China will overtake the US as the world’s largest economy in five years. According to IMF official forecasts whoever is elected President in 2012 “will be the last to preside over the world’s largest economy.”
The IMF in its analysis looks beyond exchange rates to the true, real terms picture of the economies using “purchasing power parities.” That compares what people earn and spend in real terms in their domestic economies.
Under PPP, the Chinese economy will expand from $11.2 trillion this year to $19 trillion in 2016. Meanwhile the size of the U.S. economy will rise from $15.2 trillion to $18.8 trillion. That would take America’s share of the world output down to 17.7%, the lowest in modern times. China’s would reach 18%, and rising. Just 10 years ago, the U.S. economy was three times the size of China’s.
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That President is likely to be Barack Obama, who according to the Huffington Post, leads in ratings despite a dip in the polls. He will tread the sure path; the path toward progress charted long ago by those who knew what the future looked like: it looked like Europe. You know — the Europe that is bankrupt, demographically doomed and lacking even in the ammunition to defeat the Mohammer Khadaffy. So what matters now is for the custodians of the future to protect and extend the “historic gains” from the resentments of the “bitter clingers”. Maybe it really doesn’t matter who is elected in 2012 since, as Nancy Pelosi argues, so many matters are settled. She says it a “fact is that elections shouldn’t matter as much as they do” because the “shared values” are already enshrined. But what shared values?
It is safe to say they are shared values of the party in power, the one ensconced in office for many decades: the Party of Incumbency, neatly divided up between the Republicans and the Democrats. Just how stable their grip is on power was illustrated in November 2010, an election accounted “earthshaking” by the media. Of the 435 seats open for election only 54 incumbents lost their bids. Almost every old face was returned to office. The very people who have led America to the pinnacle of its present success are returned time and again.
The party of incumbency has won as it has always won. The media focuses on the “tight horse races” and the drama, but it hardly ever reports the fact that the same old, same old people are in charge of things for decades at a time. The machine on both sides is remarkably stable. Since 2002 only 23% of House Districts have changed hands. The modern princes have fiefdoms whose security would have been the envy of a medieval noble. Primaries in either either party are rarely contested. Whoever comes out of the primary is almost certain to win. And incumbents are almost certain to win the primaries. In 2010 only 4 incumbents, 2 Democrats and 2 Republicans, lost their primary races. The Party of Incumbency has been in office so long it’s a closed club. We can readily understand why Nancy Pelosi doesn’t think elections shouldn’t matter “that much” because they keep recycling the same people. And so her appeal was to her “friends”, the members of her class.
To my Republican friends: take back your party. So that it doesn’t matter so much who wins the election because we have shared values about the education of our children, the growth of our economy, how we defend our country, our security and civil liberties, how we respect our seniors. Because there are so many things at risk right now — perhaps in another question I’ll go into them, if you want. But the fact is that elections shouldn’t matter as much as they do. … But when it comes to a place where there doesn’t seem to be shared values then that can be problematic for the country, as I think you can see right now.
But she ought not insult the public by declaring that the “shared values” of the Party of Incumbency on the Potomac to be about “the education of our children, the growth of our economy, how we defend our country”. If the IMF is to be credited, those appear to be the values of the Mandarins in China, not the friends of Nancy. For the Chinese Mandarins, national greatness is not yet an embarrassing concept. To the American Party of Incumbency, it’s “God Damn America”, to quote the pastor of an incumbent President. In their case the relevant values are likely to be “I, Me, Mine” and “where’s the stash?”
The truth is that IMF has misstated the problem. Whoever is elected President in 2012 from the Party of the Incumbency “will be the last to preside over the world’s largest economy.” Otherwise America may recover and forge ahead. With that important qualification, the challenge remains.
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well, I don’t believe the current figures on manufacturing, I assume China is already 3x the US in manufacturing output. maybe you have to exempt aerospace from that and make a few other adjustments.
but I would point out that China has 3x the population of the US, so even if they have a larger economy, they are not yet really in the game.
they barely have the concept of intellectual property rights. have they innovated anything interesting since gunpowder? and when it comes to military matters, the US still owns about 51% of the world’s capacity, with Russia probably coming in second place. the point being that China is barely in that game, either. and much of their economy is export, it’s hard to know how to even count it, in terms of “size of their economy”. The chauffer does not own the car.
