Worried, Recession? The US is Still the Best

This post was written by jd on March 5, 2009
Posted Under: Real Estate,Travel
Street Scene Buenos Aires

Street Scene Buenos Aires

There was a very interesting article in the Buenos Aires Herald today by James Neilson. The Herald is a news publication printed in English and you can usually get one at the numerous newspaper stands on the streets of Buenos Aires.

Mr. Neilson points out that we are in a better position to pull out of this recession quicker and healthier then Europe, Japan, China or Africa. If you notice, our dollar continues to gain strength against the Euro, the Yen and almost all other currencies of the world.

In his article, Mr. Neilson states in part:

“But bad as the situation in the US undoubtedly is, elsewhere it is even worse. That is one reason why in these troubled times jittery investors want to get their hands on dollars. Another is that, no matter what happens in the next year or so, the medium-term prospects facing the US are far more promising than those of Europe, China or Japan, to name just three possible alternatives. This being the case, it is somewhat premature to speak of the imminent end of US economic hegemony and its replacement by a more equitable arrangement involving at least half a dozen other countries. “

Mr. Neilson goes on to explain the problems that Europe, Japan, Russia, China, Africa and South America are facing. Problems that is severe with no easy or probable solutions for them.

For example, Mr. Neilson says about China and summary:

“China’s outlook is only marginally less alarming than that of Europe and Japan. Thanks to the one-child policy, before too long there will be a huge number of single men who will be expected to support their aging parents. Many will not take kindly to the idea. Though China is bursting with talented people who, unlike so many of their North American and European contemporaries, are willing to study and work as diligently as any Victorian, before that immense human capital can be properly tapped China’s rulers must find a way of maintaining social discipline during slumps like the current one. That will not be easy. Before everything went haywire, Chinese officials insisted that their country’s economy would have to grow by at least 8 percent a year simply to provide enough work to satisfy the millions who were leaving the poverty-stricken countryside. China’s GNP may still be increasing, but at an annual rate that by all accounts is far lower than 8 percent.

As a result, if the recession, or depression, lasts as long as pessimists fear, the US will in all probability emerge in far better shape than any of its hypothetical rivals. With this in mind, it is quite natural for Asian, European and Latin American investors to put their money on the US dollar rather than on the Euro — which may not survive the mayhem — the battered pound sterling, the Swiss franc, the yen, the yuan or even the peso. The US may be groggy and could soon hit the canvas, but it would be less likely to remain there for longer than the other big countries that would go down with it.”

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