Fri 19 Mar 2010
clarity of vision (?)
Posted by benadair under dispatch, sustainability
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I was part of a meeting with a very high powered financier yesterday and he had an interesting take on things — this economic crisis of the last few years is not what it seems.
What’s happening now, he said, is actually a structural readjustment that began in the 1990s and officially started with the 2001-2002 recession. The “Great Recession” is the end game — the torch of economic leadership for the next 20 years officially passed to China, India and Brazil.
He actually said, and I quote, “The US is Rome in 400 AD,” which is remarkably similar to what some friends and I were joking about at lunch last week.
Of course he also believes the US is still going to be a “really cool place to live” — he doesn’t see barbarians at the gates. And doesn’t factor any sustainability issues into his various calculations. He thinks the US is still going to be a very strong niche player but will lose it’s amazing clout over the next 10 years or so.
Interestingly, none of this bothered him at all.
As he put it, of course there are winners and losers; there always are. And now the winners and losers are changing. As an investor, though, there’s still lots of money to be made, just with new (and exciting) companies and nations. And more international travel.
It makes me think that people like Simon Johnson are a bit naive about how all this is going down.
Really, the economic crisis only matters if you’re still invested (mentally) in a sort of economic patriotism. But if you don’t care about the United States or the West more broadly, then the economic crisis is not a crisis at all — just a monumental shifting of the sands. Money has already rapidly changed hands. Now, the global economy is adjusting.
If you’re still holding on to notions of USA#1, then this is a HUGE problem. But if you think, for example, India is number one, then it’s an amazing opportunity.
If you don’t care about nations at all, then it’s just business.
Needless to say, I’m adjusting my 401k.
March 19th, 2010 at 10:58 am
I’m really curious to see how America handles the step down from the position of power now occupied. I wrote a blog post myself about the correlation between America and Rome that might be of interest.
Will we step down gracefully, like the British did when they surrendered the mantle to the United States as “global hegemon”, or will we go down kicking and whining? Who knows!
http://octopoe.wordpress.com/2009/12/04/not-learning-poo-from-history/
March 20th, 2010 at 10:26 am
This is a fine theory, but it requires one to think that state-controlled economies can do better than market ones over the long term.
I’m not exactly sure what economic power means, either. How exactly has the US deployed this power over the past decades? Just because the largest companies were “American”, it doesn’t imply any cohesive action or policy.
Does owning farmland in Africa make the Gulf States more powerful, or just lessen their vulnerability? Or shift it?
On the other hand, the transfer of wealth from the working class to the rich, the continuing income disparity, and the lack of a healthy financial system are serious consequences of the crisis, which affect us simply because we reside in this country, and depressions aren’t fun, even if you have a job.