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Reflections on the big, sick dog

Around the world economy in 100 days

The U.S., the big dog of the world economy, produces roughly 25 percent of global output. (Jason Lee/Reuters)

BOSTON — In his first 100 days in office Barack Obama has spent more time dealing with the economy than most presidents do in four years.

He’s had no choice. The 2008 presidential election turned in large part on economic matters, so he was on the hook even before taking office.

It seems Abraham Maslow’s hierarchy of needs theory of psychology applies to economics, too: Everybody requires money to buy (1) food and (2) shelter. This is particularly true of voters.

Moreover, as you’ve no doubt heard, we are living through “the worst economic crisis since the Great Depression.” Preventing calamity is good economics. It’s even better politics.

Aside from domestic concerns President Obama has also, rightfully, tried to play a leadership role in addressing the global scope of the crisis.

The U.S. produces roughly a quarter of the world’s economic output. It is the big dog of the global economy — the big, sick dog. The global economic meltdown began here, continues to wreak havoc here, and is spreading through the world like, well, mange.

In particular, it has infected two key economic partners and U.S. debt holders: China, where more than 65,000 factories have shuttered in part because Americans are spending less; and Japan, which now has 1.6 million people living on welfare — the most in 44 years — in part because Americans are buying fewer Japanese cars and electronics. (Japanese exports to the U.S. slid another 51 percent from a year ago in March, after dropping 58 percent in February.)

As a result of America’s culpability, the crisis has given President Obama an unforeseen reason to wake up at 3 a.m.: It has allowed friends and foes to paint the U.S. as an economic villain (what’s Russian for collateralized debt obligation?), or to maximize political and economic leverage over Washington.

We’ve already seen this from France and Germany, who resisted U.S. calls for greater stimulus spending. Beijing also played this card by rebuking the U.S. for its rapidly rising debt, and then by calling for a global reserve currency that could replace the dollar.

More troubling than lost U.S. prestige is that economic crisis is often a harbinger of instability. In fact, over the past 100 days we've seen mass protests (Hungary, Greece, Latvia, the Czech Republic, Moldova, India), labor unrest (France, Ireland), political upheaval (Thailand), and rising crime and violence (Mexico).

So important foreign policy implications have infused President Obama’s intense focus on economic matters, a fact underscored by his insistence on receiving a daily economic intelligence briefing that details global trouble spots.