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 the next generation inherits?
By Joel Bowman • November 2nd, 2009 • Related Articles • Filed Under
We've been wondering in this space recently about the kind of world the next generation
will inherit. Clearly the trend for the long haul points to a shift of power, and a migration
of wealth, from West to East. As we routinely report, the roaring Asian economies have
amassed enormous piles of foreign reserves, much of it in US Treasuries.
In part due to this shift, these economies - China, India, Brazil, etc. - command an
increasingly important role in the geopolitical arena. In addition, these New Economies
on the Block are forging important trade ties with each other and inking deals to secure
their mutually beneficial future, ex-US.
The United States, meanwhile, is up to its ears in ever-mounting debt...both to its
creditor nations in the Middle and Far East and, to an even larger extent, to its own
citizens.
And so we ask ourselves, will the young Johnnie and Jenny Smiths of the West be able to
bluff their way through the next round of negotiations with a pair of twos? Or will the
Changs, Patels and Ahmeds of the world call their bluff and take them to the cleaners?
Unfortunately, the trouble started for Generation iPod before they even had a chance to
cause it for themselves. "Like America itself," observes Bill Bonner, "[Young Americans]
are in danger of finding themselves slipping downhill. Instead of expecting things to get
better, they may find it hard even to hold onto what they've got. Instead of the 'Morning
in America' that Ronald Reagan promised, they may find that it seems more like
evening, both in their personal as well as their national lives."
Much of America's international influence was acquired during a time when the dollar
roamed free and easy as the world's reserve currency. French President Charles De
Gaulle called it an "extraordinary privilege."
At its height, the greenback commanded a magisterial awe and its position was largely
considered unchallengeable. But no challenge is too great for the mighty US
government...especially the challenge to debase its own currency.
It is true that extraordinary privileges carry extraordinary responsibilities. Within a
single generation, the irresponsible goons in charge of preserving the dollar's integrity
had destroyed almost all of its purchasing power. Measured against gold, it has slumped
some 97% since Nixon closed the gold window in '71. And now, when the Treasury
Secretary of the United States of America tells a classroom of Chinese university
students that his nation's currency is trustworthy and reliable, they laugh in his face.
Then, on top of an increasingly worthless currency, Generation iPod also inherits about a
quarter of a million dollars each in unfunded Social Security and healthcare obligations,
the overdue infrastructure bills of a crumbling nation, a couple of distant wars to fight
and die in and a world full of disgruntled foreign creditors.
Is there any hope?
Opined John Mauldin on the subject in Tuesday's issue: "It is not the times which dictate
the man (or daughter!), but the response of the man which dictates his own time. Today
has a brighter future for someone young than any other time in history, whether they
are in the US or Brazil or China. They just have to seize it..."
Echoes Bill, "The real advantage in life is having the gumption to get on with it; no one
knows where that comes from."
Indeed, history provides us with countless examples of individuals triumphing over
adversity. A hard working American student has every chance to succeed in life, as does
a hard working Asian student. It's just that, on the whole, graduating classes of Asian
engineers and computer programmers are far more diligent than graduating classes of
Western feminist film studies students.
Taiwanese university graduates, for example, would happily take on the workload of
most western jobs as a vacation, never mind as a vocation. The forty-hour workweek (35
for our French readers) is something students here manage between classes...and cram
sessions...and helping run the family business...and music lessons...and English school
in the afternoons and evenings. Not only have the Asian countries already outworked the
west over the past generation - by a measure significant enough to now own virtually all
of the western countries' debts - but they continue to up the ante even now. They have
raised the bar, in other words, and they are raising it still.
A generation ago, Mao Tse-Tung did his people a huge favor and finally died. His
successor, Deng Xiaoping then told the Chinese masses not to fear wealth and that, in
fact, to get rich was "glorious." It was a stark contrast to the self-immolating edicts
spewed forth from Mao. The people rejoiced...and got to work. Last year, China created
millionaires at the second fastest rate of any nation on the planet. Only India outpaced
her. Meanwhile, America "demoted" millionaires quicker than any other country could
manage. England was next on that dubious accolade.
The people in this region of the world are hungry...and they are only now beginning to
taste the fruits of their labor. As finite resources - energy, food, land, water - stretch
over the coming years to meet exponentially growing demand, Generation iPod needs at
least to know what they are up against in the scramble to stake their claims.
And, not unlike the Eastern generations of yore, they must work hard to succeed,
despite the impediments their government impose. This unfolding reversal of fortune
between the West and East does not simply suggest that American college students
might face a less inviting future than their parents faced. It also suggests that investors
might find a more inviting future in the Emerging Markets than they will face in the
Developed Markets.
Joel Bowman
for The Daily Reckoning Australia
source: www.dailyreckoning.com.au
inherit/2009/11/02/
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there are comments following the article as sourced. Do you think the writer reads trends
correctly?
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Mark
In my opinion this may be the best article about the state of mind between the East and the West that I have seen.
As an example, while the East is working its butt off to improve their condition and economies, we are worried "Global Warming", even though for the last 6 - 10 years the average temperature of the Earth has been declining.
The Chinese are building a coal-fired power plant each week and searching for all the oil they can get their hands on. We have stopped development of nuclear power plants, coal-fired power plants, drilling for oil and oil shale. We are planning to pass a "Cap & Trade" Act that will cost every citizen thousands of dollars in increased taxes in order to "save the world" from increased temperature while giving that money to third world countries so that they might develop their industry. (Huh?)
They are producing, each year, more college graduate engineers and scientists than the total number of college students enrolled in U.S. colleges. They are studying math and the sciences. Our students study Black History, Community Organizing.
While they are scrambling to earn every cent they can, we inhibit business and the creation of jobs and promote the importation of "slave laborers" and tax incentivize the exportation of our jobs.
The article was "right-on" and so true.
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More on this...
"Is there any hope?"
"It is not the times which dictate the man (or daughter!), but the response of the man which dictates his own time. Today has a brighter future for someone young than any other time in history, whether they are in the US or Brazil or China. They just have to seize it..."
**********************************************************************
They just have to seize it... in deed.
No, there is NO hope and we will NOT seize anything. America (if not all of the West) has lost its' competitiveness. It has lost its' will to work hard, to study hard, to strive, to play hard, and to compete. We want everything to be "equal" and "fair". We want it all but we don't think we need to work for it... it is owed to us. Somebody else has wronged us and "they" owe us.
We have gone so far as to NOT keep score in children's games so there is no winners (and of course) no losers. We have gone so far as to pass all students on to the next grade, even if they can't read nor write, so as not to hurt their self esteem. We have gone so far as to mandate larger seats on airlines so as not to hurt the feelings of the obese. We have gone so far as to remove the word God from historical speeches so as not to offend those who are non-believers.
Yes, there are some here who still do strive and work hard but the general mood has become one of "acceptance", "inclusiveness", "political correctness" despite that it is the equivalent in nature of protecting the weak and the sickly, rather than promoting the strong and the brave.
We have become weak. We have become weak physically, spiritually, morally, and intellectually. All the time, the hungry are becoming strong and smart.
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maybe
that is all true. but it is no different than it ever was. the rich become lazy and complacent because they are not hungry. empires grow because people are hungry. when they are rich, they are not hungry and a hungrier group will take over.
nothing new here. just ask the romans, the mongols, the maya, and the british. why would america and europe be any different?
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It's 'yin' and 'yang' all over again ...
... success at development inevitably goes to those who need it most first, and to those who sorta want it second. Just remember that "hunger" is much different than "appetite" ... most Americans don't get this. But we all love to rationalize, don't we?
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