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Why is it that the U.S., Britain and Japan, despite their huge debts and other economic problems, have not succumbed to the financial crises that are threatening national bankruptcy for Greece, Spain and Italy and perhaps soon for France?

After all, even the strongest British and American banks, such as HSBC and JPMorgan Chase, have now admitted that they were as accident-prone as their continental rivals. Borrowing by the U.S,air jordan pas cher., British and Japanese governments is well above European levels relative to the size of the economy. These governments are not even considering fiscal consolidation as ambitious as the 3 percent deficit targets now being written into national constitutions across most of Europe and Britain has missed by a wide margin the much less demanding targets David Cameron set himself in 2010.

Given that financial markets are supposed to be dispassionate arbiters of economic management, why are they punishing Mediterranean countries with cripplingly high interest rates, while the British, U.S. and Japanese governments are left free to borrow without any apparent limits at almost zero cost?

In the U.S., the standard answer is that the dollar enjoys “reserve currency status,” since it is the main currency of global trade and investment. But this explanation is clearly wrong, or at least irrelevant,air jordan, as evidenced by the equally low interest rates in Japan and Britain, without this supposed ”status.” Moreover, the euro has been increasingly used as a reserve currency, but this has been no help to Greece, Italy or Spain.

Which brings us to the less flattering Eurocentric explanations of the unequal treatment meted out by investors to what they often describe as “the Club Med” countries. These range from philosophical statements whose precise meaning is never clear ?such as Europe’s lack of “political solidarity” or “economic convergence” ?to claims verging on racism that prudent investors would never lend money to these countries because their national characters are rotten to the core: The Greeks are all corrupt, the Spaniards inefficient and the Italians lazy. As for the French, well maybe they are oversexed or rude or just French.

Such impressionistic explanations of market behavior are not just insulting and morally repugnant (imagine if such national stereotypes, which appear constantly in the German and British media, were applied to Jews, Africans or Muslims),Doudoune Moncler Femme. They are also factually wrong for example, Italians on average work 27 percent longer than German workers (1,Doudoune Moncler Pas Cher,773 hours each year versus 1,390, , and Italy’s long-term pension liabilities are smaller than Germany’s (relative to GDP), according to the IMF.

Worst of all, however, the racist stereotyping that passes for rational analysis of the European crisis deflects attention from a genuine difference between Europe and the rest of the world that perfectly explains the markets’ behavior. There is one simple difference between all the European victims of financial crisis and the lucky countries that are given a free pass by investors, despite even bigger deficits and worse banking crises. The countries with immunity control their own currencies and central banks. They thus have the power to print money, which they use to the full. By the principle of Occam’s razor, this one simple explanation should be viewed as the main reason for Europe’s present crisis.

The ability to print money, officially known as quantitative easing (QE), has allowed the U.S., British and Japanese governments to run whatever deficits they wanted and to offer their banks unlimited support without suffering the sky-high interest rates that are now driving the Club Med countries toward bankruptcy. Instead of raising money from private investors, these governments finance their public spending and deficits by borrowing from their own central banks. This means that the U.S., British and Japanese governments are actually much more solvent than their huge deficits suggest, because much of their debt does not really exist,Doudounes Moncler. They are an accounting fiction an IOU from one branch of government, the treasury, to another,air jordan pas cher, the central bank. The Bank of England, for example, is lending ?375 billion to the British government in 2009-12, out of a total planned deficit of around ?450 billion. The Fed’s $3 trillion balance sheet effectively reduces the U,Air Jordan Pas Cher.S. government’s total debt by 20 percent, from $16 trillion to $13 trillion.

Of course using printed money to finance government deficits cannot permanently solve structural economic problems such as poor education, crumbling transport infrastructure or unaffordable pension commitments and in some circumstances financing of deficits by central banks can be extremely dangerous, generating rapid inflation. But the world today is not threatened by inflation and overspending, as it was in the 1970s and 1980s. Instead the danger is generally thought to be deflation caused by inadequate investment, weak consumer spending and falling wages, as in the 1930s. Thus a policy that would rightly have been denounced as counterproductive and irresponsible 40 years ago, is now both necessary and prudent as demonstrated by the willingness of every major central bank in the world, including the ultimate guardians of monetary stability at the Swiss National Bank, to undertake QE. The only important exception has been the European Central Bank.

On Wednesday this week publicly urging the,doudoune moncler femme?ECB to implement a “sizeable” program of quantitative easing. If the ECB did this, the euro crisis would soon be resolved. If, on the other hand, Europe will not allow its central bank to play by the same rules as the Fed and the Bank of England,doudoune moncler, then all efforts to save the euro are doomed to failure.

