The global economy is adrift in what could be a perfect storm fuelled by a drought of growth and consumer demand, tidal waves of debt and deficit and a European banking system that is sinking. Experienced sailors know that all storms have a most dangerous quadrant in which the full brunt and force of that storm will be felt. Avoiding that quadrant is a key rule for safe navigation. Many global economies and especially the American are already well inside the financial ambit of this dangerous zone. The question is whether we can navigate our way safely out of this quadrant or risk sustaining greater and even catastrophic economic damage. One complicating reality is confusing the symptoms and causes of this economic and financial maelstrom. Sound bites and headlines bluster that the exploding debt is driving the nation into bankruptcy. Hence, fiscal conservatives clamour for dramatic budget cuts that translate into Republican demands to slash the size of government. Raising or freezing the debt ceiling became a political football. As a consequence, Standard and Poor’s (S&P’s) downgraded the US security rating to AA+, in turn intensifying arguments to cut spending while sending stock markets and bourses into a tailspin. Unemployment is nominally at 9 percent and probably closer to 15-20 percent when including the underemployed and those who have dropped out of the job market. Hence, creating jobs is a battle cry of both parties. Yet, one of the solutions to attacking unemployment is a massive stimulus package that is a political bridge too far given the neuralgic reaction to more spending. Finally there is the explosive issue of taxes and revenues, critically combustible ingredients in this raging storm. An article of faith for Democrats, matched by the diametrically opposite Republican belief is the need to raise revenues by increasing taxes on those with incomes over $ 250,000 a year, countered by the assertion that such increases would cripple growth and the economy at a time of recession. The result is political deadlock and a ship of state foundering in the midst of this economic and financial chaos. Rudderless, Congress has placed the responsibility of finding another $ 1.5 trillion in cuts on a special commission consisting of six Republicans and six Democrats divided equally between the House and Senate. Their recommendations will face a simple up or down vote in Congress in late November or December. This means that action will be deferred for at least three months without any certainty that Congress can find a solution. Failure will trigger huge automatic cuts spread across defence and non-defence accounts. Yet, there are solutions leading to a safe passage if we focus on the real causes of our travail — the absence of consumer demand and struggling economic growth that prevent job creation and revenue generation. Here, potential rests in two underutilised assets. Corporations have vast amounts of cash perhaps in excess of $ 1-2 trillion at their disposal. But corporations are unwilling to risk that cash given political uncertainty and excessive government regulation that stymies growth. The second is historically low interest rates, now extended through 2012 by the Federal Reserve. This means that borrowing say $ 1 trillion would only add an additional $ 25 billion a year to the nation’s budget expenses — a bargain not likely to be available after 2012. But even considering a new stimulus flies into a tidal wave of opposition to spending increases given that the debt ceiling legislation will add about $ 7 trillion to the debt over the coming years. Three actions are critical. First, far more visible interaction between and among US and European central banks must take place to coordinate cooperation to defuse the economic and financial crises. What is happening in Europe is likely to spread to the US unless it is checked now. Second, reform of the tax code can no longer wait. Similarly, reform of the excesses of the Sarbanes-Oxley and Dodd-Frank regulatory laws is needed now despite harshly negative public attitudes towards the financial industry. And there must be a commitment that the next Congress, after the 2012 elections, will reform entitlement programmes. Third, the White House needs to be bold and create a national infrastructure bank, proposed by Senator John Kerry and others, and finance it with a trillion dollar line of credit. The crucial action here is putting management of this bank outside government bureaucracy and incentivising the private sector to invest their hoards of cash in these projects. The interest on this line of credit will be relatively small and the upside of greater economic growth, consumer demand and jobs worth the risks. Political courage and committed leadership are essential. Opposition to any course corrections will be ferocious. Only the recognition that the nation is in crisis and needs powerful remedial action can change course. But will we? The writer is Senior Advisor at Washington, DC’s Atlantic Council and Chairman of the Killowen Group that advises leaders of government and business