Posted on 09/29/2004 10:12:39 AM PDT by Willie Green
It could simply be this year's edition of the morose introspection that sometimes accompanies autumn. But it could also be the case that the relatively short epoch of the United States as the world's sole superpower is drawing to a close.
A U.N. Conference on Trade and Development report released last week indicated that China was the largest recipient of foreign direct investment in 2003, having overtaken the United States. In the past year, foreign investment in the United States had dropped by 53 percent, taking it to the lowest level in 12 years.
The Chinese growth rate is now projected for this year at 9.6 percent. The U.S. economy is estimated to grow only at a respectable but unexciting 4.4 percent, less than half the Chinese rate.
U.S. manufacturing and service jobs are being outsourced to China and India. China is graduating thousands more engineers and scientists per year than the United States.
The United States is dependent on huge dollops of Chinese purchases of U.S. Treasury bonds to be able to continue to finance the soaring Bush administration budget deficit. A precipitous drop in Chinese confidence in the health of the American economy would be disastrous in financial terms for the United States.
(Excerpt) Read more at post-gazette.com ...
Thanks for the reference. I will not need to google for articles I've read.
The posted article mentions two of the playing cards that make up China's "house."
China's phenomenal growth consists in large part of make-work construction financed by nonperforming loans from the Chi-coms' "banks." FDI is desperately needed to hold that part of China's house of cards standing. More nonperforming loans and more FDI needed to keep Mao-era state owned enterprises going lest millions more join millions of laid off workers and the 800 million restless poor outside Chins's special economic zones.
China's ten-foot tall college-trained "professionals" are perhaps the most dishonest students and graduates in the world, in terms of cheating and phony documents.
Anyone doubting that can google, universities cheating china. Or I will supply some links.
How did China acquire all that technology and knowledge to do those wonderful things?
RE: "It's 2004, not 1950."
Cute. But what does it mean? The Chi-com masters would never, never murder tens of millions of their own citizens again? As Dan Rather said just hours before Tiananmen Square, "China is a kinder, gentler nation." Is that what that means?
How did China get all that modern technology?
I knew in grade school that such a "report" would be B.S. I am not kidding. Honest stats? From whom?
Or was your report facetious? Were the other students dumb enough to believe it? Did anyone believe that the Wall was to keep West Germans out of the East's workers' paradise?
It don't get no sillier than that. Got any more, wideawake? I suspect I'll see many more as I keep reading.
"GE decided to make India a primary centre for its high technology research. Today over a hundred MNCs have critical R&D labs in India."
Just one of tens of thousands of google hits.
Who made India a knowledge-power?
http://www.rediff.com/money/2004/feb/03bud3.htm
Ignoring google is a terrible thing to do. It is so easy to use. Knowledge, not feeeeeeeeeeeelings.
Good analysis.
RE: "I wonder sometimes if the Western globalists and leaders of freemarketeerism do not hope for the same development."
I think that is fair to say that Third Way New Democrats are a powerful force in the U.S. and their foreign comrades are powerful forces internationally. They are very much for "free trade" and globalization that are rules-based. They make the rules. See DLC's New Democrat On Line, ndol.org
Greed-related cognitive impaired conservative "free traders" are the progressives' NEP useful idiots. IMO, it's a Marxist revolution from the top down. But as you noted, first must come the conditions of enough industrialized nations.
And the "free traders" call their critics protectionist socialists or worse. Go figure.
"America can be eclipsed by China in key ways"... I bet he forgot that China can enslave over a billion people in a second and arm them with spit ball guns.
Yes. And sadly, many call themselves "Americans".
Except for those who have "moved beyond being Americans," who doesn't? Not just leftists swine but also some of our corporations say they are no longer American. "Free traders" here say they look beyond America. Capitalism rules. Then America is in second place?
IMO Willie Green is merely attempting to alert the citizens. "Willie's mission of spreading misery and discontent throughout America" is more like Paul Revere than it is "doom and gloom." ("There goes that damn Revere, wish he wouldn't do that at night. There ain't no British.")
But I am against transferring our technology (and I DON'T mean buggy whips) to developing nations in exchange for "cheap" labor and calling it "free trade."
I am very much for free trade with developed countries that have earned their comparative advantages the old fashion way.
I am very leery of "free trade" when it is praised by progressives of the ilk of Thrid Way New Democrats like the Clintons.
I am not going to google for it but I know that I've read reliable estimates that China's military (esp. space related and missiles) has be accelerated by "free trade" and outright treason.
Willie Green has a lot of good points, IMO.
We have gotten soft in the traditional manner of most socialist societies. A wake up call should be obvious when we refuse to protect ourselves in the trade arena and use our dollar to finance unlimited expansion of Chinese military and industry. Free trade is not a mandate to commit national suicide. Don't think for an instant that our trading partners are not using regulation, currency manipulation, and credit swaps to undermine us.
What other nation on earth is providing tax incentives to corporations to move their operations overseas while we suffer the deficits affecting our own future? Most of our problems arise because we have poor horse traders taking care of our business interests, while the public sits on their rump and complains about the next handout from our benevolent government.
The market place will work in the long run. We are setting ourselves up as the new world's third rate banana republic instead of the world's super-power if we don't change our ways. Demand more of your government and less from your government. It is a symbol of our greed that we have let a third rate nation with a communist structure become a more capitalist nation than we.
Thanks for the viewpoint.
I am no economist, however common sense would dictate that China has it's hands full feeding and maintaining it's own stability.
I would seriously doubt they are ready, or able to assume the role of world conquerers.
A house of cards indeed. ;)
This sentence alone shows that you did not read my post.
Our superpower status is not entirely based on our economy. It is based primarily on our ability to project military force anywhere in the world without anyone being able to stop us.
