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Poll: Global Investors Favor the US

For years the punditocracy has been analyzing American decline. Dynamic Asia, united Europe, exciting BRICs: they’ve all been hailed as the new leaders in the world economy. America, wounded in the Middle East, victimized by its outmoded “Anglo-Saxon” capitalist model, deindustrialized beyond hope or repair, was toast.

But a funny thing happened on the way to the funeral.  Europe imploded. Chinese and Indian growth revealed serious structural weaknesses. Russia remained a commodity pit. Brazil failed to industrialize, and began to drift back toward the stagnant, rentier state capitalism of its unhappy past.

And the US, somehow, staggered on.

This morning the Bloomberg organization released a new poll of global investors, and it may do something to puncture the latest hype about the magical powers of state capitalism.  From Bloomberg:

Investors are turning increasingly bullish on U.S. markets as they declare its economy in better health than major rivals from Europe to Asia, according to the Bloomberg Global Poll.

Twice as many investors thought the US was the best place to be as favored the runners up China and Brazil.

For eight long years we had to listen to the pessimists and the whiners talk about how George W. Bush had wrecked the United States beyond repair.  And for three more years we’ve heard more or less the same about President Obama.

Fortunately, the sources of American strength and prosperity run deep. They are not infinite and over time we could fritter away the power and wealth we inherit, but for now at least, the state of our union remains fundamentally sound.

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  • Jbird

    Two sayings come to mind

    1. In the land of the blind, the man with one eye is king.

    2. democracy is the worst form of government except all the others that have been tried

  • silverfiddle

    It appears our fundamentals are still sound.

    To add on to Jbird’s list, we are the least dirty shirt.

  • Anthony

    Key phrase: fundamentally sound; trumps most of time Ceteris ParibuS.

  • Kenny

    You knew this from the rise of the Dollar relative to the Euro.

    And some will say that both the Dollar and the Euro are basketcases when compare to real money — i.e., gold

  • J R Yankovic

    “For eight long years we had to listen to the pessimists and the whiners talk about how George W. Bush had wrecked the United States beyond repair. And for three more years we’ve heard more or less the same about President Obama.”

    No pleasant experience in either case. I can’t help wondering (in my amateur way) if ANYTHING is ever really beyond repair. Much less, of course, ever free from the threat of serious disrepair. For me the real nadir of our American fortunes – at least in terms of our public moral and economic culture – was the Golden Decade from Hell of 1995-2005. Precisely the time when we seemed to be most on top of the world (a not uncommon paradox in history, wouldn’t you say?).

    Much as I hope, too, that we’re far out of those particular woods, I wish I could be sure. My sense is that what’s left of the Blue Model will die of its own accord – though not without considerable agony and thrashing in some quarters. And maybe, eventually, all around. “Pray without ceasing,” right? But another hunch tells me that we can’t get far ENOUGH away from the more recent example of the Golden Decade. That if we don’t rid ourselves in particular of the SPIRIT of that time – its posturing, swaggering, “don’t tell me I know” dragon-in-a-china-shop arrogance – then we, and the rest of the world, are in for a much rougher ride than any of us is prepared for.

    Sorry. Hope I’m not whining.

  • Frank Arden

    I had to laugh when the US “lost” its AAA bond rating. True, US deficits and debt are serious threats to the strength of our economic future, but it seemed to many of us that the rating downgrade was more a PR scheme for relevance by the bond rating agencies after they totally missed the boat on the virus of sub-prime mortgages infecting asset backed securities that brought down the house of cards in 2008.

    In the eyes of investors, no matter how you rate it, US debt is the safest investment in the world. The AAA rating means, compared to others, that it is the safest. No matter what the rating agencies call it, US debt is as close to a gold standard as any investor in the world is going to find. In essence, US debt is AAA.

    China continues to hold massive sums of US debt while it pegs its currency below the dollar. It is facing inflation, economic downturn and a housing bubble.

