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September 01, 2012

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john malpas

Could it be that America is in the same state that Britain was at the end of WW2. Broke and borrowing.
And so China takes up the Empire role.

A Different Alex

john malpas:

But the US isn't broke (legally I suppose it will be if it doesn't raise the debt ceiling).

A better comparison might be to say that China is a little like the US just before the Great Depression (just without the democracy or flappers). And America is where Japan was 15 or so years ago.

As for China becoming the hegemon, I wouldn't count the US out just yet. It's not China, after all, that's bombing funerals in Yemen. And depending on who wins the election, and what's going through Obama's head, there's the prospect of war in Iran or Syria. War in Iran would be ethically and rationally stupid (and probably the same for Syria too) but it wouldn't be unaffordable (hey, killing Iraqis cost $3 trillion, but US Treasuries now have extremely low interest rates). In fact it would be fairly typical War Keynesianism.

Anyway, all this ignores Europe. I say it's a coin toss whether the Eurozone disintegrates or becomes a superpower.

jamie

The specific problem that China's having right now is that demand from the EU has collapsed to the extent that it's undermining the transition the country's trying to make from an exporting to a consumption-based economy: the end of the cliff they're trying to leap from is showing signs of collapsing under them.

A Different Alex

Yes. America was the big exporter in the 30s and suffered most from the Depression. The same may happen to China and this should be a warning sign for Germany too.

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