The American Century 21st that is

[BT]

World power swings back to America
The American phoenix is slowly rising again. Within five years or so, the US will be well on its way to self-sufficiency in fuel and energy. Manufacturing will have closed the labour gap with China in a clutch of key industries. The current account might even be in surplus.


By Ambrose Evans-Pritchard, International Business Editor


Assumptions that the Great Republic must inevitably spiral into economic and strategic decline - so like the chatter of the late 1980s, when Japan was in vogue - will seem wildly off the mark by then.

Telegraph readers already know about the "shale gas revolution" that has turned America into the world’s number one producer of natural gas, ahead of Russia.

Less known is that the technology of hydraulic fracturing - breaking rocks with jets of water - will also bring a quantum leap in shale oil supply, mostly from the Bakken fields in North Dakota, Eagle Ford in Texas, and other reserves across the Mid-West.

"The US was the single largest contributor to global oil supply growth last year, with a net 395,000 barrels per day (b/d)," said Francisco Blanch from Bank of America, comparing the Dakota fields to a new North Sea.

Total US shale output is "set to expand dramatically" as fresh sources come on stream, possibly reaching 5.5m b/d by mid-decade. This is a tenfold rise since 2009.
Related Articles

    S&P sees downgrade blitz in EMU recession
    20 Oct 2011

    Franco-German deadlock over ECB’s role in rescue fund
    19 Oct 2011

    Berlin experts fear euro break-up
    17 Oct 2011

    Europe's lost decade as $7 trillion loan crunch looms
    16 Oct 2011

    Lack of ECB firepower weakens Europe’s Grand Plan
    16 Oct 2011

    US expects strong growth
    24 Oct 2011

The US already meets 72pc of its own oil needs, up from around 50pc a decade ago.

"The implications of this shift are very large for geopolitics, energy security, historical military alliances and economic activity. As US reliance on the Middle East continues to drop, Europe is turning more dependent and will likely become more exposed to rent-seeking behaviour from oligopolistic players," said Mr Blanch.

Meanwhile, the China-US seesaw is about to swing the other way. Offshoring is out, 're-inshoring' is the new fashion.

"Made in America, Again" - a report this month by Boston Consulting Group - said Chinese wage inflation running at 16pc a year for a decade has closed much of the cost gap. China is no longer the "default location" for cheap plants supplying the US.

A "tipping point" is near in computers, electrical equipment, machinery, autos and motor parts, plastics and rubber, fabricated metals, and even furniture.

"A surprising amount of work that rushed to China over the past decade could soon start to come back," said BCG's Harold Sirkin.

The gap in "productivity-adjusted wages" will narrow from 22pc of US levels in 2005 to 43pc (61pc for the US South) by 2015. Add in shipping costs, reliability woes, technology piracy, and the advantage shifts back to the US.

The list of "repatriates" is growing. Farouk Systems is bringing back assembly of hair dryers to Texas after counterfeiting problems; ET Water Systems has switched its irrigation products to California; Master Lock is returning to Milwaukee, and NCR is bringing back its ATM output to Georgia. NatLabs is coming home to Florida.

Boston Consulting expects up to 800,000 manufacturing jobs to return to the US by mid-decade, with a multiplier effect creating 3.2m in total. This would take some sting out of the Long Slump.

As Cleveland Fed chief Sandra Pianalto said last week, US manufacturing is "very competitive" at the current dollar exchange rate. Whether intended or not, the Fed's zero rates and $2.3 trillion printing blitz have brought matters to an abrupt head for China.

Fed actions confronted Beijing with a Morton's Fork of ugly choices: revalue the yuan, or hang onto the mercantilist dollar peg and import a US monetary policy that is far too loose for a red-hot economy at the top of the cycle. Either choice erodes China's wage advantage. The Communist Party chose inflation.

Foreign exchange effects are subtle. They take a long to time play out as old plant slowly runs down, and fresh investment goes elsewhere. Yet you can see the damage to Europe from an over-strong euro in foreign direct investment (FDI) data.

Flows into the EU collapsed by 63p from 2007 to 2010 (UNCTAD data), and fell by 77pc in Italy. Flows into the US rose by 5pc.

Volkswagen is investing $4bn in America, led by its Chattanooga Passat plant. Korea's Samsung has begun a $20bn US investment blitz. Meanwhile, Intel, GM, and Caterpillar and other US firms are opting to stay at home rather than invest abroad.

Europe has only itself to blame for the current “hollowing out” of its industrial base. It craved its own reserve currency, without understanding how costly this “exorbitant burden” might prove to be.

China and the rising reserve powers have rotated a large chunk of their $10 trillion stash into EMU bonds to reduce their dollar weighting. The result is a euro too strong for half of EMU.

The European Central Bank has since made matters worse (for Italy, Spain, Portugal, and France) by keeping rates above those of the US, UK, and Japan. That has been a deliberate policy choice. It let real M1 deposits in Italy contract at a 7pc annual rate over the summer. May it live with the consequences.