Pelosi is a world-class fool, yes representative of her Incumbent Party, but of course the hypocrisy of her comment is beyond analysis. let *her* show some shared values with her Republican colleagues, let someone take back the Democratic party from the likes of her, so they have something like the values that built this country rather than her brainless yet sanctimonious diletantism.
Oh, and as for the IMF – who cares. If the US de-funded it, it would vanish like yesterday’s soap bubble – do you really think China is going to back them? Gung hei fat choi, IMF’ers.
“China will overtake the US as the world’s largest economy in five years.”
I love clear and unqualified predictions of the future at least five years out. They are an infallible guide to what is not going to happen five years out.
Not all is doom and gloom though. Certainly our elites can sell off another piece of the US to China to satisfy their need for American blood and treasure. As China increases its gross domestic product what will they do with US debt? Is it in their best interest to collapse the US economy? The answer is yes, it is just a matter of timing and our debt hangs like the sword of Damocles over our heads waiting for the right moment. With all of the world unrest, China may be poised to sweep the better part of the globe into their waiting arms. Don’t expect the traitors running this country to not flag when the moment comes to ensure themselves the comfort that they have usurped from their subjects.
I don’t share Nancys’ values. In a just country she would have been relegated to the ash heap a long time ago. In a less just country, her head would end up on the tip of a pike. But the substance in her message is clear. Vote for Hope and Change, vote for the incumbent, for more of the same; ie: Stay the Course. This is a direct slam on the Tea Party and freedom loving Americans. Nancy is “anti-democratic” and she should be made to take up residence in Leavenworth, maybe more fittingly, Gitmo.
I understand that Pimco, the world’s leading bond house headquartered in Newport Beach California, has been shorting US Treasuries. My translation of that action by Pimco is “yes we know that dastardly foreign devils are trying to shrink the US economy and that they would celebrate if that happened, BUT, the problem to be solved lies within the US and Pimco is not waiting on a solution.”
Until America regains its talent for self government, bad things will continue to happen. As W. says here, perennial and entrenched incumbency is not self government. Every country suffers from the incumbency disease but it’s reached an extreme stage in the U.S.
More Tea Party please.
They have a much larger population, so they should have the bigger economy. I mean, that’s good.
Economic size gotten by erasing borders obviously doesn’t affect how good your economy is.
Per capita GDP would be the right comparison in terms of well-being and economic strength. Divide by that population.
Shorting Treasuries is just betting on an interest rate rise, not a rating decline.
I don’t get who’s buying long term Treasuries at these rates. Perhaps they don’t know what happens to bond prices when rates go up (bonds go down); or maybe they’re matching maturities to their obligations and so it doesn’t matter what happens.
Josh – “have they innovated anything interesting since gunpowder?”
Yes, they have invented sucking the life out of a country that was foolish enough to allow it. We have unfair trade relations with China because the elites wanted to cut sweetheart deals for themselves at the cost of our life blood.
Catering to greed is innovative enough.
“The Capitalists will sell us the rope with which we will hang them”
We once the feared the Soviets, but as my leftist friends might say, the whole thing was just made up. Sinophiles have reversed the calculation and all of the wealth that was created in building and defending America has wound up going to the sleeping dragon.
Red China has by some estimates 64,000,000 UNOCCUPIED newishly built condos.
They are priced for Americans and 30-year mortgages.
But Red China wants 50% down and the rest in two years!
Her GDP growth is FAKE. Fake as in building stuff very far away from market prices and then holding the ‘assets’ on government books — one way or another.
I suspect that of the $2,000,000,000,000 excess reserves the Party controls much will have to be alloted for boners.
Like their high-speed rail fiasco. China has lost Freddie and Fannie sized monies in its pursuit.
And then there’s the staggering wastage of building up the PLAN. As the Soviet Navy demonstrated the deck is entirely stacked against island-continental powers like the USSR or Red China. They are ringed by choke points by nature — whereas their only opponent, the USN, is completely unchoked — sitting astride all of the sea routes of the world.
The only reason we face a piracy problem in the Indian Ocean is because the Resident desires it. It could be shut down in a week with the power available to him. But, as he said, he’s going to take the side of the muslim every time.
At some juncture, the world is going to slap a tariff on Red China and kick her out of the WTO.
At some point the foreign devils are going to discover that to do business with China means the destruction of your business. For them these deals are pure economic warfare — and that’s what’s in it for them.
