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Analysis: The World's Shifting Balance

news.bbc.co.uk — The combination of financial crisis with rising inflation is astonishing: in the past, a crisis in the world ’s biggest economy would have brought lower global demand, a decline in growth, and so lower commodity prices and reduced inflation. We are not witnessing that today. Does this mean that a fundamental shift in global economic influence...

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  • jasoninoakland, on 07/20/2008, -2/+41Started reading but it's amazing how poor formatting can make something like this difficult to read.
  • drape, on 07/20/2008, -5/+11It is only returning from an imbalanced state.
    • Scynet, on 07/20/2008, -3/+2You need to explain what you're thinking because that short line doesn't really make any sense.
      • drape, on 07/20/2008, -2/+5Actually, i don't 'need' to explain myself coz its an expression of my thoughts whether it makes sense or not.
        But since you asked..... I think USA enjoyed an unusual global economic influence over the rest of the world due in large part to its geographically isolated location and its success in WWII.
        Asia and Europe were devastated by wars that ate into the treasury while wealth generating machines like factories and homes were destroyed. USA on the other hand had no home turf wars to worry about while at the same time was profiting handsomely from wars waged by others.
        Even the wars that USA fought in were overseas while their infrastructure remained largely untouched. Hence its easy for them to recover. On top of that, there was a mass migration of intellectuals to USA who saw it as a safe place from the wars that plagued their homelands.
        But now, asia and europe have achieved some reasonable infrastructure and wealth such that USA's consumption is no longer dominant as the trade between asia and europe is able to support one another even were USA to fall into recession -- which has been the case in the history of mankind.
        Hence my comment that economies of the world is only regaining balance. For there is no reason that the economic mistakes made internally by the USA should drag the whole world down with it.

    • krnldmp, on 07/20/2008, -2/+4Dugg only because stability means one nation can't ***** everything up for everybody.
  • LukasSmith, on 07/20/2008, -3/+15Oh common surely you can do better then WordPad?
  • 32bytes, on 07/20/2008, -2/+3Haven't read the article but for example in Zimbabwe the official inflation is 2.2 million percent, and that's what's recognized by the goverment, the real is supposed to be much higher.

    http://www.tiscali.co.uk/news/newswire.php/news/re ...
    • migshark, on 07/20/2008, -0/+1They have $100b dollar notes I believe.
    • richmomz, on 07/20/2008, -0/+2Reminds me of an old picture of a lady stuffing her furnace with wads of cash to heat her home - was from Weimar Germany when their inflation got out of control after WWI.
  • icndvl, on 07/20/2008, -3/+62The US has had 8 years of bad economic policy, fighting expensive wars because they were fun to watch on CNN, and letting the poor fall through the cracks. You can say China's/India's progress hurts the US, but the truth is the US hurts the US way more.
    • livestradamus, on 07/20/2008, -2/+7Comment of the day
    • jahurt, on 07/20/2008, -1/+12The US has had catastrophic economic policy for 8 years, but it's had bad economic policy for a lot longer than that. A generation ago the US was the world leader in manufactured goods and the world's largest creditor nation... now the trade deficit is enormous and the US is world's largest debtor nation.

      Check out what that "crazy" Ross Perot was saying nearly 20 years ago.
    • connieLingus, on 07/20/2008, -2/+10its not just 8 years its 30+ years, and no particular party is to blame, thats for sure. politician sell themselves to the highest bidders on a daily basis and are far too concerned about getting re-elected then doing whats correct for the long-term.

      there is *no* difference between the two political parties once they take office...ie dems move to the right (as witnessed by Obama's recent stands) and repubs move left (as witnessed by our now redicious national debt since they took over congress and the pres starting 12 years ago)
    • DangerCollie, on 07/20/2008, -2/+5You're right, but a problem that may be just as big is we had 4 years of catastrophic economic policy and re-elected the stooge implementing that policy because we thought a drunken Connecticut frat boy pretending to be a religious fighter pilot from Texas would make a better leader than someone who could have gotten a deferment but choose to take their chances fighting in the jungle.

