Several things continue to get overlooked in this credit re-pricing crunch:
The new "theology of capitalism that is sweeping the world," to borrow a phrase from British historian Eric Hobsbawm. 3.5 billion people from Eastern Europe to the Pacific and Indian oceans are no longer living under the influence of socialism or communism.
The transformation of the global economy to capitalism is not a three- to five-year trend. This has to be thought of in terms of the 20-, 30- and 40-year growth we saw during the 19th century Industrial Revolution, when peasant societies became industrial ones.
Urbanization is happening all over the world, and there is no way to stop it, unless people lose faith in capitalism. But too many people are getting rich to lose faith now.
The BRIC (Brazil, Russia, India and China) countries now represent about 20% of global GDP. The United States accounts for just 21% of world GDP -- down from 30% only 15 years ago.
Small-but-powerful growers such as Estonia, Turkey and Bulgaria are growing 5%, 6% and 7% a year, respectively. More than 120 countries are growing at over 4% rates this year and next.
All the headlines are about China growing at 10% and India at 8% or 9%, but the rest of the developing world is growing at somewhere between 6% and 8% a year.
The upshot? The developing world has grown to represent 40% of the global GDP.
That’s where we get world GDP at 4.5% to 5.5% for the past several years. Compound that 4.5% to 5.5%, and you have got a hell of a strain on all resources and huge spikes in "middle class" infrastructure, services and goods consumption.
That is the global economic miracle. And crappy subprime loans don't matter a hoot in this picture.
This growth story doesn't give a damn about America's failed love affair with "NINJA" (No Income, No Job, No assets) home loans.
articles.moneycentral.msn.com
Looks like decoupling, Mr. TJ. |
