

IMF: The Age of America About to End - pjy04
http://www.marketwatch.com/story/imf-bombshell-age-of-america-about-to-end-2011-04-25


======
patrickk
Somehow I doubt these predictions are going to bear out. History always
repeats itself. In the 1980s it was Japan that was going to crush the American
economy. For the last twenty or so years the Japanese economy has been flat
(it's still the 3rd biggest in the world however).

Japan tried to boost the economy with massive expenditures in it's
infrastructure, to no avail. Compare that to China's approach of building high
speed rail networks that get cancelled, and to build huge 'cathedrals in the
desert' - cities that are overpriced by the government, who refuse to let the
price to be dictated by the market (which is what would happen in a true
capitalist system). The result is that most locals are priced out of the
market. The reason that the cities are being built in the first place is to
drive growth figures. Not having any oversight may result in some dramatic
revelations about China's supposed growth in the coming years.

<http://news.bbc.co.uk/2/hi/8691083.stm>

<http://www.bbc.co.uk/news/business-11748644>

[http://www.sbs.com.au/dateline/story/about/id/601007/n/China...](http://www.sbs.com.au/dateline/story/about/id/601007/n/China-
s-Ghost-Cities)

Related HN discussion:

<http://news.ycombinator.com/item?id=2386584>

EDIT: Added link

EDIT 2: Typos

~~~
mixmax
History does indeed have a tendency to repeat itself, and if you go a little
further back than the eighties you'll se that the way empires usually fall is
by overreaching, and trying to control and colonise beyond their ability. In
the end they implode.

America is clearly overreaching at the moment.

~~~
bfung
_"America is clearly overreaching at the moment."_

Any facts/figures and comparisons to elaborate on this statement? I can see
some arguments for this, but at the same time, the technologies we have these
days might give this "overreach" some scaling power, so the US might not
actually be overreaching...

~~~
mixmax
It seems pretty obvious, so I didn't think it needed elaboration, but try
looking at the budget of the US military.

------
Cherian_Abraham
Remember that China holds a lot of our debt. You will not see much public
chest beating from China over this because of that fact. Both are equally
vested in each others success as the other. China does not want value of the
US bonds to plummet and US needs a stable manufacturing partner. At least for
the foreseeable future, this economic and political two-step will continue.

However this does present serious doubts about the irrational exuberance in
the strength of our markets for long term. It is hard to gauge China and its
intentions. I am not saying that US has moral supremacy over China, but that
China seems to be doing now what US used to do, for its own stability sake,
twenty years ago. It is preparing to be the economic behemoth, despite the
troubles it face in real estate and regionally.

The next twenty years should be pretty interesting.

Edit: I wanted to add a reference to this paper out of the Pentagon from two
Pentagon top level staffers who assert that we should reduce our military
spending and reinvest it in our youth. A very prescient analysis of where
United States is heading, in the world. I wanted to add it as its own HN
submission, but was not sure if it would be well received. Here is the link to
the pdf:
[http://www.wilsoncenter.org/events/docs/A%20National%20Strat...](http://www.wilsoncenter.org/events/docs/A%20National%20Strategic%20Narrative.pdf)

~~~
espeed
I posted info on the Y Article yesterday:
<http://news.ycombinator.com/item?id=2478908>

~~~
Cherian_Abraham
I rest my case :)

~~~
espeed
However, yesterday these got traction...

"Warren Buffett is now betting against the US dollar"
(<http://news.ycombinator.com/item?id=2476584>)

"China Proposes To Cut Two Thirds Of Its $3 Trillion In USD Holdings"
(<http://news.ycombinator.com/item?id=2479432>)

------
keiferski
_Under PPP, the Chinese economy will expand from $11.2 trillion this year to
$19 trillion in 2016. Meanwhile the size of the U.S. economy will rise from
$15.2 trillion to $18.8 trillion. That would take America’s share of the world
output down to 17.7%, the lowest in modern times. China’s would reach 18%, and
rising._

So we won't be the top any longer, but we'll still be enormously dominant. So?
Competition drives innovation.

All the "America is doomed" folks act as if America is going to crumble to
pieces simply because we are no longer the only gorilla in the room.

~~~
mike-cardwell
The danger comes when China has enough money to equal the US in military
strength and decides it wants as much influence in World politics as America
does.

The rest of the World doesn't need that complication.

~~~
narrator
The Chinese have not had a tradition of colonialism. They're just not as
obsessed with controlling the world as the west is. They are assertive over
neighboring areas that have been arguably part of China for a long time like
Tibet, Taiwan, Macau and Hong Kong but that's pretty negligible compared to
the global domination aspirations of the Soviets, the Axis powers or Colonial
European powers.

~~~
tybris
They're working on it [http://en.wikipedia.org/wiki/Neocolonialism#Sino-
African_rel...](http://en.wikipedia.org/wiki/Neocolonialism#Sino-
African_relations)

------
Florin_Andrei
> It’s a lesson we could learn more cheaply from the sad story of the British,
> Spanish and other empires. It doesn’t work. You can’t stay on top if your
> economy doesn’t.

Kind of tongue-in-cheek - but that's a lesson I learned from playing
Civilization. I know it's just a game, yadda yadda, but sometimes I do wonder
how much of it translates into reality. E.g., if this was a game of Civ,
China's domination would be pretty much ensured at this point: they have so
many "cities" that their "production" output and "science" output will
overtake anyone else's in short order.

In fact, that's how I prefer to play the game often: just build minimal
defenses to make sure my cities are not conquered, and invest in growth as
much as possible. Sooner or later, I'm the 800 kg gorilla of the whole Civ
map.

