Obama, in Letter to G-20 Chiefs, Seeks Less Reliance on U.S.
He [Dadush] said that the United States needed to stimulate demand in the short run but curb its addiction to borrowing in the long run; that China needs to reduce its reliance on exports and allow its consumers to buy more and save less; and that Germany needs to wean itself off the fixation on frugality and productivity that helped it through reunification in 1990 but that now poses a threat to the economic integration of Europe.
Mr. Dadush’s view is the mainstream one, and one shared by the United States. As Mr. Obama put it: “Just as the United States must change, so too must those economies that have previously relied on exports to offset weaknesses in their own demand.”
This sounds very much like a call for a bottom-up stimulus that I spoke about the other day, the type that did not occur under both President Bush and President Obama, the type that is still not occurring with the Fed buying 600 billion of their own notes.
The stock market has fallen in the last several days, after this 600 billion buy—but now the Republicans are on the clock too.
The thing is, there has never been a bottom-up stimulus. The closest thing to this has been tax cuts and tax rebates. However, these amounts were nowhere close to the levels needed to bring about needed change.
So far, we have the U.S. putting 2.6 trillion into the economy by pouring it into the top—which stopped the hemorrhaging, but did not stop the bleeding.