Something of a changing of the guard seems to be occurring at the G20 summit in Los Cabos, Mexico, today, where the big developing countries are taking on the role of wise, engaged parent while our leading politicians in the U.S. and Europe continue to act like children in denial.
Consider: In TV interviews yesterday, Mitt Romney--who may now be the frontrunner in the U.S. presidential race--made clear he wants nothing to do with Europe's troubles, though they are already lapping at the front steps of the White House. Romney, sounding very much like a CEO who never really left Bain Capital in sensibility and spirit, told CBS: "I surely don't believe that we should expose our national balance sheet to the vagaries of what's going to be happening in Europe."
OMG. "Our national balance sheet?" What Romney seems to be saying is not just that he has no interest in bailing out Europe--as was reported yesterday--but also that he doesn't even want to invest in Europe. Let's avoid "exposure" in what is clearly a bad investment, my fellow men of Bain, and let the eurozoners go down together. Our "balance sheet" will be fine.
The problem with this view, of course, is that the president of the United States must oversee a globalized U.S. economy, not merely a national balance sheet, and its health is already intimately bound up in Europe's similarly globalized economy in multifarious ways. According to a report from Citigroup last year, the correlation between U.S. quarterly GDP growth and that of the largest European economies has risen to a 70 percent in the last decade, a leap upward from less than 20 percent correlation previously.
Romney's Bain-esque appraisal of Europe's problems seems even more benighted compared with that of other G20 countries such as China, Mexico and even Indonesia, which are issuing tough but well-nuanced advice to their former colonial masters.
China President Hu Jintao, in a written interview with a Mexican newspaper posted on the Chinese Foreign Ministry's website today, urged the G-20 to adopt a "constructive and cooperative approach" and "encourage and support the European efforts and jointly provide confidence to the markets," Bloomberg reported today.
Indonesian President Yudhoyono, meanwhile, expressed his hope in a speech that "our European colleagues will reach an agreement on rigorous methods to manage the crisis," because otherwise the consequences will be "unsettling."
Unsettling indeed. If the eurozone collapses, the U.S. and the world face not just the prospects of another economic downturn now, but a longer-term geopolitical future that could be far more unsettling. One only has to recall that, pre-unity, Europe turned the 20th century into one of the darkest in history, largely because of two European-generated world wars.
Will yet another American CEO president, if we end up with one, understand these stakes as well as he does America's balance sheet?
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