The Obama administration is increasingly signalling that the US will not continue to be the world’s consumer and importer of last resort. The clearest statements came last month from Larry Summers, White House economics director, in a speech at the Peterson Institute for International Economics and in an interview with the Financial Times. The US, he said, must become an export-oriented rather than a consumption-based economy and must rely on real engineering rather than financial wizardry.
This long-run vision for US growth entails greater exports and probably a smaller current account deficit than where it is now (about 3 per cent of gross domestic product). Although Mr Summers did not and could not say so, the vision will require an end to the remaining overvaluation of the dollar.
Put starkly, Mr Summers has stated that China can no longer behave like China because the US intends to behave much more like China. The world economy cannot have two, or even one-and-a-half, Chinese growth strategies from its two most important economies. Which will prevail? (via Fred Bergsten & Arvind Subramanian: Resolving global imbalances).
In the last 50 years, the US dollar has swung from being grossly overvalued to slightly overvalued. The inertia of the Bretton Woods system has kept this overvaluation going. How has this benefitted the US?
It has allowed the US to use its overvalued (and over-printed) currency to buy vast tracts of the world economy. And now having captured these segments of the world economy (especially raw material sources), with an over-valued currency, it will achieve two objectives.
The US is in no position to pay off its nearly US$4 trillion, it owes the Rest of the World – equal to about 1 years GDP (my estimate, in PPP terms). This kind of dollar devaluation does three things at one stroke.
One – It reduces the real value of its debt. The Chinese, the Rest of BRICS and the Others need to be paid a lot less in the future. (as pointed out earlier in various posts linked here.) Two – It makes US exports artificially competitive. (as pointed out earlier in linked posts). Three – The US competitiveness will be anchored to assets purchased with over-valued dollars.
Readers can take courage from the fact that each such ‘process’ gives the US lesser returns and fewer options. The Law of Diminishing Marginal Utility. Or in plain language ‘crying wolf’ often never paid off.
But the smart answer is to go out and buy one kilogram of gold. If each reader of Quicktake and 2ndlook blogs were to do this, the world would become a safer and fairer world in the next 10-20 years.
The Help has its heart in the right place, and its “White” imagining of the Black women’s voice springs from an authenticity which only a personal experience could have supplied. In a moving afterword, Stockett reveals how she never understood the silent suffering of her own Black maid until long after her death which happened when Stockett was 16.
However, the book must be accused of borrowed characterisation. Consider Aibileen who matches every stereotype one may harbour about Black people, not seeing the irony of her observation when she meets one of the White kids, now grown up, she tended to:
“And how I told him don’t drink coffee or he gone turn colored. He say he still ain’t drunk a cup of coffee and he twenty-one years old. It’s always nice seeing the kids grown up fine.”
This description, and many such, made me uncomfortable, because they play into the mythologised image of the long-suffering Black — the gentle sacrifice, the immense capacity for self-denial. Why are Blacks, unless they drive the plot, so devoid of ill will in novels about racism? How does Aibileen stand being good to the children she raises, knowing fully well that they will grow up to become dyed-in-the-wool racists? (via In search of post-racial fiction).
This observation I like. Elephants in the room! Very similar to the myth of the ‘non-violent struggle for Indian independence.’ I wonder how much this works.
When tribal women came out and take on the might of the Indian State, one thing you can be sure of! India(ns) does not believe in non-violence – at any cost. There is point beyond which, Indians will not look at the cost and price – but only the value.
Lalgarh proved that!
Indian silk industry was not a case of ‘industrial espionage’ from China – as alleged. It was homegrown!
How Big Business and Big Government combine against the aam aadmi, the common man.
- 1857 – A Failed ‘Mutiny’? (2ndlook.wordpress.com)
- Reports: India seizes $44m guarantee from IMI (haaretz.com)
- China: India ‘not rival’ after launch (cnn.com)
- Vodafone Threatens India With Arbitration Over Tax Issue (voanews.com)
- The feeding frenzy of kleptocracy (thehindu.com)
- India may see internet boom by 2015 – report (blogs.ft.com)