A Quick, Broad Look at the World Economy, Social Trends and Shifting Demographics Over the Next One to Three Years.
Note:The article which follows was written by Author Douglas Castle on 11.02.2010 for simultaneous publication in the following blogs: THE INTERNATIONALIST PAGE, THE GLOBAL FUTURIST and THE TNNWC DAILY EMAIL AND RSS NEWS FEED SUPPLEMENT.
Dear Readers, Friends and Colleagues:
Starting right now and continuing for the next 1 to 3 years, the growth (in terms of GDP and by virtually every other economic measure [except perhaps average household income]) in China will to be at very least two to four times greater than that of the US and Western Europe. China is fast-embracing a conservative brand of capitalism and is becoming (if it has not already become) the world’s greatest superpower.
They are increasingly flexing their muscles and experimenting with their newly-realized power by controlling exports of commodities (Rare Earth Elements, being one example) and by quietly buying up strategic positions in distressed U.S. and European assets.
Having said this, I believe that over the next 12 – 15 months, investors in capital markets, securities and properties in Indonesia and other countries in Southeast Asia will make even greater returns than those obtained by foreign investors in China. Many of these countries, like Singapore, Malaysia and others purchase most of their raw materials from China, add an element of value, and re-sell to the each other and export to the West.
The cost of labor in a number of these countries is significantly lower than that of China (labor costs in China are slowly rising), allowing them very significant margins of profit on items which are no longer affordably produced in the industrialized nations, and which may not be obtained at comparable quality levels from China directly. These other Southeast Asian nations are also hungrier for export opportunities and for inbound foreign investment to bolster their economies, where China is far more insular and restrictive.
Inbound investment into the Pacific Rim and Southeast Asia from some of the wealthier U.S. and Western European dynastic families, operating companies and investment funds (i.e., money under third-party fiduciary management) is increasing
While the economies and capital markets of Asia (inclusive of Southeast Asia) will significantly outperform those of the U.S. and Europe during the next 1 – 3 years, the economies and capital markets of Brazil and Chile will either rival or exceed those of Asia at some time during this same period. This will not likely be the case with any of the other countries in Central and South America, where political and economic instabilities will continue to keep foreign and international investment away. The economy and the sovereign debt status of Mexico will continue a precipitous decline as domestic drug-related violence continues to escalate and challenge government authority, as well as increasing tensions between the United States and Mexico.
Further to this latter point, the immigration-related debates taking place within the United States (i.e., what are the “rights” of illegal aliens residing in the United States) are setting the stage for both 1) border skirmishes between U.S. citizens and military border patrols [on one side] and Mexican nationals trying to enter the U.S. illegally and cross border drug traffickers [on the other side] in states that abut Mexico (such as Arizona, California and Texas), 2) increasing acts of violence against persons of Mexican descent living in the United States.
Between the rise in anti-western rhetoric by the more overtly aggressive Muslim nations and the increasing frustration, humiliation and anger that American citizens are facing when going through security checkpoints at airports, and the increasing of travel warnings which are being issued by agencies of the United States Government to American citizens who would wish to travel to Europe for either pleasure or business (due to an increase in the number of credible threats by Muslim extremists who are specifically targeting U.S. citizens travelling abroad) incidents of racial/ethnic violence in the United States against Muslims and Mosques have already begun to rise in both frequency and severity.
My personal fear about this is that Americans are reaching a temperature tipping point where they are, in increasing percentages, seeing all Muslims as enemies and terrorists. This does bode well for either Muslims or U.S. Citizens.
Expect a steadily-increasing mass exodus (in fact, this exodus has already begun and is proceeding rapidly) of members of the “Baby Boomer” generation from the United States, who are either 1) seeking any possible employment in Asia (to the greatest extent), the Middle East (to a decreasing extent) or some of the more solvent and sensible countries in Europe where US expatriates can hold employment and some dignity, or who are 2) seeking to escape the economy of the United States and take what little assets they may have remaining and head for retirement and new, less-pressured lives in a number of the poorer Latin American countries where a small amount of US dollars can support a much higher standard of living (especially on a fixed income or with a devalued pension or retirement nest egg) than that which is possible within the United States.
The United States will be losing a great deal of its best-educated, most-experienced labor force, as well as the commerce of its would-be retirees. Notice the increasing prevalence and prominence of advertisements in e-media and print media for “inexpensive, luxurious retirement havens,” primarily in non-English-speaking countries where housing, basic subsistence purchases and domestic labor are far less expensive than anything comparable within the US. Sadly, the Baby Boomers, as a group, are of a significant size and hold a great percentage of the former middle-class and upper-middle-class wealth in the United States, which they have begun and will continue taking out of the US with them by any means legally (and illegally) possible.
Faithfully,
Douglas Castle
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