Now the U.S. Election is Over – On to the G20 Agenda

Sorry to interrupt your presidential election celebrations or commiserations, but it’s time to get back to work on the global crisis, which unfortunately is far from being over.  The G20 summit is fast approaching (November 14-15th) and – to say the least – the agenda needs to focus more on some immediate problems.  Reuters’ MacroScope has a piece from me today on arguably the most pressing issue: money.

3 responses to “Now the U.S. Election is Over – On to the G20 Agenda

  1. Tim T Indiana

    Mr Johnson,

    In this piece, you write that the choice being faced is whether to force a painful adjustment upon emerging markets or help finance (loan money) to continue their high growth.

    If the “finance” choice is taken, would this just delay an inevitable adjustment/correction – and make it that much larger when it happens? Or is it possible to “loan” our way out of this?

    Thanks!
    Tim T in Indiana

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  3. When one hears that Iceland is bankrupt, does this mean that sale of the entire island (at some hypothetical market value) would not be enough to cover debts held by foreign entities? Usually, external debts are compared as a percentage of GDP which is similar to debt coverage based on some sort of possible cash flow, I guess. However, this is a bit tenuous for someone used to private companies.

    This leads me to ask, what would an external balance sheet for the US show? I assume one would have to value the housing stock as having the same value for purchase by foreigners as residents. It may be difficult, but one might even be able to value public infrastructure based on tolls that could be generated, although the number of transactions is small.

    I think President Reagan’s analogy of the Government to a household is too simple, but a US external balance sheet would put something in perspective, at least for me. It could be extended to other countries, of course.