The trade-weighted dollar has been sliding for a decade, falling 37pc since 2001. This roughly replicates the post-Plaza slide in the late 1980s, which was followed - with a lag - by 3pc of GDP shrinkage in the current account deficit. The US had a surplus by 1991.

Charles Dumas and Diana Choyleva from Lombard Street Research argue that this may happen again in their new book "The American Phoenix".

The switch in advantage to the US is relative. It does not imply a healthy US recovery. The global depression will grind on as much of the Western world tightens fiscal policy and slowly purges debt, and as China deflates its credit bubble.

Yet America retains a pack of trump cards, and not just in sixteen of the world’s top twenty universities.

It is almost the only economic power with a fertility rate above 2.0 - and therefore the ability to outgrow debt - in sharp contrast to the demographic decay awaiting Japan, China, Korea, Germany, Italy, and Russia.

Europe's EMU soap opera has shown why it matters that America is a genuine nation, forged by shared language and the ancestral chords of memory over two centuries, with institutions that ultimately work and a real central bank able to back-stop the system.

The 21st Century may be American after all, just like the last.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8844646/World-power-swings-back-to-America.html

[Michael Tee]

Who knew?

Interesting article.

On a purely abstract level, I'd like to see America back in its old position of pre-eminence but its history of militarism and fascistic launching of unprovoked wars of pure aggression make the thought of an ascendant America unbearable.   

The  article correctly identifies a growth in population as (IMHO) a positive factor, but I would think that the significant population advantage will remain with China for at least a century.  Also, China is descending from an intolerable level of overpopulation, apparently with some success under CCP leadership; there is no examination in the article as to where China's optimum population might lie, or how close they are now to reaching it.  It seems to me that as China nears the point of optimum population, it will certainly have the managerial tools available to stop or slow the relative rate of population decrease so as to keep population levels at or near the Party's ideal.

I think that America's propensity to militarism and violent aggression will be its ultimate undoing, as was the case with Nazi Germany.  As other powers become more acutely aware of the menace, and more powerful vis-a-vis the USA, unlikely alliances of necessity will form between the unlikeliest of bed-fellows, as happened in WWII, and painful joint action will have to be undertaken against the common threat to world peace.  On a geopolitical level, this seems kind of far-fetched, although who could have predicted in 1933 the alliance of England, the USA, the USSR and China ?  On a purely moral level, the outcome seems to be inevitable, but of course geopolitical events don't often seem to be following closely any moral imperatives.  Still and all, unlikely as the outcome once seemed, it did eventually happen, in the case of Nazi Germany.  The universe does seem to have a way of expunging its own evil.  (See Dr. Sax, by Jack Kerouac.)

[Kramer]

Obama's greatest achievement was unintended on his part but he clearly demonstrated so many failures that the list would be too long and take too much time to lay out in this post.

Needless to say the USA is moving to the right and ushering in our new Conservative leader in 2012 will bring many of articles predictions to light.

Yes we will reduce taxes and prosperity will once again reign in this great nation. Yes we will become much more energy independent. Gee, with all the monies wasted in the Middle East would could have already become energy independent and not need the Middle East any longer, let alone obvious strategic reasons to be there.

[Michael Tee]

Interestingly enough, an article by Stephen M. Walt makes many of the same points as the Evans-Pritchard article does, and comes to many similar conclusions, basically that we can't really count the U.S. as out of the game; it enjoys great educational advantages at the post-secondary level, a very favourable age demographic as against all its potential rivals, and despite obvious racial and ethnic divisions, a much more homogeneous population than the so-called "European Union."

Walt seems to have some kind of candy-assed view of a "nicer" USA, i.e., no more wars of unprovoked aggression against relatively defenceless Third World nations, no more world-wide chain of bases and torture chambers, no more siding with Israel against the Palestinians.  Personally I think that's all bullshit.  If the US can hang on to its power (in which, depressingly, both articles seem to agree that it will, albeit to a lesser degree) then IMHO, the country's extreme form of right-wing nationalism, stoked by the MSM and their owners, the military-industrial complex and corporate America, which benefit immensely from the policy of endless enemies and endless war, means that the foreign aggressions will continue unabated, with really tragic consequences for millions of their defenceless victims.  Anyway, the article is here:

 http://nationalinterest.org/article/the-end-the-american-era-6037

[Xavier_Onassis]

Why would electing rightwingers make us more energy dependent?

Did electing Nixon do this? How about Reagan, Olebush and Juniorbush?

The rightwing cares almost entirely about campaign donations from oil companies far more than they care about energy independence. The oil companies care entirely about profits.

If they can make higher profits from oil produced here, that is all they care about. And they will sell it to the highest bidder. They will not favor Americans.They have always done this.

You are expressing wish fulfillment. Like thinking that Conservatives are more brave. It is bogus.

