http://www.cnn.com/GPS http://edition.cnn.com/WORLD/fareed.zakaria.qa/archive/ Good continued round-table discussion on GPS as well. Columbia prof. Jeffrey Sachs points out how US government have been running on roughly 17% real financing of budgets since 1980, and that it will be impossible with tax cuts in the next presidency - that McCain is completely off the planet, totally unrealistic promoting tax cuts. The daily USD 4bn needs of the US are also at risk, so the next presidency will probably have little leniency, but will absolutely need to strengthen alternative energy research and the educational system. A quaint note on education - Italy is reducing a lot in the educational sector, possibly slashing 80 000 jobs. That seems just like pure lunacy... Washington Post columnist Sebastian Mallaby points out how the US 3% growth of the economy has actually just been the US piggybacking the rest of the world economy growth and expansion - i.e just another smoke-and-mirrors self-deception. Last participant C. Fred Bergsten noted how the US budget deficit next year would probably reach USD 1tn, and the round-table expressed doubts it could be sustained and that budget liberties will be severely restricted for the next presidency. BRIC countries (Brazil-Russia-India-China) have more than half the world economy right now, and are fast growing. They have roughly half the world's population as well - so there is nothing basically wrong there. I wonder how much of the world food production is represented by the BRIC countries, and this will no doubt grow strongly with Russia's potential and Brazil sharper exports. Any reduction in their economic growth will reflect strongly on the US growth, because of the linked "growth" of the US economy by piggybacking world growth. The cancerous growth starves when the blood flow entering its system is shunted. In the closing, Zakarai became rather bluntly political and pointed how calm, intelligent, innovative leadership qualities of JFK during the Cuban missile crisis is how this economic crisis need resolving. The US has the military of the next 22 countries accumulated in the world, but the threats are not the same as during the Cold War - the challenges are economic, not military right now. I wonder how the world will change in the next decades, though - with the projected world population growth and food production squeeze where e.g 70% of the fish populations are severely over-taxed as it is and projected 10 billion people on Earth in 2050, but I think it can even go faster... because poor countries and starving populations create larger families in order to improve chances to survive. The big loser will be the US, but the big winner will be China. Production trumps consumption, but China has both and its large population is a safety net. They also save more than they spend, as well as steaming ahead on the world stage. During the thousands of years of human civilization, China has been in a slump for some centuries... but they have always been the most advanced and innovative when human history is seen as a whole system. Now - the US super-sized consumption is an investment for hedging the future by China, and unless the US defaults on all its debt - China will now have the US in a third-world situation by being their lender. The regimes of the World Bank and IMF will now be the cuffs of the US for the future... and plight of the poor countries seem to come back to the US because of their spending. That is how the lending and production-consumption mechanisms work. US president Bush says - "we are all in this together" - but the facts are more like - "please, we need all of you and your help right now." He is not acting the part, though...
Zakaria has written two interesting books: "The Post-American World", May 2008 - http://www.wwnorton.com/catalog/spring08/006235.htm "The Future of Freedom - Illiberal Democracy at Home and Abroad", October 2007 - http://www.wwnorton.com/catalog/fall07/032487.htm Will try to get a hold of those...
"The daily USD 4bn needs of the US are also at risk, so the next presidency will probably have little leniency, but will absolutely need to strengthen alternative energy research and the educational system." it is always the same nostrum for educational ills in the US. Throw more money in the problem.The US and Europe are spoiled societies. it is time to pay the piper.
Fareed Zakaria GPS on CNNI running the program with George Soros etc again in just another 16 minutes.
What debt? All we do is move the decimal point on the asset side and voilà ! We still have the nukes I beileve those alone are good for a about 5 or 6 trillion
lrm21, well just like Howard Lutnick, chairman and CEO of Cantor Fitzgerald, said on Bloomberg Weekend news - the US is "a pretty solid corporation with lots of assets", and "what gold standard? other countries have no gold standard..." According to him - the US can just keep printing money and everyone will trust the US to pay them back --- everyone are trusting the US Treasury bills. He said that September has been their best month and he is making a killing on the panic and forced selling of governmental bonds by hedge funds and others.
I tend to agree with you, although I am hesitant to climb out on a limb. (I've been on a roll and like most amateurs don't have a talent for doubling and more on a winning streak.) My call is for yield on the ten year to hit 5.5 next year, despite malaise lasting and even deepening into next year. (That's my stagflation in roid rage scenario, a worse caser.) YEN could continue to crush the USD, but that's about as far as I am willing to venture with respect to the dollar. If crude oil falls to price more in relation to supply and demand, CAD could be punished, too, making YEN over Canadian the minor cross to bet.