The world according to shares market capitalization.

There's good stuff at MarketWatch on how the world would look like if countries were re-sized according to their total stock market capitalization. As with most things, though, there are measurement issues involved with the presentation above. China's A-shares or those which cannot be owned by foreigners are not included, making the mainland appear far smaller than its actual market capitalization if these local-only shares were to be considered as well:

Bank of America Merrill Lynch this month published a report transforming many of their investment themes into maps. One of note is what the world would look like if sized by market capitalization. The U.S. is still looking like the U.S. — and Japan is pretty hefty — but where did China go? And how is Hong Kong bigger than the mainland?

Some readers have noted that China looks unusually small — that’s because the methodology here is to use MSCI’s numbers. The index provider still keeps out the so-called A-shares from inclusion in its indexes, for reasons including capital mobility. Were the A-shares included, even after the rout in that country, the market cap of China would swell by tenfold...

The U.S. market capitalization is $19.8 trillion, or 52% of world market cap, which the brokerage says is the highest since the 1980s.

In financial markets at least, the United States remains the preponderant power. It's something to think about in the year 2015.

Making too many enemies in high places, Blatter was brought down.

After a lot of huffing and puffing, it's finally come down to this: After Sepp Blatter's trusted lieutenant Jerome Valcke was reportedly embroiled in a $10M slush fund scandal, it was probably only a matter of time before prosecutors pinned Blatter down. As slippery as he's been. Blatter likely recognizes that the game was up. With so many powerful enemies--the US, UK, and the rest of Europe for starters--he would be implicated sooner or later. Rather than try to put out fires raging all across FIFA as this and that official is charged in addition to running its day-to-day affairs, Blatter has decided to quit while he's ahead. If nothing else, he's a canny operator, and he perceives that deserting FIFA will do him better than staying on at this point in the game. So he's called for new elections right away while promising to step down once someone new is selected.

This done, there are three big questions going forward:

• Who will be the next FIFA president? UEFA's Michel Platini is the supposedly the front-runner, but keep in mind that many Blatter allies will remain in place for now, complicating the selection process;
• Will the 2018 Russian World Cup in Sochi still push through? With the (Western) Europeans seemingly ascendant, that won't be a particularly popular venue given Vladimir Putin's penchant for military adventurism at their expense;
• Will the 2022 Qatar World Cup in Doha still push through? This literally murderous event has been mired in controversy for years after hundreds and hundreds of migrant workers constructing stadiums have died--and still it's seven years away.

The latter two events may be scotched if it is proven that bribery was behind their selection (which I honestly don't think will be all that difficult to uncover if you look hard enough). So is it three cheers for American imperialism in the US Department of Justice laying the seemingly untouchable Sepp Blatter low? The long arm of the American lawman reached out and swatted Blatter down more easily than I'd thought possible. Still, my belief is that Sepp Blatter was not so much the ringmaster as he was the enabler of massive corruption at FIFA. With so many dirty old men fronting football associations the world over, Blatter simply fit right in.

As a parting shot, "Reformer Sepp" is stepping up:

The Executive Committee includes representatives of confederations over whom we have no control, but for whose actions FIFA is held responsible. We need deep-rooted structural change. The size of the Executive Committee must be reduced and its members should be elected through the FIFA Congress. The integrity checks for all Executive Committee me mbers must be organised centrally through FIFA and not through the confederations . We need term limits not only for the president but for all members of the Executive Committee. I have fought for these changes before and, as everyone knows, my efforts hav e been blocked. This time, I will succeed.

Yeah, whatever. Cleaning up the murk that is FIFA will be a Herculean task, to say the least. As long as there is football and scumbags with a fetish for the sport, I suspect corruption there will not go away so easily.

Obama's international economic diplomacy team is hard at work.

I suppose that if I were in their place, I too would exhibit the sort of nonchalant complacency American officials have displayed before its erstwhile "allies" paid it no heed in joining China's newfangled Asian Infrastructure Investment Bank (AIIB). Fat, dumb and happy, they have been totally outmaneuvered by their Chinese counterparts despite the PRC not being exactly popular in the region since it has territorial disputes with about everyone. Perhaps for this reason the Americans thought that it would be a simple matter of discouraging involvement in China's forays into multilateral development lending, but no. I suppose there was a time when the US could have its cake and eat it too in international economic diplomacy--think of the Asian financial crisis--but now is not that time.

Let us update ourselves with who's fled America in the meantime since the list keeps getting longer since we last discussed the topic. Apparently, the UK was the Pied Piper: other Europeans were not about to let the Brits get a head start by participating in potentially lucrative Asian infrastructure deals. Remember, too, that the UK and China have a rather contentious history but that was overlooked in a bout of pragmatism from both sides:

But as Beijing systematically recruited longtime American allies to help fund and oversee the new bank, it became clear that the push was more than a public relations gesture to China’s Asian neighbors. It was also a direct threat to the post-World War II financial institutions led primarily by the United States, and to President Obama’s pledges to make a “pivot” to Asia in American foreign policy.

Now with Britain, France, Germany and Italy signing up to join the new bank, despite direct pleas from Washington to steer clear, the question is whether the Obama administration mishandled a significant challenge from China, and what it might have done differently. “The administration made a major mistake in its opposition. It was a very shortsighted,” said Paul Haenle, director of the Carnegie-Tsinghua Center in Beijing. “The bank was going to go ahead whether we supported it or not.”

The United States would have been wiser, he and others said, to temper its resentment of China’s efforts to raise its international profile and play a bigger role in global financial affairs. Some argue it may also have sought to play a role in an Asia-focused bank led by China, just as Washington expects China to contribute more to the World Bank and the International Monetary Fund, the Washington-based lending agencies for development and monetary stability.

The willingness of Britain to join the China bank over American objections was an especially clear sign of China’s sophisticated strategy for winning friends, and Washington’s failure to respond effectively.

China was upset that after the 2008 financial crisis, Congress rebuffed legislation intended to increase Beijing’s voice in the World Bank and the International Monetary Fund. Now that China was sitting on more than $3 trillion in foreign exchange reserves, Beijing could easily afford to finance an entirely new institution that would have a majority Chinese stake with other countries as minority shareholders, they said.

