Stock market crash proves US power?
One of the oddest things to have occurred after the dramatic market crash of the last few days is the spectacle of plenty of news commentators claiming it shows the importance of the US economy. The idea is that since the collapse of the US housing bubble and our stock market affected other economies, we therefore must matter to them.
Apart from seeming rather juvenile (a point which Jon Stewart scathingly satired), this argument displays an ignorance of history. Of course, it is clear that as the largest economy in the world we can influence other countries. But there are plenty examples of the converse: smaller countries collapse, affecting us. The collapse of the Asian Tigers in the late 90s affected many US stocks (albeit far from all of them). And once those economies collapsed many US and other foreign firms moved in to find bargain deal in the damaged economy. At no time did American commentators proudly proclaim that this showed that Asia was important to the US. The main discussion was about the nature of the globalized economy and the flaws in the Asian economies (whether real or perceived).
Much the same is happening now, just on a bigger scale. Systematic problems in the US economy have caused some foreign investors to pull out, triggering a fall in the stock market. Later, once the dust has cleared, I’m sure some savvy firms (both foreign and domestic) will move in looking for some bargains. For those particular firms, it may be an opportunity to make money. However, why in the world would anyone regard this collapse as a good thing for the average American citizen?
Apart from seeming rather juvenile (a point which Jon Stewart scathingly satired), this argument displays an ignorance of history. Of course, it is clear that as the largest economy in the world we can influence other countries. But there are plenty examples of the converse: smaller countries collapse, affecting us. The collapse of the Asian Tigers in the late 90s affected many US stocks (albeit far from all of them). And once those economies collapsed many US and other foreign firms moved in to find bargain deal in the damaged economy. At no time did American commentators proudly proclaim that this showed that Asia was important to the US. The main discussion was about the nature of the globalized economy and the flaws in the Asian economies (whether real or perceived).
Much the same is happening now, just on a bigger scale. Systematic problems in the US economy have caused some foreign investors to pull out, triggering a fall in the stock market. Later, once the dust has cleared, I’m sure some savvy firms (both foreign and domestic) will move in looking for some bargains. For those particular firms, it may be an opportunity to make money. However, why in the world would anyone regard this collapse as a good thing for the average American citizen?