China was the second largest economy in the world in 1890. On that graph, their projected output equals that of the projected output of the U.S. in five years. And, as given the population differential mentioned above, I’d say it is no reason to count U.S. out. Unless the anti-american-economy/u.s.-dollar hype you read about all the time is just that- hype, engineered and planted in the press for the sake of currency speculators, and you want to get in there somewhere near the ground floor of that space elevator.
Democrats have taken a major beating at the state levels, and you find quite a few who doubting that they can hold on to the US Senate. Pelosi has the potential of being a poster child for the 2012 Republicans, “Vote for a Democrat and you get Pelosi as Speaker.”
IIRC McCardle of the Atlantic Monthly said after her visit to China, “How can they make predictions on the economy when their own people lie to each other about the statistics.” The recent revelation that the Chinese high speed rail system has turned into a massive money draining, corrupt, boondoggle seems to be on the “Move along here, nothing to see” list of the MSM.
On the third hand, the current US monetary policy, energy policy, and just about any policy you can name is dragging the US into an economic whirlpool of doom, women, children, and minorities hardest hit (SNARK).
PPP isn’t proper for comparing the “punching weight” between nations. Nations punch at their real, or nominal, GDP.
PPP is meant for comparing what consumption looks like inside a country (i.e., answering the question–how do they live on $2/day). But the fact that haircuts and hookers cost less in China than in the US doesn’t help them when they have to buy German machines–they have to pay in real dollars.
FT
“..when the first official estimates of GDP growth in Q1 are published on Thursday 28 April, they are likely to show an economy growing at a very disappointing rate of only about 1.5 per cent, down from 3.1 per cent in Q4.
Thus, in the period in which QE2 has been underway
– a period in which equity markets have been celebrating the supposedly strong growth of the US economy
– it now seems that real GDP grew at only about its trend rate.”
http://blogs.ft.com/gavyndavies/2011/04/24/why-has-the-american-economy-slowed-down/
A dangerous negative feedback is in play.
QE diverts productive capital to asset price speculation and delays the inevitable adjustment which must come when a central bank’s loss of credibility prevents it from pursuing its final gambit.
–We are not far from that point today.
There’s no freaking way they’re gonna pay 2T for Viagra, Blert. They’ll just steal the formula.
Even accounting for China’s larger population, at average 30-year growth rates its PPP GDP will surpass America’s sometime between 2017-2022, finally becoming the world’s largest economy in both absolute and relative terms.
As for the political class, so long as we have gerrymandering of legislative districts and a dominating two-party system, the only competitive partisan offices in this country are the statewide offices. The legislative offices could be made more competitive by removing the ability of state legislatures to re-draw district boundaries after every census and transfering such re-drawing authority to some kind of non-partisan entity (Let’s not hold our breaths until that happens), or by having a viable third party emerge in American politics. “Viable” means far more than the fringe 1% of the electorate of the Libertarian Party, the Socialist Party, the American Independent Party, etc. Say, 12-25%.
There’s a natural 12-25% constituency not presently served by the present system of two-party dominance, but a new system would require the moderates of both parties find a voice in something more attuned to their bi-partisan, moderate middle preferences, and which party is going to stand idly by as they lose their centrists?
In contrast, China’s economic growth is under a one-party system; multiple parties appall them. The European parliamentary model is multiple parties, which is not much longer going to be a recommended method of achieving economic growth.
So, what would Mrs. Pelosi recommend? More of the same, with these minor troublesome elections simply rubber-stamping district boundaries and the political fates for a decade in advance? Probably yes, and some very large percentage of 435 Members would agree with her.
If so, then the solution would be a viable third party of 12-25% of the electorate, a new party always in minority but always decisive in which of the other two larger parties, reduced from high 40′s% to low 40′s%, gets to govern. Might be fun. Might actually help us catch up to China…well, at least stay even in the new bi-polar hegemony.
PPP is a false metric. Almost as stupid as predicting global warming based on vehicle CO2 emissions.
If the goal is to “wake up” America, and fix our pathetic education system, then PPP-lie will probably be effective to a degree. But amongst thinking people, China’s real GDP is going to take another generation to equal the US.
And lest we forget, China is still a communist state, and they still try to do central planning. So they are very likely to continue to be wholly dependent on the decadent lifestyles of the West, which will demand the cheap crap they produce.
