IMF bombshell: Age of America nears end

[Nice n Easy Rider]

By Brett Arends, MarketWatch

 

BOSTON (MarketWatch) — The International Monetary Fund has just dropped a bombshell, and nobody noticed.

For the first time, the international organization has set a date for the moment when the “Age of America” will end and the U.S. economy will be overtaken by that of China.

 

And it’s a lot closer than you may think.

 

According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016 — just five years from now.

 

Put that in your calendar.

 

It provides a painful context for the budget wrangling taking place in Washington, D.C., right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world’s hegemonic power.

 

According to the IMF forecast, whomever is elected U.S. president next year — Obama? Mitt Romney? Donald Trump? — will be the last to preside over the world’s largest economy.

[moshe_levy]

A deepending cloud over the dollar and T-bill market, eh?

 

As China grows, I would ask what other attractive markets there are, based on today's scenario. Europe? Nah, not with the Greece about to default with others close behind, and the stronger nations like Germany pressuring their governments to look out for #1. (The question there is how long the Euro will even be around, by some accounts). Chinese bonds? But that would drive Chinese currency up, pressuring exports down, so nix that idea. Japan? Nope, not a chance. Who else can you think of that's safe, stable, and large enough?

 

The US T-bills, based on today's scenario (and we all know how well economic predictions work out for next week, nevermind 5 years out) are quite an attractive investment for the Chinese, even as their economy experiences explosive growth.

 

-MKL

[UberXY]

Put that in your calendar.

 

 

I'd use a pencil and not a permanent marker.

[John Ranalletta]

Firstly, US tax-payer stooges provide a large portion of financing for the IMF. Their pronouncement means they, too, have been reading from the "Book of DUH!" (I'd give credit for that quote, but can't remember who wrote it.)

 

More importantly, the IMF is setting the stage for the imposition of controls under which it can determine if any of its members are acting in a financially wise manner.

[4wheeldog]

The big question mark for predictions like this one is that China has no safety net, little backup for its people. They are one catastrophe away from a 20 year setback. And they seem on a course to bring one on themselves. Their lack of concern for their environment could bring on a calamity all its own. An epidemic, or a natural event (Earthquake, drought) and they will fall off the bubble.

 

We have our problems, and some parts of our nation cannot seem to catch a break (LA gulf coast) but the depth of our resources make us much more able to weather the unexpected thumping the world doles out. Just sayin'.

[John Ranalletta]

They are one catastrophe away from a 20 year setback.

Maybe. Social unrest due to unemployment of a primarily male, unattached workforce might be its biggest concern. That's easily remedied by exporting that labor in the form of an army. China has the wealth and enough manpower to support armed, large-army aggression for decades.

[Dennis Andress]

...

That's easily remedied by exporting that labor in the form of an army. China has the wealth and enough manpower to support armed, large-army aggression for decades.

 

That worked for the Romans...

[Bob Palin]

...

That's easily remedied by exporting that labor in the form of an army. China has the wealth and enough manpower to support armed, large-army aggression for decades.

 

That worked for the Romans...

And the British, and to an extent the US at the current moment.

[David13]

Nothing lasts forever. Things go up, and things go down. People have been predicting like this for many years.

Ain't nothing can be done about it.

You can't pass a law to halt reality.

What would be a good title for a book. Oh, the Rise and Fall of the Roman Empire; the Rise and Fall of the Third Reich; the Rise and Fall of the British Empire.

dc

[beemerman2k]

What I wonder about it this: one reason for China's relatively fast rise to dominance is our country. Many American firms relocated there, but many Americans also invested heavily in Chinese stocks and other financial instruments, and therefore, it's like a snowball that grows bigger as it rolls downhill. All of this is facilitated by the speed of electronic communications.

 

So what happens when another country rises? Will it's growth be similarly accelerated by our modern communications systems? Today, we see changes in economic world powers taking place over the course of decades, if not centuries. Will tomorrows changes take place on a much more rapid rate? China will be #1, but only for about 5 years, and then it will be Viet Nam, and then Taiwan, and then...

[John Ranalletta]

One might think of Iraq and Afghanistan campaigns as jobs programs. How would the repatriation of 360k+ military impact unemployment rates?

[John Ranalletta]

So what happens when another country rises? Will it's growth be similarly accelerated by our modern communications systems?

