Above all, officials say, the current financial crisis has shifted influence from the richest powers toward Asia and Latin America, whose economies have weathered the recession much better than those of the United States, Europe and Japan. “Other countries are no longer willing to buy into the idea that the US knows best on economic policy, while at the same time the emerging markets have become increasingly influential and independent,” said Kenneth S. Rogoff of Harvard, “Like it or not, we simply have to accept it.”
At the same time the US government, to avoid an international trade war, is again delaying a probe into the Chinese currency control strategy. Everybody knows the Chinese have been buying foreign currency for decades, keeping the yuan low to boost their exports and competiveness. It is understandable that they want to keep the current situation to avoid a radical change in the Chinese economy. If the US launches a probe into that policy, it has to take action, and that is what the Chinese government tries to avoid.
We need more unconventional thinking to turn this economy around; and the US no longer can think they can do it alone. For every action of the Federal Reserve there will be a counter action by the ECB and the Bank of Japan, and of course from China. We need coordinated efforts to restore confidence in the market so companies start investing again, and especially hiring again.