[BSB]

America, like man, reinvents itself over and over. Man learned to adapt almost everywhere he went, America dose the same. Throw a new monkey wrench into the works, we learn how to adjust.

As for Mr. Tee's pathetic comparison of us to Nazi Germany, consider the morally and intellectually corrupt source. This guy supported Stalin's Russia.

XO, please, as if Wall St doesn't own as much of the left as it does the right.

BSB

[Michael Tee]

<<As for Mr. Tee's pathetic comparison of us to Nazi Germany, consider the morally and intellectually corrupt source. >>   

The usual sloppy and inaccurate misrepresentations.  I didn't compare you to Nazi Germany, despite many interesting similarities.  I predicted that the world reaction to America's threat to world peace could very well parallel the world's reaction to the threat of Nazi Germany.


<<This guy supported Stalin's Russia. >>

And that guy supported - - and participated in - - the Viet Nam War.

[BSB]

America is like Nazi Germany, America is like Nazi Germany, Vietnam, Vietnam, Vietnam. That's the only act you got, blower. You got nothin' else but more bullshit, more lies, and the morality of a gutter snake. 


BSB

[Xavier_Onassis]

I stated the truth, which is that the right wing has not brought energy independence to this country and will never do so. Perhaps the left won't, either. But Kramer is simply wrong to believe that the so-called "Conservatives" will do anything more than make the rich richer and the poor poorer.

[sirs]

As ususal, Xo is in error.  Conservatives would do what they could that allow the rich to get richer and the poor to get richer as well....IF they chose to and work at it

It's called Freedom.  Get used to it

[Kramer]

America is like Nazi Germany, America is like Nazi Germany, Vietnam, Vietnam, Vietnam. That's the only act you got, blower. You got nothin' else but more bullshit, more lies, and the morality of a gutter snake. 


BSB

Dave, I'm happy to see that you have finally discovered that I'm not your enemy. Peace Brother!

[Plane]

  Imagine a preeminent world power without it being the USA.

    Make it as generic as you can.

    Now imagine that it is busy doing things evil.

    Is it better to raise up an other great power which is ruthless enough to overcome the first , then convert this power from ruthlessness to goodness.

     Or shorten the process by converting the existing regime to doing good.

[sirs]

As usual, good conclusion, Plane

[Michael Tee]

<<America is like Nazi Germany, America is like Nazi Germany>>

I saw parallels between the end of the American era in the 21st Century with the end of the Nazi era in the 20th Century.  Fuck you if you don't appreciate it, that was my take on it.  Take it or leave it.

<<Vietnam, Vietnam, Vietnam.>>

What, you can raise my support for the USSR and I can't raise your support for the Viet Nam War?  Doesn't work like that.  You want an ad hominem argument based on my support for the USSR, you gotta take an ad hominem argument based on your support for the Viet Nam war.  That's just how it goes in a debate, sucka.  If you object to ad hominem arguments, don't make ad hominem arguments.

<<That's the only act you got, blower.>>

Looks to me like you read my posts very selectively, moron.  There's more in them than Viet Nam and  Nazi Germany, although I realize how painful it must be for a Nazi-loving fascist like you to be reminded of the failures of imperialism, fascism and militarism.  Suck it up, ass-hole.

<<You got nothin' else but more bullshit, more lies, and the morality of a gutter snake.  >>

Lemme see if I got this one straight - - you supported the war and I opposed it, but I'M the one with the morality of a gutter snake?  You support American fascism and war crimes and I oppose them, but I'M the gutter snake?  I really wouldn't go there, pal - - your morality vs my morality.  I know who the fucking gutter snake is.  I think you'd better lay off on the ad hominem attacks while I'm still trying to stay in diplomatic mode.

[Michael Tee]

<<Is it better to raise up an other great power which is ruthless enough to overcome the first , then convert this power from ruthlessness to goodness.

   <<  Or shorten the process by converting the existing regime to doing good.>>

I think I already concluded in other threads that the conversion of the US government from evil to good is virtually impossible given the stranglehold that the 1% has acquired over both the legislature and the MSM.   I didn't even mention the economic stranglehold, where the concentration of hiring power, mortgage lending and banking power is going to be one more vehicle for the 1% to exercise their control over the totality of the ordinary citizen's interests.

Regime change will have to come either from complete systemic collapse, which I don't see coming as soon as I once thought it would, or Revolution, which I think will be easily beaten down if it doesn't spread to the ranks of the military and the police.  There is no other way that I can see for the elite to give up their grip on the levers of power in the nation.  The only other possibility that I can see is for an alliance of major powers to take on the USA in one massive attack, something that is in the realm of futuristic science fiction rather than geopolitical reality but still out there as a remote possibility.

But one thing I learned  - - the future is highly unpredictable.  Who could have predicted, from 1933, the wartime alliance of Britain, the USA, China and the USSR against Germany?  It was too weird to be believed and yet it came to pass.