Does "bifurcation" happen? Could you have a scenario with an improved US economy that is getting better with a Europe and Britain going the other way? Whether or not this can continue in the long term in the short term this has been what we are seeing.
While Britain has avoided the debt crisis of the Euro countries with their lack of effective monetary policy, this has not stopped the country from continuing to see a weakening economy.
While US growth picked up in the second half of last year, the British actually went back into contraction. It is now being argued that for the British this crisis has been worse than the Depression. This is in sharp distinction to us.
"the ongoing slump in Britain is now longer and deeper than the slump in the 1930s."
Bill Mitchell explains the difference between the American-admittedly mild-expansion, and the British continued contraction:
"the major difference between the two economies relates to the conduct of the government in each case. The UK government has been announcing its intention to impose harsh fiscal austerity on the national economy since the day it took office. The fact is that most of the spending cuts are still to come, which doesn’t augur well for 2012, the spending associated with the Olympic Games notwithstanding.
Of course Britain had already been in depression in 1925-they had never really recovered from WWI-in both WWI and WWII Europe was much worse for wear whereas we prospered greatly. Not that I feel bad-they dragged us into it.
"the major difference between the two economies relates to the conduct of the government in each case. The UK government has been announcing its intention to impose harsh fiscal austerity on the national economy since the day it took office. The fact is that most of the spending cuts are still to come, which doesn’t augur well for 2012, the spending associated with the Olympic Games notwithstanding."
"It is highly likely that the “announcement effect” by the government of its intention to harshly cut spending has further eroded confidence among households and business firms, already labouring under the deflationary burden of high unemployment."
"By way of contrast, while there has been austerity rhetoric in the US, which is probably held back private spending, the unresolved nature of the current political impasse has not translated into any serious budget cuts to date. The current US regime is still talking job creation and growth, which is far removed from the rhetoric that emerges from the British government."
There has been austerity talk in the US but not much lately-very little since the Summer debacle over raising the debt ceiling, If the "current US regime" is still talking job creation and growth with no serious budget cuts to date this is thanks to Obama. He was the last and best defense from austerity. Although the firebaggers don't like it the fact that Obama is not David Cameron, and electing him is the only way to avoid David Cameron in America is reason enough to vote for him come November. If we have not suffered austerity he's a big reason we haven't.