04 Jan 11 From An Indian Economist
Japanese save a lot. They do not spend much. Also, Japan exports far more than it imports. Has an annual trade surplus of over 100 billions. Yet Japanese economy is considered weak, even collapsing.
Americans spend, save little. Also US imports more than it exports. Has an annual trade deficit of over $400 billion. Yet, the American economy is considered strong and trusted to get stronger. But where from do Americans get money to spend? They borrow from Japan , China and even India .
Virtually others save for the US to spend. Global savings are mostly invested in US, in dollars. India itself keeps its foreign currency assets of over $50 billions in US securities. China has sunk over $160 billion in US securities. Japan ‘s stakes in US securities is in trillions.
Result:
The US has taken over $5 trillion from the world. So, as the world saves for the US – Its The Americans who spend freely. Today, to keep the US consumption going, that is for the US economy to work, other countries have to remit $180 billion every quarter, which is $2 billion a day, to the US !
A Chinese economist asked a neat question. Who has invested more, US in China , or China in US? The US has invested in China less than half of what China has invested in US.
The same is the case with India . We have invested in US over $50 billion. But the US has invested less than $20 billion in India .
Why the world is after US?
The secret lies in the American spending, that they hardly save. In fact they use their credit cards to spend their future income. That the US spends is what makes it attractive to export to the US . So US imports more than what it exports year after year.
The result:
The world is dependent on US consumption for its growth. By its deepening culture of consumption, the US has habituated the world to feed on US consumption. But as the US needs money to finance its consumption, the world provides the money. It’s like a shopkeeper providing the money to a customer so that the customer keeps buying from the shop. If the customer will not buy, the shop won’t have business, unless the shopkeeper funds him. The US is like the lucky customer. And the world is like the helpless shopkeeper financier.
Who is America ‘s biggest shopkeeper financier? Japan of course. Yet it’s Japan which is regarded as weak. Modern economists complain that Japanese do not spend, so they do not grow. To force the Japanese to spend, the Japanese government exerted itself, reduced the savings rates, even charged the savers. Even then the Japanese did not spend (habits don’t change, even with taxes, do they?). Their traditional postal savings alone is over $1.2 trillions, about three times the Indian GDP. Thus, savings, far from being the strength of Japan , has become its pain.
Hence, what is the lesson?
That is, a nation cannot grow unless the people spend, not save. Not just spend, but borrow and spend. Dr. Jagdish Bhagwati, the famous Indian-born economist in the US , told Manmohan Singh that Indians wastefully save. Ask them to spend, on imported cars and, seriously, even on cosmetics! This will put India on a growth curve. This is one of the reason for MNC’s coming down to India , seeing the consumer spending.
‘Saving is sin, and spending is virtue.’
But before you follow this Neo Economics, get some fools to save so that you can borrow from them and spend!!!
Tags: american economy, billions, consumption, credit cards, currency assets, economist, foreign currency, global savings, india, japan china, japanese economy, money, neat question, shopkeeper, trade deficit, trade surplus, trillion, trillions
29 Oct 09 Are We Looking At The Wrong Country?
In the Western world, and particularly the US, one will often hear talk about the threat from China. Perhaps we should also look elsewhere…
* The number of companies listed on the Bombay Stock Exchange, at more than 6,000, is second only to NYSE.
* Four out of 10 Silicon Valley startups are run by Indians.
* With 800 movies per year , India’s film industry overshadows Hollywood.
* The organized lottery market in India is US$7bn (2% of GDP)
* India consumes a fifth of the world’s gold output.
* Indians account for 45% of H1-B visas issued by the US every year
* Growing at 6%, in 25 years Indian GDP(on a PPP basis) will be at the same level the US is at today
* Six Indian ladies have won Miss Universe/Miss World titles over the past 10 years.
* Bank deposits in India roughly equal 50% of its GDP C again, among the highest in the world.
* Indian Railways is the largest railway network in the world under single management
* India has the third largest army in the world, nearly 1.5 million strong.
* India is the largest producer and consumer of tea in the world, accounting for more than 30% of global production and 25% of consumption.
* India is the world’s premier center for diamond cutting and polishing. Nine out of every 10 stones sold in the world pass through India.
* India has the highest number of annual bulk drugs filings (77) with USFDA.
* India is home to the largest number of pharmaceutical plants (61) approved by USFDA outside the US.
* India’s Hero Honda is the world’s largest motorcycle manufacturer, with 2002 production of 1.7m units.
* Other than US and Japan, India is the only country to have built a super computer indigenously.
* Indian Railways is the largest employer in the world, with a staff of 1.6 million people.
* India is the second largest cement producing country in the world, producing more than 110 m tones.
* Of the fortune 500 companies, 220 outsource their software-related work to India.
* There are 8,500 Indian restaurants in the U.K.15% of the country’s total dining-out establishments.
* India is the largest democracy in the world, with nearly 400m voting in the last national elections.
* India has the second-largest pool of scientists and engineers in the world.
* India has the third largest investor base in the world
* According to the Gemological Institute of America, up until 1896, India was the only source of diamonds.
* The Kumbh Mela festival, held every 21 years in the city of Allahabad, attracts 25 million people CE more than the population of 185 of the 227 countries in the world.
* The Indian city of Varanasi, also known as Benares, is the oldest continuously inhabited city in the world today.
* There are 3.22 million Indians in the US.
* Indians are the richest immigrant class in the US, with nearly 200,000 millionaries.
* India is ranked the sixth country in the world in terms of satellite launches.
* There are over 70,000 bank branches in India among the highest in the world.
Tags: india, indian facts
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