Moreover, China had decided that it wanted to use its excess capacity in steel, concrete and pipes to build up neighboring economies and benefit the Chinese economy, said Laurence J. Brahm, an American who worked with Prime Minister Zhu Rongji on China’s entry to the World Trade Organization in 2001.

The British decision cleared the way for other European allies that China had courted to go Beijing’s way, as well. Australia is expected to sign up in the next week, according to government officials, and South Korea is likely to follow.

But China can be forgiven for wanting its own development bank. “China’s voting power in the Bretton Woods institution is only 5% even though it accounts for more than 10% of global GDP,” noted Bank of America Merrill Lynch.

Plus, Asia does need more infrastructure money. Asian Development Bank estimates that Asia needs about $800 billion a year to meet its infrastructure needs. Combined, the World Bank and Asian Development Bank only provide $20 billion financing.

China’s equities have certainly responded. Looking at the performance of Hong Kong-listed Chinese stocks since the People’s Bank of China‘s interest rate cut last November, China Communications Constructions (1800.HK), China Railway Group (390.HK) and China Railway Construction Group (1186.HK) have risen 24%-46% respectively. This is quite remarkable considering they are industrial stocks and China has been slowing down. 

There's a new sheriff in Asia, folks. It looks like everyone's bandwagoning with China in the expectation that the PRC's regional influence will only increase, infrastructure needs in Asia will hardly diminish among fast-growing developing economies, and commercial opportunities are there to be taken by infrastructure-related firms whether they're Chinese, British, French, etc.

UPDATE 1: Also catch Treasury Secretary Lew's testimony before the United States Congress that's effectively blocked reform at the World Bank and IMF:

The Obama administration recognizes the link between the creation of the AIIB and Washington’s pathetic performance on multilateral funding. As Treasury Secretary Jack Lew pointed out in recent congressional testimony: “It’s not an accident that emerging economies are looking at other places because they are frustrated that, frankly, the United States has stalled a very mild and reasonable set of reforms in the IMF.” The failure to act, suggested Lew, raised “significant questions about U.S. credibility and leadership in the multilateral system.”

"GEORGE OSBORNE - United Kingdom": your seat is reserved at the next AIIB gathering.

[See breaking news at this post's end on France, Germany and Italy also ignoring US calls for them to stay away from China's new development bank and joining it after the UK.] The premise behind the US-UK "special relationship" has always struck me as risible. Supposedly, the UK, wary of its declining global influence after the demise of its empire, has sought to remain a major player on the world stage by allying with its former colony. Sure there have been spats during the postwar era--worst among them the Suez canal fracas--but the hoary term is still brought up again and again. Me? I simply refer to the "five eyes" arrangement encompassing more comprehensive information-sharing among not only between the US and UK but also including Canada, Australia and New Zealand.

However, an interesting side story has been the relative rise of China. If prognostications hold true and it becomes the world's largest economy outright by 2021--no PPP sleights-of-hand involved--then shouldn't the UK be aiming for closer relations instead with the future #1 instead of the soon-to-be-past one? Few would argue that the "special relationship" was premised as much if not more on the US being top dog as on shared historical ties.

This story has been playing out over China seeking charter membership of other countries in its so-called Asian Infrastructure Investment Bank (AIIB) since the sign-up sheet will be collected at month's end. As with a lot of multilateral lending institutions, there are a lot of politics going on backstage. Although the US adopts an outwardly amiable position towards the AIIB, in private it is strongly urging its allies not to get on board:

Beijing launched the AIIB in October with the backing of 20 other countries but Japan, South Korea and Australia —US allies in the region — did not become founding members. There has been a strong debate within the Australian cabinet about whether to join, after US pressure to stay on the sidelines.

A decision by the major economies to join now would give up leverage they might have over the AIIB as it was being set up, the US official said. “Large economies can have more influence by staying on the outside and trying to shape the standards it adopts than by getting on the inside at a time when they can have no confidence that China will not retain veto powers.”

Given their reliance on protection from US armed forces, getting South Korea and Japan to stay away was not difficult. Additionally, the Japanese already are the leading shareholder at the Asian Development Bank (ADB), so they would gain little playing second fiddle to the Chinese at the AIIB. Australia, then, is the really notable country to have turned down AIIB founding membership. What's more notable is the whining from the Yanks over the UK still being receptive at the current time to Beijing. Not being in the region and having divested itself of governing Hong Kong nearly two decades now, China is not an immediate security threat to it. What's more, the UK seeks a jump start on other European nations in availing of offshore RMB markets. Hence, it's understandable if the UK is not exactly receptive to Washington's pleas to toe the line:

The Obama administration accused the UK of a “constant accommodation” of China after Britain decided to join a new China-led financial institution that could rival the World Bank. The rare rebuke of one of the US’s closest allies came as Britain prepared to announce that it will become a founding member of the $50bn Asian Infrastructure Investment Bank, making it the first country in the G7 group of leading economies to join an institution launched by China last October...

Thursday’s reprimand was a rare breach in the “special relationship” that has been a backbone of western policy for decades. It also underlined US concerns over China’s efforts to establish a new generation of international development banks that could challenge Washington-based global institutions. The US has been lobbying other allies not to join the AIIB...

A senior US administration official told the Financial Times that the British decision was taken after “virtually no consultation with the US” and at a time when the G7 had been discussing how to approach the new bank. “We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power,” the US official said.

So the mud is flying around as the UK attends to its interests first; what else is new?

The UK Treasury denied that Britain had acted out of the blue, saying there had been “at least a month of extensive consultation” at a G7 level, including with Jack Lew, US Treasury secretary. George Osborne, UK chancellor of the exchequer, was unrepentant, arguing that Britain should be in at the start of the new bank, ensuring that it operates in a transparent way. He believes it fills an important gap in providing finance for infrastructure for Asia.

“Joining the AIIB at the founding stage will create an unrivalled opportunity for the UK and Asia to invest and grow together,” Mr Osborne said. He expects other western countries, which have been making positive noises privately about the new bank, to become involved.

In large part this outcome could easily have been avoided. Sure the US would like to maintain dominance over multilateral lending institutions, but not acting on any sort of reforms at the IMF and elsewhere was always going to further encourage China to venture more into the multilateral lending business. It's certainly not lacking in cash to buy friends abroad, and American unwillingness to give in a little regarding the IMF, World Bank and Asian Development Bank's governance merely speeds up the process.

