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Jim O'Neill Suggests It May Be Time For The US To Give Up On Our Own Middle Class, And Focus On China's

Tyler Durden's picture




 

A floundering Jim O'Neill has never seen decoupling as wide as it is now, and the man is now openly hallucinating, seeing every non-developed country as a potential BRIC (see this Friday's FT OpEd: How Africa can become the next Bric). Well, of course, China needs its resources. Soon every open mine will be a "BRIC" to be exploited by Chinese interests, which come, see, and suck the place dry as they build yet more vacant cities, ghost towns, and highways to nowhere, hoping they can sustain the illusion of the world's greatest bubble for a few more months. Which is precisely all those who are betting on a collapse of China are playing it not with China CDS, but those of Australia: for when the worm turns, Bad in Beijing, will be nothing compared to the Massacre in Melbourne. Yet even Jim's nagging conscience is not allowing him to blindly continuine to ignore the other side of the coin, namely that he is once blatantly wrong, and decoupling never did, and never will occur: "What can emerge if Ben Bernanke and the Fed is wrong? What if this
slowdown is sustained, and we actually move into another recession? The
American Dream needs something new. In conventional terms, it needs
booming private investment and booming exports. And they might happen. I
find it hard to see how net exports were such a genuine real negative
contributor to Q2 GDP as reported today, and I strongly suspect this
will be reversed. But what if it isn’t? The scope for more conventional
fiscal stimulus is hardly available. So in this light, the US needs its
own BRIC equivalent. How about something real on the infrastructure
front ? ( a nice mode of transport downtown Manhattan from JFK would be a
sign). How about literally some forced measures to shift the auto user
on masse from conventional fuels ( combined with a major hike in
gasoline taxes)?" Jim's conclusion: now that China is actively moving to developing its own middle class, perhaps it is time for the US to finally roll over and admit its consumer are on longer the world economic dynamo. He asks whether it is time to "borrow a few hundred million BRIC consumers?" Surely China will be ecstatic that the US will now be funding the development of its own middle class. As for ours...Oh well.

The long holiday weekend arrives in the Europe with everyone praying that the weather takes a turn from the miserable August to date in many parts of it, as we come towards the finale of the summer in the US and Europe. What shall September bring us , more of the gloom that has generally prevailed on and off since May, or will September and the arrival of the St Legers race, allow the famous stock market saying to come really true this year, and we re-commence the rally that ended in April, having started in Spring 2009?  We shall see.

I write after the close of European markets today, and some time after the much awaited words of Fed Chairman Ben Bernanke, and following another week of pretty dismal US data, many were looking for some signs of hope for survival from him. As discussed by our US guys, in fact, Bernanke seems to have stuck to a pretty sober tone, suggesting that the recovery will continue into 2011, which  implies that the FOMC see recent weakness as not so persistent. He, perhaps more importantly made it even clearer-if there were any doubt- that in the event that things transpire differently from how the Fed see things, then they will undertake further measures to boost financial conditions, as we expected.

In that regard, I would like to reiterate what I wrote in my last note, and will go into in more detail in next Wednesday’s Global Economics Weekly ( GEW),  US financial conditions are more important for the rest of the world than the US economy. So for everyone else, the Fed’s policy response to more economic weakness is, in my judgement, more important than the economic weakness itself.

Anyhow, amongst other things that have struck me this week, just for a change, is how powerful my beloved BRICs are, and those either not a BRIC, not a potential BRIC, or not close to one, life is quite tough. In this regard;

1.    BRICs and style.
Did you see Tyler Brule last Saturday in the FT, giving his own most amusing take on the BRIC story? Not surprisingly, in his world of style, Brazil is the major winner!  While one can easily broadly concur, I suspect some slight selection bias there when it comes to the examples given. One can easily think of some choices from the others, or at least some. Some aspects of clothing fashion from India for example?  Anyhow a great read.