From http://china.globaltimes.cn/society/2011-04/647415.html:
“The 2011 Private Wealth Report, published by China Merchants Bank and business consulting firm Bain & Company, showed that the number of high net worth individuals (HNWIs) in China exceeded 500,000 in 2010, 19 percent more than in 2009.
According to the study, those who have at least 10 million yuan ($1.53 million) worth of individual assets (financial assets, not including their primary residence) available for investment are defined as HNWIs.
Among that group, nearly 60 percent are either considering emigration through investment overseas or are already finalizing the process.
Among those with at least 100 million yuan in individual investment assets, 27 percent have already emigrated, and 47 percent are considering leaving China.”
They say money talks and bullshit walks, but sometimes it’s one and the same. China’s obvious problem is that it is not yet a place where it’s either safe or possible, or rational to re-invest a lot of your earnings. Hence we have a huge “bubble” (or will there always be rich Chinese bailing?) in high-end real estate in Vancouver, as well as in US treasuries.
Not sure I understand how China can collapse the US economy other than theoretically. What if the US defaults? What exactly can China do, make demands? And if we tell them to stick it, so sorry the cupboard is bare, what then? Even if taken to a World Court, who would enforce any finding? NATO? We are NATO when it comes to military might. I don’t know enough about this to know what I don’t know.(take that Mr. Rumsfeld!)
As long as we are producing most of the food we will be just fine. You can’t eat oil, cheap consumer goods or even gold. The only precious metals you need are brass and lead. With those you can get anything else you need or hold on to what you have. When the next civil war begins, be sure all progressives are cast outside of your wire.
“have they innovated anything interesting since gunpowder?”
Actually, that is propaganda. No confirmed evidence supporting that theory. The best support is cave paintings. They were never duplicated nor have they been seen by anyone other then Chinese “experts” and a few selected historians. No peer review that I’m aware of. Meanwhile, Bacon PUBLISHED many formula for various explosive substances, 4 of which qualify as gunpowder, in 1249. Copies of which still exist. The beast evidence that the Chinese claim is propaganda is the fact that we are not speaking Chinese. China with gunpowder in the 12th century would be like General Lee having Apache Attack Heliocopters at his disposal in 1860. In the 12th century the longest ranged weapons were Balista, which were giant cross bows. They had a range under ideal condition of several hundred meters. Couldn’t hit anything beyond 200 or so. The longest ranged mobil weapon was the compound bow used by horse archers. it had a range of about 300 meters and could hit something at 200.
The origins of the Chinese gunpowder rumors came from texts written by monks in the 16th century. Those monks were not aware of the differences between gunpowder and anything else that went boom. While gunpowder is an explosive, not all explosives are gunpowder.
“The first references was found in ancient Chinese documents, one from the year 618 b.c., referred to some form of gunpowder which was mainly used for fireworks, but also as a propellant for projectiles, which not arrived to Western world until the 15th century.”
Typical of the Bull$hit put out about the subject.
Fireworks DO NOT use gunpowder. That 15th century line is crap also. There are several invitations to the coronation of an English King(Edward III) in 1327 that have an engraving of a cannon on the front(Millemete MS.). They still exist today. Also existing are the records of what the Kings chamberlin paid for cannon balls. Dating from 1321, IIRC. BY 1325 cannon were commonplace in Europe.
pinched from;
http://www.absoluteastronomy.com/topics/Cannon
“The earliest known cannon, though not driven by gunpowder, was invented by Ctesibius of Alexandria, in the 3rd century BC
Little is known about this primitive invention—as most of Ctesibius’ works were lost—but it was noted by Philo of Byzantium
(Philo of Byzantium , also known as Philo Mechanicus, was a Greek engineer and writer on mechanics, who lived during the latter half of the 3nd century BC…)
that it operated using compressed air. Like firearms, cannon are a descendant of the fire lance
(The fire lance or fire spear is one of the first gunpowder weapons in the world.- Description :The earliest fire lances were spear-like weapons combining a bamboo tube containing gunpowder and projectiles tied to a Chinese spear. Upon firing, the charge ejected a small projectile or poison dart.) {no evidence here And this description flies in the face of physics. Any charge great enough to power something down a bamboo tube is powerful enough to shatter that tube. AFAIK, no experiment has been done to see if this was even possible. A wild claim taken at face value}
, a gunpowder-filled tube attached to the end of a spear and used as a flamethrower
Flamethrower
(A flamethrower is a mechanical device designed to project a long controllable stream of fire.Some flamethrowers project a stream of ignited flammable liquid; some project a long gas flame. Most military flamethrowers use liquids, but commercial flamethrowers tend to use high-pressure propane)
in China
(China is seen variously as an ancient civilization extending over a large area in East Asia, a nation and/or a multinational entity.China is one of the world’s oldest continuous civilizations)
shrapnel was sometimes placed in the barrel, so that it would fly out along with the flames. Eventually, the paper and bamboo of which fire lance barrels were originally constructed came to be replaced by metal. It has been disputed at which point flame-projecting cannon were abandoned in favor of missile-projecting ones, as words meaning either incendiary or explosive are commonly translated as gunpowder. The earliest known depiction of a gun is a sculpture from a cave in Sichuan
, that portrays a figure carrying a vase-shaped bombard.{never been dated by any laboratory. It could have been done the week before the patsy showed up}
Bombard (weapon)
(A bombard is a large-caliber, muzzle-loading medieval cannon or mortar, used chiefly in sieges for throwing heavy stone balls. The name bombarde was first noted and sketched in a French historical text around 1380. The modern term bombardment derives from this.)
