Moon of Alabama Brecht quote
July 27, 2020

A Significant Decline Is Coming For The U.S.

by Passer by

In response to several comments in the last open thread (slightly edited).

Actually there is even some real, and not only relative, decline for the US, for example US life expectancy is dropping. This is a pretty bad sign for a developed country. Same for the UK by the way.

On the issue of China gaining during the Covid crisis, they gained in raw power, for example gained in GDP relatively to the US. And they gained in debt levels too, relatively, as US debt levels exploded due to the crisis. Now you have V-shaped recovery in China and poor, W-shaped double dip recovery in the US. With far more debt added.

Of course there is the issue of public relations and soft power. On the one hand the US blamed China for the pandemic, but on the other hand it embarrassed itself due to its poor performance in containing the pandemic, compared to other countries. And the US lost points around the world due to rejecting WHO right in the middle of the pandemic. Europe and developing countries did not like that at all. Don't forget that Covid also weakened the US military, they have problems with it, including on ships and overseas bases, and even broke the biggest US exercise planned in Europe for the last 30 years. And the pandemic in the US is still raging, its not fixed at all and death rates are increasing again.

Here for example, the futurologists from Pardee Canter that that China gained during the crisis, in raw capabilities. Future research and relative power between countries is their specialty:

Research Associate Collin Meisel and Pardee Center Director Jonathan Moyer use IFs (International Futures) to explore the long-term impact of COVID-19 in China in this Duck Of Minerva blog post" "Where broad measures of material capabilities are concerned, the picture is clear: COVID-19 is closing the gap in relative capabilities for the U.S. and China and accelerating the U.S.-China transition. Through multiple long-term forecast scenarios using the International Futures tool, Research Associate Collin Meisel and Pardee Center Director Jonathan Moyer explain on the Duck of Minerva blog that China is likely to gain approximately one percent of global power relative to the U.S. by 2030 due to the economic and mortality impacts of COVID-19. This share of global power is similar to the relative capabilities of Turkey today.

On the issue of the USD, Stephen Roach also says that there will be a significant decline in the medium term. And the argument is pretty logical - if the US share in the global economy is declining (and it will be declining at least up to year 2060), and if the level of US debts is reaching all time high levels, then the USD will decline. I agree with that argument. It is fully logical.

On the chip/semiconductor issue. David Goldman is skeptical that the US will be able to stop China on this:

The chip ban gives the world an enormous incentive to circumvent the US
Basically Huawei still has advanced suppliers, from South Korea and Japan. And some of them are refusing to yield. The problem for the US is that China is the world's biggest semiconductor market and biggest chip importer on the world, which gives enormous initiative for private businesses to circumvent US made equipment in order to export to China. Then also China is stashing large quantities of chips. By 2025, it should be able to replace foreign production with homegrown. So these bans are lose lose situation for both the US and China - yes, this will cause come costs to China up to 2025. But it will also lead to US companies, such as Qualcomm, to lose the Chinese chip market, which is the largest in the world, and there is nothing to replace it.

These are hundreds of billions of losses for the US due to gradually losing the most lucrative market. Thus, in relative terms, China does not lose from these games, as the US will pay a large price just as China. It is lose-lose situation, but in relative terms the same. US loses just as China loses. And do not forget that China warned that a full US attack on Huawei will lead to Boeing being kicked from the country, which is becoming the biggest aviation market in the world, and will lead to hundreds of billions of losses for that company too, and will probably burry it under Airbus. China needs lots of planes up to 2028, when they will replace them with their own, worth hundreds of billions of dollars. Elevating Airbus over Boeing, which already has big troubles, will be a significant hit for the US aerospace industry.

