President Barack Obama's 2008 electoral landslide victory averted a global financial meltdown. Had Republican Sen. John McCain won that election, present U.S. GDP would have been even lower than it is now, by more than 15 percent! And similar losses in global productivity would also have taken place.

Hail then the flexibility of Chairman Ben Bernanke's U.S. Federal Reserve and of the European Central Bank for embracing activist fiscal policy for the first time since the Franklin D. Roosevelt New Deal.

Former Federal Reserve Chairman Alan Greenspan and the governors of the European central banks avoided the preventive policies that could have averted most of the present meltdown. These chieftains had falsely believed that unregulated capitalism could dodge the bullet of depression. That's everywhere proved to be a wrong belief.

The 2008 U.S. presidential election brought an end to the Bush administration blunders, and to other post-Reagan "make the poor and middle classes subsidize the ultra rich" enactments. These are bad morals and not justified by higher growth efficiency.

We begin now a new era in which China will increasingly make obsolete America's 1950-2009 world leadership. Your children and my grandchildren will live in this new and challenging era. We'll see China catch up and pass Japan as the economy second in total GDP to the United States.

Then, unless China's one-party leadership explodes, the day will assuredly come when China's total real GDP will exceed America's. Boohoo. But that's the realistic expectation.

However, don't expect smooth and quiet rotation of the globe pace-setters. More likely, within the coming 2010-2020 decade, there will be a massive run against the U.S. dollar.

Why? Because ever since the year 1000 A.D., export-led growth has been the rule whenever an educatable low-wage population has begun to imitate the technology of a more advanced nation, and thus out-compete the industries of the affluent regions.

In America, Atlanta captured much of Detroit's automobile production. So it was and so it will always be. Whenever a low-wage, educatable population can imitate the technology of a more advanced nation, it will do so. That's why protectionism is like a persistent herpes virus, and must be guarded against.

Recently I've come to fear that the inevitable disorderly run against the dollar looms earlier than I used to think. I wish I turn out to be wrong. Many times during seven decades of economics teaching and textbook creation I have been wrong. Still, remember where you read all this first. As the classical Greeks said, don't shoot the messenger who brings you bad news.

I do have a positive recommendation that might reduce the risks outlined above and even delay them into the further future. I counsel those many who invest in dollar assets at near-zero interest yield to switch soon into a diversified portfolio that earns the higher average worldwide yields. That will help better stabilize those volatile foreign holdings of low-yield bonds.

In a much-cited Newsweek column some years back, I wrote about this under the heading, "Advice for a Sheikh." There I floated this present suggestion. Also, late Harvard Business School professor Warren Law and I went to Norway to make a similar pitch.

Thanks to the advance of science and engineering, today's centrist mixed economies can all look forward to longer good-quality-of-life longevity. Before 1700 A.D., that was never the case. The new reality is that white Caucasians are a minority in world population. People of color are the majority, and will continue to become ever more dominant.

Readjust to these new permanent truths. Don't expect to reverse basic trends. Adjust to reality sooner rather than later. Gone forever, one hopes, are the idiocies of Friedman-Hayek libertarian selfishness.

When at 16, I started my economic studies, Carlyle was right to call economics the Dismal Science. Thanks to modern science and better economic knowledge, this Malthusian curse has been vanquished. Good modern economics make economics the Hopeful Science.

At last!

Unemployment Rockets

October Jobs Report: A True Witches' Brew
Liz Wolgemuth

In what will no doubt boost skepticism over the Obama administration's message of stimulus success, the unemployment rate in October rocketed to 10.2 percent, a figure much higher than economists had expected and just 0.6 percentage points away from the post-World War II high seen in 1982. While unemployment snapped back down swiftly in the early-1980s recession, it is widely expected that job creation will be slow in this recovery.

Economy: Cities Where Jobs Recovery Will Be Slowest
Liz Wolgemuth

While the nation's job market is awful overall -- thousands of Americans are exhausting their unemployment benefits daily -- it's clear that the true jobs picture is as varied as the nation's topography. With the promise of a recovery on the horizon, new data show that the employment upturn will be regional as well

Forget Inflation, Deflation Is a Bigger Danger
Mortimer B. Zuckerman

Inflation typically results from 'too much money chasing too few goods.' Today, too much supply is chasing too little demand. That, coupled with consumers' need to save money to rebuild their finances, raises the risk of deflation, not inflation. And as workers compete for scarce jobs and companies underbid one another for sales, both wages and prices will remain under pressure.

Economy: Finding Opportunity in the Recession
Matthew Bandyk

Of all the industries devastated by the recession, the media has been one of the most notoriously affected. According to the Bureau of Labor Statistics, 65,000 media jobs were cut in 2008 -- nearly 4 percent of the industry's total. Newspapers are perhaps the biggest loser, with more than 9 percent of jobs eliminated in 2008. However, ...

Unemployment and Foreclosure: If You Don't Have a Job, How Will You Pay the Mortgage
Ilyce Glink

When it comes to foreclosure, the problem isn't just the 7.2 million jobs that have been lost during this great recession. There are millions of Americans who took a huge pay cut to keep their companies going. Unpaid furloughs and 10 to 25 percent pay cuts mean tens of millions of Americans are having a much harder time paying their bills -- and their mortgages are at risk as well.

Latin American Economy Will Do Well, but Not Great
Latin American Current Events, News & Affairs - Andres Oppenheimer

The news that Brazil and Mexico have come out of the recession and are poised for solid growth in 2010 should be celebrated, and both countries' leaders should be given credit for their sound economic management. But in the global economic context, the two Latin American giants' recovery will be modest.

The Dollar and the Deficits
C. Fred Bergsten

The dollar is under attack on two fronts. Private investors are driving it lower in the foreign exchange markets. Monetary authorities are questioning its role as the world's key currency. There is an obvious linkage between the two attacks: expectations of further falls in the dollar's value will accelerate the prospect that foreign central banks will switch to euros

(c) 2009 Paul A. Samuelson