2.    Brazil news all over the place. Brazil isn’t just winning the BRIC style council, lots of other interesting bits and pieces. As Lula’s preferred candidate Dilma soars ahead in the polls, the media is full of stories of booming consumer confidence, declining unemployment.  Martin Sorrell of WPP made some interesting comments this week with his latest results ( always a good bell weather) saying his clients were undertaking a “ mad scramble” for acquisitions in Brazil ( and China). He also said that BRICs were having a disproportionate influence on clients’ thinking . in this general vein, I gather the proposed merger of LAN and TAM would create the biggest airline by market cap if it went through.

3.    BRICs  and Africa. I had an op-ed published in the FT today, where they rather naughtily chose a headline that implied I was adding Africa to the special four….subsequently, as you can imagine, I have received numerous emails offering my advice on this notion and all the various other candidates. I was merely trying to highlight, that IF African countries, especially the large ones got their act together, then they could be as big as the BRIC countries are going to be. I also pointed out that it is extremely difficult for the s in BRICs to become an S ( although they forgot the capital the second time). South Africa has too few people to become big. In any case, as I mentioned, if the ANC carries on down its recent proposed policy path, it won’t get close. Trying to muzzle the media is not what this country needs. We will be writing something more substantial on Africa in September.

4.    Germany, which appeared to be greatly influenced by the BRICs has been the economic “star” again this week.
It is starting to look more and more as though Germany has entered a period of self sustained domestic demand. This week’s IFO, its retail component, the latest consumer confidence numbers, all paint a rather rosy scenario. Now due to past disappointments a plenty, it is tough to really believe this is for real, but what a contrast to the US? Ask yourself this, dear grizzly. For all those years when Germany has struggled , often when the US was booming away, no-one ever said that Germany( and Europe, or Japan’s) weakness would negatively affect the US, so why should Germany suffer from the US? If you look at their export business, as I and Dirk Schumacher discuss endlessly, they are benefiting enormously from the BRICs.

Here is a silly anecdote that struck me as another sign of Germany doing well with its brands.. On one of my rare August days in London , I was driving in on the M4 flyover, and just before the end of the official motorway , you can see all these brand new auto showrooms appearing. The German ones have been smart enough to be up there in the sky, and so visible, with Audi and Mercedes showrooms really capturing the wavering eye. Japanese ones, are oddly below the flyover level………………

5.    The Yen-again- and Japanese politics.
I have to rub my eyes this am to really believe that I was reading a story in the FT about Ozawa possibly standing as the leader for the SDP of Japan. He sure doesn’t give up easily!  No doubt this means another series of twists on the whole consumption tax saga. Meanwhile, the Yen doesn’t like life stronger than Y85 –at least for now- with persistent talk of intervention as a coming tool. Not sure what there is new to say about it. the Yen is ridiculously overvalued, as we have talked about at length. But if the BOJ don’t do anything aggressive, especially given the style of the Bernanke Fed, then nothing changing too soon.

6.    The US and a BRIC like edge? 
What can emerge if Ben Bernanke and the Fed is wrong? What if this slowdown is sustained, and we actually move into another recession? The American Dream needs something new. In conventional terms, it needs booming private investment and booming exports. And they might happen. I find it hard to see how net exports were such a genuine real negative contributor to Q2 GDP as reported today, and I strongly suspect this will be reversed. But what if it isn’t? The scope for more conventional fiscal stimulus is hardly available. So in this light, the US needs its own BRIC equivalent. How about something real on the infrastructure front ? ( a nice mode of transport downtown Manhattan from JFK would be a sign). How about literally some forced measures to shift the auto user on masse from conventional fuels ( combined with a major hike in gasoline taxes)? Or maybe just borrow a few hundred million BRIC consumers?

Enjoy what’s left of “summer”

 

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Sun, 08/29/2010 - 15:08 | 551608 bugs_
bugs_'s picture

Just another rip-van-winkle open borders globalist who can't figure out why his open borders globalist fantasy smells so bad when its burning.

Sun, 08/29/2010 - 15:09 | 551610 LoneStarHog
LoneStarHog's picture

I can only infer that this clown gets paid BY THE WORD and not for any intelligent analysis.

