12/23/10 Baltimore, Maryland – Here’s an interesting thought for you to chew on during your Christmas dinner. The world economy, following the global recession and financial crisis, is almost twice the size of a decade ago.
In 2000, world GDP was $32 trillion. “Next year, based on conservative growth assumptions” by the British megabank Standard Chartered, “it could rise to $64.7 trillion.”
“There was a significant contraction as a result of the crisis and global recession,” the bank admits, “but now the world is back to its pre-recession peak.”
Given all the handwringing over unemployment and outsourcing in the US, the figure seems improbable. But the stat belies the fact that most of the growth in the economy over the past decade has come from economies outside the US or Europe.
Here in the Empire of Debt, GDP has been sluggish not just since the Panic of 2008, but for the last decade.
If the global trend continues for the next 20 years, then global growth in the 21st century will ring in at a clip superior to the historic period we call the Great Dollar Standard Era – from the breakdown of Bretton Woods in 1971 through the palliative Y2K freakout:
Indeed, if the trend continues, the next era will see global growth that exceeds any period in the last 200 years except for the post-World War II era.
Hard to believe, isn’t it?
What’s perhaps even more interesting, according to Chris Mayer, editor of Mayer’s Special Situations, the global output in the West may have peaked in 2000.
And if you narrow it down to just manufacturing, the peak came in 1953. “Services industries grew enough to offset such losses,” Chris says. “That trend, though, ended in 2000.”
For hundreds of years, going back to the Renaissance, China and India ranked among the most productive economies on the planet.
Ironically, many of the contacts we’ve developed over the past decade have been investing in the so-called emerging markets. They’ve been taking advantage of this growth firsthand and doing quite well with their money in places like Colombia, Brazil, Vietnam, Indonesia, South Africa and spaces in between.
[Breaking News: In a remarkable episode of synchronicity, we see this headline from the UK Daily Mail – “Fresh Humiliation for Eurozone as China Says It Will Bail out Debt-Ridden Nations.” Seems the Foreign Ministry just identified Europe as an important sector for China’s $2.7 trillion overseas investment fund. Previously, China offered to buy some of Greece’s and Portugal’s debt, but now it appears the commitment is going to be stepped up a notch or three. Stay tuned.]
Addison Wiggin
for The Daily Reckoning
Addison Wiggin
Addison Wiggin is the executive publisher of Agora Financial, LLC, a fiercely independent economic forecasting and financial research firm. He’s the creator and editorial director of Agora Financial’s daily 5 Min. Forecast and editorial director of The Daily Reckoning. Wiggin is the founder of Agora Entertainment, executive producer and co-writer of I.O.U.S.A., which was nominated for the Grand Jury Prize at the 2008 Sundance Film Festival, the 2009 Critics Choice Award for Best Documentary Feature, and was also shortlisted for a 2009 Academy Award. He is the author of the companion book of the film I.O.U.S.A.and his second edition of The Demise of the Dollar… and Why it’s Even Better for Your Investments was just fully revised and updated. Wiggin is a three-time New York Times best-selling author whose work has been recognized by The New York Times Magazine, The Economist, Worth, The New York Times, The Washington Post as well as major network news programs. He also co-authored international bestsellers Financial Reckoning Day and Empire of Debt with Bill Bonner.
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The way that I see this is that China has long since realized the USd and T-paper is bad money. What to do? They can’t cash it outright without driving down the value of their remaining stash. Simple!
So they have been buying real things; commodities and resources as fast as possible. Now, desperate to unload the US paper, they are willing to trade it to the PIIGS for anything of value–anything but US paper… That’s China, but maybe those folks holding US paper, in any form, can learn something from this strategy, hey?
ah, wunnerful, wunnerfulll!
hard 2 believe, indeed!
i wunder what the growth #’s wld be, if adjusted for inflation, or expressed in silver, gold, platinum, palladium, copper, lead, nickel, coal, oil, unleaded, sugar, cocoa, or a “basket” of grains?
uhhh-notsogood?
the damnable FED is trying to get “growth” that will double waaay faster than “ten years after”, now. a $ Tril here, a $ Tril there, pretty soon we’re talking ’bout REAL Green Stamps!
good thing the banks are still solvent, too, huh?
Riiiight! Wunnnnerfulll! Hahahaha!
Bahh Humbug.