Author: gotohell

India, China will be growth engines: Indian PM [Copy link] 中文

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Post time 2008-2-18 14:23:24 |Display all floors
China is the ' rags to riches' story!

UKKK, AmeriKKKa, KKKanada, plus UKKK colonies - Australia/NZ are the 'riches to rags' story!!!!

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Post time 2008-2-19 17:06:14 |Display all floors
PM Singh really just stated the obvious.  In the most recent Davos economic forum, you can tell the difference between the BRIC countries that are the fast growing economies, versus the G7 countries that are largely the slow growth countries.  

The growth engine really comes down to something very basic.  When you have saving and liquidity, you have more room to grow your economy by increasing domestic consumption, and investments.    When you have huge debts, you have fewer options to grow your economy.   

When you are in debt, you surrender options in the present, to pay for your choices in the past.  When you have savings and liquidity, you surrendered options in the past, to expand your choices in the present.  

I agree with Singh’s caution not to just focus on economic growth.  Economic growth by using sound fiscal and monetary policies that ultimately strengthen a country financially, are great.  But when economic growth doesn’t strengthen a country financially, and actually weaken it further, then it is but fool’s solace, since the economic size may buttress one’s ego, but not buttress the finances, where it matters.  

BRIC countries should learn from the mistakes of the G7 countries so they don’t repeat it. There is no true solace in repeating other people’s mistakes, just in avoid other people’s mistakes.
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Post time 2008-2-20 04:50:04 |Display all floors
Raymond, who cannot make the cut when it comes to real analysis in the first place, is being foolish again. The reason that developing nations outpace developed nations in growth rates is because they start from a low base. Even Africa, which receives little investment and has few advantages, has several countries which see fairly high growth rates. For India and China, their large populations coupled with an educated work force make growth much larger; we saw this same effect with Japan from 1953-1980, save that its smaller population gave it less impact than events in Europe and America.

The rest is more blah blah blah about "sound balance sheets" and other things he likely can't calculate anyhow.
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Post time 2008-2-20 06:07:25 |Display all floors

How Low is That Base?

It wasn't that long ago that America had only a $3 trillion economy.  Was America growing at double digits for 20 years back then?  Or ever?  Did ANY major economy, or for that matter ANY economy achieved China's record of 20 years of uninterrupted double digit (or close to it) growth?

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Post time 2008-2-20 06:11:18 |Display all floors
Sure: Japan.

China's growth has also been interrupted many times. Moreover, recent revaluations mean that historic growth numbers are inaccurate, leaving China with a growth rate of probably somewhere around 7-8% over that period.
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Post time 2008-2-20 06:40:16 |Display all floors

Japan Followed a Western Path

Japan had deep cycles of prosperity and recession.  China's 20 years of growth was a lot smoother, without the big dips that are so characteristics of Westernized economies.

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Post time 2008-2-20 07:13:38 |Display all floors
interesting:

You claimed it was solely about population size, and now you say it’s about starting with a low base.  Make up your mind!  Look up the definition of the word “solely”, since you thought it was about population.  


The BRIC countries happen to have the fastest growing economies now.  Brazil and Russia doesn’t have comparatively large populations, yet they still have fast growing economies, so clearly it’s not solely because of population size.  

When countries have savings, they have the capacity to increase consumption internally, so growth is not surprising.  These BRIC countries have excess savings and liquidity as a common factor, which gives it more options.  Contrastingly, when countries are already burdened with debts, not only does that reduce current income since some of the tax revenues are used to service existing debts, but it also reduces the consumer’s ability to keep up consumption.  That’s partly why retail sales have dropped off by over 30% during this past Christmas season in USA.  The projected first quarter GDP growth for USA is zero, and perhaps even negative.  We will know by the second quarter of 2008.   

The just passed stimulus package may help GDP growth in the second quarter of 2008, if Americans use the money to consume.  We will not know that until we reach the third quarter of 2008, whether Americans chose to consume the stimulus package, or chose to do something else like add to their savings, or pay down existing credit card debts.  If they choose to do the latter, it will not do much for GDP growth.  The stimulus package is yet another example of actions to stimulate the economy, but result in more debts, and greater financial weakness.  



To all other readers:

Credibility matters!   Here’s a rhetorical question for people to consider.  

What does all the following people have in common?  

Dr. Phil writing a diet book
Dr. Laura giving relationship advice on the radio
Schreiber giving economic and financial analysis

Answer:

They all lack credibility.

Dr. Phil is overweight
Dr. Laura is divorced
Schreiber was flat broke
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