Thank you, BrianT. As I recall you were one of those who corrected me last week.

Wouldn't it be wild if we went into a prolonged period where the advanced economies continued declining and the emerging economies continued to grow?

Wouldn't it be wild if we went into a prolonged period where the advanced economies continued declining and the emerging economies continued to grow?



I think that is a very likely scenario. In Asia we can see the emergence of a new middle class with the buying power to begin the accumulation of mountains of middle class stuff.


In North America the middle class already has their mountain of stuff but now they have to pay for it. In addition, the equity they once had in their homes and investments is declining, and high value jobs are vanishing (have yet to see any forecasts of the impact of the current financial sector rationalization on NY property values and the luxury cupcake business).


If the two regions were forests the North American one is a mature old growth stand verging on collapse and decay while the Asian forest represents early first growth.


The real question is the degree to which Asia can develop internal markets and transition away from dependence on North American consumers.

It has begun-right now the #1 customer of Japan is China, not the USA.

US growth came about due to large internal markets and high tariffs to protect infant industry. Henry Ford played a role by voluntarily increasing the wage paid in his plants. His objective was to create a consumer class that could afford to buy his products. The key question is can China duplicate this and create an internal market of sufficient size to replace the declining purchases of US consumers.


If yes, then China and the other Asian nations possibly sidestep the crash.


If no, then the world goes into a depression and the outcome is ugly.


Do you have any data on other Chinese trading partners?

Patterns do not necessarily have to repeat exactly.
Enough of the command economy could perhaps be reconstituted in China so that an economy based for a few years on building capital equipment to deal with energy shortages might be possible.
Important trading partners of China would include Australia, Russia and Brazil, for iron, coal and agricultural produce as well as goods perhaps by barter from the US.

The far eastern nexus including Japan and Korea and South-East Asia is probably the most powerful in the world now.

It's not supposed to work that way. That would represent a paradigm shift away from 500 years of Western colonialism and neo-colonialism:

...the function of the Spanish crown was to promote the development of the Iberian Peninsula and that of the American colonies was to furnish raw materials and cheap labor for the greater prosperity of Spain.

Carlos Fuentes, A New Time for Mexico

Yes and no-quite a while ago the global elite identified the USA government as the #1 threat to their continued dominance-the threat is being dealt with rather effectively IMO.



If you look at history the leading state was the Netherlands. But the Dutch blew everything on a tulip bubble


Spain took over the economic lead as they had galleons full of sliver plundered from the New World. They spent this as fast as it arrived and built no industry apart from bullfighting.


The lead then passed to the UK due to low cost FF, cheap sea transport (later canal and rail) and the benefits of an open internal market. Imperialism followed.


The UK went bankrupt paying for WWI and WWII and the US, with even greater resources of FF, cheap transport, and a single global market gained ascendency. A good overview of the process is Paul Kennedy's The Rise and Fall of the Great Powers.


I cannot remember now all the details of his analysis but "Imperial overstretch," over-investment in military force and a consequent credit crunch were part of the dynamic.


Or maybe I missed the /sarconal tag? :-(

Yah, I agree with BOP: there's always some sort of change going on between which countries are dominant. You could even claim that the roman empire was weakened because of a transition of power from Romans to the colonies ("the trouser wearing senators" as opposed to toga wearers).

I can venture a possible continuation of the theme though: U.S. goes bankrupt because cheap oil ceases to exist, per capita we don't produce as much as we used to, and making money by selling each other houses has finally collapsed. What's strange is the the first part, cheap oil, is straight from the neocon playbook. Remember the project for a new american century papers published a few years before the second iraq war. However, as far as I can tell, the neocon response to this problem, invasion, has only exacerbated the problem thus far (costs a lot and isn't securing any oil supplies). A better strategy might have been to try to focus on the next resource that would drive world power rather than the last one, but who knows.

I thought the North American one was a clear-cut, barren wasteland, riven with soil erosion and a few monoculture stands of douglas fir ekeing it out, destined for carcinogenic chipboard bookshelves at wal-mart.

-g

Hard to tell if that is supposed to be sarcastic. However, to a large extent, it is true.

Hello NeverLNG,

Yep, gotta agree with you. If we had never discovered the North American supplies of FFs & I-NPK*--> our population would probably be 50-100 million living in Haitian levels of deforestation and deprivation:

http://ias.okstate.edu/firstpatent.htm
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The First Patent
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* Element K = Potassium, found in pot ashes

Most 'Murkans have no idea of our agricultural history and the impact upon the habitat. I like to use the 'excessive' example whereby most of my local neighbors in my Asphalt Wonderland think the food in the grocery store is delivered by lobsters bearing bananas in their claws across the Sonoran Desert. The madness continues: the golf courses, the upscale malls, and the well-to-do resorts are now starting to put down their winter lawn grass seed to lure the endangered snowbird.

Sadly, I wasn't being sarcastic. I don't know how much the state of our forests mirrors the state of our financial system, or the state of any other system or ecosystem in this country. It's a good guess though, that they are all reflections of each other, and that they are not being managed properly. My grandfather, Gordon Robinson, was one of the pioneers of multiple-use forestry, and he would take me up into the Sierra's and describe the different systems at play, including the soil, and the microbes within the soil that contain most of the water and nutrients of the forest system. In a multiple-use system, there is logging, but its not clear-cutting to be replaced with a mono-crop tree farm. The multiple-use includes: wilderness, selective-logging, recreation, hunting and fishing and overall maintaining the forest in a state where it can be used by humans and nature, indefinitely.

Here's a link to Gordon's book, The Forest and the Trees, from google, if anyone is interested.

The Forest and Trees Gordon Robinson

g

I am a forester these last 30 years, and quite familiar with your grandfather's work. Alas, he (and all of us "scientifically trained" foresters) assumed that policy would be determined by a rational analysis of the situation. But it's the same in forest management as it is in every other field of endeavor. But we soon learned that money, greed, venality always seem to trump a rational analysis. And so it goes, as it always has.

If the two regions were forests the North American one is a mature old growth stand verging on collapse and decay while the Asian forest represents early first growth

More like the old-growth forest was clear-cut, with its ecosystem nearing collapse, and the nation iyself symbolized by its treatment of the Bald Eagle, Spotted Owl and Polar Bear.