Today’s G8 meeting of world leaders will be one of the biggest and most important to be hosted at Camp David. President Obama’s leadership skills will be tested in an attempt to maintain the integrity of the euro zone.
Euro zone austerity measures amount to fiscal stimulus in reverse. The cut back in government spending and employment have caused negative growth. The same can occur in the US unless Congress focuses on growth.
More needs to be done but the Gazelle Index applauds South Africa for its MDG achievements and continuing struggle to reduce poverty, infectious diseases, unemployment and gender inequality.
India is the world’s largest democracy. In 1981, only 19.7% of women were in the labor market. Today, women in India are responsible for 81% of the total time spent on housework and care and 36% of the total time spent in market activities.
China is challenging US global economic leadership. Its share of world output will soon eclipse that of the US and it holds $1.7 trillion in US debt. Britain lost its world financial leadership when it became indebted to the US.
Greece’s Parliament passed a tough austerity measure as a precondition for a bailout agreement. The stakes are high for US banks because five of the largest banks have billions invested in the Euro-zone countries that are most likely to default.
The Davos World Economic Forum is focused almost exclusively on euro sovereign debt and the consequences of austerity programs. Yet 1.4 billion of the world’s people live on incomes of less than $1.25 a day. The Forum should also focus on them.
The recent increase in housing starts, decrease in new claims for unemployment compensation are positive signs that Europe’s debt problem is not affecting US growth.
Two decades ago, European countries were very critical of Latin American and African countries that were saddled with tremendous debt. Now, Europe is facing the same problem–the chickens have come home to roost.
Large US financial institutions are heavily invested in euro zone countries; Bank of America, J.P. Morgan and Citigroup each have over $14 billion invested in the five worst countries. If they default, US bank lending will be curtailed significantly.