Dear Donald Trump: China, Japan and Mexico are not ‘killing us’
Last quarter, the U.S. economy grew at a 3.7 percent clip.
Annual growth now is almost twice that of Europe and four times that of Japan. Unemployment is at 5.1 percent, the lowest in seven years. The deficit as a percentage of gross domestic product (2.8 percent in 2014) is at its lowest since 2007.
“The U.S. has come out of the 2008 crisis better than all the others,” says Ruchir Sharma, head of global macro investing at Morgan Stanley. “Americans have reduced their debt burden more than the Europeans, while China’s debt has skyrocketed to extremely dangerous levels.
If you look outside of China, U.S. growth is actually faster even than the emerging markets. Since the 2008 crisis, U.S. equity markets have outperformed all others — in fact 9 out of the 10 most valuable companies in the world are now American. The dollar is the currency of choice. Global growth is not what it used to be, but in a bad neighborhood, the U.S. has the best house by far.” Sharma points out that for the past four years, the United States’ share of global GDP has increased while Europe’s and Japan’s have moved down.
The Wall Street Journal notes that in the past five years, JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs and Morgan Stanley have increased in value by $254.6 billion. In the same period, their European competitors, Barclays, Credit Suisse, Deutsche Bank, UBS and Royal Bank of Scotland added just $9.5 billion. In July, Barclays Chairman John McFarlane was asked by the Wall Street Journal if America’s banks were eating European lenders’ lunch. He replied: “They are doing a good job of it.” He added that the U.S. banks “are the only ones that really claim to be global and successful.”
To compare the United States’ performance and leadership to Mexico’s, Japan’s and China’s is particularly ill-timed. Trump might be stuck in a 1980s time warp on Japan. When his “
The Art of the Deal” was published in 1987, Americans were envious of Japan’s brilliant leaders, who were said to be outsmarting the United States at every turn. Since then, Japan has become the poster child for economic stagnation and political paralysis. Prime Minister
Shinzo Abe has been unwilling or unable to get his promised reforms enacted, and the country’s economy continues to shrink.
Mexico is watching its growth collapse. While its president, Enrique Peña Nieto, is a courageous and intelligent leader who has made some very bold decisions, he has also made some significant missteps. Most important, the country was ill-prepared
for plunging oil prices that have battered government revenues and growth.
China has had three decades of supercharged growth and competent government policy. But in the past few years, Beijing went on a borrowing binge, running up its total debt to levels that are unprecedented, according to Sharma. And in the past two months it has made mistakes in managing both its equity markets and currency — mistakes that have cost $400 billion, the
Financial Times reports.