The American Exception

Goldman Sachs employees are ungrateful. Four years ago, they were among the most generous contributors to Barack Obama’s presidential campaign. This time around, according to the Wall Street Journal, 75 percent of their donations went to Republican candidate Mitt Romney. And yet they do not have much call to complain about President Obama’s mandate. While it is true that the president called them “fat cats,” he has also allowed them to carry on playing the game at which they excel: pure and unbridled speculation. Goldman Sachs has just announced a third quarter net profit of $1.5 billion and company executives should receive bonuses averaging around $500,000 for the year 2012. “Yes they can.”

Goldman Sachs, then, is as healthy as it is hated, Wall Street is in good shape (up 11 percent since Jan. 1) and the American economy is doing better —at least, much better than that of the Eurozone. But, to be fair, that is not saying much. The unemployment rate, which had reached 10 percent in late 2009, has just gone back down below 8 percent. Credit cards are once again burning holes in the pockets of consumers, whose spirits have perked up. Even the property market, where the subprime virus originated, is recovering.

As a result, while the European GDP will fall 0.2 percent this year, that of the United States will increase by 2.3 percent. This is a much slower rate than before the financial meltdown, but it is enough for Barack Obama to enter the election race as a favorite. It is also enough to induce jealousy in all the European leaders who lost political power because of this crisis, which originated in the United States.

To paraphrase the words of Boris Cyrulnik, the American economy has once again shown its power of resilience, its capacity to rebuild itself after a devastating blow, as it did after the Internet bubble burst. From one blow to another, economists always provide the same explanations: better reactivity of financial policies, the flexibility of the job market and technical innovations associated with the excellence of universities, which attract the best brains on the planet, allowing for substantial gains in productivity.

The novelty is that America is becoming re-industrialized, which is the big difference between the U.S. and the Eurozone. Manufacturing production has almost returned to its pre-crisis level, whereas in Europe it is still 12 points below pre-crisis level. The U.S. is not as incredibly lucky as we are to have a “Minister of Production Recovery.” They do, however, have shale gas, which they are exploiting massively. This is consequently reducing their energy bill and thus their production costs (one can naturally only hope that the environmental impact was measured properly, that groundwater sources are not going to dry up and that rivers will continue to flow in Montana and elsewhere). It remains that production costs have been so greatly reduced that American businesses have been prompted to relocate their China-based factories, where wages are rising rapidly. According to the Boston Consulting Group, in 2015, tires made in the U.S. will be only 2.5 percent more expensive than those produced in China.

Today, thanks to the charisma of its president and, more importantly, to its rich underground resources, America has become again a conquering America. It seems the page has been turned on declinism. Indeed. The country remains faced with inequality and, notably, a poverty rate that has soared as never before under Obama’s mandate (over 10 million poor), which is somewhat embarrassing for a left-leaning White House occupant.

Moreover, while American companies are bursting with cash ($100 billion for Apple), the State is close to bankruptcy. Taking advantage of the dollar’s status as reserve currency and of the servility of the Fed, which had the printing presses cranking night and day to buy Treasury bonds, President Obama turned a blind eye to the degradation of public finances. In 2012, the budget deficit has reached 7 percent. In the space of four years, the public debt has gone from $10,000 billion to $16,000 billion, rising twice as fast as France’s debt. If the United States were a Eurozone country, the troika (IMF, ECB and EC) would have long ago given them a financial rebuke and prescribed them a compulsory cure of austerity.

Mitt Romney maintains that his country is following in Greece’s footsteps. It certainly will if he is elected and his tax cut policy is implemented, the Democrats retort. President Obama’s friends are not necessarily wrong, but they could be more right if they themselves offered credible solutions to rebalance the budget. This is not the case. In itself, it is already highly problematic to reduce a national debt, but it becomes mission impossible in a country allergic to taxes and fascinated by its own military supremacy. In the United States, a public taking of accounts is approaching. At last.