Saturday, September 16, 2006
Views from the wings....
The IMF-Worldbank annual meetings have started in Singapore.
And everyday, I trek from my hotel to the heavily guarded Suntec Center through a maze of underground shopping malls. The alternative, walking the spotless and flowery streets of the city,would be tough. Why do men have to wear heavy dark suits and ties, on the equator, with 90% humidity, is beyond me.
In the malls, the average age seems to be between 15 and 20. Not unlike Korea, Thailand or Vietnam. Asia is young. And they all seem to be studying books! (China produces 4 times as many graduates as the US.)
The mix of scantily clad chinese with hijab wearing malays does not seem to represent a clash of civilisations.
Once you pass the security check you are privy to the latest predictions about the economic future of the planet. The top economists meet the top bankers from all over the world. And you can see, almost physically how the world has radically changed.
While the planet , over all is in good health, the best in 40 years, with 5,6% growth, some continents are on the decline(Europe), and others are threatened with dire problems (the US.)
For Europe, it is the obstinate hanging on to "the European Model", a wewlfare state nobody can afford when jobs emigrate overseas.
For the US,it is mismanagement:
Whereas the US had a record surplus of 325 bn dollars in 2000, today, it is a debtor to the world. The US owe the rest of the world 9 trillion dollars and keep begging for 2bn dollars a day , just to pay its bills.
Such a huge debt costs: the countries that lend the US want to be paid for their money: It costs the US taxpayer 325bn dollars, or close to 1bn a day, just to pay the interest.
The gap between its earning and its spending is 400bn dollars.(budget deficit).
The US debt would be enough to to buy 28 solid gold Eiffel Towers.
But while the US danced, the Asian worker bees made honey.
China now owns 925 billion US dollars. We hope they will keep on lending it...if we are nice to them. Our other bankers are Saudi Arabia, the Gulf States, Kuwait, and Venezuela.
The IMF member states no longer accept to be ruled by Washington. Given its now modest role, it can only acquiesce to abandon a large part of its shares of the world's financial system to "emerging countries", like China, India, Mexico, Brazil or Turkey.
The US consumer, on a non stop buying spree, has helped the rest of the world grow to be rivals. It has also provoked an exodus of jobs overseas:
Between 1998 and today, 3,4 million US jobs and 2,3 million just for Germany, have emigrated to Asia.
Not only have Europe and the US lost industrial and financial power, but in the boardrooms, even if it is still in English, the major decisions are increasingly taken by Asian voices.
Sic transit gloria mundi.
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