U.S. Takes International Hit

The lead story in today’s New York Times, “Obama’s Economic View is Rejected on World Stage,” describes a ganging up on the United States in the Group of 20 talks in Seoul, Korea. The major technique for dealing with reduced global demand and a poor economy, government stimulus programs, has fallen out of favor among our European allies, and they showed no shyness in saying so. Meanwhile, the Fed’s action to pump $600 billion in the economy, to deal with persistent unemployment, was roundly criticized as devaluing the dollar at the expense of the rest of the world.

One wonders if Mr. Obama’s weakened status domestically as a result of the mid-term elections is responsible for his reduced influence overseas. I think among the foreign citizenry, he is still extremely popular, and international elites are puzzled at the rejection of such an intelligent and thoughtful man, especially considering the previous occupant of the White House. The major reason for the change, I believe, lies in the new leader of Great Britian, a conservative, Prime Minister David Cameron, and the success of Angela Merkel of Germany in pursuing a deficit reduction strategy instead of stimulus.

Germany is especially sensitive to the dangers of hyperinflation because it directly led to the rise of Hitler, and Chancellor Merkel has created the most successful response to the weak European economy by pursuing austerity measures. As they say, you can’t argue with success.