The other reason is that there is no timetable for an increase in interest rates -- businesses can delay investment until better times because there will be no cost associated with that delay. A rise in inflation would help to address that, as businesses would know that low interest rates will have to end at some point -- they would now be viewed as a finite opportunity and costs would be associated with inaction.
The biggest risk, the article argues, to the financial environment is that the U.S. economy would cease to be a driver of economic growth. Europeans interviewed in the article are already worried about their role, but as developing nations experience strong growth they are poised to take over leadership roles in the world. While this sentiment is perhaps premature and alarmist, there are significant implications would China, India and Brazil begin to take over. Those countries would attract investment at a faster rate than would the U.S. economy, which would have a negative...
The coda to the article includes a quote from Kenneth Rogoff that "unpredictability is the word of the day," which sums up the mixed message that the article contains about the financial situation as the result of this election. Some outcomes are expected to be positive, such as continued low interest rates, but others are negative, such as the shift in financial flows from the U.S. To developing nations that offer higher rates of return and the possibility of strong growth.
Works Cited:
Alderman, L. (2010). Shift in Washington stirs economic jitters abroad. New York Times. Retrieved November 3, 2010 from http://www.nytimes.com/2010/11/04/business/global/04global.html?_r=1&ref=business
