Captain Con first introduced China @6 and yourself @11. Think it better to leave posts stand an continue with discussion of US.
American investments (private sector) are intimately bound up with Chinese growth and imports, while the Chinese are dependent on the US as an export market.
This is a twin spiral of destruction, which I would predict that the US, due to superior climate, territorial reach, natural resources, agri-production, younger population, and massive gold reserves, may be better placed to emerge from sooner than China.
The least sight of a slump in China and the population will revolt. The US one is capable of weathering severe recessions and blaming themselves and the banks as well as the Government.
The US is already repatriating manufacturing and the T bills will be rendered worthless at some point, whether by inflation or outright default.
Yes, the Chinese can use their not inconsiderable slush funds to bail out their banks, if necessary, but this won't bring rain to their dustbowl or replenish depleting oil wells. In the event of higher oil prices, an economy dependent on heavy manufacturing and vast fossil fuel consumption won't last for ever, especially when the export markets dry up.
I'd bet the US will have the last laugh, ratings agencies or no.
America will deflate or default as it sees fit, with few open repercussions; it has a huge military and vast gold reserves. Check out Youngdan's previous posts, on that one, I do think they may default back to that scenario. Unlike China, they have enough fertile land, water and oil to go for quite some time (factoring in Canada's reserves), and a less degraded environment than the Chinese.
We need to get beyond artifical fiat money systems and think in terms of basic resources. America has access to more, closer to home. It really will become that simple.
The more oil prices go up, the more they'll repatriate heavy industry, simply because shipping heavy stuff in from China takes a lot of expensive oil. Fracking means more cheap gas....employment in the rust belt (above the Marcellus shale) has actually gone up since 2009.
And the destitute in Detroit are taking over empty lots and farming them. There's a lot to be said for an individualistic work ethic.......revolution unlikely, IMO, the resources are sufficient to allow everyone to be fed there, even without much oil.
Its america.saying they could feed everyone ignores the fact they dont want to.if they did they wouldnt drive food prices up via. QE. And if theyd so much oil and gas they wouldnt be after libyas oil and egypts gas
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The US has just had its worst housing figures since 2008.
http://www.nytimes.com/2011/06/04/bu...ef=todayspaperAfter several months of strong job growth, hiring in the United States slowed sharply in May, suggesting the economy may be running out of steam once again.
The Labor Department reported on Friday that the nation added 54,000 nonfarm payroll jobs last month, after an increase of about 220,000 jobs in each of the three previous months. The gain in May was about a third of what economists had been forecasting. The unemployment rate, meanwhile, edged up to 9.1 percent from 9.0 percent in April.
“The economy clearly just hit a brick wall,” said Paul Ashworth, chief United States economist at Capital Economics. “It’s almost as if it came to a complete standstill.”
Do not rejoice in his defeat, you men. For though the world has stood up and stopped the bastard, the (female dog) that bore him is in heat again. Bertolt Brecht
Double-Dip ? or just a deepening of this recession? :-
http://www.businessinsider.com/ten-s...-begun-2011-6#The US has entered a second recession. It may not as bad as the first. Economists say that the Great Recession began in December 2007 and lasted until July 2009. That may be the way that the economy was seen through the eyes of experts, but many Americans do not believe that the 2008-2009 downturn ever ended. A Gallup poll released in April found that 29% of those queried thought the economy was in a “depression” and 26% said that the original recession had persisted into 2011.
Thomas Jefferson : Banking Establishments are More Dangerous to our Liberties than Standing Armies.
The US is on the way out. It's going to collapse, just as the USSR did but much more messily and much more dangerously for the rest of the world. It may weather the current recession but people reading this in June 2011 will live to see it.
There is no doubt that there is a big slow-down in the US economy right now. Its the worst type of recession, as its coming on top of an already difficult situation.
The problem is interpreting what is going on. Some (I think including Kenneth Rogoff, one of the few economists worth listening to these days), are saying that it is an outcome of the severity of the dept off-loading - essentially, it is part of a long term 'bumping along the bottom' period before a slow upturn. Keynesians like Krugman are blaming the weakness of the stimulus - Matt Yglasias has pointed to figures showing that this downturn has occurred precisely when the impact of the original fiscal stimulus has run out of steam.
More seriously, it could be, as the good Baron points out, be part of a long term structural decline. It may be that the debt splurge of the 1990's and aughties just disguised long term decline. Tyler Cowan (libertarian-oriented economist) has argued that America has run out of technical innovations or low hanging fruit to exploit.
Or maybe, as the Republicans have argued, they just haven't given big enough tax cuts to the super rich.