I remember way back in 2008 and 2009 if you watched CNBC there were these debates on whether or not "bifurcation" were possible in the long-term. What the discussion amounted to is it was hoped that China would keep us prosperous even as the bottom fell out in the U.S. in the eurozone.
Now we have come full circle. Today the U.S. is the Little Engine that Must according to much of the business press. China has slowed way down and the Eurozone has now officially gone into a double dip recession. Krugman discusses how, we are doing "the least worst among major economies."
"In the early stages of the crisis, unemployment rose more rapidly in the US than in Europe. This mainly reflected differences in institutions: it’s much easier to fire people in America. From some point in 2010 onward, however, the US situation has gradually improved; initially some of the drop in unemployment was basically people leaving the labor force, but more recently there have been solid though modest gains in the ratio of employment to the relevant population (you have to adjust for aging).
"Meanwhile, Europe has gotten much worse; now formally in recession, but the truth is that it has been going downhill all along."
"Why the divergence? The obvious answer is that the austerity stuff broke out in 2010, and the austerians took over policy much more completely in Europe than in the United States."
During the campaign when Romney kept trying to trash the economy I always wished Obama would just point out that we're the only major economy not facing a double dip. But I guess you're not allowed to try to give things an international perspective or context in an American election as if pointing it out is an excuse.
Still, the reason austerians took over policy so much more completely in Europe is Obama. He prevented it from going as far as it did in say David Cameron's Britain. Essentially a Romney presidency would have looked a lot like how things have in Britain since Cameron's election.