IMF bombshell: Age of America nears end

Erod · Apr 25, 2011

IMF bombshell: Age of America nears end Brett Arends' ROI - MarketWatch

BOSTON (MarketWatch) — The International Monetary Fund has just dropped a bombshell, and nobody noticed.

For the first time, the international organization has set a date for the moment when the “Age of America” will end and the U.S. economy will be overtaken by that of China.

The Obama deficit tourThe Wall Street Journal editorial page’s Steve Moore critiques the president's speeches attacking Republican budget plans.
And it’s a lot closer than you may think.

According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016 — just five years from now.

Put that in your calendar.

It provides a painful context for the budget wrangling taking place in Washington, D.C., right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world’s hegemonic power.

There are big issues with this theory, no doubt. Most people in China live in abject poverty, and the divide between the haves and have-nots there is massive. The Chinese people in general aren't thinking much about taking over the planet; they're trying to eat.

The ugly truth for China is that they are still completely dependent on the U.S. And in the end, he with the biggest bombs will forever rule the day. Some things never change.

ptif219 · Apr 25, 2011

Erod said:
IMF bombshell: Age of America nears end Brett Arends' ROI - MarketWatch

There are big issues with this theory, no doubt. Most people in China live in abject poverty, and the divide between the haves and have-nots there is massive. The Chinese people in general aren't thinking much about taking over the planet; they're trying to eat.

The ugly truth for China is that they are still completely dependent on the U.S. And in the end, he with the biggest bombs will forever rule the day. Some things never change.

Shows Obama is not concerned about our status in the world. His spending is more important that anything else

donsutherland1 · Apr 25, 2011

I don't believe this is a "bombshell." Those who are familiar with GDP in purchasing power parity (PPP) terms and recent trends should reasonably expect such a development within a decade or less (depending on what assumptions are employed).

PPP, for those who are not familiar with the concept, entails expressing a nation's GDP in terms of prices that prevail in the U.S., rather than official exchange rates. Given China's sustained rapid growth, the idea that China's GDP (PPP basis) could reach parity with the U.S. within less than a decade is not too surprising.

In 2010, China's GDP was $9.872 trillion (PPP basis). U.S. GDP was $14.720 trillion. In the 2008-10 period, China's GDP rose nearly 9.7% per year (PPP basis). U.S. GDP was flat, but growth has resumed. Keep in mind, PPP entails the purchasing power in U.S. terms (basket of goods). The calculation has some important limitations i.e., baskets of goods aren't necessarily comparable, inflation effects, etc. Nonetheless, it is one broad measure that seeks to overcome issues related to exchange rates that may or may not properly reflect underlying fundamentals.

Finally, an important caveat is in order. Current trends may or may not persist. For example, were China hit by an asset bubble and resulting shock from its collapse, China's growth trajectory could be materially slower than currently forecast.

ric27 · Apr 25, 2011

Companies exist to make money for their shareholders. As much money as possible, any way they can. And while they are making as much money as possible, they want to have the lowest costs possible. That's why jobs are being shipped out of America as fast as is practical. It costs too much to do business here..

There is NO such thing as America first in big business, and there hasn't been since the 1970's.

Shipping of jobs offshore, I believe is the biggest threat facing us long term. China is going to eat us alive over the next 50 years because our country will be crushed under the weight of exponentially more government regulation.

rathi · Apr 25, 2011

I'm not really inclined to blame anyone for the U.S. losing the number 1 spot. No matter what any president did, he wasn't going to be able to match a country with triple the population and 10% annual growth. The good news is that it really isn't a huge deal. The U.S. will remain an extremely wealthy nation regardless of what China does.

Lord Tammerlain · Apr 25, 2011

donsutherland1 said:
I don't believe this is a "bombshell." Those who are familiar with GDP in purchasing power parity (PPP) terms and recent trends should reasonably expect such a development within a decade or less (depending on what assumptions are employed).

PPP, for those who are not familiar with the concept, entails expressing a nation's GDP in terms of prices that prevail in the U.S., rather than official exchange rates. Given China's sustained rapid growth, the idea that China's GDP (PPP basis) could reach parity with the U.S. within less than a decade is not too surprising.

