U.S. Empire In Decline, Makes Way for China 31 comments
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“The US is an empire in decline, according to Niall Ferguson, Harvard professor and author of The Ascent of Money,” reported Aaron Task of Yahoo Finance - Tech Ticker.
Ferguson concedes:
People have predicted the end of America in the past and been wrong. But let’s face it: If you’re trying to borrow $9 trillion to save your financial system …and already half your public debt held by foreigners, it’s not really the conduct of rising empires, is it? Excessive debt is usually a predictor of subsequent trouble.
The report highlights Ferguson as saying America today is comparable to Britain circa 1900: a dominant empire underestimating the rise of a new power. In Britain’s case back then it was Germany; in America’s case today, it’s China. Ferguson said:
When China’s economy is equal in size to that of the U.S., which could come as early as 2027 … it means China becomes not only a major economic competitor - it’s that already, it then becomes a diplomatic competitor and a military competitor.
Source: Aaron Task, Yahoo Finance - Tech Ticker, October 20, 2009.
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This article has 31 comments:
The FT did another excellent article on India "Basic Services Remain a Work in Progress". That article noted expansion is so fast, India is running out of labor. Imagine that. And half the population in India is under the age of 25. India's growth is exploding.
The top 100 brands in China have a surprisingly large number of US companies on that list. The message to corporate America is seek your growth abroad.
I wish my country well and hope it will get back on the right track, but all my analytical investment skills tell me that China especially and emerging markets generally provide much better odds of investment success.
On Oct 25 10:05 AM The Geoffster wrote:
> If I recall correctly, Germany was still smoldering from WW1 when
> Hitler rose from the ashes.
Tahiti is also an odd place to seek to avoid French influence, unless of course you did your geographical studies in the US.
On Oct 25 10:35 AM Mad Hedge Fund Trader wrote:
> bdt The US is turning into Europe. Think high taxes, chronic high
> unemployment, more government involvement in everything, less innovation,
> and much lower growth, in exchange for a social safety net and better
> coffee. That is the message the markets told us by retreating to
> the 6,000 handle in March, levels not seen since 1996, and down 54%
> from the 2007 peak. Equity prices will shrink to multiples, in line
> with permanently lower long term growth rates of maybe 1%-2%, a shadow
> of the 5% rate seen for much of this decade. Hint: that’s a lot lower
> than here. Perhaps this is what mature economies are supposed to
> look like. If someone is holding a gun to your head and you must
> buy American stocks, only select names that get the bulk of their
> earnings from overseas. Microsoft (seekingalpha.com/symbo...),
> Intel (seekingalpha.com/symbo...), Oracle, (seekingalpha.com/symbo...),
> Cisco (seekingalpha.com/symbo...) all get 60%-70% of their
> profits from overseas, where up to 90% of the real economic growth
> will come from for the next decade. Commodity, agricultural companies,
> and their ETF’s also fit this picture. As for me, I think I’ll move
> to Tahiti and live off of coconuts and freshly speared fish, wearing
> only a loin cloth. Anything is better than becoming French.
That's a little too much information.
"Anything is better than becoming French."
Now, here we go again, insulting the whole race just because the Left has pretty much taken over there. They've been in power now for about 220 years. Stability!
We compiled too many trade-offs, social obligations, and restrictions in the path of economic growth, and every one of them carries an economic price of inefficiency. Every ecological impact permit, every court injunction, every unearned social obligation is a burden. A developed economy can afford a few, but it is still a burden. A society that figures a way to deal with these issues more efficiently will eventually bypass us economically. And it's becoming obvious "eventually" may mean "soon" in case of China.
Both parties in Washington have shown little leadership in dealing with imbalances in the system whether it be currencies or trade. Whats more disturbing is that current FED policy allows China's economy to be supported by the American Taxpayer with this massive worldwide liquidity. .
Major portions of the country are polluted, air,land water ways etc. They don't have enough food, water, energy or modern manufacturing methods. Most of the stuff that they do make is of questionable quality and little is of advanced technology. They have 3 times the population of US but only1/4th or our GDP.
The Russians hate them as do the Indians, Japanese, and Koreans.
They will be suffering major demographic problems due to the "only 1 child" rule. Mao called the US a paper tiger back in the '60s. Really!!!!