That said, if the U.S. were to stop all trade with China as of tomorrow, the world would abandon China and flock to the U.S. They may be growing fast, but they are growing from a sprout. We are a still growing mature oak that is getting bigger and stronger while China is still trying to get big.
The most important gauge of economic power would probably be the water guage. What percentage of Chinese homes have running water as compared to the U.S.
Shalom.
Then USA is not superpower. Any country with the nukes or large determined population and difficult terrain can stop us.
You are confusing the standard of living with the strength of a nation. China has much larger population and four thousand years of history. So who is the "sprout" and who is the "oak"?
To become equal in economical power, China needs to have national product per capita be 25% of that of America in real PPP terms. They have ten years more to go.
I don't agree. They can make it more difficult for us to win, but they can not stop us. The large number of nukes with international delivery vehicles that the Soviet Union had could stop us, but not "any country with nukes." Even a big spanking like a nuke at Wall Street would not end the game. It would just change the way we play it.
When I lived in Texas we had to deal with imported fire ants in our yard. They were a pain, but they could not change the fact that I could go where I wanted when I wanted, and I could drive them out at will. I never truly "defeated" them, but they never even slowed me down.
The analogy isn't perfect, but it serves.
Shalom.
I don't see that as confusion. Our strength has allowed us to lift our standard of living. China and India have been around much longer, but haven't done squat for their people. Their civilizations are very much "sprouts." And I don't think you could call today's China a continuum from the four thousand years of history. India would have a better claim.
To become equal in economical power, China needs to have national product per capita be 25% of that of America in real PPP terms. They have ten years more to go.
I would have to disagree. A nation that can not support its own people would collapse under its own weight. The China that we know today has only been around since the Revolution and hasn't been able to pull out of the station well, let alone get rolling.
This can all change. I'm not trying to say that the U.S. can remain a superpower forever and that China can never overcome its problems. I'm just saying I don't think we are close.
Shalom.
I believe that you are exactly right.
I have been puzzled for a long time about the response to Willie Green's comments -- it's rare that he gets a substantive reply. Mostly it's insulting inane knee-jerk responses.
I can appreciate substantive replies that address concerns that all of us Americans should be pondering such as those you discussed.
The United States - long the main engine of global growth and finance - has squandered its domestic saving and is now drawing freely on the rest of the world’s saving pool," explains Roach. "East Asian central banks - especially those in Japan and China - have become America’s financiers of last resort. But in doing so, they are subjecting their own economies to mounting strains and increasingly serious risk. Breaking points are always tough to pinpoint with any precision. Most serious students of international finance know that these trends are unsustainable...
"[O]verly extended U.S. consumers have wiped out any vestiges of saving - taking the personal saving rate down to a rock-bottom 0.6% in July 2004. In short, America is no longer using surplus foreign saving to support ‘good’ growth. Instead, it is currently absorbing about 80% of the world’s surplus saving in order to finance open-ended government budget deficits and the excess spending of American consumers.
"It wasn’t all that long ago that the United States was the world’s largest creditor. In 1980, America’s net international investment position - the broadest measure of the accumulated claims that the United States has on the rest of the world less those that the rest of the world has on the United States - stood at a surplus of $360 billion. By the end of 2003, that surplus had morphed into a deficit of negative $2.4 trillion, or 24% of U.S. GDP.
“This transformation from the world’s largest creditor to the world’s largest debtor is, of course, a direct outgrowth of year after year of ever-widening current account deficits. Moreover, reflecting the particularly sharp widening of America’s current account deficit in the past year - an external shortfall of 5.7% at mid-2004 that is already running 1.2 percentage points above the 4.5% gap prevailing at year-end 2003 - America’s net international indebtedness could easily hit 28% of GDP by the end of this year...As scaled by exports - a good way to measure the ability of any economy to service its external debt - Roubini and Setser point out that U.S. international indebtedness could be closing in on 300% of exports by the end of 2004. By way of comparison, pre-crisis debt-to-export ratios hit about 400% in Argentina and Brazil. Of course, America is far from a ‘banana republic’ - or is it?"
Roach points out that countries, like individuals, eventually run out of time, out of money and out of luck. When a banana republic slips up...it may be a terrifying event for those in the country, but for us, it is primarily comic. We laugh at triple-digit inflation rates and wonder how the big banks could have been so stupid as to lend them money in the first place.
But when China and Japan stop enabling America's credit habit, many people will fail to see the humor in it. Asset prices will fall, real rates will rise and all of a sudden, people will be poorer than they thought they were...but, of course, no poorer than they ought to be.
(Daily Reckoning, 09/29/04)
If you slit your wrists ACROSS your arm, the blood will usually clot and the cut will almost certainly not lead to death.
The proper way to slit one's wrists is to begin at the edge of the hand and work upward, toward the elbow.
Glad to help.
Perhaps.
A quick review of "First World" economies (CIA Factbook, 2002 numbers/2003 publication) shows that the AVERAGE 'First World' country has 28% of its GDP in 'industrial output.'
The US was at 18% in that edition of the 'Factbook,' a number not quite consonant with BEA's number. Regardless, one wonders if all those other 'first world' countries are wrong--assuming YOUR theory is correct...
The payrolls and profitability of manufacturing support and/or require construction, infrastructure, healthcare, and a good percentage of IT expenditures. Further, basic manufacturing (metals and metal-forming) are absolutely sine-qua-non for military needs.
Benignly ignoring the seed-capital of manufacturing skills, or dis-incenting talented and skilled people from joining the field as toolmakers, machinists, etc., will have results; and they may not be pretty.
Carpenters and medical technicians do NOT build tanks or M16's; they do NOT build airplanes of any sort; and they do NOT build automobiles, nor hydraulic systems, nor electrical machinery.
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