In 2010, China's GDP was $9.872 trillion (PPP basis). U.S. GDP was $14.720 trillion. In the 2008-10 period, China's GDP rose nearly 9.7% per year (PPP basis). U.S. GDP was flat, but growth has resumed. Keep in mind, PPP entails the purchasing power in U.S. terms (basket of goods). The calculation has some important limitations i.e., baskets of goods aren't necessarily comparable, inflation effects, etc. Nonetheless, it is one broad measure that seeks to overcome issues related to exchange rates that may or may not properly reflect underlying fundamentals.

Finally, an important caveat is in order. Current trends may or may not persist. For example, were China hit by an asset bubble and resulting shock from its collapse, China's growth trajectory could be materially slower than currently forecast.

For the Chinese economy to reach parity with the US in GDP terms not GDP ppp a couple of things by the IMF time frame a combination of a couple of events would have to occur. Decoupling of the Chinese yuan to the dollar, a devaluation of the USD and or strengthing of the Yuan.

A good 30% currency adjustment during that period of time could see China have parity with the US regarding GDP

ric27 · Apr 25, 2011

rathi said:
The U.S. will remain an extremely wealthy nation regardless of what China does.

Not really...Great cultures rise and fall about every 400 years like clockwork. Read up....We're due.

And the reason the cultures fall is always the same. They become soft and worry about silly contrived bull**** rather than what's important.

Its, the current US irreversible backwards slide into irrelevancy. It isn't happening all at once, but a little bit here and a little bit there is enough. Sort of like erosion.

Hard to to say it, but the 21st century will indeed be the Chinese Century.

solletica · Apr 25, 2011

Erod said:
IMF bombshell: Age of America nears end Brett Arends' ROI - MarketWatch

There are big issues with this theory, no doubt. Most people in China live in abject poverty, and the divide between the haves and have-nots there is massive. The Chinese people in general aren't thinking much about taking over the planet; they're trying to eat.

The ugly truth for China is that they are still completely dependent on the U.S. And in the end, he with the biggest bombs will forever rule the day. Some things never change.

Indeed, with all China's money, it should have no problem buying enough US politicians to use to the American military as it wishes.

cpwill · Apr 25, 2011

ptif219 said:
Shows Obama is not concerned about our status in the world. His spending is more important that anything else

of course he's concerned with our status. we are still way too rich and powerful.

Zyphlin · Apr 25, 2011

If anything it highlights the ridiculous notion of wealth disparity in this country when you compare say, the average "lower class" individual in America and what oppertunities and possessions are available to them comparable to a "lower class" Chinese individual.

danarhea · Apr 25, 2011

Erod said:
IMF bombshell: Age of America nears end Brett Arends' ROI - MarketWatch

There are big issues with this theory, no doubt. Most people in China live in abject poverty, and the divide between the haves and have-nots there is massive. The Chinese people in general aren't thinking much about taking over the planet; they're trying to eat.

The ugly truth for China is that they are still completely dependent on the U.S. And in the end, he with the biggest bombs will forever rule the day. Some things never change.

Wrong. He with the biggest bombs will assist those who want to have the biggest bombs in making Earth a sterile planet.

MKULTRABOY · Apr 25, 2011

I don't think china regards itself as dependent on the US.

ptif219 · Apr 25, 2011

cpwill said:
of course he's concerned with our status. we are still way too rich and powerful.

The problem is we are reaching the point in the near future where will not be able to pay the interest

cpwill · Apr 25, 2011

SE102 said:
I don't think china regards itself as dependent on the US.

china is an unbernationalist society with extreme militant tendancies whose name for itself literally means "center of the world".

i sincerely doubt that what you describe is the case.

cpwill · Apr 25, 2011

ptif219 said:
The problem is we are reaching the point in the near future where will not be able to pay the interest

well then his mission will be complete.

The Giant Noodle · Apr 25, 2011

ptif219 said:
Shows Obama is not concerned about our status in the world. His spending is more important that anything else

Nooooooo. It shows that BOTH sides arent serious.

Tax the wealthy more until Americas situation stabilizes. They CAN afford it. While doing that cut corporate welfare AND public welfare. Create tariffs on incoming goods and corporations based out of America AND that send jobs overseas. Cook at 500 degrees for 5 years and check for a better budget. Democrats MUST stop expanding spending on our public. We must shrink gov't but not on the ones that REALLY need it. NO money on abortions! Just allow people to get by with a HUGE weight put on finding jobs. Tax cuts to anyone over $150,000 is insane. Public SERVANTS need to know..... they ARE servants. Teachers should not make over $50K a year no matter what.

