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| Economy |
| When Giants Fall |
| 2010-07-11 |
| [E] conomic debt can lead to a sudden loss of military power and global respect, Ferguson said. "By combating our crisis of private debt with an extraordinary expansion of public debt, we inevitably are going to reduce the resources available for national security in the years ahead, Ferguson said. Because as a debt grows, so the interest payments you have to make on it grow, even if interest rates stay low. And on current projections, the federal debt is going to be absorbing around 20 percent — a fifth of all the taxes you pay — within just a few years. The item of discretionary federal expenditure most likely to be squeezed is of course defense. And there are lots of historic precedents for that,” said Ferguson, who is the author of Empire: The Rise and Demise of the British World Order and the Lessons for Global Power. Ferguson said the financial crisis that started in 2007 has “has accelerated a fundamental shift in the balance of power,” with the U.S. shedding power and China absorbing it. “I’ve just come back from China — a two-week trip there — and the thing I heard most often was, ‘You can’t lecture us about the superiority of your system anymore. We don’t need to learn anything from you about financial institutions and forget about democracy. We see where it has gotten you.’ Blog |
| Posted by:Besoeker |
| #5 US seems to go into recessions as part of the natural business cycle and then recover. Reporters declare doom and gloom and the end of US leadership each time. During my life it was Japan, the Asian Tigers and now China. Heck, they were even talking about the European economic superpower and now they seem to be wobbling worse than the USA. I'm not saying that it won't happen, or can't happen but wishful thinking on the matter is pretty pathetic. |
| Posted by: rjschwarz 2010-07-11 21:46 |
| #4 that's really interesting Phil B THis is an idea i've been thinking of too. It's like the wizard behind the curtain in Wizard of Oz. We will never really know how strong China's economy is or whether it is liable to unexpected and sudden collapse (remember the USSR) because information is so tightly controlled by the state. They are mercantilist, their governmnet disguises itself as corporations (state owned) and plunders the world of natural resources to feed its factories and energy needs. There is a lot of money there being thrown around But then when you get to the domestic front, I think you are right: political connections are everything and the money could be disappearing down the corruption hole. i never really trusted the china growth story enough to say, buy shares listed on the Hang Seng or Chinese exchanges. Why would you? It's so opaque, not transparent at all. How can you tell if you are getting a good deal or not. It's a gamble. Well the Chinese do love gambling that's true. we will see if a lack of independent scrutiny, no free media and the lack of freedom will result in what i believe to be inevitable: a spectacular economic collapse one day for no apparent reason. societies evolve and I believe we have seen through history that societies that have those characteristics, lack of freedom, lack of scrutiny/transparency/free media, tend to implode eventually as it leads to misallocation of capital and resources (due to corruption/political interference) The US though it is an economic cripple, I believe will rebound off the ropes for this reason. |
| Posted by: anon1 2010-07-11 19:28 |
| #3 Supposedly these Orientals have a long term perspective. They've been a civilization for 4,000 years. We've been around only 400. What did they do with their 3,600 year head start? And now they're ready to claim superiority based on 4 of those 400 years? Not so fast, Kowalski. |
| Posted by: Nimble Spemble 2010-07-11 09:21 |
| #2 "'...and forget about democracy. We see where it has gotten you.'" The medium is the message. Just as China's state organs can continue to persuade its population that they don't need or want individual rights, Obama's popular and news media cronies have so far managed to convince enough Americans that their liberties are vanity, and a hindrance to social progress. Democracy needs a strong, independent and diverse media if it is to survive. When a majority of the people are no longer well informed, but are instead brainwashed, or at least steered, by one political narrative, you no longer have a functioning democracy. America has endured that for a few years now. The only hope is for a revolution in information dissemination, and to restore proper and honest political debate exposing the Emperor for his lack of clothes and getting rid of the pervasive cloak of fundamentally racist, intolerant, PC thought-codes. |
| Posted by: Bulldog 2010-07-11 03:50 |
| #1 We don't need to learn anything from you about financial institutions Big, big mistake. Banking is all about measuring and mitigating risk, and risk management in Chinese banks is, by Western standards, very poor. Whether you can borrow and how much is a function of your political connections. Image California's debt problems with much worse corruption and without a free press and democratic institutions to shine a light on what is going on. That is China at the provincial level. |
| Posted by: phil_b 2010-07-11 02:16 |