The changing balance of power in the world economy has seen China replace a faltering United States as the biggest contributor to global growth in an “uncertain and potentially difficult period”, reports the International Monetary Fund.
Unveiling its half-yearly forecasts, the IMF said the world was increasingly dependent on the strong performance of the three leading developing countries – China, India and Russia – at a time when the west was struggling to cope with financial market turmoil. The IMF’s world economic outlook said that growth rates of more than 11% in China, 9% in India and almost 8% in Russia meant the three nations “alone accounted for one half of global growth over the past year”.
“Like a forest that has not seen a fire in many years, a benign financial environment had built up a sizeable ‘underbrush’ of risky loans, relaxed lending standards and high leverage in certain areas. When problems ignited in the US sub-prime mortgage market, the fire ‘jumped’ in somewhat surprising ways to other areas.”
Nice turn of phrase. And permits for housing starts dropped another 10% in the last month.
We can look ahead to the Bush Administration and their 19th Century experts guaranteeing that the catchphrase for the 2008 election will be – once again – “It’s the economy, stupid!”
Our system based upon individual rights and self government is so 18th century. Maybe we should automatically discount it too for something a little more “modern.”
#1… the First modern democracy was back in the 12th century. Again America lacks in teaching proper history!
So the chinese now are at the forefront of economics. Now let them suffer from the hells of consumerism. I can’t wait to see all the obese, lung cancer ridden, hypertension suffering chinese in ten years!
It will be an even playing field then!
Cursor_
Well, I read the article, and “I Don’t Get It.” What is it that this article assumes I know to make it relevant?
What is it exactly that is being “stabilized?”
Whats the assumed good in “growth.” Whats the assumed bad in “negative growth.?” I can make some vague quasi connection to balance of trade &/or dollar value etc “but” the article itself doesn’t even try.
Isn’t the GOUSA economy 4 or 10 times larger than China with 1/4th the population?
What is the import of this article?
Given that the US economy is much large than China and those other countries, and that it is growing by a few percent a year, I would say that the US growth is more than those other countries.
According to Wikipedia, under George Bush’s Presidency, the US economy has had more growth(3.7 trillion) than the total sizes of the economies of China and India, COMBINED.
#2, Apparently, America lacks even more from idiots who can’t distinguish a smartass quip on an Internet blog, from what one might expect from a history of political systems textbook.
5. How does the missing 3 Trillion from the Pentagon and the devaluation of the dollar factor into that equation?
Everything is just fine. We have the first president in history with an MBA.
Knowledge and skill are on our side, and in only a few more years it will be 2029. Republicans are good money managers they are. They can manage it right out of the economy and into their own pockets.
#3 – This story (http://tinyurl.com/3yv7pu) from the Economist does a better job reviewing the role of China in contributing to world economic growth. The sections “If America Sneezes” & “Running Out of Fuel” are extremely insightful, however I think the labour situation elaborated on in the latter is much more of a potential drag than the author lets on.
#4 – The thing to think about with economic growth models is that BRIC (Brazil, Russia, India, China) are playing “catch-up.” On this graph (http://tinyurl.com/3cowvb) China is simply increasing capital stock (K) and increasing output (Y) leading to dramatic rises in wealth, however as you can see, the amount of Y will decrease over time as there are diminishing marginal return to capital. The U.S. economy’s strength is that due to technological innovation the Y=f(K) line continues to shift up due to more efficient and effective production models are theorized and implemented.
#3 – Using the Solow Model of Economic growth from #4′s response, the UK Guardian article is stating that the large increase in Y will allow global output to continue to remain strong, and therefore the demand for global capital investment will rise helping the U.S. & Euro-area exporters.
#7 – Here’s a strong argument for why the falling dollar long over due (http://tinyurl.com/ytedae):
“Markets must look beyond the slogan that a strong dollar is good for America to recognise that a more competitive dollar will help sustain US growth and is necessary to correct America’s trade deficit. … With appropriate policies, the dollar’s decline will correct the imbalances that threaten the global economy without higher inflation in the US or decreased growth in the rest of the world.”
There’s good money in making bad toys?
“Bush Dollars” becoming WORTHLESS !!! Way to go, Dumbya !!! Tax cut s for the Rich, and Billions Pissed Away on an ILLEGAL WAR !!!
Hell, even CANADIANS are asking us, “How much is that in real money” !!!
The problem with a lot of this growth is that it’s very uneven. I’m not sure how it is in China, but in the U.S., median (not average) income has remained more or less flat. The top 1 to 2 percent of earners have seen huge increases in their incomes, while the buying power of those at the bottom have dwindled. As a nation, we’re more productive, but we are seeing less and less positive effects of those benefits.
10. I fail to see how a weakening dollar, the missing trillions, and another 10 trillion dollars in debts equals to the strong economy proposed by MikeN in post number 5.
“According to Wikipedia, under George Bush’s Presidency, the US economy has had more growth(3.7 trillion) than the total sizes of the economies of China and India, COMBINED.”
Or maybe you werent defending that statement.
#10, a falling dollar doesn’t help with trade deficits in the long term. You’re really just changing the price levels, but in the end it’s still trade in goods. It’s better to keep things at an even keel. A weakening dollar isn’t good for America, and other countries haven’t dropped their currency as much. China has delinked from the dollar, placing their currency in a much better position.
Long term debts are bad, but they have little to do with the current weakening of the dollar. That’s because very little of the debts have to be paid. It is theoretically possible that the US will just decide not to pay out Social Security benefits and the like, which is the source of the tens of trillions in ‘deficit’s. I don’t know what this missing trillions in the Pentagon is about, but it doesn’t reflect in the GDP.
Also, I hadn’t looked up the numbers when I posted 4. The claims are definitely using different methods of calculating, since the US economy is 5 times larger than China. So a 2.2% growth rate is all that’s needed to have more economic growth.
#14
“According to Wikipedia, under George Bush’s Presidency, the US economy has had more growth(3.7 trillion) than the total sizes of the economies of China and India, COMBINED”
But.. Isn’t that the same amount of fiscal denbt your precious President has created since he became president?
16. Yep, that was my point.
Well if that’s your point, then you need to go back to basic math. The new wealth is annual, while the debt is accumulated. That’s OK, winner of the John Bates Clark medal and potential nobel laureate in ecoomics Paul Krugman gets that wrong from time to time when he’s criticizing George Bush.
If you calculate GDP in Euros instead of Dollars, it has declined since 2001. If you calculate DJIA in Euros instead of Dollars, it has declined since 2001. Same for the British Pound.
Bottom line our economic “growth” is mostly due to dollar devaluation than anything else.
By the way the first several hits on google all agree that the total budget deficits since 2000 is at about 2 trillion.