What got us into this situation were politicians GIVING! Now I agree that to BETTER America there needs to be a balance. But NOT a free for all!

At this moment we need to reduce our debt! This can ONLY (realistically) be done by higher taxes on those who can afford them ANNNND reducing spending (and favors) on BOTH sides of the aisle. You DONT like it? TOUGH! Deal with it! Its for the COUNTRY. State Unions... screw em. Wealthy over $150,000.... screw em. Democrats... screw em. GOP.... yup... screw em. They ALL cost this country billions to TRILLIONS!

We must... MUUUUUUUUUUUST manage our debt. At the same time keep America growing VIA a revised Employment Security. What is that revision? Thats for another thread. But the welfare population MUST either go on Disability or become...... something else.

EDIT: I almost forgot.... kick the ILLEAGALS the heck out of America!!!!!!!!!!
I like Latino famlies but in large they are a leach on our system!!! Get them OUT!!!!!

cpwill · Apr 25, 2011

The Giant Noodle said:
Nooooooo. It shows that BOTH sides arent serious.

Tax the wealthy more until Americas situation stabilizes. They CAN afford it

they probably can. the problem is that they won't pay it, and so as far as revenues are concerned, it's a moot issue.

While doing that cut corporate welfare AND public welfare

agreed.

Create tariffs on incoming goods and corporations based out of America AND that send jobs overseas.

IE: reduce corporate income tax, wreck the recovery, and make life harder for our poor, who are the first to suffer from increases in the cost of living that go with tariffs. no thank you.

Democrats MUST stop expanding spending on our public.

Everyone must stop doing this. literally, we are rapidly approaching the point where we will no longer have the ability even if we wanted to.

We must shrink gov't but not on the ones that REALLY need it

which is why Republicans means-test Medicare.

NO money on abortions!

certainly agreed.

Public SERVANTS need to know..... they ARE servants.

that is correct; it's something we public employees have lost, as we have forgotten that our position is to serve the general public, not lord it over them.

Teachers should not make over $50K a year no matter what.

this i actually disagree with. teachers of high quality should be paid more, as should teachers who are operating in high-cost areas. tenure and pensions, however, should be replaced by quality testing and defined-contribution plans. in general we should shift compensation from benefits to pay, and tilt that towards the quality teachers.

whysoserious · Apr 25, 2011

You have to be insane if you think a guy who has been in office for 3 years can be responsible for this.

ptif219 · Apr 25, 2011

The Giant Noodle said:
Nooooooo. It shows that BOTH sides arent serious.

Tax the wealthy more until Americas situation stabilizes. They CAN afford it. While doing that cut corporate welfare AND public welfare. Create tariffs on incoming goods and corporations based out of America AND that send jobs overseas. Cook at 500 degrees for 5 years and check for a better budget. Democrats MUST stop expanding spending on our public. We must shrink gov't but not on the ones that REALLY need it. NO money on abortions! Just allow people to get by with a HUGE weight put on finding jobs. Tax cuts to anyone over $150,000 is insane. Public SERVANTS need to know..... they ARE servants. Teachers should not make over $50K a year no matter what.

What got us into this situation were politicians GIVING! Now I agree that to BETTER America there needs to be a balance. But NOT a free for all!

At this moment we need to reduce our debt! This can ONLY (realistically) be done by higher taxes on those who can afford them ANNNND reducing spending (and favors) on BOTH sides of the aisle. You DONT like it? TOUGH! Deal with it! Its for the COUNTRY. State Unions... screw em. Wealthy over $150,000.... screw em. Democrats... screw em. GOP.... yup... screw em. They ALL cost this country billions to TRILLIONS!

We must... MUUUUUUUUUUUST manage our debt. At the same time keep America growing VIA a revised Employment Security. What is that revision? Thats for another thread. But the welfare population MUST either go on Disability or become...... something else.

EDIT: I almost forgot.... kick the ILLEAGALS the heck out of America!!!!!!!!!!
I like Latino famlies but in large they are a leach on our system!!! Get them OUT!!!!!

