U.S. on the Road to Recovery

The markets have sensed the change in the air and started to rise — this week the index of New York Stock Exchange reached its highest point since September 2008 — increasing the profits of investment banks that buy and sell stocks and bonds. As the legendary investor Warren Buffett loves to say, “a rising tide lifts all boats,” and so the waves of the American recovery have even helped companies that were in dire straits, such as Citi, GM and AIG. The end the result is what counts, and in this case the result is positive not only for America but for all of us: the U.S. economy is growing and the world’s most important banking system is still standing. A tip of the hat to the people of the West Wing. But before we starting praising Obama, Geithner and Summers, it is worth remembering that the same aid program could have ended badly, very badly indeed.

If the economy had not responded to the shock-therapy of zero percent interest rates, unprecedented aid to financial institutions and consumers and mammoth interventions in the markets, U.S. authorities would have threatened the future of the country with a huge fiscal deficit, a GDP that wouldn’t grow and a social system eroded by a skyrocketing unemployment. Fortunately, the economy and basic business — large multinationals but also small and medium companies, which are the backbone of U.S. entrepreneurship — answered well, turning equipment back on, borrowing from banks and selling products to consumers both in America and abroad. To explain the success of the operation devised by the Obama team we should call psychologists, not economists. The difference between recession and recovery was the fact that markets, companies and consumers “had faith” — they returned to work in the hope that, as they say in Broadway, “it will be alright on the night.” The almost Panglossian optimism of Americans is one of the character traits we Europeans most despise — especially in the cynical and harsh environments of finance and big business (and also, let’s say it, of journalism).

Also, the cult of individual success and the Spartan work ethic — two cornerstones of the “American Dream” that still animate the great hopes and goals of the United States — are often considered alien, almost tasteless, on the Old Continent. Taken to excess, these American characteristics are counterproductive — and the crisis of the last two years is a perfect example of a global disaster caused by the arrogant and unbridled desire of a country that felt entitled to live beyond its means regardless of the consequences. At the same time, the ingenuity of a young country with an entrepreneurial class that likes to take risks (who had heard of Google 15 years ago?) and a flexible and highly mobile workforce have been the trump card for an economy almost wounded to death.

Viewed from America, with its third-world health care system, its huge disparities between rich and poor and its working world that seems to have been designed by Stakhanov, the small Europe often looks like a happy island. But you just need to look at the Greek tragedy that is the crisis in the Euro area to understand that in this case, America is once again able to blame the skeptics and to do better than the countries across the Atlantic.