So China has cards to play too. On the issue of the US getting some countries to ban Huawei, it is again lose - lose situation - that is both the US and some of its allies will lose due to using more expensive 5G equipment and will lose more time to build their networks. So China loses, and US and some allies lose, but in relative terms things remain the same between them power-wise, as they both lose. Do not forget that Germany said that it will continue to use Huawei equipment, and this is the biggest economy in Europe:

Germany's three major telecommunications operators Deutsche Telekom, Vodafone and Telefonica have been actively promoting 5G in recent years. They implement the "supplier diversification" strategy and use Huawei equipment in their networks among other vendors. Peter Altmaier, German minister of economy, told the Frankfurter Allgemeine Zeitung on July 11 that Germany would not exclude Huawei from the country's 5G network rollout. "There can only be an exclusion if national security is demonstrably at risk. However, we will strengthen our security measures, regardless of which country the products come from," said Altmaier. "There is no change in Germany's position," a spokesperson of the country's Interior Ministry told local broadcaster ARD on July 16.

So we can say that probably half of Europe will be using Huawei. Still, as you said, a large part of the world will exclude it. Maybe half of world's GDP. Unfortunately things are not perfect. One bright spot in that is that Huawei is betting on emerging markets, and emerging markets have higher growth rates than western markets - that is, they will matter more in the future.

I would agree that the US is harming China, but the damage is not large IMO, as these are mostly lose lose situations where relative power stays the same. And with time, there will be significant damages for the US too, such as losing the biggest chip and aviation markets and the empowerment of Boeing competitors such as Airbus.

So its not too bad in China. Thus, after mentioning all of this, I do not think that Pompeo is smelling blood and moving for the jugular, its not such a situation as China is not that vulnerable, it is more likely to be US elite anger due to the US weakening and China gains during the Covid-19 crisis.

On Hong Kong China had no options. It was a lose-lose situation. If they allowed everything to stay as it is there would be constant color revolution there and they will be constantly in the media. Maybe it is better to stop this once and for all. They hoped that the Covid crisis will give them cover to do this. It did not work very well.

Unfortunately it is right that the Trump strategy of bullying works many times. Supposedly there should be costs for the US in soft power and world opinion, but we are not seeing them. I guess most of the world is too cowardly and prefers to go with the flow. They will abandon the US only after the US lost anyway. Well, it is not an easy situation. Still, the US reactions are very strong and hateful precisely because things are still not good for it and its decline is continuing, regardless of some tactical victories, where in some cases it is a lose lose situation anyway.

The data shows a significant decline incoming for the US.

  • 2019 China 1,27 times bigger in GDP/PPP
  • 2030 China 1,8 times bigger in GDP/PPP
  • US debt to GDP 2019 80%
  • US debt to GDP 2030 125%
  • US debt to GDP 2050 230 %
The Highway Trust Fund (HTF) will be depleted by 2021, the Medicare Hospital Insurance (HI) trust fund by the beginning of 2024, the Social Security Disability Insurance (SSDI) trust fund in the 2020s, the Pension Benefit Guarantee Corporation (PBGC) Multi-Employer fund at some point in the mid-2020s, and the Social Security Old-Age and Survivors Insurance (OASI) trust fund by 2031. We estimate the theoretically combined Social Security OASDI Trust fund will run out of reserves by 2031.
  • Military budget (before Covid estimates, Trump budget) 2019 3,2 % of GDP - 2030 2,5 % of GDP (Could drop to 2,3 % of GDP due to Covid)
  • Civilian discretionary spending (before Covid estimates) 2019 3,2 % of GDP - 2030 1.8 % of GDP (drop to all time low) (Could drop further due to Covid)

That is not to mention the big divide in US society, and the ongoing Covid crisis, which is still not fixed in the US. But is largely fixed in China. Do you see the decline now? They have a big, big reason to be worried. A significant decline is coming for the US.

Posted by b on July 27, 2020 at 17:53 UTC | Permalink

Comments
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A pivotal question often asked in different form lately:
can economically ravaged USA governed America,
find the financial means to avoid global war?

