In a recent poll, 60% of US respondents said they believed an imminent economic depression was "likely." To stave off a depression, developed countries will need to spend beyond even the stimulus packages already approved by governments such as the US and the UK as of this writing. Protecting the namely the global economy from the side effects of the stimulus spending means understanding the true pathology of the problem. One of the most significant -- but least remarked-upon -- contributing factors in the current financial crisis was the pervasive belief that the US could be both consumer of the world's goods and borrower of the world's money.
What is clear is that oil importers account deficit prints money like Data Box: Producing, Con- like the United States need an en- this, maybe the currency will be suming, and Exporting Oil tirely new energy paradigm, for no dumped. It would be better, there- amount of domestic drilling can even fore, if everyone does [stimulus The United States is both the leading begin to offset these trends. spending] at once. But in a deflation- consumer of oil in the world and the lead- ary situation, I think the United Chris Nelder is an energy journalist and the States, perhaps a bit less the United ing importer, even though it is also the author of Profit from the Peak — The End of Oil world’s third-largest oil producer. Kingdom, can get away with sub- and the Greatest Investment Event of the Cen- As the following statistics from the En- tury. He regularly consults with media on en- stantial increases in domestic liquid- ergy Information Administration show, ergy, maintains a blog at www.getreallist.com, ity, because I don’t think other coun- many of the world’s top oil producers are and writes regularly for Energy and Capital, tries would dump U.S. currency, as also top consumers (e.g., United States, www.energyandcapital.com. He may be con- doing so would destroy their own China, Russia, and Saudi Arabia). Energy tacted at email@example.com. A more extensive treatment of this subject may be competitiveness. It would force them analyst Chris Nelder warns that, if produc- seen at www.energyandcapital.com/articles to destroy their own money supply.” ers reserve more oil for domestic con- sumption, there will be less available for /oil-export-crisis/712. Protecting the patient (namely the export. Note that China, the number-five global economy) from the side effects producer and number-two consumer, is of the cure (stimulus spending) not even among the top 15 oil-exporting means understanding the true pa- countries. — Cynthia G. Wagner Repairing the World’s thology of the illness. One of the Top World Oil Producers 2006 Financial System most significant — but least re- I (thousand barrels per day) marked-upon — contributing factors Rank Country Production n a recent poll, 60% of U.S. respon- in the current financial crisis, says 1 Saudi Arabia 10,665 dents said they believed an immi- Wolf, was the pervasive belief that 2 Russia 9,677 nent economic depression was the United States could be both con- 3 United States 8,330 “likely.” Retirement accounts lost sumer of the world’s goods and bor- 4 Iran 4,148 more than $2 trillion in value over rower of the world’s money. 5 China 3,845 the past year, and as of November Small, export-driven countries lent 6 Mexico 3,707 7 Canada 3,288 2008, the Dow Jones Industrial Aver- large sums to U.S. consumers 8 UAE 2,945 age was down more than 30% from through Wall Street, financing credit- 9 Venezuela 2,803 its apex in the fall of 2007. card loans and subprime mortgages. 10 Norway 2,786 The causes of the current financial But the developing-nation govern- crisis are numerous and complex, ments in question were less willing Top World Oil Consumers 2006 (thousand barrels per day) says Martin Wolf, chief economics to accept direct investment from Wall Rank Country Consumption commentator of the Financial Times Street in their own economies, fear- 1 United States 20,687 and author of the recently released ing that U.S. investors would pull 2 China 7,201 book Fixing Glob
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