Mon, 08/30/2010 - 08:13 | 552590 aint no fortuna...
aint no fortunate son's picture

I blame it on the purple blotter acid

Sun, 08/29/2010 - 15:19 | 551625 Azannoth
Azannoth's picture

I think China has enough reserve capital to build 1000 more ghost cities and keep thie 'illusion' going for years not months

Sun, 08/29/2010 - 17:19 | 551815 dlmaniac
dlmaniac's picture

... that is before big Ben prints their reserve into 2 trillion toilet papers.

Sun, 08/29/2010 - 15:26 | 551629 knukles
knukles's picture

Myopic Twat.  We already have our own BRIC (emerging shithole) in southern Arizona.

Hear tell t'was a time in ancient S. American past whence soothsayers prognistactions proved wrong for long were tied to trees in the darkest bug infested jungle to be sucked dry by unmerciful hordes of ravished mosquitoes. 

Sun, 08/29/2010 - 22:41 | 552186 Mark Noonan
Mark Noonan's picture

We lack the proper virtue for such direct action - once upon a time, remember, we used to tar and feather miscreants.

Sun, 08/29/2010 - 15:25 | 551637 Frank Owen
Frank Owen's picture

Where the hell is Marla?

I miss her dirty prose.

Sun, 08/29/2010 - 20:43 | 552054 dark pools of soros
dark pools of soros's picture

the wicked witch of the jew is probably in a tizzy ever since Iran turned on the switch with narry a blow from her homeland

Sun, 08/29/2010 - 15:26 | 551640 spekulatn
spekulatn's picture

Blanket party 

Sun, 08/29/2010 - 15:42 | 551666 nmewn
nmewn's picture

The continent of Africa is a BRIC?

Ok...bartender, I'll have what he's having.

Sun, 08/29/2010 - 17:38 | 551830 knukles
knukles's picture

Yeah.  The Whole Continent.

You noticed that this "Continental Africa" crap is all of a sudden becoming the next new and wonderful undiscovered rat hole of an investment idea being pushed by......

...none other than....

....the Powers that Be, of sorts.  The flags are being raised by institutions well connected to the Centers of Government in the Anglo-Saxon World. 
Now, I am not a conspiracy theorist by any stretch of the imagination, but all of a sudden, "Shazzam-a-ram-a" here it is bright, noble, Satisfactory to the Altruist (you throw some money at it and I'll have done my part) in All of US.

I feel a big Public Turd coming on. 

Sun, 08/29/2010 - 18:52 | 551936 three chord sloth
three chord sloth's picture

The only way most nations of Africa today are going to play a big role in the world economy is as neo-colonies... this time for China, India, and maybe Japan. They've got too many decades of internal development to go through first before they can be at the level of the lowest BRIC.

Sun, 08/29/2010 - 19:36 | 552000 hbjork1
hbjork1's picture

+10

Many decades.  But the colonies(excuse me), countries of Africa can be a source of cheap physical labor and raw materials while they are developing. 

There is no where else for the players to go.

Mon, 08/30/2010 - 18:28 | 553847 iota
iota's picture

But look, 'tis unclaimed!

http://en.wikipedia.org/wiki/File:1984_fictious_world_map_v2_quad.svg

...no, no, wait that's not reality, that's dystopian speculative fiction; somehow I confused the two.

Sun, 08/29/2010 - 19:56 | 552015 nmewn
nmewn's picture

"You noticed that this "Continental Africa" crap is all of a sudden becoming the next new and wonderful undiscovered rat hole of an investment"

Yeppers...all we need now is the patented Robo wildebeast pictorial demonstration to complete this brand new buying opportunity of a life time...LOL.

Failing that...I'm playing a find the pea game on-line.

Mon, 08/30/2010 - 06:01 | 552521 grunk
grunk's picture

It must be true. I'm always getting e-mails from guys in Nigeria with money for me. All I need to do is give them my bank account number and a small fee.

No more honest place to do business.

Sun, 08/29/2010 - 15:43 | 551667 Eally Ucked
Eally Ucked's picture

"Surely China will be ecstatic that the US will now be funding the development of its own middle class. As for ours...Oh well."

