Governor Spitzer should not resign until Senator Larry (I Got A Wide Stance) Craig resigns.

IMO, our nation needs to get it's nose out of people's bedrooms - and keep it out.

O TESOURO AMERICANO ESTÁ PREOCUPADO COM MILHÕES DE PESSOAS E ESQUECENDO DE SALVAR SOMENTE CENTENAS DE PESSOAS CONCENTRADORAS DE RIQUEZAS

O sistema financeiro sempre manipulou e controlou a seu favor, a economia dos EUA e com reflexos na economia mundial. Agora ficou claro, que depois de décadas, os cartéis financeiros já não terão mais os Bancos Centrais como os seus principais aliados. Os americanos descobriram tarde, mas conheceram os males que os Bancos Centrais estão causando à economia mundial, em beneficio da maior concentração de riquesas.
E o Tesouro americano deixou bem claro que não vai injetar recursos do Povo para a manutenção dos abusivos Lucros que os Bancos tiveram com os créditos podres. Se os Bancos criaram e ainda alimentam a crise, que não foi contida por incompetencia ou conivencia dos Bancos Centrais, que eles resolvam os problemas que criaram com os seus próprios recursos.
E o espaço para ganhos fáceis com o Capital especulativo, está se estreitando na Europa, Ásia e Americana do Norte. Não sei porque o Brasil não está seguindo a mesma tendencia e continua pagando ágio de 160% acima da inflação ( talvez o maior do mundo) para a rolagem de sua dívida.
Se o G-20 se unisse, como se uniram a OPEP e os Cartéis Financeiros, determinando, através de um Tratado, que o ágio sobre a inflação de qualquer um desses países não pode passar de 3%, o montante da economia passaria de US$ 1 trilhão e esses recursos que estão indo para a improdutividade, passariam a ser melhor aproveitados e alocados em educação, saúde, transportes rodoviários, ferroviários e urbano,
em saneamento básico. E o mais importante é que reduziria expressivamente a concentração de riquezas. São sugestões factíveis de se concretizarem em curto prazo.
A redefinição da importancia dos bancos centrais e no modelo atual de ação, é absolutamente necessária. Que eles passem a defender o Tesouro de seus países e o Tesouro dos Cartéis Financeiros. é um tema que deve ser aprofundado. Querem porque querem ampliar a crise americana. Mas não será fácil enfrentar uma economia que responde por mais de 25% do PIB Mundial e financia o seu deficit com ágio próximo de zero. Aonde mesmo está a recessão, nos abusivos Lucros dos Bancos ?. Porque no Estado americano ela não existe.

"crystal:

"US consumers are paying higher prices for basic stuff like food, gasoline and home heating. These are more felt by middle-class people. Many low and middle income families are struggling to make their ends meet."

US consumers have for a very long time been advantaged by the artificially lower prices for gasoline and food and home heating. This has usually been done at the expense of the Rest of the World. Any schadenfraude the 3 world countries would have will be simply because the rising prices would curb excessive consumption from the US and probably negate/balance the resource utilization across the globe.

"This article seems to be written from third world countries pride and hoping US consumers would experience what they've been feeling for years. What a mentality."

I dont care if people starve all over the world. I still want double my share of the pie and the chocolate and the meat and the potatoes. So what if the ecosystem cannot sustain such levels of consumption - What a mentality...

This has nothing to do with the USA, but everything to do with those who keep saying me me me instead of we we we....

Oh! Come on Swaminathan. It's nothing a quarter point drop in the prime will take care of, is it?

It is, isn't it?

Swaminathan?

The American government needs to live within its means. The trillion dollar war in Iraq is currently being financed by international lenders and will eventually have to be paid for from our children's taxes, just as the baby boomers who protested the Vietnam War ended up paying for it.

