Sean O'Grady: America's troubles are a problem for us all – but also a useful lesson

To repeat the cliché, when America sneezes, the rest of the world catches a cold. While the fast-growing emerging markets have domestic engines of growth, they are still dependent on exports; and capital flows from... America. They have not "decoupled" from the US any no more than we have.

Americans are the world's consumers of last resort for everything from Scotch whisky to Chinese pet food. The US is the world's lender of last resort, too. From the Marshall Plan to its continuing dominance at the IMF, the United States has bailed out almost every nation on the planet. If it runs out of money, then where will the bust economies of the eurozone go? Mars?

So, size matters. But it is no longer enough to be the world's largest economy and its largest debtor. Standard and Poor's decision to put the US on "negative watch" and the IMF's recent warnings on debt are straws in the wind. The authorities in the US may want to continue their efforts to support the economy but the markets may not let them. Things would be better if President Obama's administration and Republicans in Congress hatched a credible deficit reduction plan. They have failed abjectly.

So what does the United States' stalling recovery teach us? And what does ours tell the US? Maybe something so obvious it is overlooked. For the health of an economy is much more down to its fundamentals – competitiveness, productivity, skills, investment, entrepreneurship – than the technical niceties of when to adjust interest rates by 25 basis points. China and Germany do not suffer from these Anglo-Saxon problems for this reason; they make stuff the rest of the world actually wants to buy.

Arguments about cutting "too deep and too fast" are otiose. Sensible fiscal and monetary policy is a necessary but insufficient condition for prosperity.