Linda Yueh at the BBC sees it as a "pragmatic" move on the part of the UK. Sorry, America, but others have their own interests to look after, too, and your case for staying the course isn't all that compelling. It's all about the money, Sammy--I hope you can understand.

3/16 UPDATE: Is Australia looking to change course and sign up again after the UK broke ranks? The rumor mill is in overtime.

3/17 UPDATE: Now here comes the kicker - France, Germany and Italy are reportedly joining the AIIB bandwagon after the UK broke ranks with the Yanks. The US is even less persuasive than I thought. From having no G7 nations on board, the AIIB now has a majority of them among its charter members, including all the Europeans [!]

France, Germany and Italy have all agreed to follow Britain’s lead and join a China-led international development bank, according to European officials, delivering a blow to US efforts to keep leading western countries out of the new institution.

The European decisions represent a significant setback for the Obama administration, which has argued that western countries could have more influence over the workings of the new bank if they stayed together on the outside and pushed for higher lending standards.

Once the Rockefeller Center--and the future-were supposedly Japan's. Same with China?

I am old enough to remember the go-go days when Japan was the all-conquering hero of the world economy. Americans feared Japan buying it up. The epitome of this fear-mongering Stateside was Mitsubishi's purchase of the Rockefeller Center in 1989 for a then-astronomical sum...which preceded Japan entering its current stagnation by just a year as their stock market bubble burst. Fast-forward to today and many Asia-bashers are singing the same tune: China is not the next hegemon but rather the next Japan. (This is not a compliment.) Take it from one of those who are said to have predicted Japan's marginalization:

Forecasts for China to surpass the U.S. as the world’s main economic power are misplaced. So says an observer who foresaw Japan’s eventual demise a year before its land-price bubble began to burst. “The vulnerabilities in China today are very similar to the vulnerabilities in Japan,” said Roy Smith, 76, who was a Goldman Sachs Group Inc. partner when he wrote a column saying Japan’s rise as a financial hegemon was done. “Nobody agrees with me. But they didn’t agree with me in 1990, so at least I have one right.”

Among the risks: bad loans, overpriced stocks and a frothy property market are flashing danger for China’s economy and putting pressure on a fragile financial system -- similar to conditions that triggered Japan’s fall, said Smith, a finance professor at New York University’s Stern School of Business. A further parallel is the burden of an aging population, with mounting pension and health-care costs, he says. 

Will things be as bad an in Japan? Probably not Smith says, but it's going to be pretty awful nonetheless as the frailties of the PRC become brutally exposed:

While China probably will avoid prolonged Japan-style stagnation, a major crisis could expose weaknesses that aren’t apparent now, according to Smith. “Most people today are talking about China displacing the United States as the great power of the 21st century,” he said in a telephone interview last week. “My view is that it is more likely to end up like Japan -- that is, the status of a former would-be superpower that isn’t.”

Will lightning strike again?

The former Goldman Sachs executive doesn’t claim to have a flawless forecasting record or to have been the only one who tipped Japan’s economic decline.

Still, his October 1990 predictions on Japan proved prescient. Made amid a tumble in the stock market that year, they preceded the pricking of the country’s property bubble. In a column in the New York Times, he assessed that Japanese manufacturers would shift production abroad and that the nation’s banks would be impaired by losses on property loans.

“Japan’s extraordinary economic and financial success has carried the seeds of its own undoing, some of which have rooted and are now beginning to bloom,” Smith wrote at the time.

Interesting stuff. Actually, PRC leadership has the benefit of hindsight and still has room to maneuver to escape a similar fate, so it's not a cut-and-dried proposition. Yet.

Today the Asian Infrastructure Investment Bank (AIIB) was born.

This is a continuation of a previous post on the US wanting Chinese competition in development lending to just go away despite the likes of the World Bank and Asian Development Bank lauding the developmental benefits of competition. You know, when it comes to actual competition in development lending, the usual American BS, posturing and hypocrisy rear their ugly head. How will China's Asian Infrastructure Investment Bank survive? Depending on your point of view whether this is a good or bad thing, the US has largely succeeded in discouraging developed countries from pledging any funding to the PRC's brainchild. When th1e signatories gather tomorrow, not a one is going to be a developed country. Australia which the PRC courted is playing dumb, for instance:

U.S. officials have attempted to sway countries not to join, publicly raising concerns about China’s ability to ensure international standards of governance at the institution. No developed countries will be present on Friday, according to an Indian government official. India will sign the agreement—a step toward the later formal establishment of the bank—along with roughly 20 other countries from across Asia, the official said.

Beijing was betting on the participation of Australia, a major trade partner which relies on Chinese demand for its natural resources and is currently negotiating a trade pact with China. An Australian government official said the country hadn’t decided whether to join and was unaware of the agreement to be signed Friday.

The Americans and their lackeys naturally express doubts and pooh-pooh the effort in demanding US-style conditionalities and whatnot:

U.S. Treasury Secretary Jacob Lew , at a conference earlier this month in Washington, raised concerns about whether the bank would adhere to international lending norms such as those followed by the World Bank. “The critical question is, ‘Do they follow the same kinds of practices that are working to help economies grow and to maintain strong and stable foundations?’” Mr. Lew said.

A Japanese finance ministry official said the country wouldn’t join because it sees no need for an alternative to the Asian Development Bank, which is dominated by Tokyo. Japan also has concerns about governance and transparency issues at the new bank, the official said. South Korea hasn’t decided whether to join and is still “looking at the governance and decision-making process” as well as the “economic benefit,” a government official said. 

That said, Southeast Asian nations with the exception of Indonesia have signed up to the program These include Philippines and Vietnam which have heated territorial disputes with China. Apparently, the lure of increased infrastructure funding with fewer strings attached was too hard to resist for these countries with large and growing infrastructure needs:

India will be the only large economy to sign up to the Chinese initiative at the ceremony in the Great Hall of the People in Beijing on Friday morning, according to people familiar with the matter. It will be joined by Mongolia, Uzbekistan, Kazakhstan, Sri Lanka, Pakistan, Nepal, Bangladesh, Oman, Kuwait, Qatar and all of the Association of Southeast Asian Nations except Indonesia. Indonesia excused itself from being involved at this stage, saying the newly installed government had not yet had time to consider Beijing's proposal. 

