The PJ Tatler

Another Anxious Year

Walter Russell Mead:

The world is just dipping its toes, so to speak, in the new year, and 2011 is already shaping up as a dangerous time. Europe hasn’t solved its financial crisis; the US is vulnerable to state and local financial crises that could erupt without warning; China’s export-oriented growth model is unlikely to yield a second generation of rapid growth; Japan’s long economic downturn could morph into something more serious. Inflation is spooking the commodity markets and food riots are popping up here and there.

The shadow of sovereign risk hangs over the world as the new year begins. Having extended themselves to save banks and stimulate their economies, some of the world’s wealthiest countries are so indebted (and unconventional central bank programs are creating money so quickly) that people are losing faith in the entire fiat money system. Every advance in the price of gold represents a vote of no-confidence in the world’s political and economic leadership.

Meanwhile, every effort to organize effective international cooperation since the crisis began has ended in failure. The major world economies from established long time powers like the EU and the US to emerging powerhouses like China, India and Brazil consistently put their own national interests before international cooperation when the chips are down.

And we have, worldwide, a less-than-stellar Political Class.