October 31, 2008
Martin Wolf, the chief economics commentator at the Financial Times, told an Atlantic Council audience earlier today that the global financial crisis has “re-emphasized the centrality of the U.S. dollar as a currency” and demonstrated once again that “when things go really badly lots of people want go to the U.S. even if U.S. is why, even in part, things are going so badly.”
What’s especially ironic about this, aside from the crisis being at last partly our doing, is that, as Kishore Mahbubani points out, “U.S. and European policymakers are doing the opposite of what they advised Asian policymakers to do in 1997-98: do not rescue failing banks, raise interest rates, balance your budget. Millions of Indonesians and Thais would have been better off if their governments had been permitted to do what western governments are doing now.” Indeed, as he points out, Asian governments are acting with remarkable calm during the crisis and showing more confidence in free market mechanisms than we are.
Why, then, isn’t the world rushing to put their money in Asian stocks and currencies? China, after all, has a massive surplus and is on the rise, and Japan is recovering nicely from its own financial collapse.The New Atlanticist