U.S is the biggest debtor and it’s recovery in this recession is limited by it’s debt
By Daniel at 19 October, 2008, 9:35 am
That would be China since they have the largest positive account balance and the largest growing middle class consumer base or close to it. They are building a coal power plant a week, many hdro plants, a new city the size of Philadelphia every couple of months or so, etc.
Now, the growth that was well over 10% may drop to 6-8% and even if it drops to less, it will be way ahead of the U.S. growth. They have dropped their dependence on U.S. exports to about 18% and are growth internal consumption. For Aug of this year, their retail sales grew 23% and even if that were to fall by 50%, it would still dwarf us as we may actually go negative for one of the rare times in the U.S.
The emerging markets are trading more and more with each other and less with Europe and the U.S. If there is a depression, they may have deep recession but, they will still have the factories that when recovery returns will fire up and hire and grow their economies faster.
Remember, we haven’t had but one positive quarter of GDP in 8 years when you calculate inflation the way we use to. We borrow, now, $6 for each $1 of growth in GDP. You can’t lead if you are a debtor nation.
Here is the ranking of nations by account balance
quote
1 China $363,300,000,000
2 Japan $201,300,000,000
3 Germany $185,100,000,000
4 Saudi Arabia $88,890,000,000
5 Russia $68,500,000,000
6 Switzerland $67,890,000,000
7 Netherlands $59,280,000,000
8 Norway $55,820,000,000
9 Kuwait $51,490,000,000
10 Singapore $41,390,000,000
11 United Arab Emirates $36,110,000,000
12 Algeria $31,500,000,000
13 Sweden $30,190,000,000
14 Canada $28,460,000,000
…….
154 Romania -$20,950,000,000
155 France -$35,940,000,000
156 Turkey -$36,270,000,000
157 Greece -$36,400,000,000
158 Australia -$50,960,000,000
159 Italy -$57,940,000,000
160 United Kingdom -$111,000,000,000
161 Spain -$126,300,000,000
162 United States -$747,100,000,000
http://www.photius.com/rankings/economy/current_account_balance_2008_0.html
Think of that. 6 times worse than the next nation up in ranking.
How can we lead when we have to borrow to even break even on GDP growth? The money we pour at the problem is all borrowed. So, when we are cut off from the loans, as the world goes into a recession, how will we be able to lead? We will not even be able to pay for basic services if we are cut off from foreign loans.
If they are right that this will be global recession, that means they have to stop lending to us to keep using their excess money for their own people. The worse it gets, the less money they will have to lend to us. We have borrowed $300 billion in 15 days. $1.3 trillion since last Oct. If we were to keep borrowing like this it would mean $7.2 trillion more in debt by next Oct. We either have to curb the borrowing or we will be in such bad shape they will stop lending to us.
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