ABSTRACT
In November 2008 American voters elected a new president, Barack Obama, and gave Democrats strong majorities in both houses of Congress. In May 2010 British voters ended a long period of Labour government, but declined to give Conservatives a parliamentary majority, so a novel Conservative-Liberal Democrat coalition government emerged in the hung parliament. Voters in both countries were reacting to a shattering economic crisis defined by the biggest declines in consumption and investment since the Great Depression. At the start of 2011, 16 million Americans were unemployed, 8.5 million jobs had been lost, federal and state governments faced huge budget deficits, and a fifth of all Congress members had been replaced two months earlier. Furious fiscal and monetary pump-priming plus massive bailouts of banks, insurance, investment, automobile and many other firms had averted a meltdown of the economy and instigated a return to modest growth. But with the federal government budget deficit at nearly 10 per cent of GDP, three million homes likely to be foreclosed during the next several years, and with pension and health insurance programs facing eventual insolvency, the longer outlook was grim. In Britain the government budget deficit was 8 per cent of GDP, the official unemployment rate was also 8 per cent, a third of MPs had been swept away in the May 2010 election, drastic austerity measures were beginning to bite, student and other protests mounted, and dissension among Liberal Democrats made the coalition government’s survival uncertain. Elsewhere in Europe, half a dozen countries teetered on debt default, maintenance of the euro-zone was in doubt, and it was feared that the European Union could eventually unravel. Nearly everywhere, in short, the new decade was regarded with trepidation.