      If our collective judgment is that bad, maybe we deserve what we're getting.
      • RationalXubrnce, on 07/20/2008, -1/+2 George Bush is an ass but don't delude yourself into thinking Kerry would have saved us. Kerry is in the same clubs and part of the same system that Georgie boy takes his orders from. He's a rich globalist sellout to the American people, just like Bush. Stop thinking the democrats are the answer. They're not.
    • citizen782, on 07/20/2008, -2/+4George Bush never moved to the center and look where we are now. A position to put a stake in the ground without cooperation is just as bad as a politician who wants to appease everyone. Not every decision is going to be popular with 100% of voters. But it better be popular with the majority and more importantly the initiative better succeed. Combine unpopular decisions with failed agendas and ta-da: Iraq.

      No politician who voted in favor of the war or signed the Patriot Act should be in office today. They displayed their inability to analyze critical details of major initiatives and the consequences. Both times they opted for the vote they thought would best represent their image in the media and country club social circles. It was all about future elections and not at all about what was best for America.
    • brad3378, on 07/20/2008, -1/+48 years of bad economic policy? The national debt has been decades in the making and both the Democrats AND Republicans are to blame.

      I don't have a clue how my generation is going to fix the problems we inherited. It may soon be time to flee to another country in matter very similar to what happened 200 years ago when people came here to escape from other countries.
    • Ratteler, on 07/20/2008, -1/+6The WAR in Iraq was never about terror or oil. It was about moving the wealth of the United States elsewhere. The "rich" are getting ready to abandon this nation for places like Dubia. Our current economic crisis is nothing but the scammers pulling out of the top tier of the great ponzi scheme they have been calling our economy.

      Do really think Bush has the brains to do any of this. Bush is a sacrificial lamb from the New World Order. A dopey yes man barely able to read a script written by those who would steal the future of 350 million.

      Want to know who to blame. Look who has made a profit in the past 30 years fromt he sabotage of the free market.
      • RationalXubrnce, on 07/20/2008, -0/+2 The war was also about staging further wars in the Middle East once we get our bases set up in Iraq and of course the all important goal of establishing Central Banks in those nations owned by the families that run our own Federal Reserve.
    • krnldmp, on 07/20/2008, -0/+1The defense contractors know damned well we're not at war because its fun to watch on CNN. CNN isn't worth hundreds of billion dollars.
      • brad3378, on 07/20/2008, -1/+1As a defense contractor, I couldn't agree more.
  • netneutrality, on 07/20/2008, -5/+8Short version: Everybody's screwed, I think.
    • rearlgrant, on 07/20/2008, -0/+1I'd like to see BushCo and the Neo-cons feel screwed.
      Republicans like to say "a rising tide raises all boats," but it sure seems that a few have beach front property where they can just watch the tide roll in and out.
  • nick1971, on 07/20/2008, -1/+7It makes for a large nightmare particularly when you think of how much western debt and stock is held by oversees companies. I think as we move further into a bear market we may need to rename it a suicidal.
    What would happen if the countries outside of the G8 started selling off their privately or publicly held offshore investments to spend the money at home because they need it to pay the bills.
    If the G8 and especially America need to finance large public deficits then how high will interest rates need to go to make the debt attractive
    • unreg, on 07/20/2008, -4/+3Blah, blah, blah.

      Every so often we have the same thing. Inflation. Unemployment. Public debt. OMG the world is going to end.

      If you want to see some real economic doldrums, go back to the late 70's. That was the *****, this is just a rough patch.

