If the economy is bad in America, it's even worse in the rest of the world. That's the verdict of a new World Bank report that says the global economy is shrinking for the first time since the Great Depression. World Bank president Robert Zoellick has been warning for weeks that instability could loom abroad as tens of millions abroad are thrown into poverty, not to mention Central and East European nations that embraced the idea of free trade and a global economy. Even Spain, Austria, and Ireland could require bailouts. More and more, the danger of a rerun of the 1930s, in which extremist movements profit from financial depression, looms as a real prospect.
The World Bank want to create a Vulnerability Fund to assist developing nations. But the billions needed would have to come from the United States, western Europe, and Japan. Are they going to reach into their increasingly frayed pockets to further aid other countries? The only plus is that Zoellick seems to be completely on top of the situation. The contrast with Obama administration officials such as Timothy Geithner could hardly be starker.
Zoellick, by contrast, deserves credit for focusing on the problem ahead summit of world leaders in London next week. Sure, American and other countries can turn inward. But eventually turmoil abroad will come to resemble a tsunami at home, washing away hopes of an economic recovery.
What's the likely reaction of the GOP, which has turned to a precocious 14-year-old conservative ideologue living in Florida as its new savior? It doesn't want to hear, let alone acknowledge, the confessions of shopaholics. Most likely, it will denounce any further aid as a form of foreign welfare, while continuing to call for freezing domestic spending--the prefect recipe for a decade-long economic depression that President Obama is desperately trying to avert.