Why the US is a giant on staggering leg. Warning, massive wall of text.

[yanamaster]

Kantor said:

yanamaster said:

Lostplanet22 said:

USA's debt is 67% of GDP..   You are talking about external debt and that is not the same.. Countries as Luxemburg have an external debt of 4.000% of GDP UK: 470% of GDP etc..

Also it may be true for now that the US is the biggest economy in the world, this does not mean anything in the grand scheme of things. the balance of power has been shifting to China, India and Brazil for some time now and i fully expect these three regions to dominate the US economically in time. china and India sooner rather than later. We're talking about not more than 10 years now.

India, China and Brazil have huge growth, yes. But none of them is anywhere near the USA at $14.6 trillion.

China could overtake the USA in the next quarter-century, but definitely not the next 10 years. By that point, it will have something like four times America's population. Brazil and India are nowhere near. Brazil is just over $2 trillion, and despite having a population only slightly smaller than China's, India has a GDP of less than $1.5 trillion. I don't see either of them overtaking the USA in the foreseeable future.

China needs the USA as much as the USA needs China. Sure, they would get some money to begin with. Then, the entire country would go bankrupt. China would lose all of the money it had invested in America. Gone would be the country that purchases more Chinese goods than any other country in the world. If China demanded debt repayment, it would be hit nearly as hard as America.

http://www.uschina.org/statistics/tradetable.html

Overall trade:

Rank	Country/region	Volume	% change over 2008
1	United States	298.3	-10.6
2	Japan	228.9	-14.2
3	Hong Kong	174.9	-14.1
4	South Korea	156.2	-16.0
5	Taiwan	106.2	-17.8
6	Germany	105.7	-8.1
7	Australia	60.1	0.7
8	Malaysia	52.0	-3.0
9	Singapore	47.9	-8.8
10	India	43.4	-16.3

And exports only:

Rank	Country/region	Volume	% change over 2008
1	United States	220.8	-12.5
2	Hong Kong	166.2	-12.8
3	Japan	97.9	-15.7
4	South Korea	53.7	-27.4
5	Germany	49.9	-15.7
6	The Netherlands	36.7	-20.1
7	United Kingdom	31.3	-13.3
8	Singapore	30.1	-6.9
9	India	29.7	-6.1
10	Australia	20.6	-7.2

Yes, this is kind of what i wish people would understand, just because something is right now doesn't mean it'll stay like that. It is more and more probable that the US government will have to take action to stop the growing debt and this will result in at least stagnation taking into account how bad the financial situation is right now. 

Simple calculation shows that in 10 years time china's gdp will be equal to the USA of today, if the growth remains the same for china. In the meantime i suspect that america will have another crisis being directly caused by bad management of debt.

Of course that is the pessimistic version. Optimistic one? don't see it really.

Edit: Sorry, i'm at work right now so i didn't manage to answer the whole post. 

Yes, it is very true that China is dependent on the US but that is because it's the easiest. China has not made a move into Europe yet, at least not anywhere as seriously as they had made towards USA. If you look into it, you'll realize that the only big chinese company in Europe is HSBC. Europe will also have to make a step toward China in the event that something happens in America. From the asian point of view, they will not hurt as much as one could suspect.

You also have to remember that South America and Africa are making constant great steps towards attracting new investments. Emerging markets have this thing in them that they do not heavily invest money in american or western european markets because they can't afford to. This allows many to survive financial turbulences. Poland is a prime case as during the whole financial crisis, it was the only country in Europe to continue having positive GDP growth. Economics on a macro scale is really tricky to predict, but there are some indications as to what might take place.