      • RationalXubrnce, on 07/20/2008, -0/+1 Suuuure, that's what they keep saying. Remember 2 years ago how they were saying the economy was rock solid and anyone thinking otherwise was a fool? Of course you don't.
      • unreg, on 07/20/2008, -0/+1Thats the unique aspect of every economist / mouthpiece. There always good at stating obvious things and hyping the current situation. Very rarely do the predict / warn of what might happen.
  • webgeek2point0, on 07/20/2008, -5/+6It's called staglfation. That's where the economy slows down, but you still see inflation. This happened in the 70s, and we all got over it.
    • richmomz, on 07/20/2008, -0/+2But the question is WHEN will we get over it? Are things going to get better after a year or two, or ten? It makes a big difference to some people, especially those that are close to retirement that are seeing their assets plummet in value daily.
    • RationalXubrnce, on 07/20/2008, -0/+1 Back then we had a manufacturing base and a citizenry that was mortgaged to the hilt.
    • rearlgrant, on 07/20/2008, -1/+2I'm not sure, we're still paying off the debt for the Republican policies that began this downward spiral under Regan. Pick up David Stockman's book. It describes, in 1986, the Republican policy to strangle domestic spending by increasing military spending to the point where the debt is the driving force in U.S. economic policy. Shorter summary: http://en.wikipedia.org/wiki/Starve_the_beast
  • connieLingus, on 07/20/2008, -1/+6the financial realty is that the world is "selling" our political leadership ie the rest of the world, which owns 1/3 of our total national debt of $9-friggin TRILLION dollars, is losing faith in the ability of washington to responsibly deal with the fact that we owe so much money. this fear is causing many worldwide investors to flee both treasury securities (the instruments that finance our reckless spending) and our stock market (as indicated by the 20% drop recently in the S&P). this will result in higher prices for our governments to raise money (we will have to pay higher interest to migrate the risk, thus putting us even further in debt)

    and you know what? i don't blame them. washington is *so* dysfunctional and so self-absorbed that there is little if anything to indicate that our so-called leader have any stomach to deal with this fiscal crisis.
  • 1randomguyO8, on 07/20/2008, -9/+4burried for crappy unreadable format
    • arjie, on 07/20/2008, -0/+2I never thought I'd hear 'crappy unreadable' about plaintext.

      Save it to your desktop and open it in Notepad or whatever with your default font. Jeez.
  • easypie, on 07/20/2008, -10/+2Buried! for posting nonsense on Digg
  • Raerth, on 07/20/2008, -0/+17Ewww, horrible format. If anyone want's to listen to the interview:
    http://downloads.bbc.co.uk/podcasts/worldservice/d ...
  • theantirobot, on 07/20/2008, -6/+1Is digg in bed with psyops, or is the digg community really this stupid. If you think this article makes sense, you don't.
  • rybiideeg, on 07/20/2008, -2/+1global growth of economy -- is of course -- did not disinfluenced -- the people thoughts of wanting to buy something cheaper -- since gas is so expensive --

    and since the only way -- the america -- can show its power is to provide cheaper food -- some too expensive -- some too cheap -- depending on who -- can afford it -- buys it

    • Number23, on 07/20/2008, -2/+5I think the "--" does not mean what you think it means.
  • alphonseragusa, on 07/20/2008, -8/+2http://news.xinhuanet.com/english/2008-07/20/conte ...

    Don't forget Obama "promised additional troops to Afghanistan to bolster war on terror after winning the coming elections. " He will redistribute troops. Much like he'd do with our dwindling wealth.

    For the love of god/allah/FSM - please write in RON PAUL in 2008.
    • thal3s, on 07/20/2008, -0/+3That's the dumbest argument i've seen all week.

      Please provide details of how Obama is going to redistribute our wealth in a detrimental way.

      PS: Note that CONGRESS passes laws in America and President signs them. The President does not drive down to the National Reserve and redistribute money at will.
  • z28com, on 07/20/2008, -6/+1It's way too much stuff to read and too boring.
  • mrzack, on 07/20/2008, -4/+2I'm not gonna read the article, only the title, but I'm gonna have to say......China = POWER!!!
  • scamper22, on 07/20/2008, -5/+2Of course it is shifting. Brown and yellow people are actually becoming independent. Everyone cheer! The colonial way of life is slowly dying. Yeah, you got the asians to build your railways for dirt cheap, you got them to farm for dirt cheap, you got them to traverse the world just to reach the shores of the great land to work as a cheap accountant, software engineer, doctors ...

    You got the best of the 3rd world for so long. People knew they could trust the solidity of the US dollar. They could trust the fairness of the system. They knew the US government wouldn't rip them off as their own government's have.

