DAILY TIMES: The huge glut of savings built up in China allowed that nation to lend billions of dollars to the US, which meant American consumers could embark on a borrowing and spending spree. But too many of those loans went bad, banks racked up huge losses, and CEOs paid with their jobs. When the stock market caught on to what was happening, shares tanked on fears that the US would fall into recession. That prompted Ben Bernanke to slash US interest rates by an extraordinary three quarters of a per cent last Tuesday. As the US economy has shifted away from traditional manufacturing to service industries, car plants have closed because of cheaper competition from lower-waged economies like China. The Americans now hope that China, and other emerging countries with cash reserves, will bail out troubled banks and the world economy… The current crisis has raised fundamental questions about the merits of the American model. For many years, the US has lived beyond its means: borrowing heavily to gobble up cheap Chinese consumer goods; splashing out the proceeds of a decade-long housing boom; and preaching the benefits of liberated markets. MORE
[ILLUSTRATION: “Big Hairy Bush” By DON RELYEA]