Last fall, Harvard historian Niall Ferguson expressed surprise that Obama’s agents had rediscovered Keynes when they poured trillions in to stimulate the economy. The problem was with this 1830s thinking that in the Great Depression the world economy was a fixed event with few players, while today the world economy is a vast panorama of primarily two major players, China and the United States, with many secondary economies, from Indonesia to the Czech Republic, all participating at varying levels.

We are told by the administration that the economy is now turning the corner. But the Sunday New York Times has an elegant set of color-coded illustrations indicating economic change in a mall between 2008’s first quarter and 2009’s first quarter: Saks down 28.7 percent, Starbucks down 7.6 percent, Nordstrom down 9.2, Dillard’s down 12 percent, Jack in the Box down 16.6 percent, Abercrombie & Fitch down 23.5 percent.

Unemployment in the U.S. surpassed 9 percent in May for the first time in more than 25 years, but Bloomberg reports that Japan’s industrial output surged the most in 56 years in April as a rebound in exports helped the economy emerge from its worst recession since World War II. Stimulus spending by governments around the world totaling $2.2 trillion has helped to prop up demand from abroad, they report.

“The region’s fate remains made in America,” said Stephen Roach, chairman of Morgan Stanley Asia. “That is where hopes of an Asia-led rebound are most tenuous. After a dozen years of excess, the overextended American consumer is tapped out.”

The Obama administration is bailing Japan out of the recession. Is that the way it is supposed to work?

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