Comparing abstract PPP values across borders is not accurate, as these incorporate broad and imprecise assumptions about non-tradable items. China and India may be in a growth phase, but they (especially China) still have anti-free-market policies that will restrict future growth. Real wealth is tradable wealth, and that is not happening to the extent described in the article.

Kruschev and Brezhnev's Russia mistook steel production for wealth, leaving vast poverty and environmental damage in their countries. The shift of manufacturing to Asia is a function of the reduction of importance of manufacturing as an economic activity in the information age, just as agriculture faded in importance during the industrial age. What items people value will change over time, but the idea that a reduction in consumerism will lead to economic growth and stability is inherently nonsensical.

Focusing less on material possessions may be ethically or even environmentally sound, but
one should not confuse ethical principles for economic analysis.

The American government needs to live within its means. The trillion dollar war in Iraq is currently being financed by international lenders and will eventually have to be paid for from our children's taxes, just as the baby boomers who protested the Vietnam War ended up paying for it.

Comparing abstract PPP values across borders is not accurate, as these incorporate broad and imprecise assumptions about non-tradable items. China and India may be in a growth phase, but they (especially China) still have anti-free-market policies that will restrict future growth. Real wealth is tradable wealth, and that is not happening to the extent described in the article.

Kruschev and Brezhnev's Russia mistook steel production for wealth, leaving vast poverty and environmental damage in their countries. The shift of manufacturing to Asia is a function of the reduction of importance of manufacturing as an economic activity in the information age, just as agriculture faded in importance during the industrial age. What items people value will change over time, but the idea that a reduction in consumerism will lead to economic growth and stability is inherently nonsensical.

Focusing less on material possessions may be ethically or even environmentally sound, but
one should not confuse ethical principles for economic analysis.

Selling carbon credits would be the way to go to reduce gas consumption in the US. Here is how it would work.

Set all speed limits for carbon credit purposes only at 55 mph. The 55 mph limit raises fuel economy and thus oil consumption by 33% on an average.

If a driver of a car wanted to drive at speeds higher then he would have to pay a carbon credit, essentially a right to pollute by spewing carbon dioxide in the air.

He would have to pay say a 20 dollar pollution penalty at 55 to 60 mph, a 50 dollars at 61 to 65 mph, a 75 penalty at 66 to 70 mph and so on. The penalty would be for each infraction and for a 24 hour period. The infractions will not result in points on his insurance rates. The penalties would not be appealable without costs. If he appeals and loses then the penalty would be tripled.

At the state's speed limit he would entail any additional fines required by state laws.

I have tried driving at 55 mph on the highway and the mpg is up by 33%.

I think there is not better suited economy than US's to withstand any recesion or increase in gas price. I am sure oil over 100 will push the US to get more serious about their dependency in external energy sources and will surprise the world with new technologies that will send the oil price down again. Sorry that many US citizens won't be able to buy a V8 SUV or one plasma TV for each room, but if their fathers could make without those, I am sure the sons could too. When the US has a recesion, 90% of the rest of the world would like to suffer a similar recesion. And, some US multinationals are recovering what they lost in the US with what they are making in the rest of world.

Author is not familiar with the US economy. If US economy grows at %7.6/year;the annual growth is larger than Indian annual output of $923 Billion. When US enters into recession the rest of the cheap(poor) labor countries; India, Brazil and China will go into depression in a few years. If US economy goes into stagnation or recession the civil unrest in the underdeveloped countries of Asia will start. It is already started in Pakistan and will spread into Iran and India in a year.

US consumers are paying higher prices for basic stuff like food, gasoline and home heating. These are more felt by middle-class people. Many low and middle income families are struggling to make their ends meet.
This article seems to be written from third world countries pride and hoping US consumers would experience what they've been feeling for years. What a mentality.

US consumers are paying higher prices for basic stuff like food, gasoline and home heating. These are more felt by middle-class people. Many low and middle income families are struggling to make their ends meet.
This article seems to be written from third world countries pride and hoping US consumers would experience what they've been feeling for years. What a mentality.