US hasn't been funding anything in China , as a matter of fact China is funding everything what US government is doing. Isn't it a fact that China and Japan is lending money to US? What are the odds that US will repay all that debt in not devalued money? I think that topic was covered here extensively.

So, Tyler, I think there is some strange note in that statement.

Sun, 08/29/2010 - 16:01 | 551690 LoneStarHog
LoneStarHog's picture

Excuuuuuse me?  Americans have been funding China's growth.  It is called the Trade Deficit.  It has been funded through CONSUMPTION, and China owes us nothing for doing so.  China then lends us the money by purchasing U.S. Treasuries which funds the U.S. Government, and WE then OWE China for doing so.

 

Sun, 08/29/2010 - 16:52 | 551777 nmewn
nmewn's picture

The govmint owes...not us. And specifically, not me.

They can tale a ride on a flying dragon for all I care...they had a lot of choices in their decision making process.

To close the loop, as a somewhat interested third party, they chose poorly.

Sun, 08/29/2010 - 17:00 | 551788 Eally Ucked
Eally Ucked's picture

You're right and that's what I said.

Sun, 08/29/2010 - 20:23 | 552036 LoneStarHog
LoneStarHog's picture

Then what do you call this, "US hasn't been funding anything in China..."

Sun, 08/29/2010 - 21:01 | 552078 Eally Ucked
Eally Ucked's picture

"China then lends us the money by purchasing U.S. Treasuries which funds the U.S. Government, and WE then OWE China for doing so."

Sun, 08/29/2010 - 16:40 | 551762 cossack55
cossack55's picture

There is a middle class in the US. When did that happen?

Sun, 08/29/2010 - 20:27 | 552040 Moneygrove
Moneygrove's picture

America had a middle class under clinton ! went bye bye under bush !

Sun, 08/29/2010 - 21:27 | 552098 Real Estate Geek
Real Estate Geek's picture

I'm certainly not a fan of Bush, but don't forget that it was your boy Clinton who signed NAFTA.

EDITED TO ADD:  But I didn't junk you.

Sun, 08/29/2010 - 16:09 | 551705 SwapThis
SwapThis's picture

The giveaway that this guy is a complete globalist stooge is the way he slips in the 'swtich from conventional fuels' language, especially without mentioning expanding our energy development of known resources here.  The Picken's plan to use NatGas for all commercial trucks and public transport going forward, especially if it is also expanded an excellerated, will help in every meaningful way to grow jobs and help our energy dependence.  Combine this with a national effort to build 100 top of the line pebble bed reactor sites & and a national MagLev rail system and we would be going in the right direction.  We need to regain the American Spirit that put a man on the moon and harness it to put our future in our own hands and not that of egomaniacal globalist neocons. 

We need $trillions of $$ of infrastructure projects on the east coast alone with huge projects like the re-work of the NYC/Philly/ Boston water & transport systems just for a start.  We have the ability to do these things IF WE CAN FIND THE BALLS TO CLEAN HOUSE IN DC. 

Without real change real soon I would rather not think of what America will be forced to submit to by the likes of China, or anybody else.

 

Sun, 08/29/2010 - 17:00 | 551789 Dirtt
Dirtt's picture

Huge projects led by Big Union?

That falls under the "estimated cost: $5 billion" and the "eventually cost: $50 billion + 5 year delayed opening + nightmare traffic)

I'm all for infrastructure with 100% transparency and 20% union 80% non-union ratio.  Otherwise blow those infrastructure projects off the table.

Sun, 08/29/2010 - 18:18 | 551900 Ultranaut
Ultranaut's picture

It's either union and the money flows to what was once the American middle class, or it's non-union and the money flows to Wall St. on the backs of undocumented economic refugees from Latin America. Either way you are getting fucked, but at least with the union guys you're not getting fucked by pricks from Wall St.    

Mon, 08/30/2010 - 00:15 | 552295 Uncle Remus
Uncle Remus's picture

You really believe that don't you?

