America, our knight in shining armor?
Opinion.
(28 November 2011 – Australia) There is hope! Yes there is a way out of this economic turmoil and uncertainty if someone is willing to take on the burden. With all the pessimists and doomsayers out there it’s hard to see a way out of this downward spiralling economy. The fact that there are analysts/commentaries coming out with self serving predictions like we have been seeing only compounds the problem further. It doesn’t take much for someone to say the economy is in bad shape when the markets are declining and all their peers are saying the same, yet there are many out there who seem to think this is the making of an analyst. With all this negativity out there it’s time for the call to be made that the economy can be resurrected and the country to do it needs to step up, and quickly.
Looking at the situation around the world there is not only light at the end of the tunnel but an opportunity for an individual or country to imprint themselves on world history as the Savior. Sadly it will not be uninspiring Merkel the reactionist, apparently the most powerful person in the world right now, nor will it be the Chinese who while profiting greatly from their upturn are not the leaders most people are looking for. It will take a charismatic, single-minded individual/group who are so stubborn they cannot conceive of there being an alternative to their own way. The world is crying out for them to come riding in like a good old boy instantly bolstering the outlook and then proceeding to tell all what to do and how to do it.
The leader the economy is waiting for is perhaps the one that caused this mess in the first place. A stronger US dollar will lead to greater buying power, and a more expansionist view that will increase spending and therefore exports from Asia particularly China. Not to mention what the stronger US dollar will do for America itself who is steadily re-growing. This increase in exports from Asia will lead to a boost in jobs, production and cash flow within the country. Combine this with China looking to halt the appreciation of the Yuan, while America will complain, this has many benefits for the rest of the world as well as China and the effect on exports will be even more pronounced. This will increase expenditure not only within China but with more disposable income, luxury goods such as those produced in Italy and America will be in higher demand. Chinese banks are also looking at loosening restrictions on lending, meaning borrowing will increase, again creating more development, jobs and cash flow which will have a similar effect as stymieing the Yuan appreciating. With these developments, construction in China will increase creating greater demand for resources meaning other countries will be able to benefit such as Australia, the African continent and South America further enhancing the flow on effect. Moving away from China to another large economy Japan, a stronger US dollar will have the same impact, increasing exports and thus the positive flow continues. Therefore maybe those from Standard & Poors proclaiming that the Japanese economy is in bad shape, along with many other detrimental forecasts, can stick to remaining invisible.
It seems simple because it is, these are just two countries which could significantly impact the world’s economy. The other continent which is booming and yet seemingly invisible to investors and those in power is South America. Brazil is now on the cusp, if not already there as one of the world’s biggest economies and yet is far behind the majority of Asian and European countries in peoples’ minds. This should not be the case, people should be focusing on those countries whose economies continue to grow because it is them that countries like Australia should be looking to for opportunities rather than dwelling on those who can’t seem to get their act together and seem intent on dragging everyone down with them. The thought that the euro will implode is ridiculous, so disregard all who claim otherwise, due to the fact it will not be allowed to. The result of an American boost to China and China subsequently diversifying its FX exposure is it’s increase in Euro holdings, so come what may, in the end China will not allow Europe to fail. Either directly or indirectly China will invest to hold Europe together. China unfortunately cannot do this alone, this scenario will only be possible if America makes the first move.
Contrary to popular belief, the economy is there waiting to be grabbed by the scruff of the neck and led. So come on, a strong US dollar along with even stronger leadership and America could be coming to save the day, again. Perhaps another movie in the making?
The Eternal Optimist
The leader the economy is waiting for is perhaps the one that caused this mess in the first place. A stronger US dollar will lead to greater buying power, and a more expansionist view that will increase spending and therefore exports from Asia particularly China. Not to mention what the stronger US dollar will do for America itself who is steadily re-growing. This increase in exports from Asia will lead to a boost in jobs, production and cash flow within the country. Combine this with China looking to halt the appreciation of the Yuan, while America will complain, this has many benefits for the rest of the world as well as China and the effect on exports will be even more pronounced. This will increase expenditure not only within China but with more disposable income, luxury goods such as those produced in Italy and America will be in higher demand. Chinese banks are also looking at loosening restrictions on lending, meaning borrowing will increase, again creating more development, jobs and cash flow which will have a similar effect as stymieing the Yuan appreciating. With these developments, construction in China will increase creating greater demand for resources meaning other countries will be able to benefit such as Australia, the African continent and South America further enhancing the flow on effect. Moving away from China to another large economy Japan, a stronger US dollar will have the same impact, increasing exports and thus the positive flow continues. Therefore maybe those from Standard & Poors proclaiming that the Japanese economy is in bad shape, along with many other detrimental forecasts, can stick to remaining invisible.
It seems simple because it is, these are just two countries which could significantly impact the world’s economy. The other continent which is booming and yet seemingly invisible to investors and those in power is South America. Brazil is now on the cusp, if not already there as one of the world’s biggest economies and yet is far behind the majority of Asian and European countries in peoples’ minds. This should not be the case, people should be focusing on those countries whose economies continue to grow because it is them that countries like Australia should be looking to for opportunities rather than dwelling on those who can’t seem to get their act together and seem intent on dragging everyone down with them. The thought that the euro will implode is ridiculous, so disregard all who claim otherwise, due to the fact it will not be allowed to. The result of an American boost to China and China subsequently diversifying its FX exposure is it’s increase in Euro holdings, so come what may, in the end China will not allow Europe to fail. Either directly or indirectly China will invest to hold Europe together. China unfortunately cannot do this alone, this scenario will only be possible if America makes the first move.
Contrary to popular belief, the economy is there waiting to be grabbed by the scruff of the neck and led. So come on, a strong US dollar along with even stronger leadership and America could be coming to save the day, again. Perhaps another movie in the making?
The Eternal Optimist
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