Quote:
Originally posted by Almighty Colin@Mar 5 2005, 01:18 AM
Whenever I read articles like this I wonder why the author didn't take the time to point out historical comparisons and contrasts. Take the US federal debt, for example. It is a record high. But so is the US GDP. On a percentage basis the federal debt is less than it was during World War II. As a percentage of GDP, it is about average for a G7 country. Historically, what has been the result in nations who hold debt around 60%-70% of GDP? How is today's economic situation different and which comparisons are most appropriate?
Low savings rate? Good or bad? What are the historical precedents? Low interest rates mean that money in the bank is not as good of a deal as it once was. Where is that money going? Home ownership, toys or food?
High consumer debt? Same as above. And how does one factor in low interest rates which make borrowing cheaper?
An imbalance in the trade deficit? So if both imports and exports continue to grow steadily but imports grow faster is that good or bad? What are the historical precedents? What is the right balance? What would we do about it anyway? Should we restrict imports with tariffs?
These articles never make the appropriate historical connections and it makes me wonder if the author even knows what they are.
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what separated this article and the rest for me is that china becoming an emergant power, with that population is going to make them a huge consumer on the global market.
while the tendancy of reports from other countries is to think that nations as a unit will turn against the us economically, collecting debt, etc. the reality is that this will never happen. It is beyond comprehension of what that would do to the world economy. a global cutting off of ones nose to spite its face. but it is a possibility, and that has never been the case.
I believe there is a lot of fear of what 1 billion consumers brought into an already strapped 21st gentury global economy, just years on the tail end of Indias surge will do to upset the applecart. Russia will play a big part in this. The Indian Ocean pipeline possibilities could tilt sympathies in the direction of Iran.
There is much change to come in the next 5 years. The U.S. will accept the ultimate roile of not being a single superpower anymore. But then again, that remains the goal of globalization, doesn't it?