    Now, the situation is reverse. The best of India and China no longer NEED to come to the USA. Many actually prefer to stay at home and prosper. You have the american government acting like zimbabwe. Printing money like there's no tomorrow to satisfy the rich and the poor. This kills the middle class if you haven't figured it out. Middle class savings are wiped out. No worries though, the rich still have the capital for 'liquidity' and the poor aren't starving. Just the way the government likes people. It's where we're the most malleable. I mean none of them want a strong middle class... we don't need government.

    The solution the american people have chosen? Elect someone who promises to keep going down the path of destruction. Continue to attack the middle class by expanding public service which only benefits the civil servants (as every government does... even zimbabwe). Continue to promise benefits they cannot afford... continue to bail out the rich the poor and continue to screw over resonsbile middle class folks. Barack will be in, and this country will be ruined as much as Bush has ruined it.
    • synik, on 07/20/2008, -0/+1dug down for whining about "brown and yellow people".

      Go on, tell us that the first world doesn't care about "brown people" you know you want to.
  • vanebeard, on 07/20/2008, -0/+3Bernstein:After the fact, everybody is explaining in elegant
    detail what went wrong, but I didn’t read anything about that before it
    was going on. I had no sense of foreboding about it at all.

    actually quite a few people explained exactly what was going to happen, its just that they were outside the mainstream. The fact that this "expert" did not understand and therefore believes that no one understood just proves he is not an expert at all, and can offer no more insight than he could have a year ago. It is this kind of arrogance from people who should know better that got us into this mess.
    • richmomz, on 07/20/2008, -0/+2Correct - there were warnings about what was to come but nobody wanted to hear it. Warren Buffet himself has been speaking out about our 'financial weapons of mass destruction' for years and how we were in danger of an epic screwing if we didn't wise up. But hey, what the hell does he know, he's just the richest man on the planet.
  • LokitheComplex, on 07/20/2008, -0/+6Lets hope the recession means and end to these pointless wars.
    • sethorama99, on 07/20/2008, -1/+3It won't.
      • rearlgrant, on 07/20/2008, -0/+1Sadly, history shows it's more likely to end by global conflict instead of homegrown hard-work and investment. The reverse of think globally act locally -- spend locally and devastate globally; I prefer the original.
  • QuickHunk, on 07/20/2008, -0/+3"STOP WAR" spread "PEACE"
    • sethorama99, on 07/20/2008, -1/+1Spread jelly, preferably on toast.
  • m00head, on 07/20/2008, -2/+2Flashback to what Web 0.1 used to be like!

    This crappy format reminds me of an RFC document...
  • Alienpruts, on 07/20/2008, -2/+2Unreadable....unfortunately... :(
  • oyenow, on 07/20/2008, -2/+3It hurts my eyes.
  • RationalXubrnce, on 07/20/2008, -2/+1 We are going to have to deal with the owners of the Federal Reserve and all of their friends in big finance, the war companies etc. The problem is a huge percentage of them are Jewish and will not allow anyone to speak against them without ruining that person as an anti-semite. We are either going to have to take that heat or watch the country fall, this is not a new choice, just read the last 1000 years of European history.
    • rearlgrant, on 07/20/2008, -0/+1Your first sentence is correct.
      The rest is from Goebbels playbook.
      Focus on the real problem.
      • RationalXubrnce, on 07/20/2008, -0/+1 I'm trying to focus on the real problem. And the real problem is that you can't talk about the real problem for the reason I stated. Go ahead and try and watch what happens to you professionally.
      • rearlgrant, on 07/21/2008, -0/+1Scapegoating Jews isn't focusing on the problem.
        I can understand if you focus on the behavior of censorship, and I agree the charge of being an anti-semite is thrown around without basis for political purposes. And your advice that way is good -- take the heat.
        But the censorship behavior and the partisanship has nothing to do with being Jewish. If you read the last 2000 years of history, you'd know that "the Jewish problem" is a scapegoat to distract those being harmed by non-jews. It's that kind of behavior that is suppressing action against "the owners of the Federal Reserve and all of their friends in big finance, the war companies etc."
  • CrushThemTorg, on 07/20/2008, -0/+2Thank god for a multi-polar world – it'll keep us on our toes.
  • hoodster, on 07/20/2008, -0/+1M. Wolf is my man. That gentleman never minced his words. These British FT editors are no joke.
    In 1995 he hold lecture in Harvard titled: The End of Dollar Supremacy...For non economists it's pretty dry, but it makes a lot of sense. But don't sleep on this! It's a classic.

    http://www.iop.harvard.edu/Multimedia-Center/All-V ...

