Tuesday, December 23, 2008

Niall Ferguson: US Is Not Completely Down the Toilet

Popular historian Niall Ferguson thinks the financial situation is disastrous for the US. On the bright side, it's worse for other countries.

Emerging markets, too, have been hammered harder by the crisis than the "decoupling” thesis promised. In the year to the end of October 2008, the U.S. stock market declined by 34 percent. But Brazil’s was down 54 percent, China’s 58 percent, India’s 64 percent and Russia’s 66 percent. When Goldman Sachs christened these four countries the BRICs, they little realized that their equity markets would one day be dropping like bricks. These figures are scarcely good advertisements for the more regulated, state-led economic models favored in Beijing and Moscow.

The financial crisis is especially bad news for energy exporters: not only belligerent Russia, whose leaders yearn for a reconstituted Soviet empire, but also those other thorns in the side of the United States, Iran and Venezuela. Any oil price below $94 a barrel is bad news for Venezuela’s fragile finances; any price below $55 spells trouble for Iran.

In any case, is even the fastest growing of America’s rivals really a credible alternative to the United States? Rapidly though it is growing, China is bedeviled by three serious ailments: demographic imbalance, environmental degradation and political corruption. China’s military is not remotely ready to mount a serious challenge to American dominance in the Pacific. And, crucially, it is far from clear that China is ready to wean its manufacturing sector completely off the U.S. export market. After three years of very mild renminbi appreciation, the People’s Bank of China seems to be contemplating renewed intervention to keep the currency weak relative to the dollar. That means China will continue to sell renminbi for dollars, further enlarging its already large portfolio of U.S. bonds.

Read it all.

10 comments:

  1. Exactly. When you start comparing the US to Rome, etc.... it get absurd. And, as for an Official saying to the US that we should talk to them and, gasp, treat them as equals, why in the hell wouldn't you not? A little humility goes a long way... you've always said that, and it will work globally too. After Iraq and Afghan, who in the hell would question whether the US is prepared to use the stick.

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  2. Well Ferguson spends most of the article talking about the decline of the US, so it's very fair to compare it to Rome. Also, I don't think people are trembling in fear of the US using the big stick anywhere else soon. Iran doesn't seem to worried about it.

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  3. Wow, I think Fydor should try reading a few books on the Roman Empire. The Roman Empire had all sorts of similar affluence problems that the US is currently experiencing. They had a welfare problem, ever rising tax rates,a declining currency,and the work ethic was disappearing.Fydor thinks comparing the US to the Roman Empire is absurd. I suggest that Fydor may be mentally challenged.

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  4. Yes I agree. I bet Fydor is either a Postal worker or in the Canadian military. Sea Salt has to be polite to Fydor, but lets face it, this guy is a moron.

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  6. Fydor: I don't think anybody thinks it's the exact same but we use history for comparative analysis. The reults of the past we are supposed to learn from.

    And do you rule out a future dark age? There's no guarantee that we will keep rising. As history shows, (there we go again,) societies rise and fall.

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  7. Anon-hole: Like Wow! The US is Rome, the US is Rome! Yay! I'm original! So, are we heading to a dark ages genius?

    Yes, there's some similarities, but the world is wholly different. Think a little. Like the article you didn't read said, power is relative, and when it comes down to it the US has it more than anyone. But, we lead and reform ourselves along the way. Name the country that is innovating more than the US. Canada?!

    Plus, tell us what you really think of the Canadian military.

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  8. I don't rule out anything. Anyone who speaks with certainty and/or buys into dogma is Anons buddy, and is likely bitter about not seeing the crash 3 months ago.

    Nothing says history has to repeat (or even rhyme).

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  9. Fydor: "Anyone who speaks with certainty and/or buys into dogma is Anons buddy, and is likely bitter about not seeing the crash 3 months ago."

    ----> You realize that that makes no sense right?

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  10. Yes it does. You're just not moronic enough to figure it out.

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