What sets China apart thus far is its determination, strategic vision and absolute unwillingness to veer off its intended course to dominate the world, economically, militarily and physically. No other country (certainly not the US) can ever muster the sheer magnitude of will that China has.

 

Chinese leaders (for good or ill) have discipline and patience. Name another country intent on global domination that has either.

[AviP]

Let me ask a different question. Why does it matter if China passes the US economically? Bragging rights?

 

We have outsourced our manufacturing to them a long time ago so this is inevitable. But like every country so far, it will rise and fall or stagnate. That's just the nature of economics. Indefinite growth is unsustainable in a global economy. There will be a saturation point.

 

Take corporations for example. There was Microsoft, a financial darling in the 80s and 90s. But there's only so much you can grow. As your great idea, Windows in this case, succeeds and you capture more of the market, there's only a reduced market left. Eventually, saturation is achieved, growth stalls and the company turns into an income stock as opposed to a growth stock.

 

China is a growth story. The US was the growth story. It's now an income story (technically it's really a bankrupt story but that's another post).

 

Once England, France and Spain ruled the world. Then there was Germany and 2 world wars. That was followed by UK, USA, Japan and the Soviet Union. Then there was just the USA. Now it's China. Perhaps India but I doubt it because it doesn't have the political will and strength. In all the previous periods, strength was demonstrated with war. But there's way too much interdependence to wage war and show strength. So we'll plod along, perhaps unhappy that we are not the biggest economy.

 

Our wealth is in our freedom and laws and implementation of those laws as far as I am concerned. That's why I immigrated here.

[AviP]

One might think of Iraq and Afghanistan campaigns as jobs programs. How would the repatriation of 360k+ military impact unemployment rates?

Spoken like a politician. I think there are much better ways to employ them than the 500+ billion that has been spent so far.

 

BTW, did you hear Obama's new language for a tax hike. He called it a "spending reduction in the tax code".

[John Ranalletta]

Let me ask a different question. Why does it matter if China passes the US economically? Bragging rights?

Go to Google Earth and gaze at that part of the globe. While I'm not arguing for renewed colonialism, it's a fact that all of the "free" countries surrounding China look to the US to counter balance China's growing power.

 

If the US becomes a economic cripple (is that still a question?), how would we support resistance to Chinese aggression against Taiwan? It's said that the Chinese could line up, four abreast and parade march into the ocean and never run out of able bodies to fill the queue.

 

A strong economy is the US' best weapon. It provides the means to back up diplomacy with ships, armies, planes, etc. If we went to a big war, from whence would the funds come? From whom could we borrow? Who would buy the war bonds? Our unemployed, under employed brethren on food stamps? The banks?

 

The non viable option is nuclear. Would we nuke China over Taiwan? Not in a million years! What about Singapore? Senkaku? No, we'll complain to the UN, wag some sanctions at them and slink back home. We cannot afford the military adventures that exist let alone some grand maneuver.

 

Did it ever occur that China might be funding and selling arms cheaply to the opposition forces in all the skirmishes that are currently killing and maiming our armed forces and our national will?

 

Being strong matters. The weaklings in this global herd will be eaten. Some will unwittingly give themselves over as we are.

[John Ranalletta]

One might think of Iraq and Afghanistan campaigns as jobs programs. How would the repatriation of 360k+ military impact unemployment rates?

Spoken like a politician. I think there are much better ways to employ them than the 500+ billion that has been spent so far.

 

BTW, did you hear Obama's new language for a tax hike. He called it a "spending reduction in the tax code".

No laughing matter. Too many people are making $ from these wars to stop them.

 

The US should impose an immediate 15% surtax on all corporate and personal incomes to fund the wars and the people will decide which ones they want to fight.

[DiggerJim]

Maybe. Social unrest due to unemployment of a primarily male, unattached workforce might be its biggest concern.

Actually, unrest due to a large male population with insufficient female counterparts to provide opportunities for dating, marriage, etc (lots of etc ) Decades of population limits & the aborting (or female infanticide) has left a population skewed towards males. In '07 it was 51.5%M/48.5%F...but the <15 population had a 53M/47F ratio & females had a 20% worse infant mortality rate than males. Gonna be a problem when the testosterone needs an outlet.

[beemerman2k]

OK, this thread clearly crossed the no politics line. AviP, was it really necessary to bring a specific politician into the discussion?

 

Let's move on to another topic of conversation, this one is over.