Money talks, I guess, and more than a few are willing to give China a chance if it really is opening up its wallet. Speaking of "governance," the irony is that the Chinese are establishing their own development lender with a catchy refrain on infrastructure development precisely because the West and countries friendly to it (read: Japan) have refused to accommodate changes in the world economy since the turn of the millennium. As for China, the interesting thing to watch is whether there will be real participation allowed among the other countries signing up to this venture as opposed to being National People's Congress-style rubber stampers. Alternatively, they may be treated like Hong Kong administrators--serfs in all but name.

UPDATE 1: David Dollar (no relation to Eddie Money), formerly of the World Bank, lauds the creation of the AIIB in a New York Times op-ed. He too harps on the value of competition:

But as the new bank will also try to be leaner and faster than the existing banks, it will provide some healthy competition. And hopefully the success of the bank will encourage more rapid reform of the old institutions [i.e., the World Bank and ADB]. That would be the best global outcome of all. If we want China to buy fully into the existing institutions, then we have to give it the seat at the table that it deserves. 

UPDATE 2: More on today's event in Beijing--who was there who was not:

But other than China, among Asia's 10 largest economies only India and Singapore signed the AIIB memorandum, with three of the top five--Japan, South Korea and Indonesia--notably absent. The Japanese head of the Asian Development Bank, another regional lender, said Thursday that questions remained over the AIIB's structure and it needed to adhere to international standards. "Our position about AIIB is first that it is understandable because there is a very big financing need in the region," ADB President Takehiko Nakao told reporters. But he said he was still awaiting details about the bank such as membership, shareholdings, the location of its headquarters and who will head it.

Poor Russia; it always pick the worst time to have a crisis.

The trouble with being a commodity-dependent country is that putting all your eggs in one basket is bound to have deleterious effects when downturns in the prices these commodities command occur. Unfortunately for Russia, its worst downturns coincide with steep falls in commodity prices. In 1998 when it famously went to the IMF poorhouse, oil prices were around $18 a barrel. $20/bbl oil! It almost makes you wish China didn't grow so much, but being a charitable sort, I am thankful for all those Chinese lifted out of poverty over this time. The Russians were also rather grateful as Vladimir Putin became Russian president shortly thereafter, erasing the memory of the traumatic Boris Yeltsin years.

Fast-forward sixteen years and it is Putin's turn in the hot seat. As if ill-advised military adventurism and sanctions weren't enough to deal with, recent evidence of the global economy slowing down is causing oil prices to decline anew. Sure $88/bbl oil doesn't sound so bad compared to $18/bbl oil for producers, but the trouble is that Russian production costs have risen since way back when since it doesn't exactly have Western levels of efficiency. What's more, expectations for turning a profit selling oil overseas was predicated on a rather higher market price. As of last year, it was...

Russia will probably require an average Brent oil price of $117.8 a barrel this year to balance its budget, the fifth straight year it’s needed crude above $100 and compared with break-even prices of $90.3 for Saudi Arabia and $65 for Kazakhstan, Deutsche Bank AG said in a May 10 report.  

This sets the stage for what's happening to Russia at the moment. In advance of the damage sanctions will cause as well as lower oil prices, the ruble has plummeted. Simultaneously, the central bank has been intervening in a big way to stem the currency's downward spiral. How "big"? Try $6 billion for starters:

The ruble extended its longest losing streak in more than a year as $6 billion of Russian currency interventions failed to stem the depreciation amid tumbling oil prices. The ruble weakened 0.6 percent versus the dollar-euro basket to 45.3303 by 6 p.m. in Moscow, taking its seven-day decline to 2.3 percent, the longest stretch of losses since the nine days ended Aug. 1, 2013. Oil, which along with natural gas contributes almost half of Russia’s revenue, fell 2.2 percent to $88.21 per barrel in London, the lowest since December 2010.

Russia’s central bank intervened in the past 10 days to stabilize the currency, central bank Governor Elvira Nabiullina told lawmakers in Moscow today. The action, which comes as President Vladimir Putin orders a withdrawal of Russian forces from Ukraine’s border, has failed to halt the ruble’s drop amid a domestic foreign-currency shortage stemming from sanctions. The cost to swap rubles into dollars widened to a record, while wagers for interest-rate increases climbed to a six-year high.

The main driver for the ruble right now is the oil price,” Dmitry Polevoy, the chief economist for Russia at ING Groep NV, said in an e-mailed note. Crude’s decline “totally eclipses” the “reassuring news” that Russia announced it was pulling back forces from Ukraine’s borders, he said. The ruble slid 0.9 percent to a record 51.3120 versus the euro and lost 0.3 percent to 40.4350 against the dollar.

Russia's $400 billion-something reserves sound impressive until you hear about the rate they're burning cash. I am not entirely surprised that they've pulled back troops from the border with Ukraine with few histrionics. Apparently not even mighty Russia can buck Western hegemony circa 2014. As its currency drops and drops without end in sight, the interim verdict is inevitable -

The West has got Putin by the balls.

To understand America, explain why "Orange Balloon Dog" is worth $58.4 million.

At best, Americanism is a good-natured kind of hucksterism that does not take itself too seriously and invites us to be part of an inside joke of grand proportions. ("Can you believe our largest media conglomerate was built on the image of a common household pest?") At worst, Americanism is an ill-natured kind of hypocrisy that takes itself too seriously in attempting to tell the rest of us how superior the United States is despite its patently obvious contradictions.

The above paragraph sounds pretty good as a summation of America to those not drinking USA#1 Kool-Aid, doesn't it? Once again reinforcing my idea that nobody has a monopoly on insight or understanding of American preponderance at the beginning of the 21st century, I simply paraphrased  critic Howard Halle discussing a retrospective exhibition by artist Jeff Koons. (I came across this article while thinking about buying an accompanying book on his work before ultimately deciding against doing so. It was, alas, overpriced and undersized IMHO.) Unless you've been hiding under a rock, Koons is among the most famous pop artists of recent years, sort of a son-of-Warhol if the backlash wasn't so great.

In many ways, Koons embodies the contradiction which is the United States as it attempts to balance culture and commerce, art and artifice:

If I had to sum up American history in a word, I wouldn’t use racism, though obviously that’s a biggie. I’d pick hokum. I put it right up there with liberty, as in “life, liberty and the pursuit of happiness,” a passage which itself could be taken for hokum, written as it was by a man who owned slaves [Thomas Jefferson].

