Industrial Nations Losing Common Sense of Direction
At the start of the new year, the United States and its major trading partners remain preoccupied with their own problems. They have shifted international economic cooperation into reverse gear and, as a result, many experts fear, could back themselves into a global recession.</br></br>Look around the world: The American stagnation continues; most experts see - at best - U.S. economic growth barely over 1 percent this year. Germany's Dec. 19 boost in interest rates to the highest levels in 60 years has all but killed the prospect that "Europe 1992" will be, as once hoped, a global "engine" for growth. And the Japanese economic boom is clearly over. "After a period of unprecedented growth, Japan is on the defensive," says Tokyo-based analyst Kenneth S. Courtis.</br></br>The German move to raise interest rates at the exact time the Federal Reserve Board lowered the discount rate here to 3.5 percent, lowest since 1964, was dramatic evidence that the vaunted "Group of Seven" economic coordination process is dying on the vine.</br></br>Each major nation is attending to its own current problems with little regard for the impact of its decisions on others. At the peak of the G-7's influence in the late 1980s, efforts were made to coordinate fiscal and monetary policy. But today, there seems to be little enthusiasm among Treasury Secretary Nicholas F. Brady and his foreign counterparts for the G-7 process.</br></br>Recently, the G-7 has spent most of its time - through deputies, not principals - on the Soviet food problem. This is important, but it doesn't grapple with macroeconomic disputes among the major powers.