Obama Seeks What Europe And China Gave Up On
“Thanks”, or “no thanks” to Obamanomics, the U.S. is now losing its competitive edge with Europe, to say nothing of China and a whole list of other countries.
China has been moving in the direction of free-market capitalism for many years, and the benefits of the move have been spectacular.
China now has a two trillion dollar trade surplus, and it’s now America’s principal banker.
With every day that passes. the U.S. is more fiscally reliant on China, and it continually begs the Chinese to go on supporting it.
In the short run, the Chinese will, but the interest rate will have to be much higher and in the long run, they probably won’t.
According to Fortune magazine’s latest list;
a) The number of U.S. companies in the world’s top 500 fell to the lowest level ever.
b) More Chinese firms than ever made the list.
c) Thirty-seven Chinese companies now rank in the top 500, including nine new entries.
d) The number of U.S. firms fell to 140, which is the lowest total since Fortune began the list in 1995.
e) China surpassed the United States as the world’s biggest automaker in the first half of 2009. American sales were 4.8million vs. China’s 6.1 million which is a huge difference.
How Did China Do It?
a) China has no capital-gains tax and only a 15 to 20% corporate tax.
b) The United State intends to raise its cap-gains tax rate to 20% percent, and also increase its top personal tax rates.
Investment flows to its most profitable destination, provided it has a stable currency, but it can be moved with a couple of mouse clicks and Bush’s last year and Obama’s first several months have made the U.S. a turnoff when it comes to investment.
The highest taxes in the U.S. look likely to be around 50%, but in the OECD (Organization for Economic Cooperation and Development) they’re 42%!
If health care is nationalized which seem more and more unlikely at the time of writing it will consume around 15% of the U.S.’s economy and the energy proposals, another 15%.
As I write this;
a) Dow Jones stocks are down 8%
b) China’s stocks are up 71%
c) The world index is up 4%
d) Emerging markets are up 25%
Investment risk and work effort, are sadly no longer seen as rewarding, or as things worthy of pursuing in the U.S. and the increasing bureaucratic red tape and the current government’s policies on taxes, spending and regulation are causing the United States to lose more and more of its competitiveness in the global race for capital, prosperity and growth.
Last 10 posts by Michael Redbourn
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- The End Of Many Democracies Is Near - March 9th, 2010
- Not Only Is Israel Not An Apartheid State - March 4th, 2010
- The Dubai Liquidation - February 27th, 2010
- The Fiscal Stimulus Package Of 2009 Was A Failure - February 23rd, 2010
- Liberals Turn A Blind-Eye To Reality - February 17th, 2010
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