However, I don’t mean the term as it’s generally construed, i.e. bullshit. I refer to this definition: “A device used (as by showmen) to evoke a desired audience response.” As embodied by the oratorical sleight of hand that has sold Americans on everything from snake oil to unprovoked war in Iraq, hokum provides the filling for our proverbial apple pie, baked into such rhetoric as “manifest destiny,” “the lost cause” and “morning in America.” Hokum is also why I think Jeff Koons is the quintessential American artist: His work is a concrete expression of the idea.

But wait, it gets better...

Koons in now the subject of an exercise in overkill that trots out nearly his entire career: The vacuum cleaners entombed in fluorescently lit Plexiglas cases; the basketballs eerily submerged in fish tanks; the inflatable toys, tchotchkes, Hummel-style figurines and copies of antiquities, minted in bright reflective steel or carved in wood and granite; the insipid pop-mélange paintings; and most oddly of all, the depictions of himself in flagrante with his former wife, Ilona Staller, the adult film star known as Ciccolina.

The pieces display an undeniable genius for grabbing your attention (and given the narcissistic appeal of so many mirrored surfaces, how could they not?) but never for very long. Especially with the more recent stuff, your gaze flits from one piece of eye candy to another without much sinking in. Seeing the work en masse only exposes the void at the center of his enterprise, as well as his pretense to populism.

His larger point is that Americans aren't really trying tp put one over you as many (like myself) routinely suspect. Rather, they have literally drunk the Kool-Aid in buying into the very same shtick they want to sell to the rest of us:

But the exhibit does reveal something much more interesting: Koons isn’t a charlatan as some would have it; rather, he transforms charlatanism into high art.  [What a fantastic point if you apply the same idea to America itself.]

Collapsing the distance between innocence and guile, Koons is both the grifter and the mark, the stage illusionist and the person in the front row. His output could be read as an unpacking of how conviction is fabricated—a process best summed up by George’s Talmudic advice to Jerry for foiling the polygraph in Seinfeld: “Just remember, it’s not a lie if you believe it.”

Ultimately Halle gives Koons' exhibit 2/5 stars. When Pax Americana has well and truly bitten the dust, I suspect future civilizations will give it a mark somewhere in the same ballpark as far as its contributions to humanity are concerned. You take the good with the bad; be thankful for the former and try to minimize the latter:

I describe Koons above as the quintessential American artist, but it should be noted that American in his case pertains to a particular version of the country, one on which the sun is clearly setting, yet one also struggling—violently at times—to stay in charge. Koons’s aesthetic dovetails neatly with this reactionary climate, much like the 19th-century academic painters before modernism swept their reputations out to sea. It would require a revolution on the same order to consign Koons and his art to a similar fate. But that change seems a long way off.

They partied till they literally dropped.

Thousands of years into the future, when archaeologists sift through the ruins of the United States as they currently do with empires Aztec, Babylon, Carthage to Zulu, what will be their preferred excavation site for artifacts of once-unrivaled splendor reduced to absolute nothingness? Detroit is a prime candidate given its many imposing edifices long deserted. They even make massive photo essays about it. Motown, however, lacks the tabloid-grabbing bacchanalian excesses that I call "history porn": Babylon has been immortalized as the epitome of sinful existence in the Christian bible. The Emperor Caligula's mad perversion has been immortalized in bad soft porn films. Montezuma upped the ante with human sacrifices and cannibalism. Does modern-day America offer anything remotely as decadent?

Well, not quite, unless you consider "Ivan Kane's Royal Jelly Burlesque Nightclub" [?!] at the now-closed Revel Casino in Atlantic City, New Jersey. Speaking of which, its rate of decline certainly merits the Detroit comparison. If Detroit represents the death of world-leading American manufacturing, Atlantic City does the same for gambling services. It is fast disappearing at an astonishing rate:

How big a loser is Atlantic City? So big that Donald Trump sued to have his name removed from two casinos he no longer controls. He may have to amend the suit, since one of them, Trump Plaza plans to shut down next month. And it will have company. The two-year old, twice-bankrupt, $2.4 billion Revel casino will also close after its owners failed to find a buyer, company officials announced Tuesday. As the saying goes, you don’t throw good money after bad.

Revel’s shutdown brings [Atlantic City's] losing streak to four properties that announced a closing this year. The Atlantic Club was taken out earlier this year and Showboat, owned by Caesars Entertainment, locks down at the end of the month. Through June, revenues at the casinos are down 6.3%, continuing a long-term trend. The city’s casinos brought in $2.86 billion last year compared with $5.2 billion in 2006. 

Why is the boardwalk such a crap place nowadays? Precisely for the same reasons America as whole is: stagnant income = fewer gamblers with less money to gamble with. Add to this the proliferation of gaming industries in other states dreaming of cheap sources of revenue and it all adds up to...lots of red ink:

In Atlantic City, some of those displaced workers will be able to catch on at the city’s remaining seven casinos—who will no doubt see an uptick in business—but the losses and closures are indications that the runaway growth days of gaming are over. Any new casino built in the region—indeed, just about anywhere– will have to take business away from somebody else.

And that’s exactly what’s been happening to Atlantic City– a municipality that never blossomed into the revived seaside resort envisioned when New Jersey opened its first legalized casino in 1978. It has remained mostly a weekend gambling jaunt for many punters, and they have since found other places to play. Oddly enough, north of Atlantic City, from Asbury Park to Long Branch, Jersey’s casino-less shore towns have revitalized and grown, despite taking a hit from Hurricane Sandy.

For those interested in modern history, Atlantic City is still around to catch the few swirling motions left before America is fully flushed down the toilet of history. (I tired of the "dustbin of history" sometime ago. So sue me.)

Like America itself, Atlantic City was a good idea that's since lost its reason for existence.

As any number of blog posts in the IPE Zone will attest, there is no finer pantomime villain than the United States [insert your favorite villain sound effect here]. From inventing reasons to invade other countries to showering the world with death from the skies via drone strikes, it is the country decent people love to hate--and that its own people often loathe. Turning to the economic realm, its offenses against mankind are no less lengthy. Today, let us focus on American indifference to giving poor countries a greater voice at the IMF.