This biased author apparently has a biased audience. I've never seen such a sanguine attitude towards an economic slowdown, nor such gleeful delight in the prospect of "discipline" to the U.S.

As an American, I tend towards reality. I do not revel at the prospect that America and its economy will suffer.

Reality: no slowdown in the economy is coming.
Forecasters predicted 0-1% growth last quarter. Reality: 3.9% growth.

Stick that in your pipe and smoke it!

Economic growth in the developing countries is
highly export oriented. Most of these products are
destined for the US and Europe. A slowdown in these markets will have a negative impact in
Asian economies. A US slowdone won't cripple them
but it will shave several percentage points off thier growth.

The globalization means to defend USA dolar by the Fed (or all american institutions), because if they don't do it, many, many, many people is going to run away from USA dolar FOREVER. Remember this comment: who has been burned with milk, he sees a cow and begins to cry.
This could be for USA economy, millions times worst than any terrorist attack.
It is a simple advice from an argentine.
Thanks

"The U.S. may indeed be slipping into a mild recession, but that is an overdue warning from markets that living beyond your means is not feasible forever, and that Americans need to curb their consumption"

I won't bet on Americans curbing consumption. Americans have been living on credit cards for decades now. The real problems may lie not in excessive shopping but in housing, health care and jobs. When Americans stop shopping,if that happens, China and India, seeing 9%-11% growth currently, could be left little to celebrate. China and India are export driven and don't have America's large internal economy.Press reports suggest that America is their biggest market,though the European Union may also be a large and growing market

Some economic discomfort, if great enough, might shake Americans up enough to start living within our means. And, long term, that would be a good thing. However, I fear that many, if not most, of my countrymen value their own comfort and leisure above all else. If that means going deeper into debt, so be it. The same is reflected in our government. I think the hope is that "this will not come due until after I die."

For the author, however, to suggest this would not have much impact on the world economy is naive. I think for many years to come, the momentum (if nothing else) of the US economy is going to continue being the engine to the world's economy. Hard times will be shared by most of the world if/when our economy tanks.

There is certainly great truth to this article. No matter where you live don't take anything personal.

EU and the States combined is less than 800 million people, whereas every 1 out of 3 people in the world live in India and China (2.4 Billion).

Europe US, and Japan has played a major role in the developed world, while the rest of the world getting the taste for good life.

Globalization is playing a huge role here.

It is not the end of the world - it is however a new world. People should adapt to the change and live responsibly. At the end of day, one has to pay for his expense.

This Canadian agrees.

US pessimism is driven largely by partisan politics... me thinks.

The US remains a huge economic engine with 30-year-record low unemployment and inflation and manages to support 12 million illegal workers and presumably the Mexican economy (home tranfers.

For all its fightening deficits (which are falling of late) and the costly Iraq war (now turning to success)... the US has recovered largely from the huge tech bubble of 2000 and of course the horrific 9/11 attack.

I still like Americans, their love of country, their sacrifices for world order (Bosnia, Isreal/Palestine, Iraq, Afghanistan etc.)

God Bless America !

I don't agree that the excesses are being paid by those with the deepest pockets. The poor are more likely to drive an Escalade or Navigator than a Prius. I also think that no matter high oil prices go, the US will never go for European sized autos in a big way.

A U.S. recession good news? Maybe for you, sir, but tell that to the thousands who will lose their jobs in this country and elsewhere. Your attitudes, and those of your comrades who continually wring their hands over 'U.S. overconsumption,' begs the question, "Aren't you people late for a meeting of Busybodies Anonymous?" To quote Voltaire, "Tend your own gardens." Keep your hoes out of mine.

Your assumption that the greater the GDP, the better the economy is a myopic view on the state of the world economy.

There are many other indicators other than GDP that can give a clearer indication of where a country or the world economy is.

