Although G-8 leaders have warned that significant risks remain in the world economy, the U.S. media seem to be paying less attention to the continuing global crisis than their European counterparts. The likely reasons are that Europe is lagging behind the United States on the road to recovery and that Europeans are traditionally more attuned to the outside world than Americans.
In Britain, The Daily Telegraph reports the warning from the G-8 that “the global economy faces ‘significant’ dangers in the coming months and a recovery from recession is still some way off.” But although the article is accompanied by a photograph of President and Mrs. Obama, it makes no mention of the United States, or of Obama. Political correspondent James Kirkup instead focuses on the UK, France, Germany, and Russia.
A piece in Le Figaro delves deeper, providing some economic tips to the American president. Pierre-Yves Dugua said Obama’s reforms “must be a compromise” and include “a radical overhaul of the complex system of supervision of banks … and more marginal changes to rules imposed on financial institutions, so that they can better control their risks.” Dugua thinks President Obama should take the opportunity to conduct a complete overhaul of an outdated system “instead of simplifying the system currently in place.” He goes on to compare Treasury Secretary Timothy Geithner’s idea of a systemic risk board, operating above the Federal Reserve, to similar plans in Europe.
In another article, Le Figaro concludes that “Barack Obama does not want to reinvent capitalism.” It continues, “He could have been much more ambitious in reaction to the gravest financial crisis that America has known since the 1930s.” As mentioned in the article’s title, Obama is, therefore, “a pragmatist.”
In The Irish Times, commentator Tony Kinsella describes in concrete terms the threat to European countries and companies posed by the global recession. The United States, lacking an operational social safety net, has borrowed to fund domestic economic stimulus, Kinsella pointed out, whereas European governments are all borrowing massively to maintain public employment and social benefits. He concludes, as the piece’s headline suggests, that Europeans face unprecedented choices in uncharted waters, “with dragons aplenty on all sides.”
The British and international agency Reuters illustrates how Obama’s reform plans may be contributing to his decline in popularity: “He remains personally popular, but President Barack Obama is starting to see signs that some of his economic policies are causing doubts among many Americans.”
“The end of the recession will merely be the start of a long, painful journey,” says Edmund Conway, The Daily Telegraph’s economics editor. “Every week, it seems, has brought new economic indicators, good or bad. Indeed, the whole thing has recently descended into farce…” Conway concedes that “from a technical point of view, we are close to the end of the recession, in that economic growth is probably stagnating rather than shrinking.” But he concludes on an acerbic note. “There will be no return to the boom years: the recovery will instead take the form of a long convalescence, one that has barely even begun.”
From the U.S. point of view, however, the Financial Times reported July 14 that Treasury Secretary Tim Geithner believes U.S. and global recovery may be at hand, and that there is no need at present for fresh fiscal stimulus. “There is a very good chance for seeing the U.S. economy and the world economy get back to the point when it is growing again over the next few quarters,” Geithner said at the start of a tour of European and Gulf capitals.
Nor was Europe completely forgotten by The New York Times, which published a piece by Steven Erlanger in Berlin, Economy Shows Cracks in European Union, which argues that the EU is still “less than the sum of its parts.” Erlanger reports that European leaders have been feuding about broad issues such as how to combat the economic downturn as well as about specific points such as how much money to dedicate to stimulus programs. The article cites tensions in Europe between France and Germany, as well as between north and south, and east and west.
Comparing the impact of the recession on either side of the Atlantic, Erlanger says that Europe “is arguably suffering more” from the subprime mortgage crisis and that “the International Monetary Fund estimates that European banks hold more bad assets than American ones and have written down much less… With the response hobbled by a fractious European Union, many economists now expect the downturn to last longer here than across the Atlantic.”
