View from Germany, Feb 2. Rickety World Power...America Forever

The USA is stuck in a deep crisis. That's why, in Davos, politicans and economic experts are calling for a world without U.S. dominance. But what should replace the American model remains a puzzle.

At the end of a long debate, it was surprisingly the Americans who stated it bluntly. "The American model was wrong, " the renowned economist Ken Rosen said. "The German, Japanese and Swiss models are better."

Rosen is speaking about the consumption cumbersomness of the US economy, but his succint assessment captured the Zeitgest at Davos in 2009--the Americans have crashed and they have dragged everyone else with them into the abyss. A new World Order is needed to end U.S. dominance. The key word is "Multilateralism."

But how this cooperation between East and West, rich and poor, and industrial and developing countries, which has been requested at the World Economic Forum under the motto "The world formed after the crisis" is supposed to look, is unclear.

"The most important task by far for the new US administration will be finding the right relationship with China," the former British Prime Minister Tony Blair believes.

Even China and Russia, who arrived, unlike the new US administration, with their top minds in tow, made clear on the first day that they see themselves on the same niveau as the US, or even above. He didn't want to resort to finger pointing in the direction of America, but the Russian President, Vladimir Putin, did just that at length. The enormous disparity in the world, where one consumes (the US) and one finances (China) is a cause of the crisis, he analyzes. His Chinese colleague, Wen Jiabao, has criticized the "inept macroeconomic policy", also a clear swipe toward Washington.

A "new world architecture" with reformed institutions must come about, according to Putin. Also, that there is "a danger of only having one reserve currency" he warns, with the Dollar in mind. "More countries must be issuers of reserve currencies." Whether he meant by that the rubel, euro, or Chinese renminbi, Putin didn't say. During many appearances and rounds of talks it still remains baffling what should replace the written-off American model.

In this way, the participants of a forum for the US buying public quickly came to agree, that it is untenable over the long term that the US GDP exceeds 70% of consumption. But Zhu Min, Vice President of the Bank of China, made the sobering assessment, that this hope for Chinese consumers is an illusion. The contribution on a global scale is minimal at this time and in the short term nothing will change. Indeed the consumption contribution to the GDP in China has sunk from 54 to 38% in recent years.

Economist Nouriel Roubini, the prophet of the crisis who has risen to become a master of his craft warns that without future internation cooperation, individual states will pursue "policies at the cost of neighbor states." The G-20 community of states will be the deciding committee for the crisis. "The G7 club, this is behind us," he writes about the group of industrial countries. South Africa's finance minister Trevor Manuel's call that the G20 take over the coordination received a resounding 83% in favor in a vote in the hall. "It's not enough, when Washington and Beijing talk with one another."

Stephen Roach of Morgan Stanley, however, gave some food for thought, that this "multilateralism" which everyone is longing for can not be implemented in reality. No country is ready to sacrifice its sovereignty in the interest of the best for everyone.

Laura Tyson from the University of California pointed to the fact that the stabilization of multilateral institutions is hardly realistic in the short term. The crisis has actually strengthened the national governments. Only a strong country can actually get the process started. The paradox is: "We will be multilateral, but only if it brings with it the power of a hegemony as well."

The US is ready to take over the roll. Valerie Jarrett, a adviser of Obama's, promises "global economic cooperation." How that is supposed to look, she doesn't say.

Hope for a miracle

Dream In almost all national economies, exports take a nose dive. For this reason, governments and economists focus more on the domestic market and demand. Consumers, above all, are to bring the most money to the businesses. Many economic programs contain components which boost consumer demand.

Reality Consumers in the European Union are becoming even more skeptical of economic development, however. The corresponding index of consumer confidence sunk even further in January. This index is based on a survey of income, occupation, and consumption behavior of EU citizens, who made known their expectations in the coming months.

http://www.ftd.de/politik/international/:Wacklige-Weltmacht-America-forever/467765.html