Mon, 08/30/2010 - 00:30 | 552310 laughing_swordfish
laughing_swordfish's picture

+ 1

Sun, 08/29/2010 - 17:38 | 551831 Hulk
Hulk's picture

The reality is that we can't even afford to maintain our existing infrastructure...A true stimulus would have nucs being built,LED lighting, massive effort in energy storage tech and a conversion of our vehicles to NG.

Sun, 08/29/2010 - 19:01 | 551956 three chord sloth
three chord sloth's picture

The fact that we are not developing a NatGas economy right now is the best proof that the decline of America is being purposefully engineered. We've got centuries-worth of the stuff, it's much less polluting than oil, yet the gov't always finds a way to stop its development.

We've got the brains and the spirit... its being squashed from DC. The CFR, neocons, globalist Ds and Rs... clean 'em all out!

 

Sun, 08/29/2010 - 16:11 | 551707 ZeroPower
ZeroPower's picture

 a nice mode of transport downtown Manhattan from JFK would be a sign

Um...how about EWK? (forget youre in NJ for a second..)

Sun, 08/29/2010 - 16:16 | 551720 belogical
belogical's picture

He is fortunate I was not in his presents when he said that or he'd be looking for an acupuncture point to expel my foot out of his ass

Sun, 08/29/2010 - 16:20 | 551726 Sudden Debt
Sudden Debt's picture

This is way overdone. I don't think people should only focus on the supernegatives and write stuff like this.

I amazes me that most of the Americans on this site actually would like to see a implosion of America instead of fighting for it and do what is best for it.

I guess that's why Europe is better off then America. People here are proud of our civilization.

Sun, 08/29/2010 - 17:12 | 551804 nmewn
nmewn's picture

Mkay.

If you could keep the world wars down to minimum of two per hundred years that would be helpful. And letting Islam overrun your "civilization" would also be helpful in avoiding another one. Just sayin.

Don't worry about us, we know exactly what we're doin.

We tried the whole Englishman John Keynes socialism thingy...it just didn't work out for us, so we're sending it back. We don't expect a refund cuz it's past it's expiration date, a little worn and has some rips in it. Maybe ya'll, being sooo superior, can work on it a little more and get the "multiple" bugs out. Maybe try it out on yourselves for twenty years again before you send the sales people back around ;-)

Cheers!

Sun, 08/29/2010 - 17:43 | 551840 ZeroPower
ZeroPower's picture

Spending a month so far here in France...and i would have to agree with the poster above regarding foreigners simply taking over everything here. I cant walk by without a shawarma shop on every street corner in Paris, and the smaller cities are much the same (in the South, the North is still quite isolated).

From what ive seen London, much the same. 

I agree however some people here would like to see the end of the USA (despite being American!) though i am not so crass... i do recognize all world orders come to a fall at some point. Would not think it happen in this generation or the next.

Sun, 08/29/2010 - 17:45 | 551844 Hulk
Hulk's picture

We want to see the fraud and corruption implode, not the country. Unfortunately, the two are inexorably intertwined...

Sun, 08/29/2010 - 19:34 | 551997 Vendetta
Vendetta's picture

exactly

Sun, 08/29/2010 - 16:53 | 551774 huggy_in_london
huggy_in_london's picture

zzzzz....more bullshit from jim o'neill .... more patting himself on the back ... useless dribble.....

 

But you are right about massacre in melbourne ... when china pops or even if it just goes fizzzzzz, everything south of brisbane is going to hit the wall and how.  As it is, new south wales is broke, and with lower distributions coming from QLD and WA both Victoria and NSW are going to find themselves firmly in the shitter....

Sun, 08/29/2010 - 17:12 | 551803 JR
JR's picture

Resources—oil, corn, or iron ore—are inanimate objects.  It is man who invented steam; it is man who makes steel and circuit boards.  And it is man who makes politics and government.  It is man’s government, whether it is under a Saudi king, the Soviet politburo, the Chinese communists, or the Constitution of James Madison, that moves the inventions, the production and the resources.

