Many of us, including myself, think that the current credit and financial crises is the first major step towards the fall of America as a world financial superpower. Looking at how far the market has fallen, the massive layoffs occuring more and more, and the total embarassment we feel because “we should have known better”, you would definitely think that some other country is a prime spot to jump ahead of the United States is the world power rankings.
But when you open your eyes to what else is happening in the world economies, you get a different picture. America isn’t the only one who made mistakes. This article from CNN brings to light what’s happening across the globe in other wannabe superpowers:
But economists including Stiglitz are nearly unanimous: The United States won’t lose its position as the world’s financial superpower because foreign economies are slowing just as fast as America’s, their debt levels are just as high, and the developing world is too reliant on the U.S. market to achieve significant growth on its own.
However, economists did accept that America won’t be going “over to India or China and tell those countries how they should run their banking systems”. We’re no longer trusted as the experts on how free markets should run due to the mistakes and greed across the financial, and consumer, levels.
Gas prices increased everywhere. Home prices fell almost everywhere (granted there are pockets everywhere that prices still increased, even here in America). The article even suggests that China has a housing bubble ready to pop. We’re not the only ones to feel the affects of poor judgement, inflation, or recession. It’s bad everywhere.
However, one thing to note is that the crap happening here in America is part of the cause of other markets failing. So many countries have their money tied up in U.S. investments and holdings, and when our market tanks, so does theirs. But looking at stock market losses worldwide, the U.S. market is actually down less than most European and Asian markets. Heck, the dollar is even rising against many foreign currencies (except when the Fed cuts the lending rate).
And China, the next expected superpower economy, doesn’t have it as easy as many Americans think:
With China’s unbridled economic growth spurt, there’s talk that it could one day overtake the United States. While that could happen several decades from now, China’s fate currently is directly tied to the U.S. If we don’t buy, they don’t grow.
China and other big exporters to the U.S. are laden with dollars – not because its a great investment – but because the U.S. buys so many foreign goods in dollars, argues J.P. Morgan Senior Economist Jim Glassman.
If they tried to switch to another currency, they’d have to sell those dollars and flood the market.
That would kill the value of the dollar and push other currencies up. Exports to the U.S. market would become much more expensive for Americans and because they lack large enough domestic markets it could kill their economy.
“‘Whether they like it or not, they are compelled to hold the dollar,” said Glassman. “We’re enabling their growth and development.”
So don’t expect the downfall of America to happen anytime soon. Sure, it’ll happen eventually, just like any empire before ours has fallen too. What goes up must come down, and that’s not just due to gravity. But if you’re really concerned about our economy failing completely, then I suggest learning Mandarin (enough people speak English in India, so don’t worry about that country) and converting your dollars to yuan right now, although the conversion rate stinks. But I’m no financial expert, so don’t listen to me.