China to Overtake US Economy, Germany Calls US “Clueless”

Germany to United States: “You’ve lived on borrow money too long!”

From DATELINE ZERO – It seems like every other major country in the world is vocalizing anger at the United States. It’s about self-preservation, and they see that other countries might get pulled into whatever further economic mess awaits the U.S.

• Fed Backlash Grows…
• China Fires Back At Bernanke With Harsh New Capital Controls…
• WARNS: ‘CATASTROPHIC INFLUENCE ON WORLD’…
• GERMANY: ‘The US Has Lived on Borrowed Money for Too Long’…

Germany’s outbursts against U.S. policy: U.S. is “clueless”…

Germany’s undiplomatic outbursts against U.S. policy, calling it “clueless” before a G20 summit, show growing estrangement on economics as America’s focus shifts away from transatlantic ties to domestic challenges and Asia.

“The Atlantic is getting wider,” said Anton Boerner, head of Germany’s Foreign Trade Association, who spoke of a “creeping alienation” between America and Europe, which has been exacerbated by the global financial crisis.
…
“It’s not acceptable for the Americans to criticize China for currency manipulation then slyly help the dollar by printing at the Federal Reserve,” Schaeuble told Der Spiegel magazine.

Meanwhile, the scheming and clueless U.S. political class plans to “rebalanced the world economy.”

I have my doubts about that plan, seeing as the rest of the world seem reluctant to go along with that. In fact, some other countries are levelling demands to the Federal Reserve asking where their gold is. The World Bank President is talking about holding the world to a global gold standard.

Other big news today is word that the Chinese economy is set to outpace the US within two years.

From Jeremy Warner article at The Telegraph:

Here’s a finding that will have any red-blooded American spluttering into his cornflakes. According to the Conference Board, a highly respected economic research association, China will overtake the US as the world’s biggest economy by 2012, or within two years.

OK, so in dollar terms, that’s obviously not going to be the case. It will be a lot longer than two years before China overtakes the US on that measure. But in terms of purchasing power parity, according to the Conference Board’s latest world economic outlook, China is already nearly there, and by 2020 will have reached a size of output which is nearly half as big again as the US.

Here’s the Wkipedia link explaining what PPP is, but broadly speaking the idea is to measure output according to the volume, not the price of goods and services produced. The assumption made is that identical goods will have the same price in different markets. In practice, this is obviously not the case. A taxi ride in Beijing, for instance, will cost you approximately a tenth of what it costs in London. But it is essentially the same service.

In any case, in PPP terms, the Conference Board’s projections show China as 24.1 per cent of world output by 2020, and the US at just 14.8 per cent.

We all knew that the weight of economic growth had skewed dramatically since the crisis from advanced to emerging market economies, but many in the West don’t yet seem fully to appreciate the speed with which economic and geo-political power is shifting. This is a truly seismic change. How these once irrelevant economies choose to use their new found power is the overarching question of our times.

Related, from CNBC: Jobless Claims Drift Lower; Prices Rise…