend system - I

We have seen many global crises in our times, ranging from SARS to 9/11 and the subsequent global war on terror. In each case, a global response was called for, and it was delivered, with varying degree of success. Yet, many of these challenges were limited in their scope, sometimes by geography (SARS), and sometimes by the already existing power balance (war on terror). The current financial crisis is different. It involves much more of the world and touches people directly. Not only is this our most serious global crisis ever, it is in fact our first crisis of globalisation.

Almost a decade after Thomas Friedman wrote The Lexus and the Olive Tree and presented his idea of the new, globalised world pushing all nations to be in the same “golden strait-jacket”, billions who benefited from that process now face the consequences of its most serious downside. The same “global herd” of investors and finance professionals that Friedman said were driving this global boom are now villains, inspiring so many nasty internet and SMS jokes.

But also see the stunning globalised response to this crisis. True, a very large majority of nations cooperated on the war against terror. But ideology, national interest and domestic public opinion were always thereabouts, influencing their actions. Europe, even members of NATO, had grave doubts over the invasion of Iraq. Even on the anti-Taliban operations in Afghanistan, there were varying opinions, with most Europeans contributing no more than a token military unit. Most of Asia and Africa stayed out of it altogether, and even America’s Arab client states kept quiet. But on the financial crisis, there wasn’t a different voice except, most predictably, Hugo Chavez’s.

For decades now, it’s been fashionable as well as convenient for governments around the world to blame America for their problems. And today, America is, indeed, responsible for this global turmoil that threatens banks and credit markets in more than a hundred countries, endangering the investments of the rich, savings and pensions of the middle classes and the social support for the poor.

And yet there has been no name-calling. No world leader, not even Chinese or French, has said that his country, or the rest of mankind, has been delivered such a mortal blow by the madness of the American borrow-and-spend system. They are, on the other hand, getting together to find a solution. Governments as far apart as the US, Europe,...

...to be concluded.

S.G - Indian