The basic question in any economy as to the health is whether the economy is supporting food, jobs, healthcare, energy, and housing. What percentage of the population falls below a threshold of poverty, what percentage of the population controls the assets.

The current economy fails here and so does your Op Ed.

The new America:

Wealth without Work
Pleasure without Conscience
Science without Humanity
Knowledge without Character
Politics without Principle
Commerce without Morality
Worship without Sacrifice

-M

What planet are you on?

Let's poor people who couldn't pay back home loans should have been given home loans anyhow? Yeah that makes a lot of sense.

Why should we consume less? There is not one thing humans can do to affect global climate. If you have any proof (not computer modeling predictions, but proof) to the contrary, I'd love to see it.

I have seen both the Economist, then this guy act cavalierly regarding an American recession. I think both underestimate the portion of gdp increase in China and India that are directly related to exports to the United States and Western Europe. An American recession woudl curtail these exports. Such a scenario get a short shrift.

I thought Mr. Aiyar made some good points. Americans (and our government) have become too accustomed to buying on credit. I see too many people with an entitlement mentality that is bigger than their income. This has to stop. If a recession is the only way to bring people back to reality, so be it.

If only the Federal government would lead the way and stop spending more money than it takes in!

I agree with the fact that Americans need to learn how to live within their means. However, the claim that the excesses are being paid by those with the deepest pockets is a false one. While overxtended borrowers are at risk of losing their homes, I-bankers are setting up a mega-fund to help stem their losses.

Finally, a lot of the numbers you are looking at are backward looking. So yes, it is true we have seen some unprecedented global growth over the last 3 to 4 years (according to your data), but the important question is whether or not the upcoming US recesssion will impact the global economy, and to what extent? Also, most of the GDP growth you point to in developing nations is skewed by the BRIC countries (Brazil, India, China), and commodity based economies (i.e. oil revenues flowing through middle east).

Contrary to popular belief and the author's statement, the subprime mortgage situation in the United States has actually lowered the number of homes owned by 'poor' individuals. The majority of subprime loans were not purchase money loans, that is they were 2nd mortgages, home equity lines of credit, etc. In other words, sub-prime loans were, in large part, not used to purchase homes, but refinance existing debt of a family (credit cards, etc.) and tap into their home's equity. Because the loans were made to existing homeowners who should not have been given a 2nd loan (i.e. not enough collateral to cover the loan, non-credit worth individuals, etc.) the effect of the sub-prime market is to reduce the number of homes owned by 'poor' individuals, rather than allow them to purchase homes.

Conclusion: The sub-prime lenders spew talking points about how great it is that poor people now have access to money to purchase a home, but what they really care about is making loans, flipping them to REITs and making a quick dollar.

America is now the world's sick man and will need all the generosity our erstwhile allies can muster, given our arrogant strutting through impoverished third-world countries, waving a military baton and gloating about our newfound empire.

Really? And what planet do you live on???
Your comment is misleading, simplistic and naive, for its lacks a full analysis of all the factors that play a role in the global economy. You apparently have not stopped to think about the massive problems that are looming on the horizon, more growth means more need for resources. The problem is, the world does not have unlimited resources. Growth is not a measure of well being or progress. It is time we rethink the idea of prosperity and base it on different parameters. Perhaps if we did, we could really start talking about prosperity.

Great to see Mr. Aiyar's column. A few years ago someone introduced me to his "Swaminomics" website.

He is quite possibly the smartest columnist alive. The only one who comes close is Steve Chapman of the Chicago Tribune.

I must be on another planet or an alternate universe. The US future looks very bleak for quite some time and I'm sure that will have an effect on the world economy too. Since the dollar will be worthless, some other money will take over. The yen, the Euro something.

Iam not an economis but i always felt that globalizaton would cause the us economy do have to adjust down to the poorer coutry

The trouble with putting lipstick on a pig is that the pig keeps growing into a big hog and as the skin stretches there are gaps in the lipstick and one has to keep applying that lipstick. The worst is yet to come for the USA economy--more and more countries and companies will buy other currencies and ask to be paid in currencies, rather than the dollar.