For a long time, the developing world has clamored for a larger role at the IMF commensurate with their growing stature in the world economy. Having contributed much to beefing up IMF resources during the recent (American-sourced) global financial crisis--witness the odd phenomena of poor countries contributing to the bailout of ostensibly "rich" countries such as Greece and Portugal--you would think these poor countries deserved a greater say in IMF governance.Well, tough. In 2011, the Europeans got to appoint the institution's next managing director in Christine Lagarde to replace the rather frisky DSK instead of choosing someone from the developing world to break up the monopoly. Meanwhile, plans to implement IMF reforms that take away voting powers from Europeans and redistributes them to poor countries have been indefinitely delayed by the US.

This package of IMF reforms--increased funding accompanied by greater voting powers for developing countries--was supposed to be done in 2012. Due to American intransigence, however, it has gone nowhere. To his credit, Senate majority leader Harry Reid (D-NV) recently tried to bundle this reform package with Ukraine aid, only for it to be questioned by Republicans in congress. Meanwhile, at the recently-concluded IMF spring meetings, Lagarde (gently) chided the Americans for delaying reforms pretty much everyone else is agreed upon in bolstering resources and redistributing governance:

Both Tharman [Shanmugaratnam of Singapore, chairman of the International Monetary and Financial Committee or IMFC] and Lagarde expressed regret for the continued delay in advancing the IMF quota and governance reforms agreed in 2010. “These reforms to the Fund are not just institutional reforms, they’re reforms that will enable us to have a safer and better world, because the Fund provides critical public goods,” Tharman said.

At the G-20 press conference on April 11, Tharman said that there was “significant goodwill” among ministers to find a way forward on the quota issue and that there was consensus on the absolute importance of maintaining a strong and adequately resourced IMF. “We have a way forward,” said Lagarde, noting that the IMFC set an end-2014 deadline for ratification of the 2010 reforms. If this deadline is not met, the IMF will develop options for next steps.

Considering that the US uses the IMF to fulfill its policy objectives, what reasons are offered for delayed American efforts to finalize the reform package? The average American has no idea whatsoever what the IMF does, while politicians may not fully appreciate the institution's usefulness in pursuing American interests. At any rate, the IMFC also gave the US an ultimatum at the recently-concluded meetings: either the US moves on the matter or the rest will go on without it if nothing is done by year end:

We are deeply disappointed with the continued delay in progressing the IMF quota and governance reforms agreed to in 2010 and the 15th General Review of Quotas (GRQ) including a new quota formula. We reaffirm the importance of the IMF as a quota-based institution. The implementation of the 2010 reforms remains our highest priority and we urge the United States to ratify these reforms at the earliest opportunity. We are committed to maintaining a strong and adequately resourced IMF. If the 2010 reforms are not ratified by year-end, we will call on the IMF to build on its existing work and develop options for next steps and we will schedule a discussion of these options.

Meanwhile, here is a laundry list of excuses for US delays:

The U.S. Congress has refused to sign off on the overhaul, which was agreed to in 2010...Some Republicans have complained the changes would cost too much at a time Washington was running big budget deficits. The reforms also ran afoul of a growing isolationist trend among the party's influential Tea Party wing. If Washington does not ratify the reforms this year, the G20 advanced and emerging economies said they would ask the IMF to develop possible next steps. 

A source said Brazil had pushed for a harder line. It wanted to require the Fund to begin work now to determine options to be implemented if the United States failed to act, a notion that was floated in an early draft of the communiqué. "The end of the year for me is the final limit," Guido Mantega, the Brazilian finance minister, said later through a translator. "Four years waiting for me is just too much."

How to "move forward" is complicated by the IMF requiring at least 85% of all shareholders to agree on something, i.e. taking steps without the US. However, the US currently has 17 point something-something shares, enabling it to veto any such move in theory. Surprisingly, some of those calling for the IMF to move on without the US are the folks over at the (Washington-based) Institute for International Economics. I guess "America Sucks"  is a broader church than I thought...

The time has come to think the unthinkable: The Fund should move ahead without the United States. If the United States does not want to participate in reforming the IMF, it should get out of the way...we propose two ways for the Fund to move ahead by raising funds from others while depriving the United States of some or all of its longstanding power to block major Fund actions.

One way would be to make permanent the 2012 initiative by IMF managing director Christine Lagarde to arrange temporary bilateral credit lines of nearly $500 billion from 38 countries, augmenting the Fund's capability to finance its lending [and in so doing reduce the United States' quota shares below 15% by regularizing the New Arrangements to Borrow without US contributions]. The United States opposed that proposal, but the IMF and other countries could convert it into a permanent arrangement, placing decision making in the hands of the funding countries, not the United States.

A more radical approach would be to increase total country quota subscriptions in a manner that would also not allow the United States on its own to stop the Fund from reforming its governance. The United States deserves to lose influence if it continues to fail to lead. Washington obviously should not withdraw from the IMF. But its historic leadership role deserves to decline unless the Congress reverses itself. It should let the rest of the world pick up the reins and move ahead if they are prepared to do so.

IIE lays out more details in a blog post for getting around the 85% requirement. I have included the table above comparing current and proposed quota shares. The curious thing is that the US would still retain its effective veto power (over 15% of shares) after the reforms. Yet, it chooses to risk falling below that mark by not moving on the matter while the rest of us do. The political calculations are fascinating: perhaps the US is counting on Lagarde not going that far in terminating the United States "first among equals" status? Like Darth Vader flinging the Emperor into the abyss at the cost of his own [political] survival, perhaps even she can be brought to her senses.

The United States has the reverse Midas touch: everything it touches turns into, well, garbage alike its near-zero growth jokeonomy. After the fine job the crusaders did of remolding Afghanistan and Iraq in their own image--not full of promised freedom 'n' growth but lots of discord and infighting coupled with little economic growth--the average American has grown tired of wasting lives and treasure on foreign adventurism with nothing to show for. It's just as well since it has a host of worsening domestic problems. For starters, try bastardy, insolvency, obesity, stupidity...identify some undesirable attribute and odds are it's rising in America. 

