Will The US Have A Debt Crisis ?

Is America Turning Japanese?

You don't land on it, because these things are tumbling end over end. It's very hard to land on them.

Growth will slow, with Europe and or America possibly even slipping back into recession.

But that forecast assumes continued growth, whereas France is slipping into recession.

The risk for Europe is that it goes down the Japanese, rather than the Italian, path.

Countries run into trouble when they do not use high growth periods to strengthen their institutional underpinnings.

For all of China s long term structural problems, it is not exactly slipping into recession.

It consists of three rods, and a number of disks of different sizes which can slide onto any rod.

WASHINGTON At the beginning of last year, Kenya seemed to be descending into madness.

The big southern European countries, Spain and Italy, battered by austerity, are spiraling into recession.

Now, according to former Czech President Václav Havel, the region could become trapped in a suffocating atmosphere.

The world urgently needs to create a political mechanism to help these countries escape the quagmire into which they are sinking.

Economic growth in the United States has remained anemic, at 1.5 2 for most of the year, and Japan is lapsing into a new recession.

Fortunately, an L shaped period of protracted economic stagnation Japan s experience in the 1990 s is unlikely.

Unless Ukraine s democratic opposition is allowed to take part in the election, a new crisis is certain.

Or the US could slip into recession (though modest growth is certainly the central scenario nowadays).

In 2008, they were called upon to fix financial market dysfunction before it tipped the world into Great Depression II.

In the air, however, they are very capable, and can glide as far as 70 m (230 ft) from one tree to another with minimal loss of height.

That said, the US will probably muddle through another year, neither pushed over the cliff nor put on the road to robust recovery.

Europe is on the edge of an abyss, and will surely tumble into it unless Germany and France alters course.

If Iran and the Arab countries and alongside them the US and the international community do not manage today s tensions wisely, the region could enter a period of protracted warfare.

In both the US and Europe, government leaders are gripped by one overriding fear that their economies will slip back into recession or worse.

Without progress in that domain, post conflict countries could easily slip back into conflict, which could then spread to neighbouring States.

Why these Washington politicians are idle while their state slides towards ruin says much about what s broken in American politics.

And when the former Yugoslavia was sliding into serious violence in the 1990 s, neither the US nor the Europeans wanted to intervene.

A mechanical traveller is a moving part of a machine, typically a ring that slides between different positions on a supporting rod when the machine goes through its operating cycle.

Overall, the immediate response of policymakers to the global recession in 2009 did not repeat the mistakes of the early 1930 s.

And people, at the time, feared that South Africa would end up going the way that Rwanda has gone, descending into one skirmish after another in a civil war that seems to have no end.

If today s higher incomes are consumed and tomorrow s incomes decline (which is likely if the economy slows), middle class households with no savings buffer could easily slip back into poverty.

Indeed, across the region, apprehension is growing that when foreign troops leave, Afghanistan will again descend into civil war, ultimately bringing the Taliban back to power.

The country will descend deeper into authoritarianism, political divisions will become irreconcilable, and yet another political rupture may become inevitable.

Because all the derivatives were based on the same assets, if anything happened to those assets, all the banks holding the debt would find themselves in the same soup.

While they would most likely have no immediate calming effect on today s panic stricken financial markets, they are far superior to watching with folded hands as Europe descends into a financial abyss.

Yes, many companies took on too much debt, and some countries, such as Korea, are more compromised than others. But China, which is Asia s anchor, is not, and in a world where everyone else is falling down, the one left standing is that much taller.

If oil prices rise much further towards the peaks of 2008 the advanced economies will slow sharply many might even slip back into recession.

Developing economies that maintain their old growth models for too long fall into it, and China probably will hit the threshold in 3 5 years.

Indeed, Kenya could end up with a conflict similar to the one in Nigeria s Niger Delta, where local people took up arms to fight the oil industry s degradation of their environment.

Indeed, 42 of Chinese exports go to Europe, the United States, and Japan three economies that are flirting with secular stagnation. And Europe, China s largest export market, has struggled the most.

The idea of coordinated fiscal stimulus became problematic when it became obvious that many European governments could not take on more debt without unsettling markets and pushing themselves into an unsustainable cycle of increasingly expensive borrowing.

And when they finally hand you heartache, when they slip war and hatred under your door and offer you handouts on street corners of cynicism and defeat, you tell them that they really ought to meet your mother.

No government can sit idly by as a country goes into recession or depression, even when caused by the excessive greed of bankers or misjudgment of risks by security markets and rating agencies.

It is one thing for Russia and China to exploit America s growing difficulties from Gaza to Kabul but it is quite another if the situation deteriorates to the point of general destabilization in the region.

Without determined efforts at political progress and unity, however, it will remain stuck in neutral and could slip into reverse.

Change is easier promised than accomplished. Unless the ruling elite embrace an honest and earnest effort at national and class reconciliation and soon, Thailand could well descend into a civil war along class lines that would make the turmoil of the past two months in Bangkok seem like a brawl in a bar.