Tectonic change in the global financial market

Schumpeter once said that the capitalist process is one of creative destruction. Sometimes I think that the establishment is in control, and sometimes that the destruction is in control of the situation. In essence, the two processes go hand in hand. What we are seeing now is more destruction in the world and we know where we focus, that creation. The problem is that we are focusing on the world we know and not in the world as a whole. I think it is the end of the world we know, but not throughout the world, because there is another world out there that runs in parallel and that's the world of Asia. What is happening is the process of shifting U.S. as the world financial center.
At times like these that process is not easy to see and this explains the widespread panic, but the first signs that China is moving to the United States as a centre of the global economy are real obvious. The United States has 5% of the world's population, produces 22% of GDP but requires 66% of the world's mobile savings to do so. But the big savers in the world, including sovereign funds are now thinking, "why should we send two thirds of the world's savings to 5% of the population so that they can enjoy their current lifestyle?"
I believe this tension and the many questions that are being made behind the turbulence we are witnessing. Because responses to these issues are not commensurate to the world as we know future will have to conform to the world to which we are leading and we do not know so well.
When you have a situation where in the United States the average savings per person is -1% of their income, and compare it with China, which has an average savings of 45% of their income per person, you realize that they were functioned reasonably adjusted. The belief is that average U.S. household has 11 credit cards. There have been a lifestyle of luxury based on credit, but unfortunately the system that creates the credit is the banking and it is corrupt and decapitalized and take several years for this situation is corrected.
By contrast in China, which by 2006 was the sixth largest economy in the world, by the end of next will be the second largest economy, surpassing the United Kingdom, Germany, Japan and France. It is an economy that is in a positive streak: U.S. is calculating a current account deficit of 6% of GDP, China is likely to report a surplus of 6%; United States has a fiscal deficit of 4% of GDP, a fiscal surplus China 2%; United States has virtually no international reserves, except perhaps the gold in Fort Knox, China is sitting on reserves of U.S. $ 2 billion.
Therefore, is a tectonic shift that is experiencing the global financial market.

Post Reply

You must be logged in and a member of this Groupsite in order to post a reply to this topic.
To post a reply, contact your group manager(s) Join this Groupsite

 

South America - Investment & Development
Powered by Groupsite.com

Visibility Public Membership By Invitation or Approved Request Default Profile Social

Your Status Not Logged-In