World economy: Still 'coupled' after all these years

Maybe we ought to feel good that the United States is still the big dog when it comes to the world’s economy, but somehow it’s not all that comforting. It certainly was distressing to the investors in India I saw interviewed on a cable news channel Monday as the markets there and in many other countries plunged in response to the U.S. decline. As they watched the ticker on a street in Mumbai, they seemed concerned but almost bemused at the same time. One man cracked a smile as he said he doubted he had enough left in his account to pay his broker.

Investors in India (and other nations) were taken by surprise. They had assumed their economies were becoming “decoupled” from ours, less tied to the ups and downs of the U.S. stock market. India especially had been taking this new “independence” as a point of pride, analysts said. But recent days have brought a rude awakening: As the U.S. goes, so goes the world. In particular, U.S. housing woes affect banks and investors in Europe and beyond – a recent Enquirer report, for example, noted that Germany’s Deutsche Bank is one of the top lenders involved in foreclosures here. If America goes into a full recession, everybody gets hurt.

But if other nations have an interest in seeing the American economy right itself, perhaps it follows that we ought to be more concerned about conditions abroad. We ought to pay a lot more attention to economic progress in other nations, and encourage policies that foster growth and prosperity.