    The problems of the Euro have become more than monetary and fiscal as the debt crisis has spurned questions about politics, culture, history, and even philosophical musings about the liberal, elite experiment of the Euro itself. As investors have dumped the Euro for dollar denominated investments the dollar has risen against the Euro.

    In spite of unhealthy deficits and debt increases, along with inflationary (and wasteful) stimulus spending, and in spite of the expansion of the money supply with low interests rates by the FED, the monetary easing of QE1, QE2, and the Fed’s monetizing of long-term bonds; the inflows of foreign money has kept the US 10 year bond at historic lows under 2 percent.

    The US is the safest haven in the world compared to the others no matter what Moody’s and Standard and Poors say. The markets prove it.

  • a nissen

    “Mom always me best”

    —The American Interest

  • a nissen

    “The US is the safest haven in the world compared to the others no matter what Moody’s and Standard and Poors say. The markets prove it.”

  • WigWag

    Very interesting. In light of this it seems that Minnesota might just be able after all to count on a continuation of the 9.6 percent historical rate of return that it’s been getting on it’s pension fund investments.

    Seems like just yesterday that Professor Mead was assuring us that rates of return approaching double digits might have been the rule for the past 30 years but were now a thing of the past.

    Looks like the taxpayers and retirees in Minnesota dodged a bullet yet again.

  • thibaud

    Not so fast. The dollar is not fundamentally sound. The “least dirty shirt in the laundry pile” quote alluded to, above, comes from the world’s most powerful bond investor, Bill Gross of Pimco. It’s not an endorsement of our path, or a particularly optimistic assessment.

    A large part of the reason investors come back to the US in times of crisis is that we retain ownership of the world’s reserve currency. That’s not guaranteed by any stretch; in fact, odds are that the dollar will lose reserve-currency status at some point in the next 30 years.

    The good news – thankfully brought to the public consciousness by the Keystone scandal – is that, thanks to shale, we may be able to offset the dollar’s demise by becoming a net energy exporter during that time frame and by dramatically lowering our cost of heating, manufacturing and transport.

    But that will require an intense focus on those un-cool, boring old industries like manufacturing, agriculture and energy production. Plus an end to the demonization of fossil fuels. Not sure whether the people can be persuaded without seeing a dramatic drop in their fuel costs, which would require refitting most cars and trucks to burn liquid natural gas. Possible, but not under the current administration.

  • Luke Lea

    The state of the Union is fundamentally sound — for capitalist investors. And only then when they are running scared.

    For those who live off their labor the Union is as fundamentally unsound as it has been since the Great Depression.

    Did WRM really write this post? It contradicts so many things he has written over the past couple of years.

  • Luke Lea

    One reason the Union is fundamentally sound for investors is that the American taxpayer has assumed responsibility for all those bad loans they made in the oughts. What kind of soundness is that?

    How bad would things have to become before WRM declared it unsound? Sound for whom? is the better question.

  • Luke Lea

    The blue model is unsound. The blue model is the predominant model in the United States. It is coming apart. So how is the Union fundamentally sound? Jeesh!

  • Luke Lea

    Progress, progress everywhere. Yet the bottom half of our society is falling into an abyss. You call that fundamentally sound?

  • Luke Lea

    I guess those poor slobs are just going to have to “compete” with Chinese slave labor. 1.3 billion hands with no human rights. That is the reality of our new “Manchester School. ”

    Meanwhile 150,000 new mouths to feed pour into this country month after month. And those are the legal ones.

    These trends are destroying the fabric of American democracy. Yet Mead declares the Union to be fundamentally sound?

    I see servants quarters are once more becoming a standard feature of upper-class architecture. We have bicycle rickshaws in downtown Chattanooga, and human “signs” are out on the streets.

    Ah, but real per capita GDP has never been higher, and the U.S. currency is the safest in the world. Who cares about our people when the money is good?

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