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Sunday
Feb032008

Better days, just not right now

Americans feel down right now. Unhappy with our current leaders, we've not yet fallen in love with any prospective presidential candidates. The world seems more challenging than ever, with plenty of scary news out of the Islamic world hitting us amidst record oil prices. Most humbling, as our economy teeters on the edge of its first serious recession in decades, our rescuing cavalry turns out to be foreign wealth funds!

As historical ages go, we've downshifted from the "gilded" to the "gelded" in the blink of an exhausting occupation. Feeling broke and lonely, we no longer seem masters of any universe. Instead, we distrust globalization, our historical gift to the world, more than ever. In our popular imagination, we spot looming catastrophes around every corner, with each new sci-fi movie seemingly resulting in New York City's destruction.

Wish we could get back to where we once belonged?

Let me remind you of the following:

We enjoy a wonderfully resilient global economy that's processed numerous financial panics (e.g., Asian flu, Internet bubble) and significant slowdowns by major players (Japan, Europe) over the past two decades while consistently growing.

As a result, poverty has been dramatically reduced around the planet and, as the Economist points out, we've got twice as many fast-growing economies right now as we did during the go-go '80s and '90s.

Yes, it stings having Arab sovereign wealth funds bail out Wall Street firms in the sub-prime crisis, but I dare you to think of a more painless way of re-injecting liquidity back into our markets.

Anyway, by entering at bargain prices, these oil-rich regimes are simply doing what we've long advised: diversifying holdings and connecting their economies more broadly to globalization. It sure beats the alternative of white-elephant projects or military build-ups.

Speaking of guns, let me also remind you that our planet has never been more peaceful: fewer wars, less civil strife and the smallest-ever percentage of humanity engaged in or preparing for mass violence. Washington may wage global war, but nobody else is.

Not surprisingly, while we're polling glum, the rest of the world isn't. Global opinion trends over the past half-decade portray a rising tide of human happiness among nations that have opened up to globalization and thus enjoyed increasing per-capita income.

Across the Islamic world, we also see a broad decline in popular support for terrorism and, in particular, al-Qaida's brutality. We're losing old allies over Iraq, but Osama bin Laden is losing the future.

As for recent fears that China will soon rule the world, go slow on that one. The World Bank just recalculated the purchasing power of China's economy and found it to be about 40 percent smaller than we imagined. China won't be overtaking the U.S. economy anytime soon - if ever.

Moreover, while we may fret over Beijing's dollar reserves ($1.4 trillion), you have to remember that China's rapid industrialization has been built on a very shaky environmental and demographic foundation, meaning most of the economy's vast liabilities have been pushed into the future on a scale that makes our Social Security overhang look minuscule in comparison.

China will grow old before it gets rich, and it'll become increasingly unhealthy until it super-funds its environmental clean-up. Hard to replicate, this development model poses no global threat.

But rather than complain about rising multi-polarity in our global financial order, why not be grateful that the enterprise no longer depends solely on the spendthrift American consumer?

Frankly, we all knew we were living beyond our collective means these past few years, and deep down, we were hoping somebody would apply some discipline to this unsustainable dynamic.

Given that our political system didn't seem up to the task, I say thank God for those whiz kids on Wall Street - you know, the ones who seem to come up with some new, dazzlingly complex risk management scheme every 10 years or so.

I'm not being facetious. It's that type of edgy innovation that keeps the United States the most competitive economy in the world, triggering not just our booms but also the necessary corrections.

So for all of you who've long dreamed of the day when America wouldn't have to run the world by itself, the good news is, that day has come.

Tougher times ahead?

Only if we get vindictive.

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