, firing flames and a ball. The oldest surviving gun, dated to 1288, has a muzzle bore diameter of 2.5 cm (0.984251968503937 in); the second oldest, dated to 1332, has a muzzle bore diameter of 10.5 cm (4 in).
The first documented{Big LIE, not documented but claimed} battlefield use of gunpowder artillery took place on January 28, 1132, when Song
(Song Dynasty
The Song Dynasty was a ruling dynasty in China between 960 and 1279; it succeeded the Five Dynasties and Ten Kingdoms Period, and was followed by the Yuan Dynasty. It was the first government in world history to issue banknotes or paper money)
General Han Shizhong
(Han Shizhong was a Chinese general of the late Northern Song Dynasty and the early Southern Song Dynasty. He dedicated his whole life to serving the Song Dynasty, and performed many legendary deeds. It is said that he had scars all over his body and, by the time he retired, there were only four)
used huochong
(Huochong is a tube-like, projection firearm. It first appeared in the Song Dynasty and was constructed of bamboo. The bamboo body was replaced with bronze sometime in the late 13th or early 14th century.{2 centuries After Europeans} The oldest metal huochong, which is seen by many as the first known cannon)
to capture a city in Fujian
. The world’s earliest known cannon, dated 1282, was found in Mongol-held Manchuria
. The first known illustration of a cannon is dated to 1326. In his 1341 poem, The Iron Cannon Affair, one of the first accounts of the use of gunpowder artillery in China, Xian Zhang wrote that a cannonball fired from an eruptor could “pierce the heart or belly when it strikes a man or horse, and can even transfix several persons at once.”
To counter this argument one needs to go off net. Both Ian V. Hogg and Sir CharlesOmen make valid, well documented arguments against the Chinese claims. None of which have ever been validated. Xian Zhang’s writings have never been validated by outsiode experts. They do not appear in ANY literature until after the claims that China invented gunpowder were met with open sceptisim in the west.
When the Chinese allow forensic documents examiners to examine the documents and artifacts, then the issue will be settled. Until the next time so 2-bit historian tries to re-write history for a buck.
Footnotes are in ()
comments in {}
Speakeasy – “What if the US defaults? ”
Then the money grubbers in Washington can’t borrow more from baby Jane’s piggy bank. They would kill their own mothers to pay for their lavish lifestyle so they will trade US sovereignty for thirty pieces of silver. You can bet on it. We would not be where we are at right now if it were not true.
19. Annoy Mouse:”they will trade US sovereignty for thirty pieces of silver”
I have to believe that is the day they hang. We will not go gently….
ok then, since chopsticks.
There’s no freaking way they’re gonna pay 2T for Viagra, Blert. They’ll just steal the formula.
Yeah, but Chinese made Viagra will be full of lead and melamine.
A caution on IMF “projections” and predictions:
This is the same IMF that a few years ago claimed that China’s GDP at the time was $9 trillion. It was not. The IMF had to correct itself later and revise China’s GDP of that year down to $6 trillion; a rather spectacular error.