The answer to that important question depends upon the
environmental prospective from which the question is answered.
If your prospective is given as in 1, or 2, or 3, or 4, or 5 your answer is :_?
1. USA governed American dependent on USA for your survival, your answer = _?
2. USA governor, responsible to provide for governed Americans, your answer=_?
3. Governor of another nation state, your answer is =_?
4. Citizen of another nation state, your answer is = _?
5. International body concerned with governance, your answer is =_?

Posted by: snake | Jul 29 2020 8:10 utc | 201

the Trump strategy is really more of the same and it is like a medicine that loses it's power over time and becomes ineffective - sort of like antibiotics...by: james @ 1 <==I think you hit the matter on its head,
the Trump white house avoids strategic planning, instead it responds in emotional hit and run scenario.
if the situation angers, Trump responds with fight or run,
if the situation is delightful, Trump responds with adopt and embellish.
Trump decisions are binary, either yes/no; simplifies matters, and makes more time for Golf. .

Posted by: snake | Jul 29 2020 8:32 utc | 202

Trump sending in military style federal infocement must have been a wake up call to all states, mostly they were not welcome.
What we saw was the reality, United States is a classic protection racket. Expensive protection from imaginary outside threats ! If you don’t comply we’ll the boys round.
Reality ——- There is no external threat to your state. What percentage of your state budget is paid to that protection racket. What percentage goes to your state internal law enforcement. ?
What could that money be better spent on.
This is on topic — as to the benefits of all the country’s (a long list) US accuses of being the external threat !
Not least China now.
Follow the money, your money.

Posted by: Mark2 | Jul 29 2020 8:42 utc | 203

Typo @ my 201
Last line of first paragraph should read ......
We’ll SEND the boys round.

Posted by: Mark2 | Jul 29 2020 8:50 utc | 204

Posted by: uncle tungsten | Jul 29 2020 2:13 utc | 197

Re: Ms Rice

Now she is close to seizing the prize of VP to Biden. She is a iron war horse of formidable capacity and mendacity given her past roles. She has few redeeming features. She will conform exactly to the dictats of the permanent state and she will easily step right over Joe Biden as he either falls or is taken down at the most opportune time.

I think you have Ms Rice about right, she has always appeared to me to be an obedient tool, a born bureaucrat. The way Ms Rice has suddenly popped up just about now after being circumspect and retiring these last few years is worth noticing as well. Like Bolton, a native swamp-dweller.

It appears to me that Ms Warren and Ms Harris would be willing to strew a few bodies around if that got them the job too, but I'd put my money on Rice, if I had to bet.

Posted by: Bemildred | Jul 29 2020 11:07 utc | 205

Susan Rice needs to change her name to something less offending. Clearly, "Rice" is such an insult to the struggling Black community.

Posted by: Scotch Bingeington | Jul 29 2020 12:53 utc | 206

Bemildred @203

I haven't paid enough attention to Rice. I felt from the beginning that it was always going to be Harris. It was my decided conclusion that Harris was the anointed one, pre-chosen, but embarrassingly rejected by the voters. Either one would serve the MICIMATT's purposes as obedient tools, and at any rate, beyond us poor proles ability to influence. (Le's see, which war-mongering predatory capitalist should we CHOOSE from?) Warren isn't even in the running: the Democrat campaign is going to be a series of maneuvers of flanking Trump on his right. It's not that the DNC is tone-deaf, it's well, these lines from The Moody Blues put it in perspective:

It's not the way that you say it,
When you do those things to me;
It's more the way you really mean it,
When you tell me what will be.

btw: good to see your tag and hear your thoughts.

Posted by: vinnieoh | Jul 29 2020 16:29 utc | 207

On chips, i would say watch dutch ASML, without them you cannot make chips, ASML is 10yrs ahead in development of the machines that actually produce chips.

If ASML is forced (we had some strange fires), to stop delivery to China ...

NL is a US prostitute.


