I just can't see this as one nation survives and the other all collapse.
I use the example of the post-WW2 period, when the US was basically the only major economic power left standing.
The only difference between then and now is that we held most of the "strings" that operated the economic "puppet" (poor metaphor, I know..:0). Now we have to use the carrot and stick routine.
Now we have to deal with obstinate Europeans who think that uniting under one currency suddenly makes them a contender on the world stage, yet lacking the legal and financial infrastructure to make it work.
And on the other side we have the mauled Asian "tigers", having always depended on having "free markets" available here in the US think they can leverage the US into bowing to their will based upon the threat they may move closer to China or some form of Asian economic union. Again, they lack the legal or financial structures to make it work, and it would be a battle between the Japanese and Chinese as to who would have the ultimate say, (technology vs Bodies).
So we have to ask ourselves who's in the economic driving seat here (even with a market correction or bear market)?? I still say that it's the US. Look at the examples. Every other country in the world is suffering from economic slowdowns or recession, EXCEPT the US. Yeah, we'll slow down, but for other economies to recover, they need our markets, thus giving us the key.
As for the Japanese people removing funds, the issue is where they will remove them to (and it ain't going to be the Euro..:0) The only refuges are Dollar denominated securities/cash and Gold.
Remember that the largest portion of US gdp is domestic, not foreign. TThat means that we could see our gdp contract by 20%, whereas if we shut down our borders and institute protectionism, foreign economies stand to suffer even greater contractions.
Anyone out care to flesh this scenario out or contest it?
Regards,
Ron |