Certainly, the US consumes a lot of the world's production, but instead of paying cash for those goods, the US has gone deep into debt.

Sooner or later, creditors will get tired of accepting US securities in exhange for their products. Then, Americans will have to start paying back those trillions accumulated over the years. And the IMF will have a hard time building the largest debt-restructuring package in history.

If a recession helps straighten world's financial relations, the sooner the better.

I take exception of your characterization of the sub-prime meltdown as "a small price to pay". There have not been this many foreclosures in the U.S. since the Great Depression. Yes it's true, borrowers should read the fine print. But in many cases families were aggressively pushed into ARMs they could not possibly expect to afford. The idea that rank and file Americans should all take heart because growth is still positive on a "global" is ludicrous.

Why, every day, in every possible way, things are getting better and better! Oil is $100 a barrel -- that's a good thing! A "mild recession" is coming to the U.S. Happy-happy joy-joy! Did I mention that I mistook my Prozac for M&Ms this morning and gobbled a handful? Please excuse me while I swoon onto the linoleum.

You know things are getting bad when Candide-style prognosticators start admitting there will be a recession. It means we've already hit the wall. All that remains to be seen is whether the car gets severe body damage, or the passengers do...

I agree that a mild recession in the United States certainly will correct excesses and right the ship, so to speak. I disagree, however, with the conclusion that a recession in the United States, and possibly Europe, will not have an effect on the world economy. Since the consumers in the US buy a great deal of the goods that export oriented economies with under developed consumer markets such as China's produce, I find it hard to reconcile the logic that a recession in the US will not affect such economies.

Yes, growth in such countries as China, India and the like is remarkable and continues at break neck numbers. But, again, 10% growth in an eight hundred billion dollar economy is dwarfed by 3% growth in a twelve trillion dollar economy. Reducing that growth in the US economy to 0 will certainly be a drag on the now interdependent world economy and will most certainly will slow growth in the developing economies. Maybe not world recession, but certainly a world economic slow down.

I agree that a mild recession in the United States certainly will correct excesses and right the ship, so to speak. I disagree, however, with the conclusion that a recession in the United States, and possibly Europe, will not have an effect on the world economy. Since the consumers in the US buy a great deal of the goods that export oriented economies with under developed consumer markets such as China's produce, I find it hard to reconcile the logic that a recession in the US will not affect such economies.

Yes, growth in such countries as China, India and the like is remarkable and continues at break neck numbers. But, again, 10% growth in an eight hundred billion dollar economy is dwarfed by 3% growth in a twelve trillion dollar economy. Reducing that growth in the US economy to 0 will certainly be a drag on the now interdependent world economy and will most certainly will slow growth in the developing economies. Maybe not world recession, but certainly a world economic slow down.

