America
by
charleshughsmith
Executive Summary
- The Sole Superpower
- The Importance of factoring in External Costs
- The Biggest Loser
- Which nations to keep your investments in
If you have not yet read Which Countries Will Be Tomorrow's Winners & Losers?, available free to all readers, please click here to read it first.
In Part 1, we examined the thesis that geography and demographics largely define a nation’s destiny.
In Part 2 here, we add other potentially game-changing factors that don’t necessarily fit neatly into either category.
Oh, No: America, The Sole Superpower?
Many of those who disagree with America’s military-interventionist foreign policy of the past 15 years will naturally be appalled by any analysis that suggests America’s preeminence is only going to become even more dominant as the rest of the world is destabilized by the inter-connected dynamics driving global disorder.
The good news is Zeihan sees America becoming much less interventionist as it withdraws into greater self-sufficiency—a topic I’ve discussed in previous essays on autarky. (What If Nations Were Less Dependent on One Another? The Case for Autarky (January 2014))
In Zeihan’s view, America’s preeminence is based on its unparalleled assets of geography and more favorable demographics than its competitors. Zeihan sees the U.S.A’s energy resources, dual-ocean buffers, lack of contiguous-border competitors/enemies, culture of innovation and impressive pool of domestic and foreign capital as an unbeatable combination that no other aspirant to superpower status can match.
In his analysis, the intrinsic weaknesses of other nations and alliances such as the Eurozone have been papered over by the flood of capital that has saturated the global economy for the past 20 years. The source of this ocean of capital is….
And The Winner Is…
PREVIEW by charleshughsmithExecutive Summary
- The Sole Superpower
- The Importance of factoring in External Costs
- The Biggest Loser
- Which nations to keep your investments in
If you have not yet read Which Countries Will Be Tomorrow's Winners & Losers?, available free to all readers, please click here to read it first.
In Part 1, we examined the thesis that geography and demographics largely define a nation’s destiny.
In Part 2 here, we add other potentially game-changing factors that don’t necessarily fit neatly into either category.
Oh, No: America, The Sole Superpower?
Many of those who disagree with America’s military-interventionist foreign policy of the past 15 years will naturally be appalled by any analysis that suggests America’s preeminence is only going to become even more dominant as the rest of the world is destabilized by the inter-connected dynamics driving global disorder.
The good news is Zeihan sees America becoming much less interventionist as it withdraws into greater self-sufficiency—a topic I’ve discussed in previous essays on autarky. (What If Nations Were Less Dependent on One Another? The Case for Autarky (January 2014))
In Zeihan’s view, America’s preeminence is based on its unparalleled assets of geography and more favorable demographics than its competitors. Zeihan sees the U.S.A’s energy resources, dual-ocean buffers, lack of contiguous-border competitors/enemies, culture of innovation and impressive pool of domestic and foreign capital as an unbeatable combination that no other aspirant to superpower status can match.
In his analysis, the intrinsic weaknesses of other nations and alliances such as the Eurozone have been papered over by the flood of capital that has saturated the global economy for the past 20 years. The source of this ocean of capital is….
by
charleshughsmith
Executive Summary
- Will profit-chasing bring corporate capital back to the U.S.?
- China's dwindling T-bill leverage
- The decline of dependence on Mid-East oil
- Autarky may be the best investment for the U.S. (and similar nations)
If you have not yet read Part I: What If Nations Were Less Dependent on Another? available free to all readers, please click here to read it first.
In Part I, we sketched out a framework for evaluating the trade-offs implicit in autarky; i.e., national self-sufficiency. In Part II, we’ll explore a few potential ramifications of America’s declining consumption of energy and increasing ability to replace foreign-supplied capital, resources, energy, and expertise with domestic sources.
The core issue of autarky boils down to: What are the risks and costs of exposing the nation to the vulnerabilities of dependence for the convenience and profitability of remaining dependent on foreign providers?
Of the potential consequences, let’s focus on several high-visibility possibilities:
- China’s ownership of U.S. Treasury bonds possibly giving it leverage that amounts to blackmail-type veto power over U.S. policies.
- The dependence of U.S. corporations on foreign sales and the weak dollar for profits
- The decline of oil imports changing the calculation of U.S. interests in the Middle East and other oil-exporting regions
Profits as Priority
As I have often noted, the stupendous profitability of U.S.-based corporations is largely the result of non-U.S. sales and the profits reaped from a weak U.S. dollar. When the euro was at parity to the dollar a decade ago (1 euro = $1), U.S. corporations reaped $1 of profit on every euro of profit gained from sales in the European Union. Now the same one euro in profit generates an additional 35% in dollar-denominated profits due to the exchange rate.