ENTER THE DRAGON
Our economy is draggin’
Overtaken by the dragon
That was sleeping when old Marco Polo came
For five hundred years they struggled
Cold and hungry as they juggled
Flood and famine that would always win the game
Then United Stated decided
Far too long that we have bided
Both our time and money wasted on our own
So we went ahead with Nafta
And so now it seems we hafta
Import all we use ‘cause nothing’s US grown
But the IMF is wrong ‘cause
This is just another long pause
And the US will rebound to rightful place
You recall in nineteen eighties
All the savvy media fraidies
Said the world would have a smiling Japanese face
If Obama gets re-elected in 2012, the population is already so dumb we’re sunk. What happens if gas is 7 or 8 bucks a gallon? Does he still get re-elected? Or do they empty the entire strategic reserve in October 2012 and give everybody a hundred bucks cash out of the stimulus Monopoly money to boot?
One stock that may be last to fall is the influence of the “best and the brightest” whose specialty was to produce “brilliant policies that defied common sense”. Halberstam applied the term to the “whiz kids” of the LBJ administration, but it probably be attaches to the permanent elite for whom “elections matter less than they should” because they all share the “same values” — and perhaps the same conceits and delusions anyway.
There was in Kim Philby a residual loyalty to his class even after he had decided to betray his country. What rankled in him was the idea that crass Americans should supplant the likes of himself as the new movers and shakers of the world. That the wrong people should be in charge was worse than the wrong country. Asked why he joined the KGB, he answered “One does not look twice at an offer of enrollment in an elite force.”
Elite. In that one word was Philby’s soul, supposing that he admitted it’s existence, or at any rate, what passed for his heart.
Interestingly, the snobbery was returned by Walter Kendall Myers “a leading State Department adviser” who sneered at British attempts to cultivate a special relationship with America. Myers and his wife turned out to nearly life-long Cuban spies. One journalist who knew him wrote:
Myers was rewarded for his treason with a personal audience with Fidel Castro. He said “Fidel is wonderful, just wonderful” to which his wife added that Castro was the most “incredible statesman”. Both pined for a return to “their home” Cuba.
Myers especially admired Castro’s health care, which in the pre-Obamacare days, he compared favorably to medicine in the United States. At his sentencing he said that all he wanted was to advance the cause of goodwill and world peace.
The Washington Post noted that “they did not have to give up a 38-foot sailboat Walter Myers once said they might use in retirement to sail to the communist country.” Even in espionage there were hints that ‘criminal convictions shouldn’t matter as much as they do’ if you did things for the right reasons. In one thing Myers was probably telling the truth. “We did not intend to hurt any individual American.” To the end it was about them and their crazy conceits, their self-absorbed academic games. He probably never thought of ordinary Americans, the bitter clingers. People like Walter Myers are above it all.
“One stock that may be last to fall is the influence of the “best and the brightest”
Yes, when it falls it will be because everything else has gone bust. However, the imagination of the West will probably continue in new lives as a double-edged sword. Recently, a Chinese friend, immigrated to Canada, told me about his five-year-old daughter who was back in Beijing visiting family. They came across a crew making some kind of children’s tv show – kids were performing – and the daughter was asked if she knew how to sing or dance. She said, I can sing, and proceeded to give them a song. Afterwards, her mom asked, what song was that you sung, dear (she sung in Chinese but her Canadian pre-school is in English)? And the kid replied that she had just made it up. My friend figures that could not have happened if she had grown up in China, not Canada. Apparently, Chinese kids don’t just make up songs for the cameras; at least that is one supposed reason proud parents might use to reflect on their emigration choice. China is a powerhouse, with 1.2 billion people, who all want to live in the West… Those who don’t or can’t and who resent those who do will be showing us the fully-fledged 21st Century version of National Socialism, one might sadly conclude (with their take on visionary leaders). One could argue that the 20th Century version was an economic powerhouse too, until it blew itself up, but that it was inherently self-destructive, in the medium term, from the very start. Then again, maybe China will, from sheer necessity, invent something new and keep things together.
do the per capita math.
china has no future.
6. rhhardin
Treasuries are a compelled buy for some players. These folks can use Treasuries — only — as a substitute for cash collateral.
Commodities traders are one such group.
Elsewhere, commercial banks insurance companies, etc. are strong-armed into buying Treasuries.
Beyond that the Federal Reserve bank is the true buyer — hence printed money.
It goes in a two step, just like Weimar Germany. Bonds are auctioned on Day Zero and bought by Primary Dealers. On day ten the Fed buys the newly issued paper — at a premium — from the Primary Dealers — using money printed by their computer terminal.
