The great American mirage

In September 1998, during the depths of the Asian financial crisis, Alan Greenspan, the US Federal Reserve's chairman at the time, had a simple message: the US is not an oasis of prosperity in an otherwise struggling world. Greenspan's point is even closer to the mark today than it was back then.

Yes, the US economy has been on a weak recovery trajectory over the past three years. But at least it's a recovery, claim many, and therefore a source of ongoing resilience in an otherwise struggling developed world. Unlike the recession of 2008-09, today there is widespread hope that the United States has the capacity to stay the course and provide a "backstop" for the rest of the world in the midst of the euro crisis.

Think again. Since the first quarter of 2009, when the US economy was bottoming out after its worst postwar recession, exports have accounted for fully 41 percent of the subsequent rebound. That's right: with the US consumer on ice in the aftermath of the biggest consumption binge in history, the US economy has drawn its sustenance disproportionately from foreign markets. With those markets now in trouble, the US could be quick to follow.