You know the concept of globalization is not some temporary phenomenon that got great press during the great global boom of 2003-2007 when the first ever BRIC summit happened today and world policy was discussed. To put into perspective, the cumulative GDP of Brazil, Russia, India and China is about $7 trillion, half the size of the US but we know that its emerging economies that hold the key to future global growth as 86% of the world’s population live in the developing world. The FUJUG countries, France, US, Japan, UK and Germany will continue to struggle with highly leveraged institutions, whether at the consumer, corporate (particularly the banking sector), and government levels but at the same time will depend highly and hopefully will capitalize on the growth and vitality of faster growing emerging markets.

Category: MacroNotes

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8 Responses to “BRIC vs FUJUG”

  1. leftback says:

    The problem for BRIC is that FUJUG buy their stuff, and half the population of FUJUG are broke.

  2. Bruce N Tennessee says:

    I did find it interesting, since we’ve been discusssing the desire of the BRIC’s to use something other than the dollar that this idea just won’t die. Russia (won’t put up the web site since everyone has seen the headline) is going to suggest that at the BRIC conference, and oh, by the way, we asked to come as an observer, and were refused……how about them apples?

    Those who are smug about the dollar status…I think may be in for a rude awakening..

  3. leftback says:

    B n T: All true, regarding the likelihood of the $ following the £ into decline – but not yet.
    There is still way too much $ denominated debt in the rest of the world for a collapse in the immediate future.
    Deleveraging, increased savings and debt writedown/restructuring will all support the $ for a while.

  4. leftback says:

    Setser on China stockpiling and recovery – “decoupling” may be over-estimated, AGAIN …

  5. super_trooper says:

    “its emerging economies that hold the key to future global growth as 86% of the world’s population live in the developing world.”
    Dude, that’s like so the 90′s……… and the 70s (Brazil).

  6. jrm says:

    I’m not sure French consumers are highly leveraged. Local law doesn’t allow you to be indebted to more than 30% of your income.

  7. Urkel says:

    Brazil: 25% of population in abject poverty. Still very reliant on natural resources but environment is being destroyed at an accelerating pace
    Russia: Economy close to 100% reliant on oil, corrupt oligarchical economy. Aging and dying (literally) younger generation
    India: Still highly reliant on outsourced service jobs from the US and other Western countries – mostly with the purpose of selling back those services to western consumers. Reliant on its “best and brightest” to be educated in the US/UK.
    China: Reliant on manufacturing outsourced by the west – similarly to India with the purpose of exporting back to the the west. Pegs its currency agressively to remain competitive. ANY published government numbers highly suspect.

    The US most certainly has some enormous challenges, but to think that those four will become the new powers is ridiculous. There will no doubt be a weakening of US power, but BRIC need to set their own respective houses in order as well.

  8. teraflop says:

    You know the (ex) Soviets are coming around to thinking like westerners when they seek institutional consensus. Good luck to them. These BRICs remind me of children playing poker with hands loaded with Kings, Queens, and Jokers – they know they have a good hand because the colors are pretty.

    Look, if you’re a Russian chafing at having to use USD to buy goods from India, then go ahead and transact in Rubles or Rupee or Yuan or Real, anything but the dollar, plus provide whatever other credit/liquidity – curing document or funds (non USD) are required and see what happens. The Argentinians & Chinese were able to execute their Swap, for example.

    Pony up and grow up, I say (hmph).