Posted by: Michel | Jul 29 2020 16:43 utc | 208

Posted by: Jackrabbit | Jul 27 2020 21:08 utc | 37

People often say, as you do, that China’s 1 trillion dollar holding of US Treasuries are at risk of confiscation. I am not so sure. China could deposit its US Treasuries with Western Banks and use them as collateral against loans. These loans would be at very low interest rates, somewhere in the order of 0.1 percent. China could have already withdrawn its money from the US. If the Treasuries are confiscated, then this would bankrupt many western banks and simultaneously destroy the US Treasury market.

Posted by: Michael Thomas | Jul 29 2020 16:58 utc | 209

Posted by: vinnieoh | Jul 29 2020 16:29 utc | 207

"I felt from the beginning that it was always going to be Harris".

I did too in the beginning. I have to give credit to Tulsi there, she hammered Kamala pretty good in the debates. Warren has been hammered pretty good too, some of it her own doing. Rice is a "new face" at this point, a dream popin replacement for the Borg. This has Obama's fingers all over it. I was reading someone today who called the DNC a cult, I think that's about right.

As American Society Crashes and Burns, the Cult of Neoliberalism Marches on

Nice to see you around too.

Posted by: Bemildred | Jul 29 2020 17:38 utc | 210

RE: Susan Rice, here ya go right from the Borg:

Vice President Susan Rice: Could This Be Joe Biden's Pick for VP Next Week?

Posted by: Bemildred | Jul 29 2020 17:56 utc | 211

Posted by: Bemildred | Jul 29 2020 11:07 utc | 205
Posted by: uncle tungsten | Jul 29 2020 2:13 utc | 197

Greeting Bemildred, our previous encountered did not reply, I was either too tired or decided takes too much time to composed, draft and rechecked..

I truly believe both are wrong. Harris Kamala previously DA SFO, California, in 2016 ran for vacated Barbara Boxer Senate Seat. I didn't know earlier and very little information about her what she did as DA of SFO. I supported Tulsi Gabbard the Congressman from Hawaii. She is an Indian-stock parent from India. I supported her and donated to her campaigns. I believe in Tulsi. Now back to that fucking Kamala Harris, another Indian-stock parent from the Caribbean

Tulsi Gabbard trashed her to shred as a DA. Kamala Harris incarcerated more black and Hispanic than any previously DA. And Tulsi was correct that ends her fucking presidential hopes. She resurfaces now when Zombi Biden (if) picks her for vice president. Anyone with some brain will know what Americkka looks like within one-two years when Kamala Harris becomes commander-in-chief. An Indian President, holy cow India Modi would love that!!

Posted by: JC | Jul 29 2020 18:46 utc | 212

follow-up to my comment @Jul27 20:43 #27

Saker: Russia and the next Presidential election in the USA

Russia and the AngloZionist Empire have been at war since at least 2013, when Russia foiled the US plan to attack Syria

Very pleased to see Saker recognize this because it's very close to my understanding as well.

We differ only in that I date the start of hostilities to Kissinger's WSJ Op-Ed of August 2104, which I had termed a "virtual declaration of war" within weeks of its publication.

We could date the "hydrid war" to USA's attempt to compel capitulation via economic 'shock therapy' in the 1990's (during which the Russian people suffered greatly) and push NATO borders further east (breaking the "not one inch" promise). But IMO until Fall Spring 2014 USA/Empire's assumption had been that Russia would eventually join with the West/Empire. To the Empire asshats celebrating "the end of history", it was only logical. I'm not sure that a Russian diplomatic victory wrt Syria really changed their calculus. And I believe that a Ukrainian color revolution would have happened whether Russia had objected to USA bombing Syria or not. But when Russia countered USA/Empire in Ukraine (securing Crimea and assisting Donbas Rebels to prevail) USA/Empire suddenly understood that Russia's having joined SCO wasn't just an alliance of convenience but their worst nightmare: the joining of Russia and China to counter USA/Empire hegemonic plans for a New World Order (NWO).

!!