Traditional buyers like Japan, Red China and Nationalist China are now backing away. Rather than selling outright they are ‘running off’ their positions. That is, they are letting their portfolios mature and then cashing out; not rolling over their paper. This avoids having the Primary Dealers taking fat commissions off of their national accounts.
The average weighted maturity of US Treasury debt is very short. So WHEN the Fedsury loses control of the market the move will be very expensive very quickly.
The Stashist class will be blown up with lightning speed.
A super crisis will be upon the land.
One must expect after all of the advice Soros has give the Resident ( Soros visits him constantly. ) that such a crisis is his Marxist intent. If so he’d be tracing the tragic story arc of Lenin. “Worse is better.”
The pile-on is underway in the FX markets. Soros is about to make his latest greatest killing.
It is not hard to meet intelligent, hard-working and pleasant Chinese living in a wide variety of foreign countries. They have to a soul immigrated and chosen to start a new life at this or that level according to their means and opportunities.
The primary and most important export of China is these people–it’s best and brightest. Sure, some in universities will return to China for a time with their diplomas, but just long enough in many cases for them to escape again. Yes, the Chinese intelligence services works the diaspora mercilessly for gain. But, the US, Canada, and a myriad of other countries are reaping the benefits of acquiring Chinese self-selected winners.
This demographic feature applied to American (and Australian, among others) history and is one of the major contributions to the success of the US and other Anglo colonies. You could do well with work and live free, so the best and brightest came from all over.
I rather suspect that if you troll the cities and countrysides of China you’ll get a different impression of the people remaining.
–JC
It seems probable that China would like to replace America as the Saudis chief arms supplier and purchaser of oil. Surely they would attach less conditions to the use with which the weapons are put.
Nothing is as it seems:
The GOP’s course will be “more directed at cutting services and achieving the ideological purposes of the Republicans rather than to get the economy going,” [Soros] said. The billionaire also told Zakaria he thinks interest rates are going to increase and “choke off the economic recovery.”
As for the Tea Party, Soros said the group is “decent” and “hard-working” but are being misled by Republicans who want to slash taxes and regulation for selfish reasons. “They are being used and deceived,” he said.
There’s a lot of that going around.
I would take the Chinese Ascendancy with a grain of salt.
Remember when the Japanese were supposed to be the wave of the future?
And before them the Arabs , with all the oil money?
Each time, we were still here when the dust settled. Let’s remember that.
China has succeeded through the mechanism of the ‘China price’ in destroying the value of manufacturing work. In the industries I am familiar with mainly hard disk and semicon, its understood that if a production machine costs $100,000 from the US, it should cost 70,000 from the Japanese, $50,000 from Singapore and $25,000 from the Chinese. At this price, the Chinese maker barely covers his raw material costs. In a very real sense the technological cornucopia that we see around us, is built by Chinese wage slaves working endless hours with little compensation. There was a window of perhaps 15 years when it did some good to lament the loss of high-paying manufacturing jobs in the US through a combination of union gangsterism, socialistic policies and the greed of capitalists but it no longer makes sense now. Many of those jobs have now disappeared, destroyed by the relentless advance of technology and manufacturing processes. Not the worst of it, is that when manufacturing work is so atomised, (I am aware that efficiency through specialisation is older than Adam Smith) the rewards such as they are, are captured by the managerial coterie (who in turn cite relentless competition from China and India as an excuse. Its a circle jerk I tell ya). In Singapore, there are numerous ‘high-tech’ factories, which are run at the machine level by housewives, migrant girls and grandmothers. The ruling assumption in such factories is that there is no bottom to the idiotification of factory work. Much manufacturing is of this nature now. On the other hand, when I go shopping I find that a DVD player costs about as much as a kilo of beef. Which illustrates the larger trend; viz that the value of ‘intellectual work’ is being constantly eroded while commodity prices are on a roll. God is in heaven and all is well with the world.
China’s overall output equalling ours is nothing more or less than the final, incontrovertible sign that the advantage we had at the end of WWII due to the rest of the world’s industrial base being damaged or destroyed and their people being uneducated/untrained is OVER.
The politicians can no longer lie about it. They can’t hide it. Any solution other than telling the people the truth combined with honest, innovative reactions to this new reality will fail, and get them unelected – or, as some commenters have pointed out, swinging from lamp posts or tree limbs.
The public can continue to lie to themselves about it, but doing so will result in a continuing decline in their standard of living and unresovable cognitive dissonance with regard to the reasons.
