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The fiscal fallacy of decoupling from America Published: April 15 2007 17:08 | Last updated: April 15 2007 17:08 If the US economy tanks, what will happen to the rest of us? Some investment bankers have argued that this time we can easily decouple from the US. This view is rooted in the assumption that the indefatigable Asian consumer and the resilient European corporate sector have made us all less dependent. I do not buy this argument because it does not quite square with what we know about globalisation. The world has become more, not less integrated, in terms of trade and financial linkages. The large world economies do not all have the same growth rates, nor do they share the same business cycles. But surely we are not fully decoupled. Some countries may be more shock-resistant than they used to be, but in a globalised world shocks also spread more easily. The answer depends on which of those two effects weighs more strongly. I suspect it is the latter. __________________________________________________ Do You Yahoo!? Tired of spam? Yahoo! Mail has the best spam protection around http://mail.yahoo.com
