A World of Trouble: reacting to the stimulus deal
BOSTON — Tuesday in Denver, President Barack Obama is expected to sign into law the $787 billion stimulus package. The hope, of course, is that this hard-fought mix of government spending and tax cuts will jolt the world’s biggest economy into recovery.
But the world did not wait long to weigh in on the plan. And judging by the early returns, it’s a tough crowd out there.
In particular, China’s official Xinhua news agency blasted the "Buy American" provision requiring projects funded by the stimulus to use only U.S.-made goods, mainly steel and iron.
"History and economic theory show that in facing a financial crisis, trade protectionism is not a way out, but rather could become just the poison that worsens global economic hardships," Xinhua warned.
Meanwhile, Group of Seven finance chiefs meeting in Rome over the weekend urged U.S. Treasury Secretary Timothy Geithner to act quickly.
"On paper it looks great and the principles are certainly very good," French Finance Minister Christine Lagarde told reporters. "The essential thing is now to implement it."
Britain’s Chancellor of the Exchequer Alistair Darling also took a swipe at the "Buy American" provision. "We must be vigilant on creeping protectionism whether it is intentional or unintentional," he said.
The latest numbers only confirm that sickening feeling now spreading around the world:
- G7 finance ministers said a "severe" global economic downturn would persist for most of 2009;
- We also learned that Japan’s economy — the world’s second largest — shrank by 3.3 percent in the fourth quarter of 2008, its worst showing since the oil shock of the early 1970s; and
- Standard & Poor’s warned that it may lower its credit ratings for Ukraine.
For more on the global economic crisis, see our country-by-country analysis of a world in trouble: