Richard Duncan is the Singapore-based economist who, in 2003, predicted the current worldwide recession, knowing that US consumers could not keep piling up increasing debt. He is now predicting a US economic collapse in about a decade as a result of America's huge budget deficits and shrinking manufacturing sector. Patrick Rial at Bloomberg discussed what he is now saying. Here is the key paragraph:
The U.S. has little chance of resolving its deteriorating financial position because the manufacturing industry continues to shrink, leaving the nation with few goods to export, said Duncan, now at Singapore-based Blackhorse Asset Management....I am not as pessimistic. America will have three chances in the next four years to bring back our manufacturing sector:
- Dollar Crash. The dollar may crash within the next few years, perhaps even within the next few months. After the crash, cheap American wages would get American manufacturing roaring back.
- Obama Administration Action. Another possibility is that the Obama administration could get into a trade war with China and discover balanced trade, as a way to win the trade war. If we began to tie our imports from China to China's imports from us, China would have to take down their many barriers to American products. Increased exports would get American manufacturing roaring back.
- Fiscally Conservative Republicans. In 2012, America could elect fiscal conservatives who understand that more debt is not the solution to excess debt. They could balance trade to end our borrowing from abroad, balance budgets by cutting government spending, and jumpstart investment by replacing the corporate income tax with a VAT or by replacing the entire tax system with the FairTax. The increased business investment would bring American manufacturing roaring back.
Disclosure: No Positions