Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Crash-Test Dummies the Gop Candidates Aren't Prepared for an Economic Crisis

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Crash-Test Dummies the Gop Candidates Aren't Prepared for an Economic Crisis

Article excerpt

Will China's stock crash trigger another global financial crisis? Probably not. Still, the big market swings of the past week have been a reminder that the next president may well have to deal with some of the same problems that faced George W. Bush and Barack Obama. Financial instability abides.

So this is a test: How would the men and women who would be president respond if crisis struck on their watch?

And the answer, on the Republican side at least, seems to be: with bluster and China-bashing. Nowhere is there a hint that any of the GOP candidates understand the problem, or the steps that might be needed if the world economy hits another pothole.

Take, for example, Scott Walker, the governor of Wisconsin. Mr. Walker was supposed to be a formidable contender, part of his party's "deep bench" of current or former governors who know how to get things done. So what was his suggestion to President Obama? Why, cancel the planned visit to America by Xi Jinping, China's leader. That would fix things!

Then there's Donald Trump. You might think that a swooning Chinese economy would fit awkwardly into that worldview. But no, he simply declared that U.S. markets seem troubled because Mr. Obama has let China "dictate the agenda." What does that mean? I haven't a clue - but neither does he.

By the way, five years ago there were real reasons to complain about China's undervalued currency. But Chinese inflation and the rise of new competitors have largely eliminated that problem.

Back to the deep bench: Chris Christie was more comprehensible. According to Mr. Christie, the reason U.S. markets were roiled by events in China was U.S. budget deficits, which he claims have put us in debt to the Chinese and hence made us vulnerable to their troubles. That almost rises to the level of a coherent economic story.

Did the U.S. market plunge because Chinese investors were cutting off credit? Well, no. If our debt to China were the problem, we would have seen U.S. interest rates spiking as China crashed. Instead, interest rates fell.

But there's a slight excuse for Mr. Christie's embrace of this particular fantasy: scare stories involving Chinese ownership of U. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.