Posted by: Jackrabbit | Jul 29 2020 21:07 utc | 213

Cold War II

Although it started in 2013-14, it's also important to recognize that it has been rather tame thusfar primarily because Russia revealed their advanced capabilities in October 2015 launch of Kalibr and then again in March 2018 when Putin first spoke of Russia's hypersonic missiles. Russia also has a number of other powerful military systems as well.

This has put a damper on USA/Empire adventurism but the USA has a crash program to catch up. If/when they do, we may see a more assertive USA/Empire.

!!

Posted by: Jackrabbit | Jul 29 2020 21:30 utc | 214

Bemildred #211

Thank you,
ugh, that Borg piece was a shocker. I respect the way Tulsi cut Harris to shreds and Harris deserved all of that and more. Warren is a permanent waste of space. But Susan Rice is a neocon front runner with 'experience' to kill for. More of the same old team of global killers and meddlers and home town wreckers.

Whats the bet that Tulsi and Bernie endorse her too? What bleak outlook.

Posted by: uncle tungsten | Jul 29 2020 21:39 utc | 215

Michel #208

That ASML kit was destined for Taiwan as I recall. The NL will bend the knee for uncle Sam.
Have you a link of recent news?

Posted by: uncle tungsten | Jul 29 2020 21:45 utc | 216

De dollarising in Russia China commerce

https://www.rt.com/russia/496570-russia-china-dedollarisation-process/

Posted by: uncle tungsten | Jul 29 2020 22:02 utc | 217

Forget about decline, America is likely headed for a Soviet Union-style implosion, according to Dmitry Orlov.

In fact, America should be thankful if the "United" States breaks apart relatively peacefully into several different nation states.

Americans are far less prepared for a collapse of their country than citizens of the Soviet Union were.

http://cluborlov.blogspot.com/

Indeed, given America's violent and sociopathic national character ... my bad... love of "individual rights and freedoms," the United States will likely suffer a much more destructive end than the Soviet Union ever did.

It would not be surprising if there were a Second American Civil War involving the use of tactical nuclear weapons and biological warfare inside the American Homeland itself.

In many ways, this is would only be a case of America finally getting what it deserves, given the massive war crimes that self-styled Land of the Free is guilty of around the planet.

If you are living outside of America, get ready for some hellacious fireworks.

Posted by: ak74 | Jul 30 2020 5:02 utc | 218

I can t avoid feeling stunned about those western punditism wishthinks, sticky hopism and expectations-for-the-better whown on their figures.
Africa has and is the process of coming from zero communication structures to long distance cell phones which will be handy for low cost in a few years.
In ten years the present Potomac and Hudsons vicinity will NOT be the city-shining-on-the-Hill anyshitlonger. Quite the opposite, the shining cities will be in the Pacific.
And there is one decisive factor. The speed of conscience, of behaviour changes and of social adherence in prevaliling in the 19th-20th century (where changes appeared) is NOW multiplied by several figures of magnitude...
So forget.
In plain language no formal universal elections, no vote casting, no individualism
driven societies, no-my-personal-freedom-is-the-best-thing, no worldwide neo-liberalism will be a winning recipe for 5 billion people anylonger. Wake up to that.

Posted by: augusto | Aug 2 2020 15:03 utc | 219

The fact that China's Communist Party actually loves and cares more ordinary Chinese people than westeern ruling class its own people is still poorly understood reckoned by some 98% of western people. What's even more import - Chinese people have dream for better future while great majority of western folks now are emotionally ja culturially empty souls. Every nation lacking vision and meaning for life is doomed. This is the main reason why so called west is in hopeless situation. Western people are bored and culturally broke.

Posted by: Frankie | Aug 3 2020 8:51 utc | 220

@130: So Bernie points out that the GOP bill provides $2 billion for F-35s. No doubt this is why Bernie will vote for it.

Posted by: corvo | Aug 4 2020 21:25 utc | 221

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