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Investing Ideas Who Says this is Asia’s Century?
Investing Ideas Who Says this is Asia’s Century? 
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| Who Says this is Asia’s Century? |
| Tuesday, 27 November 2007 | ||||||||
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Dear Reader, One of these days, if thing continue like they are, China and the rest of Asia won’t need us as much. They’ll find other markets for their exports. And the Middle East won’t need us as much either. It will spend their billions of petro-dollars elsewhere. I may be in the minority, but I don’t want Asia or the Middle East or Russia or India to decouple from us. I want them to need us, just as much in the future as now. And make no mistake about it, they need us now. Despite all the brave talk about these countries surviving a U.S. downturn, that’s the last thing these countries want to see. Take Asia, for example. It seems that Asians are losing confidence with every passing day. And we’re to blame. When they turn their eyes toward the U.S. market, they don’t like what they see. And how could they? Our economy is grappling with mounting problems and fretting retailers. Yes, the same retailers these Asians export to. You think the companies making electronic and other consumer goods 10,000 miles away from the U.S. don’t care about “Black Friday?” You bet they do. When our spending runs out of steam, it matters. Maybe not as much as a few years ago, but enough for Asian businessmen to lose their swagger. They’re breathing a big sigh of relief this week that the sales numbers for this past Friday and Saturday came in 7.2 percent higher than last year. The Asia Business Council, an independent group of regional chief executives, recently surveyed their members and found that 28 percent of respondents expected business conditions to worsen in the next 12 months. Last year’s figure came in at just four percent. This is the last thing the Wall Street bigwigs want to see. They’ve been flooding overseas markets with U.S. investment dollars for a while now and reaping nice returns. But I’m happy about it. This double dose of investment capital fleeing the country and a worsening credit crunch mean less business spending, less hiring, and less expansion of assets here in the U.S. If more money stayed at home, it would mitigate the credit crunch. But that’s not why I’m glad that Asia is concerned with the shaky state of the U.S. economy. I want them to have a stake in the well being of our economy. I also want the sheiks of the Middle East to have a similar stake. Do you really think that OPEC is considering raising production to ease the price of crude because they like us? And as I talked about last week, it’s scary how dependent we are on the Chinese to finance our huge national debt. Do you really think that China buys our Treasury bills because of attractive interest rates? The day we stop spending more than we earn will be the day that Chinese exports take a huge hit. Right now China needs us. So do Japan, Korea, Taiwan, Singapore, and the Philippines. Perhaps that’s not so surprising. What may surprise you, however, is that companies operating in Asia need the U.S. more than they need China. Rating the importance of countries to their business prospects, members of the Asia Business Council gave China a 66-percent score. The U.S. scored 75 percent.
For now, the performance of the U.S. economy is still relevant. If Asia and the rest of the world’s growth suffers from our flirtation with recession, at least it serves as a reminder that we’re the biggest and most important cog to global growth. That’s not good news for the bulls. But I, for one, am glad that we still matter. Good Investing, AMG P.S. To let me know what you thought of today's article, send an e-mail to: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
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