The revival of American populism is partly synthetic, but mostly real
A WEEK or so ago America was seized by a spasm of fury over the bonuses paid to executives at AIG, a troubled insurance company. Across the country Americans were enraged that people who had helped to cause the financial meltdown were being rewarded for their incompetence. And Washington responded in kind.......Was the fuss over AIG a sign of a new populist mood in America? Or was it just a storm in a teacup? It is hard to answer this question in a country in which anger is a form of entertainment and where the political parties have turned partisanship into a fine art. Television personalities such as Bill O’Reilly are always angry about something or other. Many of the politicians who proclaimed their outrage at the “malefactors of great wealth” are delighted to take campaign contributions from the very same malefactors.
But, for all that, there are good reasons for taking the resurgence of populism seriously. One is the breadth of the discontent in the country. Left-wingers complain that Mr Obama is selling out his supporters in order to rescue irresponsible financial institutions. Right-wingers worry that he is using taxpayers’ money to save people from the consequences of their own profligacy. This fear has plenty of resonance outside the world of political enthusiasts: a recent Harris poll shows that 85% of Americans believe that big companies have too much influence on politicians and policymakers....MORE
From The Economist Intelligence Unit:
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Download the special report From page 5 of the 34 page PDF:
After the crunch
If things feel bad now, how much worse could they get?
In line with our previous risk reports (Heading for the Rocks and Shooting the Rapids), we have identified three macroeconomic scenarios for the evolution of the crisis that began in the US sub-prime mortgage market and is now reverberating throughout the world economy.
Scenario 1: Our central forecast (60% probability)
Government stimulus stabilises the global financial system and restores economic growth in leading developed markets during 2010, albeit at lower levels than in recent years. This scenario underpins our regular analysis and is not the subject of this report.
Scenario 2: The main risk scenario (30% probability)
Stimulus fails, leading to continued asset price deflation and sustained contraction in the leading economies a depression persisting for some years.
The stubborn decline in global economic activity is punctuated by occasional rallies that are taken as signs of recovery, but these quickly fade as the underlying downward trend reasserts itself. The prominent role of governments in propping up banks and reviving domestic demand leads to strong political pressure for protectionism, effectively putting the process of globalisation into reverse.
Scenario 3: The alternative risk scenario (10% probability)
Failing confidence in the dollar leads to its collapse, and the search for alternative safe-havens proves fruitless. Economic upheaval sharply raises the risk of social unrest and violent protest. A Political Instability Index covering 165 countries, developed for this report, highlights the countries particularly vulnerable to political instability as a result of economic distress. The results of the index are displayed in map form and in a ranking table in the centre pages, along with a brief methodology. The political implications of the economic downturn, informed by the results of the Social and Political Unrest Index, are discussed at length in the second half of the report.
The full report, in both PDF and HTML format, is available online at
www.eiu.com/special. The microsite includes a full methodology for the Political Instability Index, a complete ranking of results including a comparison with the results for 2007, and a large-format version of the map....MUCH MORE
