The U.S. Economy vs. the World
Historically, both Americans and non-Americans have tended to believe that the global economy tends to follow the U.S. economy. For this reason, all eyes round the world have been focused, out of self interest as well as out of curiousity, on good or bad management of the U.S. economy, of its health and stumbles.
It is likely that at least part of having a downturn is psychological, and the media have been all over the “coming US recession,” including a front-page piece on the business section of the weekend NYTimes featuring the R word.
Given the combination of Greenspan tapping the refi markets to save us from his prior anti-equity market antics, and from rising oil price-driven inflation, there is a good chance that next year will be the weakest year in U.S. economics since the Reagan years.
But, to globalists, and non-American citizens, there is a difference: this time around, it appears that there is enough in trade and economic activity which does Not directly involve the U.S., that we may fall ill while others continue to thrive. Specifically, it would appear that China, Western Europe, and ASEAN are going to do very well; so will Brazil, India and Russia.
As trade between China and others outweighs U.S. – China trade, and as sovereign funds increasingly turn away from dollar-denominated investments, the result will be increased insulation from domestic U.S. mess-ups, and, maybe more importantly, a new global economic psychology that comes with the understanding that the world economy may take a separate route from that of the U.S., at least from time to time.