In Germany, the “summer fairy tale” of strong quarterly growth is being celebrated, driven primarily by export successes in the automotive industry (domestic sales have slumped by 30 percent at the same time) and mechanical engineering. The crisis is considered to have been overcome, although GDP has by no means returned to its previous level and a sustained boom in the global economy is unlikely. The current uncertainty factor is the world’s largest economy, the United States. The mood there is deteriorating. This is mainly due to a phase shift in the economy, as the government programs in the U.S. started first and therefore expire earlier. Now it is becoming clear that this supposed “stimulus” is in danger of coming to nothing. Leading economists are talking about an imminent double dip, possibly an even deeper relapse into recession.
The main problem, apart from government debt, is the massive over-indebtedness of U.S. households, whose consumption accounts for 70% of GDP. At the height of the deficit stimulus in 2007, average real incomes were below those of 1970, with spending power coming solely from credit cards and leveraged mortgages, most of which are now worth nothing. Official unemployment has doubled to 10 percent; real unemployment is estimated at 17 percent. Annual growth of 3 percent is needed just to maintain this precarious status quo; a permanent reduction in the unemployment rate would require growth of 6 to 9 percent growth. This is out of the question in the long term, as the middle class in particular is eroding at a breathtaking pace. To regain purchasing power, U.S. households would have to pay down more than $6 trillion in debt or massively reduce their spending for 10 years. That would drag the economy down even further. But further government subsidization calls into question the creditworthiness of the U.S., not to mention its global military power. The cost of operations in Afghanistan, Iraq and elsewhere has risen by several hundred percent since 2002 and can no longer be paid out of petty cash after the financial bubbles burst.
The rampant anti-American gloating in the face of this development ignores the role of the world power economy for global capitalism. A longer-term decoupling of the world economy from the U.S. is illusory. This structure, built up over decades and based on deficit-financed consumption of the world power, cannot be reversed within months. Neither China nor the EU nor Japan is in a position to take over the role of the U.S. This also applies to the function of world money. After the end of the “gold dollar,” the “arms dollar” is now up for grabs. The Chinese yuan is not even a convertible currency, and the euro is itself in deep crisis. The loss of a recognized world trade and reserve currency would hit the global economy even harder. As soon as the cyclical phase shift evens out and the government programs in China and in the EU (exacerbated here by the imposed austerity programs) also reach their limits, a similar situation will arise for these centers as is now the case for the U.S. The actual end of the world power economy, which is only hanging on by a thread, could then trigger a second wave of the world economic crisis in the next few years at the latest.
Originally published in Neues Deutschland on 08/20/2010
EXIT! in English 