PHOTO: A photographer takes a picture of the construction site of the new headquarters of the European Central Bank (ECB), in Frankfurt July 16,nike air jordan, 2012. REUTERS/Kai Pfaffenbach

This piece originally appeared in .

As Europe’s leaders struggle to restore confidence in the single currency and America’s economy limps ahead at a painfully slow pace,air jordan, China’s economy continues to power forward at its now characteristically strong clip. For the past three decades, China has been the world’s fastest growing economyand within the next several years, the People’s Republic will overtake the United States as the world’s largest. Some economists have even argued that, measured by purchasing-power parity, China has already pulled ahead. Such prognostications, accurate or not, have led to dire warnings that liberal capitalism’s best days are behind it, that the future lies with authoritarian market managers who are able to relocate populations and move mountains by decree. For the moment,moncler pas cher, at least, state-managed capitalism appears to be triumphant.

Such appearances,air jordan femme, however, are misleading. The appeal of state capitalism lies in its ability to withstand the occasional crises that afflict market systems,doudoune moncler homme, thus shielding the general population from politically inconvenient disruptions. It is a system in which the state uses state-owned enterprises, national champion firms, sovereign wealth funds, and politically loyal banks to dominate the process of domestic wealth creation. To be sure,air jordan pas cher, this is not communism; significant segments of state capitalist economies are in private hands. But the state plays the largest role in ensuring that market forces serve political endsby ensuring that, profitable or not, businesses invest in projects that bolster social stability and protect the ruling elite’s political control.

China is not the only state capitalist economy producing impressive results. As the Arab world continues to contend with the risks of political turmoil,Doudoune Moncler, Saudi Arabia and the United Arab Emirates have stockpiled the cash they need to maintain stability by controlling much of the wealth produced by national oil companies. Even some emerging democracies have begun to flirt with limited forms of managed capitalism. Brazil’s private sector remains crucial for the country’s expansion, but its government leans on state-owned energy firm Petrobras and privately owned mining champion Vale to help create jobs. President Dilma Rousseff’s government won’t milk cash from these firms as President Hugo Chávez has done with state-owned oil company PDVSA in Venezuela, but Petrobras is already at risk of becoming a much larger, less efficient, and thus less profitable company.

State control is not the future of capitalism. It is a dead end from which China will have to free itself if it is truly destined to dominate the world economy. As a system and by design, state capitalism ensures that wealth creation does not threaten the leadership’s hold on political power. Its ability to stimulate growth and general prosperity is a secondary benefit. Forced to choose between public wealth and political survival, state capitalists will always protect their own interests first. In China, as elsewhere,doudoune moncler homme, commercial activity depends on access to information, and the Internet provides the best and most efficient access to it. Yet if the Internet threatens to enable popular resistance to China’s authoritarian government, and if political officials have the means to shut the Internet down, even temporarily, they will do just that.

State capitalism’s greatest weakness lies in its intolerance of “creative destruction,” a process that invests liberal capitalism with vital self-regenerating momentum. The liberal capitalist model makes it possible for the workers,nike air jordan, resources, and ideas invested in a dying industry to spontaneously recombine in novel configurations to produce goods and services that satisfy emerging demand. But the economic engineers of state capitalism fear any form of destruction that develops beyond their control. This is why state-owned companies, which build influence within government over time, often succeed in resisting the need to adapt to changing times.

Then there is the question of openness. Within autocratic state capitalist systems, government-owned companies like China National Petroleum Corporation and some of the Arab world’s sovereign wealth funds?shun the transparency that long-term resilience and adaptability demand. This opacity can benefit a country’s ruling elite by hiding unsuccessful investment decisions, but it is very harmful for the system’s long-term health. When such institutions can hide their failures, they are free to inflict much more lasting harm than they otherwise could.

Managed capitalism also falls short when it comes to exploiting innovation,chaussures air jordan, though government-directed investment can play an important role in the development of new technologies. The Internet arose from a U.S. government subsidized defense project,Moncler, but it was profit-driven companies that developed and reimagined the Internet and thus transformed the world. History shows that over time state officials never value assets and allocate resources as efficiently as market forces can.

Even in China, state officials understand that citizens are the engine of economic vitality. That is why the state has embarked on an historic and ambitious plan to shift wealth from China’s largest companies to the country’s consumers. China’s leaders know that the next generation of?economic growth must be less dependent on exports to Europeans and Americans; creating domestic consumer demand is crucial. Thus the process of empowering Chinese consumers will undermine state capitalism’s appeal even within the country that has made this system so seductive.