Tuesday, February 21, 2017

If you define dangers logically, solutions will follow.

Manas Chakravarty analyses a report published by the US National Intelligence Council, which tries to predict what the world will look like 5 years and 20 years from now. The report is pessimistic. "Global economic growth will slow, making life difficult for governments, who will come under increased pressure to deliver jobs and welfare," he writes. "Governance will become more difficult. Real wages have been stagnant in the West, and this will lead to increased populism and dissatisfaction with globalization." "Geopolitical risks will rise, as ambitious new powers such as China and Russia seek to expand their presence. Non-traditional forms of warfare, such as terrorism, will gain prominence. Environment stress will increase." The US can do nothing about it. India will suffer terrorism from Pakistan, lack of jobs and increasing pollution. However, on the positive side stock markets all over the world are booming. Jim O'Neill lists 6 reasons for being optimistic. Unemployment in the US is down, manufacturing, although a small component of the GDP, is up, inventories are down, indicating high demand, Chinese retail sales are up, South Korean trade is recovering and a survey from Germany indicates recovery for Europe. The International Monetary Fund predicts an 'explosive path' for Greece. The government debt is at 180% of GDP, will fall slowly to 160% by 2030, and then jump to 275% of GDP by 2060. The problem seems to be an inability to change with changing circumstances. The recent murder of Kim Jong Nam, half brother of the North Korean dictator, Kim Jong Un, is a typical example. The attack took place in Malaysia, but the government there seems paralysed. Why? North Korea is a failed state, surviving on Chinese handouts. If US agencies can accuse Vladimir Putin of being behind the hacking of Democratic Party emails then Malaysia should be able to determine if Kim Jong Un ordered the assassination and put out an international arrest warrant for him. What are they afraid of? China? China is the most dangerous country in the world today. It threatens all its neighbors, claims all of the South China Sea and supports rogue nations, like North Korea and Pakistan. The US has a huge weapon it is reluctant to use. China gains over $400 billion in trade from the US. Donald Trump should follow through with his promise of levying 45% tax on Chinese goods into the US. Will China make it difficult? Initially yes, but a low growth rate will make it impossible to service its huge debt and it will come crawling back. For India the choices are easy. Reduce population by linking handouts to not having children and build a fence along the border with Pakistan and lay mines so that nothing comes through. The world needs statesmen, we have knaves.

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