Demise of the USA

Better get ready for it! Just less than three years’ time and the funeral march will be playing; the guys will be dressed in black, but it won’t be the men in black from the NSA cyberspace. For the first time in 2016 according to estimates, the US will not be the most economically-powerful country in the world, but the second since World War II. Getting used to being number two will take some getting work, but the US will have all the time in the world afterwards to make sure that it manages to cope with that, since China is set to overtake it and massively storm ahead of the best today. Come what may, screaming blue murder, stamping feet, or even spying on the world is not going to save that fateful day that is looming very fast in the near future. It is a strange thing to be able to predict the date of your own country’s demise and be in a position to plan ahead for that, isn’t it?



As President Obama’s second mandate and stint in office draws to a close in 2016, he will be handing over the trophy to the arch-rival, China for being the first in the world in economic terms. Will that change the outlook of the US? Will it alter the way the rest of the world looks at and listens to the country in the future and the role that is played by the markets? Will the world court even more so than now the future number one and the top of the roost in the hope of partaking in some of that new-found wealth and economic power? Being at the top has always meant bowing and scraping for the ones below, but will it have an effect on the way the world looks up at the US?

The next President of the US, whoever it is, will have to deal with the blow of being just the second-best country’s president in the world economy. That will be the first time it has been like that for decades and before most can remember today with ease.

We are told that the economy of the US is picking up. That employment is getting better and that the worries of the country will soon be over. Unemployment decreased from June’s figure of 2013 at 7.6% to July’s figure of 7.4%. That’s a vast improvement on the 10%-figure that the Bureau of Labor Statistics ended up having to juggle with almost in 2009 and 2010 at the height of the knock-on effects of the financial crisis. But, is it all just figures that tell us what the state wants us to hear. Yes, the figures show that unemployment is falling. But, how many people are in precarious jobs that are part-time, unable or too old to find real full-time jobs that they lost when the crisis hit the country? Add those people in to the figures and we can reach something over 14% of unemployment. It’s harder for someone who has been out of the circuit, the rate-race victims that have ended up in the gutters to get back into the race and start running again. If you’ve been out of a job for more than half a year, the chances that you will get called for interview just fall by nearly 50%. But that’s one of the reasons alone why the US will fall behind into second position. It’s unable to create jobs for the workers and just prints money to throw it out of helicopters at the people down below. The figures might be showing an upturn, but that upturn is unreal.



The difference between the USA and the future number one is that China is going through its industrial revolution and transition from agriculture to manufacturing, from rurality to urbanization. China already reached over 50% of urbanization (52.6%) by the end of last year with 712 million people living in urban areas. It was only 26% back 20-odd years ago. By 2035, 75% of the Chinese population will be living in urban areas. That alone means construction and employment in the country. The urbanization rate of China is beyond all the countries in the world today and historically has never been seen. The US took decades longer and Britain over a century to reach this level of urbanization. 170 cities in China will need transport systems built and tens of thousands of skyscrapers are currently under construction in the country to accommodate the workers arriving at a rate of a 3%-increase per year. China will have 4 times as many skyscrapers as the US currently does as a new one goes up in the country every five days.

China has one of the highest and most widening income gaps in the world today. Mean salaries in urban areas are three times more than in rural areas on average. It means that there is room for growth. It also means that there is cheap labor. The rural workers are also being called to the cities to find work and increase their wages, causing a rise in the percentage of new arrivals in cities across the country. It’s exodus on a mass scale in the race to become one of the haves in Chinese society. The expansion of the country means that there is that possibility that still exists there, at least. But, it also means that China will have to make structural changes to society, providing for pensions and for health care at a cost. The urban population only has 55% of employees covered paying into a pension scheme at the moment, for example and they contribute 28% of their salaries. But, the population of China is ageing at a fast rate. However, for those that think that this may slow down the race to the first position of the most economically-powerful future country in the world, think again. 2016 is too close for anything but to sit back and do little else but watch what is going on. The ratio of people in China aged 65 and over in comparison with those that are under 65 and of working age (14-64) will be 38% by 2050. It’s currently 11%. Per-capita income in China increased by 9.6% in 2012 (after inflation adjustments).  Average income for rural areas alone increased by 10.7%.

Getting used to being number two in the world will be hard for the US, but they have had the past few years preparing for it with the financial crisis. Just by the sheer number of Chinese that are an army of hoards of workers ready to plod to the factories day-in and day-out, the Chinese will overtake the US in next to no time. What will knock the Chinese off their perch in the future? Nobody stays at the top of the roost forever. We all know that, don’t we? Just might be harder to predict when the Chinese might fall.

The US’s demise is closer and closer and there’ll be no avoiding it!

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Professional team of writers/analysts analyzing the financial markets.

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