Ah, yes, it’s that time of year again, when we all sit pensively with pen and paper and scrawl out our resolutions for the New Year. In that spirit, I thought I’d lend a hand to the leading figures of global economic policy with a few suggestions of what I think should be on their 2011 lists:
Angela Merkel, Chancellor, Germany: Give more to the poor. So we all can recall what the penny-pinching Ebenezer Scrooge discovered when the Ghost of Christmas Yet to Come time-warped him to his lonely, unkempt gravesite. Merkel runs the risk of ending up like old Scrooge, and for similar reasons. Her repeated rejection of or resistance to proposals that could stem the European debt crisis, for selfish political reasons, will end up backfiring, not just for Europe, which still faces the threat of cascading sovereign meltdowns, but also for her own legacy. It’s time for Merkel to catch some Christmas spirit and stop blocking the kind of comprehensive solutions that could start to solve Europe’s problems. Her Germany needs to take a greater leadership role in Europe, backed by a willingness to make more sacrifices for the future of its neighbors. If not, the monetary union, and her political standing in Europe, will remain at risk. Perhaps Merkel needs her own private ghost to escort her to her future, one without a euro, where she is maligned as the chancellor who let European integration slip away.
John Boehner, incoming U.S. Speaker of the House: Build bridges to old foes. For the past two years, Boehner and his Republican buddies have had it easy – sniping at the Democrats from the sidelines as they strove to fix the struggling U.S. economy. Now that the American people have voted Boehner into power, he needs to forget the “just say no” act and focus on what’s best for the nation. Drop the partisan bickering and ideological nonsense. Don’t pander to the Tea Party radicals. What America needs is for Boehner to reach out to the Obama administration and support far-sighted policies to ensure the U.S. economy can compete with rising emerging nations like China and India. That means rebuilding the nation’s education system and infrastructure, not just handing out goodies to the rich. It means helping the unemployed pay their bills and find new jobs, not heartlessly sacrificing them to misguided budget cuts. The public has giving Boehner an opportunity to ensure America’s future. Time to put them first.
Hu Jintao, President, China: Learn from others. My sense is that the leadership in China believes their nation possesses a superior economic system to the West, and that the government has all of the powers it needs to resolve any challenges ahead. Think again. Based on what’s going on in China, Hu should be taking a much closer look at what happened in the U.S. and other parts of the developed world – since China is heading into similar danger territory. China’s growth is being propelled by a debt-driven property boom, just the kind of phenomenon that so devastated the economies of the U.S., Spain and Ireland. Sure, in China’s case, state banks are doling out the risky loans, rather than private banks. But who might be doing the lending and borrowing doesn’t matter – a bubble can be created by state-owned enterprises as readily as private ones. China is now as dependent on one source of growth (investment) as was the pre-crisis U.S. (consumption). Americans have learned about the risks of credit-created expansions the hard way; Hu has the luxury of learning from other people’s mistakes. If he’s listening.
Ben Bernanke, Chairman, U.S. Federal Reserve: Spend more time with family – and less in the office. Bernanke has experienced one of the most trying two years in the history of central banking. In the process, he helped rescue Wall Street and global economy, and created the cheap-money conditions that usually lift economies out of recession. Now he might want to take things a bit easier. Yes, we all know the U.S. economy isn’t recovering as strongly as hoped. But the reality is that there is a limit to what the Fed can do at this stage. Working even harder to try to rev up the recovery could end up doing more harm than good – like that QE2 program, for example. Perhaps it’s best that Bernanke just enjoy the NFL playoffs, or spend a bit more time with wife and family, and let the inescapable process of self-repair the U.S. economy needs run its course.
The G20: Be better neighbors. The spirit of global cooperation forged at the height of the financial crisis has faded. Instead, we’ve degenerated into protectionism and currency wars. We all know from history (the 1930s) that such self-centered measures don’t get us anywhere. If the world economy is truly going to recover, the leaders of the G20s have got to recapture that lovin’ feeling, to show renewed willingness to roll up their sleeves and coordinate policy so we can all escape from the grip of the Great Recession. We’ve still got to reduce those giant imbalances between surplus and deficit nations and strengthen the global financial system. If we’re all not more neighborly, the problems that plague the world economy simply won’t get resolved.
My own New Year’s resolution is to bring my cholesterol down. I doubt I’ll stick to it. I hope the leaders of the world economy do a better job with theirs’.