How will taxing the wealthy help the economy and unemployment.

The way to get more tax money is to get the people working.

cpwill · Apr 26, 2011

whysoserious said:
You have to be insane if you think a guy who has been in office for 3 years can be responsible for this.

solely responsible?

no.

deserving of blame?

Had the U.S. economy recovered from the current recession the way it bounced back from the other 10 recessions since World War II, our per-capita gross domestic product (GDP) would be $3,553 higher than it is today, and 11.9 million more Americans would be employed....

If we had matched the 1982 recovery rate, today annual per-capita income would be $4,154 higher than before the recession—that's an extra $16,600 for a family of four—and some 15.7 million more Americans would have jobs. That's enough jobs to employ 100% of the 13.5 million Americans currently classified as unemployed. In addition, we would have provided jobs for 30% of both the 2.4 million discouraged or marginally attached workers and the 4.8 million who have totally dropped out of the work force since January 2008...

yup.

whysoserious · Apr 26, 2011

cpwill said:
solely responsible?

no.

deserving of blame?

yup.

Which part of that graph is Obama and which part got bipartisan support? How much of it is the bailouts and how much from TARP? I would be the farm most of the increases are all directly related to the crises he inherited. Knowing this, you think Bush is deserving of blame, as well?

cpwill · Apr 26, 2011

whysoserious said:
Which part of that graph is Obama and which part got bipartisan support? How much of it is the bailouts and how much from TARP?

TARP got spent in 2008 under Bush. the Stimulus was in 2009 under Obama and was not "bipartisan" in any meaningful sense of the word.

I would be the farm most of the increases are all directly related to the crises he inherited. Knowing this, you think Bush is deserving of blame, as well?

I absolutely do. I was screaming in early 2008 that if he tried to "stimulate" the economy through keyensian economics he would only make things worse (he did, and I was proven right), and then again in late 2008 and early 2009 that we should just change the mark-to-market rules and let the auto makers fail. Then I was screaming that the Obama Stimulus was only Bush's failures writ larger, uglier, and stupider... and so on and so forth.

Harry Guerrilla · Apr 26, 2011

whysoserious said:
You have to be insane if you think a guy who has been in office for 3 years can be responsible for this.

99.9% of our current situation has nothing to do with Obama.

On the other hand, he could stop trying to get reelected and take one for the team, by doing the right thing.

cpwill · Apr 26, 2011

Harry Guerrilla said:
99.9% of our current situation has nothing to do with Obama.

I don't think you can say that. Looking at the long-term structural debt, Obamacare has made things much worse, and our huge deficits, high unemployment, and low growth under his administration have hastened the debt crises.

the Problem was preexistant. Obama just put it on Crack.

On the other hand, he could stop trying to get reelected and take one for the team, by doing the right thing.

i think if he were to come out in favor of the Bowles Simpson plan and split the Republican Party he would win reelection handily, actually. Good Policy here is Good Politics...... it's just that for some reason he Can't Resist the cheap and easy thrills of demagoguery. Perhaps it's just in Democrats DNA

Harry Guerrilla · Apr 26, 2011

cpwill said:
I don't think you can say that. Looking at the long-term structural debt, Obamacare has made things much worse, and our huge deficits, high unemployment, and low growth under his administration have hastened the debt crises.

the Problem was preexistant. Obama just put it on Crack.

I believe that he is a symptom of a larger problem, the people.

cpwill said:
i think if he were to come out in favor of the Bowles Simpson plan and split the Republican Party he would win reelection handily, actually. Good Policy here is Good Politics...... it's just that for some reason he Can't Resist the cheap and easy thrills of demagoguery. Perhaps it's just in Democrats DNA

Demagoguery and utopian promises is what wins elections, regardless of party affiliation :shrug:

IMF bombshell: Age of America nears end

Erod

ptif219

donsutherland1

ric27

rathi

Count Smackula

Lord Tammerlain

ric27

solletica

cpwill

Zyphlin

danarhea

Slayer of the DP Newsbot

MKULTRABOY

ptif219

cpwill

cpwill

The Giant Noodle

cpwill

whysoserious

ptif219

cpwill

whysoserious

cpwill

Harry Guerrilla

cpwill

Harry Guerrilla