One wonders what the initial steps in, say, a fifteen year program to wean us off the current situation would entail. Grasping for the obvious, one can muse about a huge US R&D effort to open up new technologies/products. But we don't seem to have an entrepreneur friendly administration in place......for at least the next 4 years. Not optimistic.

The 1960s were a time of great innovation, and high tax, quite "unfriendly" by modern (fiscally irresponsible) standards.

Indeed, despite your earlier reference to deficit, I think the only "friendly" strategy in the post Grover Nordquist era is one that we can't actually afford.

Hyperbole, eh? I, of course, would never do that. (snicker)

"However, I do think that it could be possible under the right circumstances for exports to play a role in recovery and I'd like to see our economy diversify away from consumer consumption as its nearly singular driver towards exports and business spending."

This is a huge topic in and of itself. Perhaps for exchange over at GE.

As a first salvo: given the US govt deficit - increasing as far as the eye can see - and China's internal demographic issues, can changing the relatively low consumption/saving/export economic models of China and Japan be a real option with the US in such great need of financing?

One wonders what the initial steps in, say, a fifteen year program to wean us off the current situation would entail. Grasping for the obvious, one can muse about a huge US R&D effort to open up new technologies/products. But we don't seem to have an entrepreneur friendly administration in place......for at least the next 4 years. Not optimistic.

However, I do think that it could be possible under the right circumstances for exports to play a role in recovery and I'd like to see our economy diversify away from consumer consumption as its nearly singular driver towards exports and business spending.

If there is to be a recovery at all it's got to be based on something. Given a reasonable exchange rate I think that exports is part of a possible basis.

Correct: The increase in free capital flows is the key to the current wave (25 years) of "globalization," not goods. A nice read is The World is Curved.

Dave - But you didn't really think export was a US option, right? Wait 'till the Euro's fix their banking system. Think the Saudis will want to price oil in Euros? The dollar will continue (relatively) strong.

I think the Financial Times piece by Wolf you posted at Glittering a few weeks ago makes this basic distinction between Japan's export opportunity in the 90's vs us.

China ended its policy of autarky in 1979, India in 1991.

But in both cases (1920's and now) it coincides with a global debt boom - cue the Drew/Odo "deleveraging" story

It's kind of a worrisome parallel perhaps.

I think this is going to finish globalism as we knew if for at least a generation if not more. All those countries that bought into global trade as their model for development are going to be really gun shy about returning to it without a lot of changes.

I'd certainly be open to entertaining a more complete argument on that scores, DC Loser, but, frankly, I doubt it. For India, China, Singapore, South Korea, and scores of other countries, it's the only game in town.

March 9 (Bloomberg) -- The value of global financial assets including stocks, bonds and currencies probably fell by more than $50 trillion in 2008, equivalent to a year of world gross domestic product, according to an Asian Development Bank report.

The World Bank's pronouncement over the weekend is sobering:

The global economy is likely to shrink this year for the first time since World War Two, with growth at least 5 percentage points below potential.

I won't grind anyone behind the curve on calling this contraction, but I'll hope they'll spend a few moments in introspection.