~~~
tlear
In Civ with the current balance of power US would be launching an all out
nuclear strike against China to win the game at this stage.

~~~
pjy04
If you play Civ, you should really check out victoria II. Much more realistic

<http://www.paradoxplaza.com/games/victoria-2>

~~~
Qz
Was wondering when I would see crossover between this board and those boards!

------
weavejester
_"According to the IMF forecast, whomever is elected U.S. president next year
— Obama? Mitt Romney? Donald Trump? — will be the last to preside over the
world’s largest economy."_

Technically this has already happened, as the EU has a larger combined GDP
than the US.

It's also not too surprising. For it's land area, the US is very sparsely
populated, and 350m people are not going to have the same economic purchasing
power as 1000m people, assuming the latter group can catch up in terms of
infrastructure and technology with the former group.

~~~
billybob
Is that a fair comparison? The EU is still made of up sovereign countries with
their own economic policies.

~~~
weavejester
The EU is a single market, and economic policies are governed to some degree
by Brussels. I guess it's open to interpretation, but most sources I've seen
describe the EU as a single economy, including the CIA world factbook.

------
edw
Why is this story here? It should be posted to Digg and Reddit, home to all
the people awaiting the Ron Paul Revolution and are posting stories about peak
oil and the need to return to the gold standard.

Unless, of course, the content of this article is somehow going to influence
your business plans or YC application or your Ruby or JavaScript code. (No, I
didn't think so.)

Butterfly flaps wings

Adjust your business model

The U.S. is doomed

------
knowtheory
Oh yes, lets parade out yet another rising Chinese menace story.

Are we counting the cities worth of empty condos in the Chinese GDP? How
exactly did the IMF arrive at these numbers? Is there external confirmation of
government stats?

There are definite signs that there's a bubble waiting to pop in China, just
as it did in the US, so i view even analyses by the IMF with some skepticism
if they're based on government reporting, given that the government of China
has both the means and the incentive to present itself as a growing economic
power.

How about we hold off on the sound and fury until 2016, mmkay?

------
espeed
Right now, oil and commodities are transacted in US dollars so countries have
to stock-pile dollars. When China becomes the dominant economy, this won't
probably won't be the case for long.

See this discussion from yesterday -- "Petrodollar Warfare -- AKA the "Oil
Currency Wars" (<http://news.ycombinator.com/item?id=2477659>)

------
mattee
We would remain, however, the most technologically advanced nation. Plus, GDP
per capita would remain far higher. The majority of economists consider GDP
per capita the most important thing when determining the wealth of a nation.

------
reso
We speak of Real-GDP, but the day when China overtakes the US in RGDP/capita
is still a very long way off.

Still, probably a good time to start learning the ol' Mandarin.

------
vessenes
Unlike most other commenters here, I like this article and the general
premise. I would be surprised if GDP in China increased so rapidly without
also impacting PPP multiples, though. The article was a little light on this
angle, but I would mentally adjust their number out to take into account the
likely fact that increased GDP in China will continue to drive cost of living
up. This pushes out the date a bit.

------
vorg
Comparing the US and China "nations" doesn't make sense. A Chinese person can
"become" an American, but an American doesn't become a Chinese.

------
NY_USA_Hacker
Yes, America has the worst economic system there is except for all the others
that have been tried.

China? You GOT to be kidding! They are run by a one party dictatorship. They
run essentially a centrally directed, command economy. They are still so poor
that on average they have a tough time even getting enough rice for their
people.

So, starting from where they are, they can get a fantastic rate of growth
basically borrowing science, technology, and finance from America. BUT: Once
they quit crawling, get up on all fours, and start walking, then they will
face the fact that they have some serious problems: (1) Total suckage for a
constitution. (2) Similarly for their political and legal systems and human
rights, e.g., little things like freedom of the press. (3) Next to nothing in
'democratic traditions'. (4) A lot of filthy air and water. (5) A population
with a quite old average age.

So, once they are standing, their people will want to do things about (1)-(5).
As a country, they will struggle. The struggles may become violent. On "One
fine day" (I know, Japan, not China), they will get (1)-(4) solved; solving
(5) will be harder.

Then they will be about where America was in, say, 1950. As they move ahead,
actually to do better than America they will have to do well with things that
are new, with pushing the envelope, with making progress on new ground. Then
they will begin to see the enormous advantages of political freedom, freedom
to cut new ground in our research universities, free enterprise, freedom of
the press, freedom in art, guarantees of freedom from an oppressive
government, etc. They will still have the problem of a population with too old
average age and a bad ratio of people to land and natural resources.

Net, bet on the economy in China continuing to grow rapidly for some years,
but don't bet on China actually beating America in any significant sense this
century.

------
wiks
[http://www.cnn.com/video/#/video/world/2011/04/24/gps.fareed...](http://www.cnn.com/video/#/video/world/2011/04/24/gps.fareed.take.china.us.cnn?iref=allsearch)

