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View Full Version : When the U.S. Sneezes, Canada Catches Cold (not)



Huggy85
10-20-2007, 10:55 AM
You keep saying that Speedy. You must be living somewhere in the past, because it seems you are just about the only American that still believes that.

http://www.cnbc.com/id/21080795

"It is not at all clear that the old saying "when the U.S. sneezes, the rest of the world catches a cold" applies anymore; it certainly does not apply to the extent it did so even a decade ago.

Consider this: according to the Economist, this year for first time China alone will account for more of global GDP growth than the US at current exchange rates. China and most other Asian emerging economies are now exporting more to the European Union than to the U.S.

David Kotok has also written often about this "decoupling" of the U.S. and global economies. It is a different world today. For example, Kotok notes that:

--Today, Asian and other emerging countries all have large currency reserves, providing insulation in a downturn.
--China has become Japan's largest trading partner. The U.S. is now second.
--In North America, Canada has distinct energy pieces that are growth oriented.
--Old Europe has central and emerging Europe as its growth engine.
--Latin America, particularly Mexico and Brazil, do remain vulnerable to a U.S. slowdown.

This is the reason the global stock markets continue to perform well--it's not that the U.S. doesn't matter, it's just that there are other growth engines emerging in China and Central and Eastern Europe that are helping to take up the slack. For Asia in total, for example, a 1% drop in the US growth rate translates to only about a 3/10 of 1% drop in the region's GDP growth."

Learn to think in present terms Speedy.....rather than what has been.

Perhaps the US isn't the center of the universe anymore!

1337
10-20-2007, 12:51 PM
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