So it's gratifying that a recent WSJ/NBC poll has nearly half of them saying the US should be less interventionist in world affairs--47% to be precise. Going abroad from a position of weakness has not done the US much good in terms of gaining other people's respect. After all, who aspires to emulate a downwardly mobile country? First sort out matters at home, then perhaps people will listen to you instead of having "close" allies turn you down flat. How does the song go? Nobody knows you when you're down and out. Instead of sticking their noses in everyone else's business NSA style, American citizens would prefer leaving the rest of us be:

But here's the curious thing: Americans are becoming less hostile to free trade globalization from recent phobic extremes, even if on the balance they still dislike it. Putting 2 and 2 together, my take is that Americans recognize they are no longer willing or able to take the lead in world affairs. OTOH, they do recognize the benefits of being open to trade. Fair enough: let others take the lead, especially developing countries, so these countries can take care of poor old, beaten down Uncle Sam in his sunset years.

The rest of us do not particularly like the American brand of inequality and unfairness writ large on the world stage via subprime globalization. Given the United States' demonstrated inability to do anything about this sorry situation--if the US cannot "save" itself, what more the world--the burden falls on us to fix the mess America played a starring role getting us into. If this is indeed the case, the fault for doing nothing will shift to us instead of doddering old Uncle Sam.

Oh, the burdens of having ignorant Westerners relate to Africa--a continent that is largely a mystery to them. US television network CBS received much flak for playing Toto's hit "Africa" over mournful footage of Nelson Mandela's funeral. Aside from "Africa" being a composition of an LA band, Toto had never even been to the continent when it released the song back in 1982. Surely there are African performers of note known even to the least curious of Westerners such as Youssou N'Dour, Hugh Masekela, King Sunny Ade or Ladysmith Black Mambazo?

Whatever the case, the example of paying "tribute" to South Africa's deceased leader with "authentic" music is but one in a series of continuing slights against Africa by Westerners. I tend to view the matter on the more optimistic side: the CBS producers were not consciously belittling Africa, African music or African culture. Rather, their limited perspectives tend to present a bland, samey view of the World According to White People. Hence my criticism of much IPE produced by the hegemony of Western universities as "White PE." These scholars may not be trying to parade their ignorance so clumsily--save for a few--but their analysis tends to be limited since (as I've said) they usually represent "lots of monolingual white guys at American and British universities talking to each other and calling it 'international.'"

Today's Western offender du jour is Google. This California outfit is ostensibly about not being evil and observing proper lefty behavior about respecting other cultures. As it turns out, however, they too are guilty of slighting Africa in a way their predecessors have by using the Mercator projection of the world map. From James Wan (not the actor):

[O]ne particular model gradually surpassed all the others to become the world map that is now ubiquitous on classroom walls, in books and now even on Google Maps. For many people today, that projection − invented by the Flemish cartographer Gerardus Mercator in 1569 − is the world map.

The main reason Mercator's projection became so popular was because of its navigational usefulness; in his map, straight lines represent lines of constant compass bearing. However, in manipulating the map to ensure this feature, the sizes of countries become hugely distorted. In particular, the southern hemisphere appears much smaller than it is in reality.

For instance, in the Mercator projection (below), North America looks at least as big, if not slightly larger, than Africa. And Greenland also looks of comparable size.

But in reality, Africa eclipses both. As is apparent in the Gall-Peters equal projection map (below), you can fit North America into Africa and still have space for India, Argentina, Tunisia and some left over. Greenland meanwhile is one-fourteenth the size of the continent.

So Google stands accused of replicating prejudices that show the white man's lands are "bigger" than those of others. Is Google really being hypocritical in violating their so-called motto of "Don't Be Evil"? My guess is that it is again an unconscious decision stemming from not knowing any better being stuck behind computers all day and not really striving to understand other people, places or cultures. Wan then delivers the knockout blow that even if Google knew any better, they still would use the Mercator projection since there isn't anything much of (commercial) interest in the vast African continent from a moneymaking perspective:

Google relies on advertising for almost the entirety of its nearly $60 billion annual income. One way to think of Google's business model is that its massive advertising revenue allows it to offer its services free of charge. But another way to think of it is that the near monopoly the company achieves by providing its ubiquitous services for free gives it the dominance necessary to generate those ad dollars in the first place. Google's corporate motto may be 'Don't Be Evil', but it's bottom line is still 'Make A Profit'.

It is arguably this reality that has led Google to spend massive sums of money on developing Google Maps, but which also affects what is put in and what is left off its maps. "It is telling that some townships in South Africa are just blank spaces on the map," says [cartographer] Brotton...

[I]t is much harder to quickly highlight Google Maps' particularity because there are no real alternatives to which we can look. We can imagine that if all of Google's data and programming ability was suddenly in the hands of a Namibian agriculturalist, a Sahelian nomad or a Senegalese fisherwoman, the maps they would conjure up would be completely different. They might well prioritise soil types over Starbucks, wells over Walmarts and the state of land degradation over panoramic streetviews of American towns. But we can only imagine. As was the case a century ago, it is still just a small group of Western individuals with specific ideas of the world that have the resources to map the world [my emphasis].

And to think that all these years we've been fed a steady diet of white persons' biases by literally grinding Africa small. The cartographer Jerry Broton explains in his book that just as history is written by the victors, so are maps drawn by them to reinforce their biases. I'm saddened but not surprised, and hope this post makes some amends. On this matter we can (correctly) reference Toto:

I know that I must do what's right
As sure as Kilimanjaro rises like Olympus above the Serengeti
I seek to cure what's deep inside, frightened of this thing that I've become...  

UPDATE: It is true that some cartographers do not consider the Gall-Peters projection accurate either and prefer the Robinson projection or the even newer Winkel tripel projection. Fair enough, but keep in mind that both do the same thing as the Gall-Peters projection in rendering Africa significantly larger in relation to Western Europe and North America than the hoary Mercator projection.

Or so the Nikkei Asian Review believes. And the reasons for China reasserting its sphere of influence in the region are straightforward. On China's part, it has the bully pulpit in 2014 as the host of the Asia-Pacific Economic Cooperation (APEC). So, member economies' ministers--maybe even the Philippine president the PRC has put in its doghouse--will be trooping to the Middle Kingdom over the course of the year:

Holding the rotating chair of the APEC forum this year, China will host a series of APEC meetings, including those of ministers in charge of trade, energy and finance, in various parts of the country starting in May. The series of APEC events will culminate in a summit of leaders in a Beijing suburb in early autumn, which will be chaired by Chinese President Xi Jinping.

