Over the past century or so, international trade has dramatically increased, and because of this the economic inter-dependence of nations from around the globe has increased.
The United States could easily be on the verge of another Great Depression. No one knows the extent of the problems of corporate fraud. No one knows what capabilities the terrorists have now (thermonuclear, chemical, biological, etc.). But we DO know that they will become more technologically advanced in the future. Any reasonable person would conclude that our economy could be in jeopardy.
So ‘if’ our economy collapses, will we pull the rest of the world down with us? Is a global economic meltdown inevitable??
This seems like a question for Great Debates as I don’t think it has a factual answer.
I will say that I don’t think a global economic meltdown is inevitable. Possible yes but inevitable no. If the US economy by itself implodes it will cause major economic shocks throughout the world and will quite likely drag many countries down with us. The US is a HUGE importer of goods…far more than we export. If the US can no longer buy the world’s good a great many people will be out of work beyond what exists today and their economies will suffer greatly.
America’s economic depression in the 30s caused huge global dislocation - no doubt it would happen again if we had another major depression. All things being equal, though (meaning depression not coupled with other disasters) I think recovery most likely.
The economy isn’t going to collapse. Some long overdue asset deflation is taking place, and overcapacity and debt are being cleared. The Fed will tweak interest rates to keep things going. Despite the best efforts of idiots in both the US and Europe, countries will not beggar each other by retreating behind protectionist trade barriers. We have learnt a bit since the 1930s.
The terrorists are an unknown quantity, but presumably/hopefully not as big a threat to us as we can be to them.
Together today China, Japan and Europe make up circa 42% of the World’s Economy. The U.S. is about 22% (here is a cite)
The U.S. buys about a fifth of the EU’s (the world’s second largest) economy’s goods & probably roughly the same of China’s (harder to tell). There would be major disruptions in the world economy were the U.S. to collapse, especially in the capital and securities markets.
But the world economy would abhor a vacuum. These big three and assorted small fry would fill the gap - in most cases almost immediately (capital and labor shortages depending on the “why” the US is out of the picture might slow this process considerably). E.g. you ordered 10 planes from Boeing that can’t be delivered? Well Airbus can take that action tomorrow, same with virtually any sector you name.
No, a U.S. collapse, in most sectors would not cause a collapse of the world economy and might even stimulate some foreign sectors. It would trigger deep economic dislocations and more wealth would disappear than would ever be created, but no world “collapse” of economies like a house of cards
Yeah, a GD for sure.
Let’s see …
- Enron - cooked the books - now dead in the water
- Arthur Anderson - cooked the books - now dead in the water
- Merril Lynch - cooked the books - paid a $100 million fine
- KMart - going belly up
- Tyco - CEO charged
- ImClone - CEO charged
- Adelphia - CEO charged
- WalMart - cheated its employees
- Microsoft - cooked the books - (that one hidden under the rug with a consent decree)
- Rumors today about General Motors accounting practices - stock trading halted on NYSE
- Martha Stewart - told two different stories to two different federal agencies about her stock - faces felony charges
- WorldCom - cooked the books - America’s second largest telecommunications company
a) The dollar just about on parity with the euro
b) The dollar in free fall on world markets
c) The Japanese Yen propped up by the Diet
d) Unemployment in the USA continues to flutter
e) USA in a war and the economy not picking up
f) Al Qaida’s economic war with the USA threatens to go cyber
g) Bush’s conservative government spending goes &100 billion in the red - biggest buildup since Reagan’s small government model?
Now if I could just fit these puzzle pieces together … ?