I have also noted that the enormous importation of goods made in China has generated remarkable profit margins for U.S. corporations such as Apple, while the Chinese suppliers are eking out net profits in the 1% to 2% range for the privilege of manufacturing goods that generate gross margins of 50% to 60% for U.S. corporations.
In other words, the Chinese did not impose this trade on U.S. companies – the U.S.-based corporations extracted maximum yield on capital invested by moving production to China, not just in terms of lowering manufacturing costs but also in the enhanced proximity to the world’s great consumer-profit opportunities in developing Asian nations.
In other words, while other nations may focus on self-sufficiency, the American priority is profitability and maximizing return on capital invested. If and when profitability is threatened, capital pulls up stakes and relocates to whatever locale makes the best financial sense.
That the locale that makes the best financial sense is the U.S. is a new thought for many…
The Consequences of American Autarky
PREVIEW by charleshughsmithExecutive Summary
- Will profit-chasing bring corporate capital back to the U.S.?
- China's dwindling T-bill leverage
- The decline of dependence on Mid-East oil
- Autarky may be the best investment for the U.S. (and similar nations)
If you have not yet read Part I: What If Nations Were Less Dependent on Another? available free to all readers, please click here to read it first.
In Part I, we sketched out a framework for evaluating the trade-offs implicit in autarky; i.e., national self-sufficiency. In Part II, we’ll explore a few potential ramifications of America’s declining consumption of energy and increasing ability to replace foreign-supplied capital, resources, energy, and expertise with domestic sources.
The core issue of autarky boils down to: What are the risks and costs of exposing the nation to the vulnerabilities of dependence for the convenience and profitability of remaining dependent on foreign providers?
Of the potential consequences, let’s focus on several high-visibility possibilities:
- China’s ownership of U.S. Treasury bonds possibly giving it leverage that amounts to blackmail-type veto power over U.S. policies.
- The dependence of U.S. corporations on foreign sales and the weak dollar for profits
- The decline of oil imports changing the calculation of U.S. interests in the Middle East and other oil-exporting regions
Profits as Priority
As I have often noted, the stupendous profitability of U.S.-based corporations is largely the result of non-U.S. sales and the profits reaped from a weak U.S. dollar. When the euro was at parity to the dollar a decade ago (1 euro = $1), U.S. corporations reaped $1 of profit on every euro of profit gained from sales in the European Union. Now the same one euro in profit generates an additional 35% in dollar-denominated profits due to the exchange rate.
I have also noted that the enormous importation of goods made in China has generated remarkable profit margins for U.S. corporations such as Apple, while the Chinese suppliers are eking out net profits in the 1% to 2% range for the privilege of manufacturing goods that generate gross margins of 50% to 60% for U.S. corporations.
In other words, the Chinese did not impose this trade on U.S. companies – the U.S.-based corporations extracted maximum yield on capital invested by moving production to China, not just in terms of lowering manufacturing costs but also in the enhanced proximity to the world’s great consumer-profit opportunities in developing Asian nations.
In other words, while other nations may focus on self-sufficiency, the American priority is profitability and maximizing return on capital invested. If and when profitability is threatened, capital pulls up stakes and relocates to whatever locale makes the best financial sense.
That the locale that makes the best financial sense is the U.S. is a new thought for many…
by
Adam Taggart
by
JHK
by
Adam Taggart
by
Adam Taggart
by
Adam Taggart
It’s characteristic of the time that we’re living in that there simply is no sense of consequence. And that’s exactly what you get when you have a Federal Reserve that’s out of control and a public that is filled with technological narcissistic visions of Santa Claus delivering rescue remedies on demand. And so there’s no general sense that when you do things, bad things can happen.
James Howard Kunstler is concerned. Sure, he still has the same issues with the West's highly energy-consuming suburban lifestyle that he famously brought to light in his books, The Long Emergency, the World Made by Hand series, and Too Much Magic. But beyond our decaying fundamentals, he's distressed by society's unwillingness to be honest with itself about the issue's it's facing.
James Howard Kunstler: The Dangers of the Age of Delusion
by Adam TaggartIt’s characteristic of the time that we’re living in that there simply is no sense of consequence. And that’s exactly what you get when you have a Federal Reserve that’s out of control and a public that is filled with technological narcissistic visions of Santa Claus delivering rescue remedies on demand. And so there’s no general sense that when you do things, bad things can happen.
James Howard Kunstler is concerned. Sure, he still has the same issues with the West's highly energy-consuming suburban lifestyle that he famously brought to light in his books, The Long Emergency, the World Made by Hand series, and Too Much Magic. But beyond our decaying fundamentals, he's distressed by society's unwillingness to be honest with itself about the issue's it's facing.
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