Wealth and Sovereign funds do not translate into economic power. Simple. Emerging countries are accumulating wealth at a fast rate than they have any mechanism of putting the wealth into work. Let’s compare for instance compare the development of these countries financial markets and economies, the capital markets lag behind. The US will still dominate the business of managing world’s savings, and the emerging markets have the greatest incentives to utilise, since they have no real alternative to the US Investments.
there is no emopiral evidence of foreign aid being a contributer to the economies of the third world.it may have lined the pockets of a few politicians and bureaucrats and other sundry rent seekers. Peter Bauer had a fantastic book on Developmental economics where he makes the cause for western governmental financial aid being stopped to poorer nations
Most Indian and Chinese middle-class+ families are actually cash flow +ve. It may be a very small amount by Western Standards however, it’s still +ve. When you add up that small cash flow and multiply by a few hundred million there’s a few billion dollars of savings getting generated every month. I believe that may be sufficient to keep the engines running on until (and if) the West recovers. In addition a lot of companies in India & China are turning out +ve cashflow and would continue in the near future. They in turn collectively would have billions of dollars available to invest or buy out western companies. Also, Indians and Chinese are used to grinding poverty and hardship, it wouldn’t be very difficult for them to reduce their standard of living if the situation demands. People in the west would need to live on 1/5th to 1/10th of their current income/expense to match the expenses of a typical Indian family.
JOE2010 Wrote: ------------------------------------------------------- > Wealth and Sovereign funds do not translate into > economic power. Simple. > > Emerging countries are accumulating wealth at a > fast rate than they have any mechanism of putting > the wealth into work. Let’s compare for instance > compare the development of these countries > financial markets and economies, the capital > markets lag behind. > > The US will still dominate the business of > managing world’s savings, and the emerging markets > have the greatest incentives to utilise, since > they have no real alternative to the US > Investments. you probably didnt hear the saying which goes" dubai,shanghai,mumbai or goodbye".loaning to the US govt is no real investment -it is a who-blinks-first situation with the lenders wanting to keep their currencies depreciated i.e an acceptance of the (still remaining) power of the US dollar. it is much more like vendor financing. the US dominated the automarkets in the 70s but now?. things change. the financial market domination is not so robust since the jobs are fungible and money traverses borders faster than jobs.
John Lipsky, the IMF’s first deputy managing director, said recently, “emerging economies cannot defy gravity in an increasingly multipolar world; their fate is bound up with that of the mature industrialised economies”. However, a new balance of power is possible. How long it takes is another issue. Dsylexic Wrote: ------------------------------------------------------- > JOE2010 Wrote: > -------------------------------------------------- > ----- > > Wealth and Sovereign funds do not translate > into > > economic power. Simple. > > > > Emerging countries are accumulating wealth at a > > fast rate than they have any mechanism of > putting > > the wealth into work. Let’s compare for > instance > > compare the development of these countries > > financial markets and economies, the capital > > markets lag behind. > > > > The US will still dominate the business of > > managing world’s savings, and the emerging > markets > > have the greatest incentives to utilise, since > > they have no real alternative to the US > > Investments. > > you probably didnt hear the saying which goes" > dubai,shanghai,mumbai or goodbye".loaning to the > US govt is no real investment -it is a > who-blinks-first situation with the lenders > wanting to keep their currencies depreciated i.e > an acceptance of the (still remaining) power of > the US dollar. it is much more like vendor > financing. > > the US dominated the automarkets in the 70s but > now?. things change. > the financial market domination is not so robust > since the jobs are fungible and money traverses > borders faster than jobs.
Dsylexic Wrote: ------------------------------------------------------- > there is no emopiral evidence of foreign aid being > a contributer to the economies of the third > world.it may have lined the pockets of a few > politicians and bureaucrats and other sundry rent > seekers. > Peter Bauer had a fantastic book on Developmental > economics where he makes the cause for western > governmental financial aid being stopped to poorer > nations Agreed. Poor countries need fair trade, not aid.
“And the Third World would be even more impoverished as foreign aid would essentially dry up.” You meant Investment right? And one more thing to consider if west goes into recession and the oil price goes down , the oil import bill of India would come down a lot, which would again provide a cushion against decreasing exports.
How did we get so quickly away from a history debate? I love history debates. Let’s talk Grant and Reconstruction vs Hoover and the '20’s vs GWB and the Debacle.