Recent American economic disaster has deeply affected the global economical circumstances. With the dying of dollar, the economy all over the world is now in a downtrend. The major world markets i.e. Nikkei, KOSPI, Hangseng, Sanghai, FTSE, CAC, DAX each and every stock market is following the downtrend of US market. Share traders, mutual funds and corporations are facing financial crisis. Obama mania is observed globally. He has an image of a global personality. The rest of the world is now looking at him.
As an economist, President Obama is in the driving seat of the global economy and major decisions by him will not only badly affect the American economy but also the whole world. Obama has declared his priorities at his first press conference. It is the economy as expected. He rightly mentions his intention to fight the recession. Job loss in US is also in alarming state 6.5%, which was at most since 1994 and throws a big challenge to the President elect. He knows the challenge well. He will take it as top priority when in office. Many people in America believe that outsourcing is a major cause of unemployment and job loss in America. Obama campaigned for a policy against outsourcing during the election. He likely has to come out with some regulations for the corporations to discourage outsourcing. He may provide tax benefits and subsidies to encourage generating local employment.
Some analysts are making statements and assumptions that the U.S. economy and the recent extended debate between President Barack Obama and Congress over raising the country’s borrowing limit have left investors wondering about the country’s resolve to correct its habit of borrowing more money to finance its government operations.China is the world’s second-largest economy behind the U.S., and the American government’s biggest foreign creditor. It has sharply criticized what it says is an American “addiction to debt,” but it and other countries that buy U.S. Treasury bonds may have little choice but to continue to lend money to the U.S. because most other countries sell too little debt or have significantly shakier economies than the U.S.
It had been clear for some time that the modest recovery that had begun in 2009 from the recession that began in 2007 had not reached takeoff velocity. But the new figures showed how close the growth was to stalling out entirely.
New fears also arose about confidence in the banking system, after a European agreement reached in July on a new round of bailouts failed to calm the markets. Italy and Spain suddenly found themselves forced to pay the steep interest rates investors had been charging countries like Portugal and Ireland.
The European Central Bank responded with its most forceful program to date, saying it would buy large amounts of Italian and Spanish bonds. In Washington, the Federal Reserve made an unusually firm commitment, saying that in light of the weakening economy it would leave interest rates near zero into 2013 if no threat of inflation appeared.
The Soviet and Japanese threats to American supremacy proved chimerical. So Americans can be forgiven if they greet talk of a new challenge from China as just another case of the boy who cried wolf. But a frequently overlooked fact about that fable is that the boy was eventually proved right. The wolf did arrive — and China is the wolf.
The most immediate of these problems is the dysfunction of the US political system. For sure, the division of power between president and Congress, and between the two houses of Congress, is part of the strength of the US federal system and underpins its plural democracy. In the past disputes largely between the two major parties or between president and Congress have seldom been taken to the point of seriously damaging the US position in the world. The debt issue is as much part of foreign policy as key treaties such as NATO. In the past, America’s friends and its enemies could generally rely on a Washington consensus straddling mainstream US politics and expressing itself in the policies of the State Department and the Treasury.