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America as a Safe Haven

12:00 AM, Jun 9, 2012 • By IRWIN M. STELZER
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In America, Federal Reserve Board chairman Ben Bernanke and his colleagues are waiting for the fog to lift from their crystal balls, even though Vice Chairman Janet Yellen concedes that “several serious headwinds [are] facing the U.S. economy.” And what passes for the nation’s political leadership remains paralyzed until after the November elections, if not longer.

In Europe, the eurocracy remains locked in doctrinal disputes about the efficacy of austerity and stimulus, with Germany calling for the former and most of its eurozone colleagues pleading for increased German financial help to their economies, a position not helped by the decision of France’s new president, François Hollande, to lower the retirement age of many French workers to age 60, reversing his predecessor’s reform of the pension system that included raising the retirement age to 62. The added pension costs will be covered by an as yet unspecified tax on “the rich,” many of whom are hunting for flats in London and New York. German workers, to remain in harness until 65-67 years of age, are unlikely to find it reasonable to be asked to subsidize the pensions of younger French ones.

All eyes are now on next week’s gathering of the G20 leaders in Cabo, Mexico. Don’t expect much. Mrs. Merkel is in no position politically to do more than a little, and she has already given the back of her hand to British prime minister David Cameron’s plea that she fund immediate crisis measures. Meanwhile, America’s sad tale of deficits as far ahead as the eye can see makes it unlikely to get more than a polite hearing—if that—for its preachments on the advantages of a new stimulus. There seems to be no one on the horizon who can lead the leaders to the promised land of sustained growth.

All is not gloom, however. Most regions are still growing, even if only moderately, the important housing sector seems finally ready for release from intensive care, and with the average age of automobiles now on the road around 11 years, vehicle sales should continue to remain more than satisfactory. 

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