The International Monetary Fund reported without fanfare recently its projection that the candidate who wins the 2012 U.S. presidential election will be the last U.S. President to lead the world’s richest super power.
The IMF prediction is based on its calculation that within the next five years China will surpass the United States as the world’s largest economy.
The IMF forecast differs from that of most traditional forecasts, which put the date China’s economy outstrips the U.S. at least a decade or two into the future. However, those traditional forecasters are looking at value as calculated in currency—and as we at WealthCycles.com have reiterated many times, currency lies.
The Obama deficit tour
The 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.
According to the IMF forecast, whomever is elected U.S. president next year — Obama? Mitt Romney? Donald Trump? — will be the last to preside over the world’s largest economy.
Most people aren’t prepared for this. They aren’t even aware it’s that close. Listen to experts of various stripes, and they will tell you Read more…
This is one of the findings in the newly released research report ‘CNH Market Guide: A precursor to internationalisation of the Chinese Renminbi’, the most comprehensive research yet to look at the offshore CNY market in Hong Kong, also known as the CNH market.
The combination of growth in the offshore CNY market and the sheer size of the Chinese economy will support the Chinese government’s ambition to internationalise its currency, according to RBS.
“China now holds 30% of the world’s USD9trn foreign reserves. The other 70% which does not belong to the People’s Republic of China (PBOC) could potentially be held in CNY. As China’s share Read more…
As I pointed out in 2007, many countries have started moving out of the Dollar as the basis for international trade settlements, including:
Venezuela and 12 other Latin American countries as well as Cuba
Many other countries
In 2008, I wrote: Read more…
When it comes to state visits the devil is in the detail. It’s the nuances of the arrangements that allow you to calibrate just how important a relationship is. That’s why the world has been watching the visit of the Chinese President Hu Jintao with such attention. The state dinner at the White House – described as an “intimate” event – apparently signifies that Washington rates China as pretty much the most important nation, economically, on earth. But the visit has also prompted much speculation in the press about how long the Chinese economic miracle can last and whether it is about to come to a juddering halt. Jim Rogers, the legendary investor who co-founded the Quantum Fund with George Soros, has moved his family to Singapore and is making sure his two young daughters can speak Mandarin. He spoke to the Business Daily’s Justin Rowlatt.
Transcript is below
Justin Rowlatt: But listen, I mean the Chinese economy is still way behind the American economy is and it is about the third the size of the American economy.
Jim Rogers: Yes, of course. They had a disaster for 300 years, but about 30 years ago, they woke up, they changed their minds and they said we got to try something new. They unleashed entrepreneurship and capitalism again, and they have been astonishing for 30 years. It takes a while to go from a disaster to rival the Americans, but they are on their way.
Justin Rowlatt: Do you really believe the Chinese boom can continue, because lots of people are saying there are all sorts of asset price bubbles that are going to trip the Chinese up in the coming years?
Jim Rogers: Well, the only asset bubble I see potentially in China is in urban coastal real estate, but real estate is not nearly the entire Chinese economy as it was in America and the U.K. Sure, they will have setbacks.
Justin, in the 19th Century, America had a horrible civil war. We had 15 depressions with a ‘D.’ We had very few human rights. We had massacres in the streets regularly. We had very little rule of law. You could buy and sell – you can still buy and sell congressmen in America, but in those days they were cheap. America had horrible problems, but they came out of that and had a pretty good 20th Century. Read more…