For 6000 years, man struggled as a beast of burden to exist under despotic government.  It is time we realized that civilization’s progress rests on the foundation of a single principle: freedom! China dies as soon as its American corporations are withdrawn or taken over by a communist government. A tremendous volume of goods produced in China is produced by American corporations located there: those corporations are protected by American patents and American innovation which were developed under a free-enterprise system.

Everyone is so smart: they know how we got here after they look around and see all this stuff: “America, you got the ball rolling, it’s now time the Communists handle it.”  No matter that all past communist systems have failed, of course. It’s time to try it again.

Jim O’Neill is like a little kid who thinks milk comes from the grocery store.

A 1997 study of the inventors honored in the National Inventors Hall of Fame in Akron, Ohio, revealed that 91% of the world’s greatest inventors worked in America, under freedom and property rights, and only 9% in other countries.

As ZH Anonymous said: "The whole world worships China for its rapid economic growth, while we forget that their industrial revolution is very different in character than that of North America and Western Europe. The industrial revolution in the West was fueled by an endless stream of innovations starting with the steam engine. Chinese growth is fueled by cheap money, cheap labor and the drive of multinationals to enter a huge market. China has opened up to benefit from the innovations made in the West, but it isn´t contributing anything beyond cheap labor and the promise that companies can grow there for a long time to come. Capitalism without individual freedom is not capitalism, it is feudalism.”

O’Neill says “the US needs its own BRIC equivalent. How about something real on the infrastructure front?” Yeah, how about a Congress that won’t barter away our manufacturing base and our jobs to the highest Bill Gates-type lobbyist?  It’s time for the American people to take away the American punch bowl from The Globalist Dreamers and let the O’Neills and their developing nations emerge on their own.

Sun, 08/29/2010 - 17:29 | 551822 RockyRacoon
RockyRacoon's picture

Whoa, now.  You silver-tongued devil.  That makes way too much sense.

Sun, 08/29/2010 - 17:41 | 551837 Hulk
Hulk's picture

That was good...

Sun, 08/29/2010 - 18:43 | 551926 weinerdog43
weinerdog43's picture

Well said JR.

Sun, 08/29/2010 - 17:45 | 551842 Uncle Remus
Uncle Remus's picture

"Prudence, indeed, will dictate that governments long established should not be changed for light and transient causes; and accordingly all experience hath shown that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same object evinces a design to reduce them under absolute despotism, it is their right, it is their duty, to throw off such government, and to provide new guards for their future security."

 

The train is quite long enough. We've been at this particular station before.

Sun, 08/29/2010 - 18:52 | 551939 Ultranaut
Ultranaut's picture

Stalin industrialized a nation of peasants into a global superpower in a matter of decades. China just figured out a way to do the same thing without pissing off the capitalist elite. I think most "American" corporations recognize that the Chinese model is far more profitable. In business, patriotism is just marketing. American business continues to import the new model of authoritarian capitalism they are pioneering in China, they don't care about anything beyond profit.

 

Sun, 08/29/2010 - 19:43 | 552003 Vendetta
Vendetta's picture

Very well done.  I liken the growth of China as an artificial insemination of manufacturing sperm and hoping a mutant isn't formed ... but it has.

Sun, 08/29/2010 - 20:21 | 552035 william the bastard
william the bastard's picture

It's time for you to make a guest post JR, as long as the developing nation you have in mind isn't Dallas.

Sun, 08/29/2010 - 21:47 | 552135 Real Estate Geek
Real Estate Geek's picture

As ZH Anonymous said: "The whole world worships China for its rapid economic growth, while we forget that their industrial revolution is very different in character than that of North America and Western Europe. The industrial revolution in the West was fueled by an endless stream of innovations starting with the steam engine. Chinese growth is fueled by cheap money, cheap labor and the drive of multinationals to enter a huge market. China has opened up to benefit from the innovations made in the West, but it isn´t contributing anything beyond cheap labor and the promise that companies can grow there for a long time to come.

I hope you're right, JR.  But China is a dynamic beast and the above viewpoint assumes that it's not.  Right now China is as described, but it may just be priming the pump. 

