March 6, 2009
Justin Fox at Time complains that Outside the U.S. and China, there’s not all that much stimulating going on, and is concerned that “much of the money will leak overseas as we spend on imports but others don’t buy our exports”. Here’s a sampling (% of GDP):
United States 5.5%
United Kingdom 0.9%
I think we should take ability to stimulate into consideration: China has 2 trillion saved in USD-denominated assets so they’re in an excellent position.
The U.S. has the unique advantage of the dollar as reserve currency and perception of treasuries as ultimate safe harbor (other than gold), so it can borrow magnitudes more than most at a much cheaper rate without exchange rate fluctuation risks.