US is no longer the superpower that determines the fates of many economies quite as it did in the past
No one really notices small cracks in the mud on the earth’s surface. We walk past them, glancing over them, unsuspecting their importance. Until one day, these cracks cross paths and a much bigger, more dangerous hole forms a gaping pit in the earth’s belly.
This is the metaphorical landscape that we encountered over the past year that our generation will never forget. The economic system as we knew was shattered and every day the abyss seemed to get deeper and wider. The more we peered into it, the more news we heard, the worse it seemed. Many tried to guess its dimensions, to chart its elusive bottom, but it was unlike anything we had ever seen. From June ’08 to March ’09 the world’s major indicies suffered over 60% losses from their highs and many pensions, retirements, dreams, fortunes, savings and legacies were lost or hugely devalued. We know this – it’s history already.
But we live in a world where sentiments change as quickly as time, so as the year draws to an end I find myself pondering the questions: Where are we now? What happens next?
When I attended the World Economic Forum in Davos two years ago, the newest addition to economic lingo was ‘decoupling’ – the idea that developing economies could drive world economic growth to the extent that their dependence on the US was now relatively less significant. Its validity was debated in many a forum and formed a cornerstone for many an investment thesis. The theory seemed to indicate that if the global economy was a giant superhero, it had transformed from one with a single source of energy to one with several smaller and more efficient turbos that all contributed to its strength. Two years on and it seems the theory has had a stage on which to perform and be tested, and it seems to have held its own.
Whilst it is undeniable that the crisis was felt in every corner of the world, it is safe to say that some nations, those once completely dependent on the state of the American economy, have emerged less scathed. According to John Ross of the Shanghai Tao University, China has already this year surpassed the US as the world’s largest generator of investment capital with around $2 trillion versus America’s $1.4 trillion.
No one really notices small cracks in the mud on the earth’s surface. We walk past them, glancing over them, unsuspecting their importance. Until one day, these cracks cross paths and a much bigger, more dangerous hole forms a gaping pit in the earth’s belly.
This is the metaphorical landscape that we encountered over the past year that our generation will never forget. The economic system as we knew was shattered and every day the abyss seemed to get deeper and wider. The more we peered into it, the more news we heard, the worse it seemed. Many tried to guess its dimensions, to chart its elusive bottom, but it was unlike anything we had ever seen. From June ’08 to March ’09 the world’s major indicies suffered over 60% losses from their highs and many pensions, retirements, dreams, fortunes, savings and legacies were lost or hugely devalued. We know this – it’s history already.
But we live in a world where sentiments change as quickly as time, so as the year draws to an end I find myself pondering the questions: Where are we now? What happens next?
When I attended the World Economic Forum in Davos two years ago, the newest addition to economic lingo was ‘decoupling’ – the idea that developing economies could drive world economic growth to the extent that their dependence on the US was now relatively less significant. Its validity was debated in many a forum and formed a cornerstone for many an investment thesis. The theory seemed to indicate that if the global economy was a giant superhero, it had transformed from one with a single source of energy to one with several smaller and more efficient turbos that all contributed to its strength. Two years on and it seems the theory has had a stage on which to perform and be tested, and it seems to have held its own.
Whilst it is undeniable that the crisis was felt in every corner of the world, it is safe to say that some nations, those once completely dependent on the state of the American economy, have emerged less scathed. According to John Ross of the Shanghai Tao University, China has already this year surpassed the US as the world’s largest generator of investment capital with around $2 trillion versus America’s $1.4 trillion.
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