Time for us all to admit that we can’t have it all, all at once, simply because we’re above ground and breathing. To those with the brains and wisdom and honesty and maturity to see it, RIP outcome egalitarianism.
Now if only we could figure out how to export our excess of union/community organizers, lobbyists and tort lawyers.
Ok, here is an unconventional explanation, claiming the rise of China is just beginning, China is on the way to becoming a “super-state” due to an open adoption of eugenics to favor the reproduction of the intelligent and dis-favor the reproduction of the low-IQ.
Any endorsement of such anti-PC idea as eugenics gets a Westerner roasted alive by the academic and political guardians of all things PC. Apparently, the Chinese ruling class is not at all afraid to go where all others fear to tread….
http://www.counter-currents.com/2011/04/the-coming-chinese-superstate-richard-lynns-eugenics/
Sounds at least possible. What if it works, if not in China, but somewhere else? What if the population of a country which practices eugenics raises it’s average IQ by 25 points? or 30? or 50? They will end up running the world.
What if the population of a country which practices eugenics raises it’s average IQ by 25 points? or 30? or 50? They will end up running the world.
Oh, yeah, right. That’s exactly how human nature works (sarc). A surplus of intelligent people being forced by necessity to be either unemployed or doing the equivalent of menial jobs in this “super society.” Right, that’ll work. Not.
3rd World Hell Holes: Rwanda, Zimbabwe, Uganda, Haiti, Sierra Leone
Average IQ less than 75
First world developed nations: South Korea, Japan, Finland
Average IQ greater than 100
Are you sure there is no connection?
w@21 (Syria): The Middle East is not going to fix itself to a degree acceptable to European standards of order within our lifetimes….After all, what do you do with a car that has got part of the chassis working loose, as an analogy to the global system? Either you tighten it to the chassis, that is bring it into line with the rest of the car, or you put a bushing or a shim and let it keep flapping loose.
Versus Pelosi’s statement on “shared values” rendering elections obsolete. (I am reminded of Christiane Amanpour’s “Look we all know GW is real.”)
Versus the “bitter clingers,” which events are transforming into a cliche for individualism – as an archaic anomaly demonstrating an amusing resistance to the tidal wave of the future.
Time for a return to benevolent dictatorship?
I hope not but the divides seem to be widening, not to even mention the introduction of female liability for the breakdown of the family which I suppose implies benevolent patriarchal dictatorship (although I suspect a certain degree of provocative intent as well.)
The Chinese IQ experiment worries me not a bit. I have met the Asian genius in question and he couldn’t pull his head out of his computer models to save his life. More to success. Much.
But back to shared values, bitter clingers, and keeping the car operational, my guess is that resolutions will evolve at a painfully slow pace with incremental steps coming from unexpected places, a trajectory that is impossible to anticipate or control. Commenters who predict a slow leavening of democracy are correct, but the question remains what to do with the interim messes.
I have no magic bullet(s). Unleash the animal spirits (Kudlow.) Unlock the vise grip of energy-related subsidies (heck assign staff to review them all).
In all, the federal direct and guaranteed loans that were outstanding last year had a total value of $1.4 trillion–nearly two-thirds more than the value 10 years earlier
It’s a place to start. After raising taxes – a “quit yer whining” move if there ever was one.
3rd World Hell Holes: Rwanda, Zimbabwe, Uganda, Haiti, Sierra Leone
Average IQ less than 75
First world developed nations: South Korea, Japan, Finland
Average IQ greater than 100
Are you sure there is no connection?
Bell Curve: I read your original message as being about creating a society of well above average intelligence, not the merely greater than 100 IQ you cite here. These societies were not created by eugenics or any other “IQ accellerant” imposed from above. Also, the mentality of those who are fanatical about “superior intelligence” mirrors that of the current western elite, who’ve made a mess of everything. Any eugenics projects by any self-appointed elite will result in catastrophe for the society that tries it. Incidentally, N. Koreans probably have inherently above average IQs as well, or at least started out that way; they are now the starving subjects of a madman. It’s how you harness that intelligence to resourcefullness that distinguishes S. Korea from N. Korea.
Also, remember: while today’s progressives may pretend to be appalled by eugenics, the earlier progressives were very much for it. Eugenics among progressives is not dead, just ask John Holdren.
Well said Don, far more than IQ it is burning ambition to succeed and being able to put in the requisite amount of work that is the basis of success.