Global economy continues to slow; India continues to shine...
429 sats \ 7 comments \ @shado_op 30 Dec 2023 econ
Global growth weakest in 20 yrs, excluding financial crisis and covid years. Significant risks now arising due to high gov borrowing. ... US growth depends almost entirely on gov borrowing, already higher than the end of WW2. No-one knows when the US debt ratio becomes unsustainable; but there is no serious economic theory that doesn't think this happens at some point. At this point neither likely Presidential candidate appear to have a policy solution. ... Eurozone growth is similarly dependent on gov borrowing; however the risks are higher as the Euro-zone is a grouping of countries tied to the same currency meaning political responses are harder to achieve. ... China has a severe property crisis driven by high debt; however the gov is effectively now underwriting that debt, creating another gov debt problem, with new housing (a major economic driver) down by 60%. China now likely to overtake the US by 2038. ... India continues it's rise up the global league of economies; moving up from 10th in 2013 to forecasted 3rd by 2033. ...
From the World Economic League Table, issues by the CBRE, a UK based economics consultancy; https://cebr.com/service/macroeconomic-forecasting/
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35 sats \ 4 replies \ @Undisciplined 30 Dec 2023
You're right that neither of the likely presidential candidates have a serious long-term solution to the fiscal situation. Trump's "Drill baby, drill" is probably the nearest thing to a short-term fix (which isn't saying much), since it at least offers a possibility of real productivity growth overtaking the rate of inflation.
Do you think there are any politically feasible solutions to the fiscal problems of the US government?
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286 sats \ 3 replies \ @shado_op OP 30 Dec 2023
Interesting question...Global geopolitics being what it is, it could be some kind of non-partisan "america first" economic strategy that would accelerate re-shoring and energy production, all in the interests of 'security'... Higher economic growth and taxes would ease the pain of higher gov debt. US is also, unlike Europe, more interested in tech developments that could possibly improve productivity (US productivity is already higher than Europe). Would have it's own costs; higher inflation and conflict around net zero commitments, for example. Ultimately, though, what may 'save' the US from it's gov debt issues is the fact that it may be worse elsewhere! Eg most of Europe, and many developing countries. We shall soon find out...
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25 sats \ 2 replies \ @Undisciplined 30 Dec 2023
what may 'save' the US from it's gov debt issues is the fact that it may be worse elsewhere!
That always seems to be what bails us out.
There are two approaches I anticipate if things get dire, not in any particular order:
  1. Selective defaults under geopolitical pretenses, i.e. not paying China back
  2. Financial regulations requiring large pension and university funds to hold a share of treasuries.
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286 sats \ 1 reply \ @shado_op OP 30 Dec 2023
Those are good points. Point 2 caught my eye. Because if I was trying to fix it, and this is pure speculation (!) I would want to replace short term gov debt with long term gov debt; remove the short term pressure in the next few years, giving breathing space to sort out the annual overspend; but getting enough buyers could be an issue. However, pension funds and insurers have long term liabilities. So if you make sure from a regs perspective it benefits pension and insurance funds to hold the debt (allow them to discount future liabilities against "safe" US gov debt, plus make sure they never have to mark to market for example) and add in some populist narrative about us all being in it together against an increasingly hostile world; imv you'd have an election winning strategy and a plausible policy objective...
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25 sats \ 0 replies \ @Undisciplined 30 Dec 2023
The political issue is probably that all those big funds are operated by powerful special interests. That must create a pretty strong headwind. Otherwise, it seems like a political no-brainer.
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25 sats \ 1 reply \ @xz 30 Dec 2023
That's nice to hear that India is holding its own. Wonder what are the main drivers of India's growth, or sustained economic activity.
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0 sats \ 0 replies \ @shado_op OP 30 Dec 2023
Yes, it's an amazing economic story. According to the report, the root of India's success is based on a young demographic, large population, increasing middle class, and entrepreneurial attitude. Downsides and risks are large scale economic inequality and poverty. My view is that within a generation, India will attain global economic superpower status, akin to the current US position. (See empire cycles theory, as the West moves into decline, we move back towards a multi polar world...not predicting the demise of the US, just that others will catch it up). If I am right (and who really knows?) it will be an interesting world when people care as much about India's views as they do about the US!...
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