But the United States itself? Foreign leaders have had to settle for a demand from the sidelines: Please follow your own advice.
In Asia, where the United States was a strict taskmaster in that region’s crisis in the 1990s, the events of the past few weeks have seemed so wrongheaded, “it requires grading from an elementary school teacher,” said Singapore’s finance minister, Tharman Shanmugaratnam: “Room for improvement.”
Meetings of the IMF and the World Bank last week became a multi-day variation on the theme — of how the United States was risking another recession, of how disruptive a U.S. default would be, of how mystifying it was that the world’s most powerful nation seemed unable to make basic decisions. The public language was diplomatic, with deference to the American political system and faith that a solution would be found.
In private, the words were sharper.
“Embarrassing,” one member of the IMF’s governing board said of the U.S. impasse, which, by the reckoning of many analysts, is the chief near-term threat to the world’s tentative economic recovery.
China’s official Xinhua News Agency said the situation demands that the world be “de-Americanized” to diminish the importance of the dollar and lessen its ability to cause trouble.
Nations in the position of “exorbitant privilege” that comes with issuing a reserve currency change only under the pressure of longer-term dynamics, said Stephen King, chief economist at HSBC.
A parallel, he said, was Spain in the 16th century, which used its global silver hoard to import lavishly and finance trade deficits that, in effect, transferred its future potential growth to then-rising powers such as England. Over time, England and its pound sterling overtook Spain, only to lose that perch to the United States — which relies on China, Japan and others to finance its government and trade deficits.
“The point is that if you happen to be in the position of having the world’s reserve currency and you live beyond your means for many, many years, you are in some sense passing the baton of success to other countries,” King said. “There is potentially some long-term damage.”