I get nervous when I read statistics showing that the number of engineering students in China is larger than the total number of engineers who have ever lived.  (Well, perhaps I exaggerate, but you get my drift.) 

Even if they're just a bunch of automatons, it’s a numbers game to some extent.  A million chimpanzees typing away, etc.

 

Mon, 08/30/2010 - 00:26 | 552306 JR
JR's picture

I understand your concern, R.E.G.

The American system, in the beginning, was a government and a nation that operated with the consent of the governed.  It was the first time in the history of the world that a government was set up completely to be a government operated by the people.  Even Rome, with its early Republic, was a government operated by special families.

The United States has moved away from this model to the point of endangering its existence.  But China is so far away from this, that it’s hard to believe that it would ever achieve a society governed by the people.  It’s unimaginable that will happen.

And if it doesn’t, then China’s path leads to despotism because her rulers use the country for their own power and wealth; and if that should ever be endangered, they will bring on the chains of slavery.

It is a mistake to believe that China’s aping of capitalism is akin to free enterprise.  It is not.  The Chinese people cannot hope, even with hard work, intelligence, expertise and industry, to ever gain control of their future.

That globalization apologists try to compare what China is doing to some form of capitalistic, free enterprise engine is foolhardy, IMO, because that Chinese engine is feeding off the U.S. and European market.

America will return to her grandeur when she returns to self-government.  I believe this will happen because her other choice is oblivion, and I don’t think people will choose oblivion.  This is not the 19th century where people were isolated in small villages and farms with scant transportation, no communication and no way to join their countrymen in resisting despotism. Should this government attempt to close the  clamp on freedom, it isn’t going to have the resources to bring the people into slavery, IMO.

Millions of engineers in a country without a people base that can affect a government is meaningless until they have a civil government where the people can control the government. One despot can have all those engineers eliminated.  As far as I can see, China has made no progress in the direction of self government. The truth is, as China gets richer and richer and more and more powerful with carrier groups and airplanes and the power of the military, the rulers have more concentrated power than ever before.  Power must be dissipated for freedom to flourish.

Don’t mistake this: America still has representative government. The American people have just not insisted upon it.  When you have two highly corrupted political parties who select the candidates on the basis of special interests, and when only 25 percent of the people vote, the people are not exercising their control of the government.  But believe me, they have it.  And when things get to a certain boiling point, they will exercise it. 

Sun, 08/29/2010 - 18:05 | 551880 Buttcathead
Buttcathead's picture

There is always something to sell and a sucker somewhere to buy.

Sun, 08/29/2010 - 18:05 | 551881 Buttcathead
Buttcathead's picture

There is always something to sell and a sucker somewhere to buy.

Sun, 08/29/2010 - 18:05 | 551883 Buttcathead
Buttcathead's picture

There is always something to sell and a sucker somewhere to buy.

Sun, 08/29/2010 - 18:26 | 551911 Fred Hayek
Fred Hayek's picture

If you're already very rich, one of the few remaining additional ways to signify your status is to put yourself above mere identification with your country. 

The annoying guy at the gas station, the exasperating waitress at the restaurant, you're not just another one of them.  You don't identify with them.  All their follies and foibles, sigh, those are typical americans.  That's not you.  You don't identify yourself as "american" even if you are.  You're above that sort of simpleton thinking.  You'd be just as much at home in Mayfair or St. Moritz or Capri, probably more so.  There would only be sophisticated people like you there.  Take special care to protect the american middle class?  What?!

I really think there's a certain subset of the upper middle class and upper class in the U.S. that thinks this way.  Globalization isn't just economics to them.  It's an expression of their attainment of status, too.

 

Sun, 08/29/2010 - 20:38 | 552049 Frank Owen
Frank Owen's picture

Fred, what a great, rarely stated observation. Oh, and I like round-abouts too.

