Financial crisis fallout: from your stocks to America's global role
Some economists see some rays of light amid the economic gloom.
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There's some speculation that as consumers tighten their belts by spending less and saving more, the American standard of living will shrink a little.Skip to next paragraph
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At the same time, the rescue package will not do much to restrain corporate executive earnings in the US.
"I'm very discouraged," says Sarah Anderson of the progressive Institute for Policy Studies, after analyzing the new Treasury rules on executive compensation. She has more hope for legislation to limit CEO pay, say to 25 times the wages of the lowest paid employee in a firm – should Democrats control Congress next year.
The US role in the global economy
Talk of the American economy slipping down in the world pecking order is "a lot overblown," says Peter Temin, an economic historian at the Massachusetts Institute of Technology, Cambridge, Mass. "It's not the end of the world as we know it."
Professor Temin is encouraged by the strength of the US dollar on foreign exchange markets in recent days. Normally, he says, a financial crisis in a country prompts investors to flee that nation's currency. But international investors apparently regard US Treasury bonds as the safest investment in the world and see Europe as in "more disarray" than even the US.
Earlier this month, the Institute of International Finance (IIF), an association of more than 390 of the world's largest financial firms, called for adding "important emerging market countries" to the Group of Seven industrial nations.
Froehlich suggests the G-7 reflect the "changing global landscape" by adding China, India, Mexico, South Korea, Russia, and Brazil, all with economies exceeding $1 trillion in size, to the current members – the US, Britain, France, Germany, Canada, Italy, and Japan.