Morning Don.. the world has changed dramatically in the last six months. I'd like to address a conceptual hurdle many find difficult to get over.
Some people have difficulty understanding the importance of world trade. They don't see the connection between trade and prosperity. Somehow they rationalize that its OK if SKorea and Asia fall, or for Russia to drop back into the middle ages... some think it has nothing to do with the United States.
That may have been true in the 1800's but not today. Prosperity's confidence echoes at the speed of light and affects us all.
First, America is dependent on other countries' success in creating sustainable markets, otherwise our own markets and prosperity suffer.
America is dependent on other countries getting richer and raising their standards of living, in trade, inn commerce, in communication and exchange. The world is a co-dependent economic factory that needs to keep working.
Its clear that investor confidence directly relates to how people decide to hire, pay, spend their time and money, travel, be expansive or contract. General wealth relies on confidence, its the difference between a market PE of 3 or 21.
I like to think of PE as meaning "Performance Expectations" not price to earnings ratio. The "PE" (performance expectations) of Asia, Russia, Latin America and Africa are low... there is a retraction of initiative and hope.
Congress is myopic. In failing to fund the IMF it demonstrated a loss of confidence not only in US policy, but also our loss of confidence in other nations being able to pull themselves up through financial assistance and structural remedy.
Because these IMF remedies are an extension of our philosophical belief in free markets and democracy, parts of the world must wonder if America still believes those values are important when the chips are down.
Congress failed the IMF strictly for short term partisan reasons. The world's confidence and faith in a free market system must exceed the short term failings of politicians.
Jim |