    Check around 30 minutes...(his little summary)
    LOL, check the chilling effect of his lecture to the audience.





  • AlbinoRaven, on 07/21/2008, -0/+1Odd thing is nobody really has talked about the obvious. If you have a large percentage of folks in your population that are retiring or retired it can also demonstrate the same thing as stagflation. Retirees tend not to spend as much, if at all, except on essential things like Medicare, drug, place to live and toast (for some reason this is all I see my parents eat for breakfast followed by a cup of tea and about ten pills each).

    Basically all of the capital that is in the markets has to come back out of the market. This includes commodities and stocks. It wont stay invested forever. It has to, sooner or later, come out and be spent on those essentials. It's kind of the reason people invest in the first place, to afford a decent retirement.

    Unfortunately the biggest investment, real estate, has been obliterated and along with more folks retirement strategies. That unfortunately was the human instincts of stupidity and greed. Commodities and stocks are really a very small drop in the bucket when it comes to where capital sits. For most companies and people it sits in their homes and buildings. But you get a couple of years of shows cramming the idea of home ownership down the throats of the entire population everyone tends to lose sight of what a home really is.

    Its a box to keep crap in. Some of those boxes are fancy, others are not so fancy. But at the end of the day, it's still a box that we put all our sticks, metal and fabric (sofa, bed, stove, clothes, etc) into. Society decided with the massive TV advertising scheme of HGTV and about a million news reports, those boxes where very precious. So every human decided to do what they thought was correct. Sell their box for more money than people could really afford even though the seller understood that they could never find a box the same size for remotely the same price. Personally I've talked with dozens of couples that have fallen into this line of thinking. We'll sell the house, make a mint and hopefully buy another house for less.

    However it all falls into demographics again. If you have a large retiring population, the two story, giant house isn't even feasible after a certain age. It's to big to take care of so you have to move into something smaller. By dumping the house into a market where supply outstrips demand. What happens? Prices fall back to where they should be, which hasnt quite happened yet, but it will. This includes europe, canada and the usa. Its spotty in the usa right now in pockets, but people are starting to realise its creeping into their neighbourhoods. Developers have been very busy building more homes without looking at the inventory that will be available in 2-10 years as the population retires/dies. Although it's not really the developers fault, they just build what 20-30 year olds want; a new home that looks just like the model they seen on HGTV. So they can go house poor with the rest of their friends.

    The market readjustment is annoying, it has to happen sooner or later. Better to happen now. The only sad thing is as it gets readjusted, our parents and grandparents are going to have a bit of shock when they realize their own pension funds have dried up in 15 years, if they live so long.

  • Vocifer, on 07/24/2008, -0/+1best line from the text imo:

    "The governance of the world system is all premised on a
    world where the United States was the largest creditor, where the G7
    could cluster around the United States and they could be the directorate
    of the global economy to some degree. The United States is now the
    world’s largest debtor. Trillions of dollars worth of reserves are being
    held in emerging market economies. In other words, global financial
    stability depends not just on decisions being made in Washington DC
    but on decisions being made in Beijing, in the Gulf and elsewhere.
    Even the banking crisis can no longer be managed. Banks cannot be
    bailed out in the G7. Every major bank is now relying on Sovereign
    Wealth Funds; in other words, the funds being produced by
    governments in the emerging world. So it means we’ve got an
    architecture which is horribly out of date. We’ve got a nice, small,
    comfortable, intimate grouping called the G7 who like to get together,
    who say they share values and they can regulate the world economy -
    making pronouncements, telling China what to do with its aid, telling
    China what to do with its Sovereign Wealth Funds. And needless to say
    China and many other emerging economies are saying well thank you
    for that piece of advice, but I think we’ll ignore it. And why should they
    not ignore it?"

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