Partisan politics holds US economy captive

Just as European nations have begun to implement a series of crisis-fighting mechanisms to save their common currency, the United States now faces a so-called fiscal cliff at the end of the year, a series of austerity measures that could throw the world’s largest economy into a double-dip recession.

In October, the International Monetary Fund (IMF) warned during its meeting in Tokyo that the slow pace of reform in Europe and the United States was causing global economic uncertainty. And increasingly, emerging economies such as China are no longer able to pick up the slack, as they also witness slower growth.

“Whether you turn to Europe, to the United States of America, to other places as well, there is a level of uncertainty which is hampering decision makers from investing and from creating jobs,” IMF chief Christine Lagarde said in Tokyo. “We need action to lift the veil of uncertainty.”

In Europe, the European Central Bank (ECB) has agreed to an unlimited bond-purchase program aimed at pushing down interest rates in crisis-stricken states, while the 17-member eurozone has set up its permanent bailout fund. But across the Atlantic in Washington, a deeply divided Congress is still struggling to resolve America’s ballooning budget deficit.

Currently, the world’s largest economy faces a series of massive taxes increases and cuts in spending to the tune of $607 billion (470 billion euros), or four percent of the country’s gross domestic product (GDP). Both Lagarde and the Congressional Budget Office (CBO) have predicted that in lieu of some sort of political compromise that cushions the worst of the austerity, America will dip back into recession.

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As new powers emerge, political realism drives global agenda

(By Deutsche Welle) The US and the EU campaigned for a common world order based on liberal values such as democracy and human rights. But as the balance of power shifts toward developing countries, national interests are trumping values.

During the 1990s, the advanced democracies of North America and Western Europe emerged as the powerbrokers of global politics. Russia shrank from the world stage as it slid into chaos after the collapse of the Soviet Union. And the large developing countries – such as Brazil, India and China – remained preoccupied with their own internal reforms.

As a consequence, the United States and the European Union began to construct a world order based on liberal vales. They promoted a doctrine of free trade, democracy and human rights.

Those nations that accepted – or at least did not challenge -these “international norms” were integrated into a growing network of economic globalization. This network was governed by institutions such as the World Trade Organization, the International Monetary Fund and the World Bank.

Meanwhile, leaders who actively undermined the liberal rules of the game – such as Slobodan Milosevic and Saddam Hussein – faced crippling sanctions and devastating airstrikes. Integration and confrontation became two sides of the same coin.

But in the new millennium a more diverse group of countries is sharing world power, which has made it difficult to form a consensus around a common global agenda. As Brazil, Russia, India and China – often referred to as the BRICs – confidently pursue their own national interests, the liberal international order is buckling.

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