
A statue of the Canadian “groundhog”, Wiarton Willie, in Wiarton ON. It started as a spoof in the 50s by a bunch of partying Canucks anxious to help a journalist with a story, and it just GREW. Alas, the original Willie died at the ripe old age of 22 in 1999, but, Wee Willie is carrying on the tradition.
In the last few years, Punxsutawney Phil the groundhog has made one wrong forecast after another. The American tradition, which marked its 122nd anniversary on 2 February, states that if on that day, if the groundhog leaves the burrow where he was hibernating and he sees his shadow, which happens if the sun is shining, spring is still a long way away.
Regardless of the groundhog, the weather in Russia is still colder than in the United States, even in Pennsylvania, a state in the north-east that is the home locale of all the Punxsutawney Phil groundhogs over the years. However, now, the two countries share a problem. The second stage of the economic crisis has set in, when unemployment requires more urgent attention than the banking system. The unemployment rate in the United States is the same as in other countries. In early 2008, it was 4.9 percent in the United States as compared to 7.2 percent today. In the European Union (EU), the figures are 6.8 percent and 7.4 percent, respectively. In the estimate of the Ministry of Health and Social Development, Russia also has up to 7 percent unemployed, just like in Europe and America.
The US administration’s measures are becoming increasingly “socialist”. For the time being, everything is concentrated around “Obama’s package”, which is worth almost 900 billion USD (32.641 trillion roubles. 701.46 billion euros. 623.43 billion UK pounds). The package was approved by the House last week, and should be endorsed by the Senate this week. It contains simple, but, smart measures, such as a long-term loan of 1,500 USD (54,454 roubles. 1,170 euros. 1,039 UK pounds) per capita for the purchase of a truck or car. Washington is hoping that even such a small sum will help restore the sales of US cars, which have fallen one-third as compared with these in 2007. Needless to say, this is somewhat different from the prohibitive car import duties that have been introduced in Russia. In effect, this is a reverse action aimed at supporting domestic car-makers, but, it will produce the same effect.
We will see the positive results of Obama’s package at the end of the year or later. However, analysts are already talking about the failure of the previous package by Treasury Secretary Henry Paulson. At the Davos World Economic Forum It was described as a “failure” by Joseph E. Stiglitz, who won the 2001 Nobel Prize in Economics. His assessments of unexpected crises have been uncannily accurate. He said that the first 700 billion USD (25.412 trillion roubles. 546.21 billion euros. 484.89 billion UK pounds) given over to the banks was wasted, for they did not resume any loans. Professor Stiglitz likes the idea of setting up a special bank for problematic assets by buying them from the banks even less. As a result, they will simply run bankrupt, because banks are kept afloat by the problematic assets for which they may still get something in the future. Once again, we can draw unpleasant parallels with the EU and Russia, where banks are reluctant to issue loans, and nobody knows what to do with bad assets. Should they be written off as Prime Minister Vladimir Putin suggested in Davos? What will happen with the banks in this case? That should be thoroughly analysed.
Professor Stiglitz doesn’t like Obama’s plan either. He explained that it would lead the United States to the third stage of the crisis, an unacceptable internal debt up to 10 trillion USD (363.029 trillion roubles. 7.803 trillion euros. 6.927 trillion UK pounds) and a budget deficit of 1.4 trillion USD (50.824 billion roubles. 1.092 billion euros. 970 million UK pounds). These figures are unprecedented since the end of World War II. Interest rates on this debt that will have to be paid to American creditors are a third problem (in addition to finances and unemployment). In this case, many nations, not only the Americans, will wish they could hibernate together with Punxsutawney Phil the groundhog for a long time to come, because the ideas of how to extricate themselves out of the crisis have been very similar everywhere so far.
2 February 2009
Dmitri Kosyrev
RIA-Novosti
http://en.rian.ru/analysis/20090202/119930141.html (in English)