On Oct 25 03:30 PM parky wrote:
> Oh come on guys! China has enough of a problem just feeding and hauling
> away waste every day for 1.3 billion or so people rather than conquering
> the world. They don't have much of an Air Force or Navy and their
> Army is mostly conscripts with a uniform and a rifle. How can they
> project power if they don't have the means to get troops, etc. out
> of their own country? US has 10 carrier task force groups. China
> can't even spell "task force."
>
> Major portions of the country are polluted, air,land water ways
> etc. They don't have enough food, water, energy or modern manufacturing
> methods. Most of the stuff that they do make is of questionable quality
> and little is of advanced technology. They have 3 times the population
> of US but only1/4th or our GDP.
> The Russians hate them as do the Indians, Japanese, and Koreans.
>
>
> They will be suffering major demographic problems due to the "only
> 1 child" rule. Mao called the US a paper tiger back in the '60s.
> Really!!!!
Are you absolutely sure the Chinese are not bright enough to come up with a better plan than that?
On Oct 25 02:07 PM Pauly B wrote:
> China still needs consumers for their products and if they drive
> America and Europe down they will likely have political unrest as
> their economy gets weaker. In this case it takes three to tango
> and I am sure their leadership understand that.
>
> Both parties in Washington have shown little leadership in dealing
> with imbalances in the system whether it be currencies or trade.
> Whats more disturbing is that current FED policy allows China's economy
> to be supported by the American Taxpayer with this massive worldwide
> liquidity. .
On Oct 25 04:53 PM jtareen wrote:
> Hahaha. People who make these predictions have no understanding of
> China. China is potentially the most imbalanced nation in the world
> in terms of wealth concentration. Hence a communist country that
> does not allow any free thought and free discussion. The coast where
> most of the wealth is concentrated has traditionally been under
> the influence of the west. The western capitalist interest wield
> more influence in China than what meets the eye. Today's China is
> a result of large amount of foreign direct investment from the west,
> precisely because it was a closed society with power concentrated
> in few hands. This allows for less environmental and labor regulations
> and cost. Lower the labor cost, higher the profits. US and European
> interest chose China to be the world producer of goods. Up untill
> 1970's and 1980's China was one of the poorest nations in the world.
On Oct 25 03:30 PM parky wrote:
> Oh come on guys! China has enough of a problem just feeding and hauling
> away waste every day for 1.3 billion or so people rather than conquering
> the world. They don't have much of an Air Force or Navy and their
> Army is mostly conscripts with a uniform and a rifle. How can they
> project power if they don't have the means to get troops, etc. out
> of their own country? US has 10 carrier task force groups. China
> can't even spell "task force."
>
> Major portions of the country are polluted, air,land water ways
> etc. They don't have enough food, water, energy or modern manufacturing
> methods. Most of the stuff that they do make is of questionable quality
> and little is of advanced technology. They have 3 times the population
> of US but only1/4th or our GDP.
> The Russians hate them as do the Indians, Japanese, and Koreans.
>
>
> They will be suffering major demographic problems due to the "only
> 1 child" rule. Mao called the US a paper tiger back in the '60s.
> Really!!!!
That said, all these countries and the rest of the world besides face many challenges as well as opportunities; challenges that dwarf those facing the US in many cases. Further, while each country naturally wants to maximize and secure its interests, the US does not face the sorts of aggressive challenges to its role and interests from any of them that the UK faced immediately before WW I to its. While the historical analogy that best represents the challenges the US faces today are the challenges the UK faced at the beginning of the 20th century, the challenge the US now faces from China is much more like the UK/US rivalry of that era than the UK/German rivalry. I could elaborate but only if someone questions the logic of my analogy.
The US will remain “the first among equals” for the foreseeable future but the emphasis will shift somewhat more to the ‘equals’ aspect. Like the citizens of the UK for the past century, US citizens have every reason to expect to excel and live well even as they and their country experience of the best of life more in parallel with other countries and their citizens.
