THE DECLINE OF THE U.S., THE RISE OF CHINA
MANILA, OCTOBER 30, 2007 (STAR) BULL MARKET, BULL SHEET By Wilson Lee Flores - It is sad that due to our politicians’ overpriced ZTE deal, the controversial cash-dispensing scandal in Malacañang and now the Erap pardon dominating our headlines, most of us seemingly missed out on the biggest business news of the times: the decline of the world’s formerly mightiest economy of the US and the phenomenal resurgence of China to once again reclaim its ancient economic superpower status. Add to this the meteoric rise of Russia, Brazil, India, South Korea, Asean and other new economic powers.
This tectonic shift in global economic realities has far-reaching impact on our economy, so I urge our insular, self-centered and myopic political and business leaders to help the Philippines seize new opportunities from this inexorable trend. Yes, we should maintain and cherish our colonial, sentimental, economic and other vital ties with the US, but we should also decisively reorient our thinking towards a post-Cold War and a 21st-century globalist perspective beyond our traditional over-dependence on the West. Let us export more agricultural, mineral and food products to China’s 1.3 billion people, let us promote our tourism to outdo the Thais, Malaysians and Singaporeans in wooing increasingly affluent Chinese tourists.
CNN recently reported that despite still being a growing and developing society with an average per capita income at only $2,000, China is this year forecast to overtake Europe’s powerhouse Germany as the world’s third largest economy. The only two other economies higher in rank than China would be No. 2 Japan and No. 1 USA, both of which are showing signs of weakness in their economies, with Japan predicted to suffer the consequences of a maturing and aging population, while the US seems headed for economic recession next year due to nonstop real estate, housing and sub-prime mortgage woes.
What is inspiring about the rags-to-riches saga of modern China is that, unlike the European powers Britain and France, Japan or the US, all of which partly financed their economic rise through controversial colonial conquests and economic exploitation of other nations, the economic resurgence of China is financed by the hard work of the masses in export industries, by the business-savvy and boldness of Chinese entrepreneurs, and by the bold vision, patriotism and long-term strategic planning of its government. I believe the best capitalists in the world today, ironically proving Karl Marx and Jose Ma. Sison of the CPP/NPA dead wrong, are none other than the mercantilist “communist” mandarins in Beijing.
To help enlighten our political and business leaders so that they can help lead the Philippine economy wisely move out of over-dependence on the free-falling US dollar and the declining high-debt/lower-exports US economy, I wish to share this October 24 news report by Bloomberg about one Wall Street investment genius whom I admire. May investor Jim Rogers’ wise strategic thinking help influence us towards better economic planning for the Philippines.
Here is the report:
“Jim Rogers, chairman of Beeland Interests Inc., said he is shifting all his assets out of the dollar and buying Chinese yuan because the Federal Reserve has eroded the value of the US currency. `I’m in the process of — I hope in the next few months — getting all of my assets out of US dollars,’ said Rogers, 65, who correctly predicted the commodities rally in 1999. ‘I’m that pessimistic about what’s happening in the US.’
“Rogers, delivering a presentation late yesterday at an investors’ meeting organized by ABN Amro Markets in Amsterdam, said he expects the Chinese currency to quadruple in the next decade and that he is holding on to commodities such as platinum, gold, silver and palladium. The dollar has dropped against all the 16 most actively traded currencies except the Mexican peso this year as slowing growth and the first interest-rate reduction since 2003 last month dimmed the allure of dollar-denominated assets.
“Since the Fed lowered US interest rates on Sept. 18, the first cut in four years, the dollar has fallen 2.8 percent against the euro and touched a record low yesterday. Gold rose to a 27-year high and platinum jumped to a record. ‘It’s the official policy of the Central Bank and the US to debase the currency,’’ said Rogers, a former partner of George Soros. ‘The U.S. dollar is and has been the world’s reserve currency, the world’s medium of exchange,’ he said. ‘That’s in the process of changing. The pound sterling, which used to be the world’s reserve currency, lost 80 percent of its value, top to bottom, as it went through the whole period of losing its status as the world’s reserve currency.’
“The Chinese currency, known as the renminbi, or yuan, is ‘the best currency to buy right now,’ Rogers said. ‘I don’t see how one canreally lose on the renminbi in the next decade or so. It’s gotta go. It’s gotta triple. It’s gotta quadruple.’
“China, growing faster than any other major economy, is ‘going to be the most important country in the 21st century,’ he said. China’s gross domestic product expanded 11.9 percent in the second quarter, and analysts surveyed by Bloomberg estimate the economy grew by 11.5percent in the three months to Sept. 30.”
Rogers also is buying Swiss francs and Japanese yen, which he said have been “pounded down” because of the so-called carry trades.
We should condemn and indict our politicians (not pardon them) if they continue their bankrupt policies of financing misgovernment with more foreign loans and with dollar remittances from our exports of overseas Filipino workers! We need sweeping economic, educational, industrial, infrastructure, agricultural, political and other reforms to make our Philippine economy super-efficient, self-reliant and globally competitive. We should radically change our age-old mindset about the world beyond our former colonial masters USA and Spain. We should not only adjust to new global realities, but we should take bold initiatives and aggressively export more to China, ASEAN, Russia, South Korea, India, Brazil and cash in on all these unparalleled economic opportunities of our fast-changing new world order.
Chief News Editor: Sol Jose Vanzi
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