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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: bond_bubble who wrote (48444)12/30/2005 12:41:19 PM
From: GraceZ  Read Replies (1) of 110194
 
It's amazing then that since we don't make anything that foreigners can afford and no one here can afford to go into a field where they do actually make something... that we managed to send so much stuff overseas in 2004. Germany maybe will overtake us this year as number 1, but 2004 had us as the leading exporting country. Our exports were more than the entire economy of Australia.

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But I guess what makes them be able to afford our stuff is that we buy so much of theirs. Just think how much higher those exports might be if the developing countries like China start to approach parity with the developed world in terms of GDP per capita. Look how much our exports to Mexico have risen as they became wealthier. They've more than doubled in the last ten years to make them the second biggest buyer of US goods after Canada.

This is the nature of trade, both parties are better off after it or it doesn't get done. As China gets richer, so will the US. This will surely happen just as we got richer when the Japanese and other smaller Asian countries were making their progress out of poverty. You cannot beggar your trading partner, it doesn't work that way.

Still it'll take a long time (beyond my lifetime) for China to catch up to US GDP per capita even under the rosiest scenarios for them (more than likely a currency adjustment gets them halfway there) and the gloomiest for us. The disparty is huge. The historical record of shifting economic power shows that the rising power spends some time in a period of economic crisis before the shift is complete. i.e. Japan in the 90s, US in the 30s.
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