On Oct 25 10:35 AM Mad Hedge Fund Trader wrote:
> bdt The US is turning into Europe. Think high taxes, chronic high
> unemployment, more government involvement in everything, less innovation,
> and much lower growth, in exchange for a social safety net and better
> coffee. That is the message the markets told us by retreating to
> the 6,000 handle in March, levels not seen since 1996, and down 54%
> from the 2007 peak. Equity prices will shrink to multiples, in line
> with permanently lower long term growth rates of maybe 1%-2%, a shadow
> of the 5% rate seen for much of this decade. Hint: that’s a lot lower
> than here. Perhaps this is what mature economies are supposed to
> look like. If someone is holding a gun to your head and you must
> buy American stocks, only select names that get the bulk of their
> earnings from overseas. Microsoft (seekingalpha.com/symbo...),
> Intel (seekingalpha.com/symbo...), Oracle, (seekingalpha.com/symbo...),
> Cisco (seekingalpha.com/symbo...) all get 60%-70% of their
> profits from overseas, where up to 90% of the real economic growth
> will come from for the next decade. Commodity, agricultural companies,
> and their ETF’s also fit this picture. As for me, I think I’ll move
> to Tahiti and live off of coconuts and freshly speared fish, wearing
> only a loin cloth. Anything is better than becoming French.
America is on the verge of another huge collapse, and at the same time, may have the most to gain by coming to China, and introducing more services, products, culture and friendship.
The Chinese are very open to America, and at the same time, careful. America has been a bit of a bull in a china shop, and has broken a lot of pieces....
American's are innovative, welcoming and good people. The Chinese are hard working, welcoming and good people. The Chinese have a long history of concessions to the West, and have opened the borders again, just like in the 19th Century. Innovation and raw talent will keep America a partner with China. Politics and financial malaise will reduce our chances.
America has a lot to offer the Chinese, and the Chinese are doing the best they can, to provide wealth and stability for the world's largest nation. I see that America could also take another road, less traveled, and that is the road of fear, protectionism, and retribution. It would prove to be a disaster for the USA, and further marginalize the relavance of a declining Superpower.
The Beatles sang about a world with no countries, and while this isn't in the cards for the short term, there is a wisdom to the attitude. The best things about America, is the diversity of it's people, food choices, and innovation. Figure out how to celebrate that, and we just might have a chance.
My conclusion exactly, as I wrote here: seekingalpha.com/user/...
On Oct 25 10:16 AM Alphameister wrote:
> When I hear comments today to the effect that it is a mistake to
> underestimate American ingenuity in getting past this country's huge
> problems, my reaction is, "Don't mistake the America of today with
> the America of earlier generations. I appreciate the patriotism of
> such comments, but not the analytical perspicacity. The "flower children"
> have taken control in the nation's capital, the nation as a whole
> has become all about instant gratification, and the work ethic (and
> arguably ethics in general) has suffered a serious decline across
> several generations.
>
> I wish my country well and hope it will get back on the right track,
> but all my analytical investment skills tell me that China especially
> and emerging markets generally provide much better odds of investment
> success.
Good comment. My same conclusion I wrote here: seekingalpha.com/user/...
On Oct 25 07:21 AM Dave Wrixon wrote:
> Niall grossly underestimates how quickly things are developing. It
> won't take more than a decade. Look how the Hilter changed the face
> of Europe in less than a decade starting from zero. Look how quickly
> the British Empire caved in. How quickly communism rose and how quickly
> it imploded? How long did it take for the Japanese Miracle to collapse.
> These things don't take generations.
Thanks
THAN INPORTING MEDIOCRE GOODS. GIVE TAX INCENTIVES TO MANUFACTURERS TO STAY HERE. CHARITY BEGINS AT HOME.STOP SENDING MONEY OUT TO COUNTRIES WHO WANT US ON OUR KNEES. THEY ARE A BOTTOMLESS PIT.
THESE GOVT'S. POCKET MOST OF THE MONEY WHILE THEIR
HANDS ARE STILL OPEN FOR MORE . WE SUBSIDIZE THE CORRUPT HERE AND AS WELL AS ALL AROUND THE GLOBE.
NO WONDER WE ARE DOING SO BADLY.
they are moving toward capitalism; we're moving toward socialism/fascism. you figure where is the best place to invest!
On Oct 26 09:38 AM jtareen wrote:
> I think if enough people bang the drum of China's ascendancy and
> America's decline. Alas we will all start shifting our capital there
> and indeed make this self created prophecy come true. The economy
> is all mental. As Americans our mentality has become of defeat because
> like someone said we are not getting the quick gratification any
> longer. Folks let's invest back in America and create real capital
> instead of massive liquidity in the system which only creates an
> imbalance in the system. If everyone gives up on America then indeed
> it may be true that our greatest days are behind us.
>
> Thanks