Sun, 08/29/2010 - 18:59 | 551953 Lord and Master
Lord and Master's picture

Sudden Debt- We Americans have what Id say is a very unusual society.  One of the more noteworthy aspects of it is the way that the criminal class (any kind of gangsta) is glorified (in movies, music, pop culture etc), especially among youths.  Its an obvious prelude to collapse for any intelligent viewer of the phenomenon.  I mean obviously no society survives long where precisely the elements that destroy and hollow out society from the inside are glorified-- on billboards, on tv etc etc. 

On a related note, and as part of the laughable decay here (laughable to some individuals with > 130 iq), various other elements in america are currently engaged in an enormous program of siphoning the hard assets (namely gold, silver, diamonds) from the hands of the aforementioned criminal elements, as well as from the hands of the non-criminals elements i .e. law-abiding citizens.  To wit-- there are a ton of 'Cash for Gold' type outfits popping up all over in the US these days.  The proliferation of gold-related companies and ads has obviously been noted by many here, but the degree to which those companies and ads represent ventures engaged in gold-buying rather than gold-selling has maybe been less often noted.  Some of course say that Fort Knox doesnt have the better part of the 8000+ tons of gold it is supposed to have.  But if that be true, i would proffer that the same 'lost' gold is nonetheless being guarded just as well or (apparently) better--- i.e. a few ounces are around the necks and wrists of the millions of well-armed criminals in america.  These criminals are arguably better incentivized to protect america's gold, than hired military or guards of the US treasury/ Fed.  In any case, various elements in america are (of course) engaged in an all-out effort to divest all private citizens of america of their gold-- via the thousands of cash for gold enterprises now popping up.  For people unfamiliar with the game-- with gold at all time highs, enterprising individuals can now get middle class housewives and others to turn in their gold jewelry here at 1240, before it moves on to 2000, 3000 etc.  Its a particularly beautiful bull market move in the sense that the housewives (or old ladies, or young thugs, or young wanna be thugs, guidos , criminals, gangstas etc) are very happy to sell the chains they bough 10 years ago at 1000 for 2000 or 3000 now.   To any intelligent observer, this trend makes sense in the sense that it screws the middle class, and those others who are not apprised of bigger economic trends generally.  On a related note there-- i laugh when i hear of this supposed Great Debate between inflation and deflation.  This debate should not have been allowed to go on for 10 minutes, much less a couple of years,... obviously there are huge downdrafts and updrafts in various asset markets (deflation and inflation), but average americans obviously get screwed badly with inflation, less so with deflation.... ergo....        ....QED.

Sun, 08/29/2010 - 19:02 | 551959 DosZap
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 "He asks whether it is time to "borrow a few hundred million BRIC consumers?" Surely China will be ecstatic that the US will now be funding the development of its own middle class. As for ours...Oh well."

Er', I thought, that was WHY we are where we are now.......

Sun, 08/29/2010 - 19:42 | 552002 williambanzai7
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Everything this crack pot says ties into a sucker trade.

Sun, 08/29/2010 - 19:43 | 552004 midtowng
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How does that work? How can you give up on your own middle class without leaving the country? Or is everyone going to be living behind razorwire and using armed guards to take your children to private school?

Sun, 08/29/2010 - 20:58 | 552072 Quinvarius
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So China is finally going to open up their markets to US goods?  Really?  What a joke.  China banned the movie Avatar because it was sending too much money overseas.  Anyone who thinks China is ever going to consume anything except natural resources should be forced to eat my sh!t.

Sun, 08/29/2010 - 23:06 | 552209 SnarkAttack
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Australian CDS?  Isn't Aussie government debt like 1% of their GDP?  It's basically nothing if I'm remembering correctly.

Mon, 08/30/2010 - 05:10 | 552486 LadyH
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Yeah, that resources grab worked out real well for Africa when it was perpetuated by Brits and Belgians so i guess the Chinese are next to "save" the lost continent?

Mon, 08/30/2010 - 09:06 | 552654 DosZap
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The Chinese  are buying up Commodities, and metals mines, and partnering for farms to grow food.

They are not sinking $ into anything that will not give them a major stake in the years to come.

Their goal is not colonialism.(Yet)

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