No nation or business wants more financial uncertainty. But that is what the US is dishing up this week as the debt issue is now everyone’s issue. Meeting with government ministers and business folks here in Indonesia as well as talking to other Asian officials has been a wake up call given the current state of affairs.
Messy very messy state of affairs I say. So it’s days before the default deadline and I am in Asia traveling. The strange reality is the Debt Ceiling Crisis, and it is now a crisis affects the world markets, not just the US. This is especially true of Asia. The concerns from Asia are with nations such as China holding over a trillion in US dollars and with the increased risk of reduced consumer export demand from the US, instability and uncertainty are now the major concern.
No leader wants excess uncertainty. That’s the word from Asia. Uncertainty breeds risk. Risk threatens stability and predictive forecasts that economies, markets and organizations need to thrive.
The new reality is that Asia has escaped the last global financial crisis with the CDO contagion, again brought to the world’s banks and economies by the US, now we have a another crisis affecting markets, currencies and debt. Is is time for the US leaders to grow up and realize that the linkage of economies is game over, transnational globalization and connected global economies, especially in Asia and the US, are a dynamic intimate interdependence that is not being managed well. Meaning, critics here share that US is not holding up its end. Now default uncertainty is being factored into markets, currencies and government policy. But we have an erosion of confidence and trust that is negative.
This is not how responsible global superpowers play the game given the Post-Bretton Woods advantage of the US. Asia is nervous and they have a right to be. No economy stands alone today. Let’s get on with it and manage this uncertainty before real damage is done. A new reserve currency maybe? Power comes with responsibility.
We need a new generation of leaders that understand the multi-polar world of intimate linkage of economies and who have a vision and responsibility that surpasses the politics. I am for cutting and curtailing spending, even a balanced budget for the US I would support. But being captive to the current chaos is not helping the US or Asia. Let’s get on with it.