05 Jun 2010, 7:17 am
lotuspuppy wrote:
gemstone123 wrote:
lotuspuppy wrote:
codarac wrote:
I think the world financial system is absurd.
Real wealth comes from industry and agriculture. The fact that, in the modern world with all its technological advances, you can have a country's economy booming one week and then in recession the next thanks to internationalist investors crunching numbers on computer screens on the other side of the world is a nonsense.
But it looks like the current financial system is one we're stuck with, and it can still provide "interesting" talking points.
I predict the 21st century will be China's, whatever the globalist rags say.
I question China's short-term prospects for two reasons. First, China is not a dynamic society. Even if the Beijing politburo makes liberal reforms, China is still much too homogenous and ancient to change. For one, I question if Chinese can accept immigration to reverse the massive demographic decline they will have the first half of this century. At least the United States can absorb some immigrants.
Secondly, China's financial system is inefficient. State-sponsored banks make bad loans for political reasons, and not for fundamentals.
I think that a shift in economic power from the West to the East is happening. It doesn't surprise me though because if you take Indonesia for example it's a country with a huge population, enormous natural wealth and a very hard-working population.
The US may have political and military power and influence but they've lost their capacity as an industrial/manufacturing nation to China.
I do think Asian economies are rapidly industrializing. In terms of economic power from one nation to the next, though, they have a long way to go. For one, most Asian nations (Japan excepted) lack a sophisticated market of their own. For another, they lack control of their own financial systems. For the moment, they have to go to the US, Japan and Europe if they want capital. They can't really raise it in their own nations.
The US, btw, does not really have a decline in the manufacturing sector. It's certainly had a decline in manufacturing jobs, but not really in industry itself. The sector has just become much more efficient, either outsourcing or becoming automated. I guess this just further reflects the growth of services. One day, most services will become automated, too.
I agree that the shift isn't going to happen overnight. However I completely disagree with what you say next. A sophisticated market?! The whole global market is flawed and quite frankly there's no such thing as a "sophisticated market". Another point is that they can quite easily raise capital. The "capital" that the US, UK and other such countries raise are just numbers on a computer. Plus China could easily pull the rug out from the US economy by simply selling the huge number of bonds it owns and of course the UK heavily relies on it. I'm not saying when this will happen though. Could be a week Or 50 years. Also I know that the US dollar is the world's reserve currency but this could be boycotted by countries such as Russia, China etc.
It's interesting you say that the US has had a decline in manufacturing jobs. This I expect. However what I meant is that the US is losing their capacity as a manufacturing nation. Here's my example: A company hires 100 people in a factory in the US for $500 a week. The wages the workers earn is put into the US economy. Now, the company then realises that if they outsource to say, Indonesia as they only have to pay the workers $30 a week then not only does the US lose the money from the now unemployed workers as they've lost their purchasing power but, more importantly to my point, the US workers eventually lose the skills required. Therefore this is what I meant when I say that the US is losing it's capacity as a manufacturing nation to countries such as India and China. The loss in jobs in the manufacturing sector is also exacerbated by the factories becoming automated as you mention.
This highlights the unfairness and crookedness in the so-called "free-market".
