India’s Auto Expo, Picture Credit: Swapan22sadar’s photostream
The economic consensus has been that China and India could withstand an economic slowdown in America because of their booming economies. China and India have been depending on America for their economies to keep running strong. Gee, do you think that as Americans’ hunger for goods from these countries has been quenched, (due to Americans not buying goods and services) these countries would not be affected? As usual the so called experts get it wrong again.
Yeah, and I remember last summer when an OPEC minister said American had better get used to high oil and gas prices. I am thankful to have paid $1.49/gallon for regular gas on Monday. Oil prices can and may go up in the near future, but $1.00/gallon gas price predicted by Gulf Oil CEO.
One of the Biggest Factors Never Considered as Experts Make Their Opinions: Change Cannot be Controlled!
Wal*Mart in China: Picture Credit: Asian Travels
Globalism: The experts said China and India were the new economic “juggernauts” — strong, independent and insulated even from America’s financial woes. The experts were wrong.
The Chinese and Indian economies are in a free fall, proving that when America booms, the world booms; and conversely, when she sneezes, the world catches a cold. Stripped of all the hype, the “China Miracle” now looks more like a mirage, and the “Shining India” rather dull. Both countries, it turns out, have been desperately dependent on America for their growth. The World hates us, but will they hate us even more as Americans stop buying their imported goods?
China needs American’s purchasing power to keep their economic structure from failing. Nearly 60% of China’s total exports are churned out by plants not owned by the Chinese but by American and other Western companies. And they’re now starting to close them. The resulting layoffs have been so massive that dislocated workers are rioting. Some 3 million Chinese have already been fired in the industrial province of Zhejiang alone. Millions more layoffs will follow by Christmas, the World Bank predicts, as China grinds to its slowest growth in two decades.
Some might say that China’s economy might not really expand as it is an export driven economy. With developed economies down, China will not find any takers for its exports. Agreed, but this just turns the entire problem on its head. Source: Mostly Economics
Is India fairing any better? America’s economic calamity is hitting India hard as dislocated workers turn to violence. After Jet Airways, India’s biggest private airline, laid off 1,900, a large crowd of workers stormed the airline’s headquarters in Mumbai to vent their anger.
Though less export-dependent than China, key sectors of the Indian economy are exposed to the U.S. recession. The business outsourcing industry is particularly vulnerable due to its dependence on our crippled financial sector.
The Indian employment base relies heavily on the U.S. for call-center jobs, as well as those involving technical support. India’s software industry is also taking a beating.
The U.S.-led global recession smashes the myth that Asian economies have become so powerful their batteries no longer need charging by the American economy.
It’s a far cry from 2005, when the media breathlessly predicted the “communist economic juggernaut” would “challenge the West.”
What the financial crisis and U.S. recession have really exposed is the Big Lie. Far from posing a threat to our economy, China and India have proved to be paper tigers dependent on corporate America. As America goes, so still goes the world — in bad times as in good. Source: IBDeditorials.