OS VINTE PAÍSES MAIS RICOS SE REUNEM NA ÁFRICA DO SUL

O Fórum do G-20 que está acontecendo na África do Sul, com a participação de países que representam mais de 90% do PIB mundial, pode trazer resultados positivos para o mundo capitalista.Os Bancos Centrais Mundiais e as Comissões de Valores Mobiliários, com a crise das Letras Hipotecárias americanas,maturada por mais de dois anos, deixaram claro a incompetencia preventiva de ação e provaram que realmente estão impotentes e precisam de uma reformulação total e imediata no monitoramento do sistema financeiro internacional.Em plena éra da cibernética, da facilidades da comunicação On - Line, o mundo de hoje não é o mundo da realidade da Conferencia de Bretton Woods que deu origem ao Banco Mundial, criado em 1994, organismo que também precisa de uma reformulação profunda, fazendo reflexões sobre o que fez e o que deixou de fazer en favor dos países das americas e do caribe.O fórum do G -20 deve também discutir a importancia da Trasparencia das atividades dos Bancos Centrais e das Comissões de Valores Mobiliários e como conter a desenvoltura da volatilidade do capital especulativo e tambem avaliar a importancia das chamas empresas de ANÁLISES DE RISCO. Por falta de um correto monitoramento e mesmo por incompetencia ou tolerancia, os Bancos Centrais e as CVMs deixaram que os maiores grupos financeiros americanos chegassem ao ponto de maquiar balanços, para enganar investidores e continuar auferindo lucros fácies nas intermediações. E as multinacionais,os bancos de outros países, inclusive o Brasil, será que tambem estão no mesmo caminho dos Estados Unidos?. Só mesmo uma eficiente CMV e um Banco Central atuante e Transparente, serão capazes de nos dar as respostas.Na reunião do G-20 deve surgir, com certeza, normas e regulamentos que não tornem os Bancos Centrais e as CMVs Escravos permanentes da especulação financeira mundial. A planta mundial está mudando de eixo,político, economico, financeiro e social, quando sabemos que os americanos dependem irreversilvelmente dos recursos da China, do Japão, de Taiwan,de Hong Kong, Coreia do Sul, Russia, Índia Singapura e até do Brasil, para a rolagem das dívidas do Tesouro. E a desconcentração de riquesas tambem deverá ser um tema muito importante para que se acelere a redução do índice de pobreza e de indigência nos países pobres e em desenvolvimento. A China contribuiria muito, se deslocasse uns 400 bilhões de dólares de suas aplicações em títulos do tesouro americano, que devem passar de US$ 1,1 trilhões, para aplicar em Letras do Tesouro de outros países, inclusive o Brasil, nas mesmas condições de Prazos e Juros. A pobreza absoluta só existe por anuência e conveniência dos governantes. Os americanos, com certeza, nesse fórum do G -20, poderão trazer à luz, grandes soluções para o aprimoramento do capitalismo selvagem e que não está na sua melhor forma. Afinal,os americanos não estão em recessão mediata ou imediata, quando destacam , em planejamento para até 2017, gastos de mais de US$ 3 trilhões de dólares somente com a Guerra.Que recessão é essa que estamos utilizando aquí no Brasil para manter a taxa Selic elevada, mas sabemos que os motivos são outros e, o prinicipal, atrativo para a rolagem de nossa dívida de mais de R$ 1,3 trilhões, no Curto Prazo. Precisamos começar a usufruir dos benefícios de uma inflação baixa e de uma economia em desenvolvimento e não continuar, em prejuizo dos brasileiros, financiando os americanos, com a aquisição das Letras do Tesouro, com recursos das reservas internacionais, acima de US$ 150 bilhões, rendendo juros de pouco mais de 4% ao ano e pagando internamente por eles, o mínimo da taxa selic. Esse diferencial da renumeração interna e externa deve custar mais de R$ 10 bilhões anualmente aos cofres do Tesouro Nacional.Como pode o primo pobre financiar o primo rico?. O Governo precisa fazer média com os recursos brasileiros,beneficiando os brasileiros

I agreed, broadly, with most of what you said, but there's one thing I have to disagree with:
"The penalty for excesses has been paid by those most culpable, who have the deepest pockets."

The poor who (arguably foolishly) got loans they couldn't afford are paying a fairly steep penalty. The lenders I have no sympathy for, but the poor families who wanted homes but didn't have the financial sophistication to understand the risk of their sub-prime loans deserve better than your glib aside.

Long live free markets and capitalism !!!

I personally liked your article. I'd also like to draw attention to another one of your editorials - Coca-colonialism and Tata-colonialism dated Feb 11, 2007)as I have personally seen hundreds of vile attacks on Tata and Indians from Americans. It's funny because Coca Cola was (and probably still is) one of the epitome of the anti-globalist backlash seen in much of the developing world. Now Tata, Wipro et.al are taking some of the same vitriol from Americans (predominantly). Life does come full circle after all....