The APEC meetings will cover issues in a wide range of areas, including trade and investment rules and environmental and energy cooperation. By presiding over them, China will try to demonstrate its growing presence in the Asia-Pacific region. "The Xi administration sees the proposed Trans-Pacific Partnership pact, which the Obama administration is actively promoting, as part of Washington's efforts to leave China out and cement the U.S-led international order in Asia," said one source close to U.S.-China relations.

This fear will probably prompt China to try to take advantage of its role as APEC chair this year to regain some of the lost ground in the competition with the U.S. for influence in the region.

OTOH, the United States foreign diplomatic machinery will be stuck in its usual holding pattern due to the midterm elections, set to be held just as APEC gatherings reach their summit:

The odds seem to be against the Obama administration, at least this year. The energy the Obama administration can devote to promoting its Asia policy will be fairly limited as it will have to concentrate on campaigning for the Nov. 4 midterm Congressional elections in early autumn, when the APEC summit will be held.

The quadrennial Congressional elections will be very important for Obama's Democratic Party, which has a majority of seats in the Senate, but not in the House of Representatives. If the Democrats fail to end the divided Congress by wresting control of the House from the Republican Party in November, the Obama administration could lose some steam, with two years left before his term expires.

If Obama becomes an even lamer duck due to electoral setbacks for his party, then he will have even less leeway on the foreign policy front to make a major push towards Asia.

 The wrangling over both the US government shutdown and the debt ceiling caused Barack Obama to cancel his attendance at the annual Asia-Pacific Economic Cooperation (APEC) shindig being held this year in Bali, Indonesia. So he stayed at home to deal with a localized insurrection led by an angry, mostly whitebread crowd, "Tea Party" members, they call themselves. Just desserts, I say. His absence triggered yet another round of commentary about the existence of American hegemony in general and its alleged "pivot to Asia" in particular. Some say the absence does not matter; others think it's a culmination of US decline.

At any rate, this notable omission only served to highlight China's latest plan (gimmick?) to curry favor with other nations in the Asia-Pacific. After having its Noughties-era outreach efforts to ink economic agreements alike free trade deals undermined by its strident assertions to territorial disputes in the South China Sea and East China Sea, the PRC seems to attempting to return to a more diplomatic approach. The Silk Road was named after the commercial routes plied by China when it was an empire. At APEC, keynote speaker Xi Jingping's main talking point concerned the "Maritime Silk Road" which once again promises improved relations with neighbors through commercial ties.

On Oct. 3 during his trip in Indonesia, Xi [Jingping] said in a speech that China and the ASEAN will promote maritime cooperation and build a 21st-century maritime Silk Road. This was also brought up by Li [Keqiang] in his seven-point proposal on China-ASEAN cooperation in Brunei on Wednesday. [B]uilding a maritime Silk Road will involve a new consensus, including discussing the signing of a treaty on good neighborliness, friendship and cooperation, strengthening security exchanges, setting up an Asian infrastructure investment bank and prioritizing maritime connectivity development...

In the seven-point proposal, Li [Keqiang] said "the two sides should launch negotiations on upgrading their free trade area and strive to bring bilateral trade to one trillion U.S. dollars by 2020 so as to allow ASEAN countries to benefit more from regional integration and China's economic growth." Zhang Jiuhuan, former Chinese ambassador to Thailand, Singapore and Nepal, said, "Upgrading the free trade area is another significant step for the Chinese government to beef up China-ASEAN cooperation." 

President Xi and Premier Li have been flogging this idea for many months in ASEAN countries, although they have not yet taken it to the Philippines and Vietnam with which it has the most pronounced maritime disputes in Southeast Asia. Still, they allude to the success of the China-ASEAN FTA which they wish to use expand and use as a focal point in strengthening ties:

Starting operation in 2010, the China-ASEAN free trade area is the largest one among developing countries. China is the largest trading partner for ASEAN, and the association is the third largest trading partner for China. According to Zhang, bilateral trade volume between China and the ASEAN grew from 78.2 billion U.S. dollars in 2003 to 400.1 billion U.S. dollars in 2012. Volume reached 210.56 billion U.S. dollars in the first half of this year, up 12.2 percent year on year.

Zhang said "upgrading the free trade area" is needed for both sides. He said the area will help improve the trade of commodities and services and investment cooperation in order to provide convenience and freedom. "All-dimensional cooperation will create more favorable conditions for the maritime Silk Road," said Zhang. "China's economic growth will also bring about more opportunities." 

The idea remains the same in a liberal sense: improved economic ties will smoothen relations--including frayed ones over territorial disputes. However, reception of the Maritime Silk Road idea is mixed among Southeast Asian countries as you would expect: Malaysians are more sanguine, but then again their territorial conflicts with China are not particularly heated. How successful can the Maritime Silk Road project be in calming neighbors? I personally believe that building more economic ties is welcome, but they will be accompanied by more guarded opinions of China's broader intentions. That is, for how long can it afford to give security matters lesser priority while the "security dilemma" the PRC has created makes others feel insecure?

President Xi Jinping and Premier Li have toured ASEAN extensively; it reflects their strategic outlook of developing relationships with neighbouring countries. The new leadership is trying to diffuse tension in the SCS by using various techniques, of which MSR is one. However, a revival of the MSR looks bleak. Also, earlier the route was used for the import of precious stone, wood and spices but today it will used for oil and gas, which is directly connected to the energy security of not one but many countries. There is an emerging security architecture in the region which has led to an increased arms build-up, and the assertiveness of new regional powers has further complicated the regional military balance, which makes the MSR an unlikely prospect.

Moreover, isn't this the same China that disinvited the Philippine president from participating in a trade mission due to the South China Sea imbroglio? More commerce is welcome, but I believe that economic and security matters are becoming less positively correlated in terms of Sino-ASEAN dynamics. That is, stronger economic ties do not necessarily imply improved security ties. Remember, trade has been increasing against a backdrop of worsening conflicts over the South China Sea with the Philippines and Vietnam especially.

Lastly, wasn't the Silk Road at its height when China effectively enforced a tributary system on others in the region? Perhaps the metaphor China has chosen is not a good one since its original iteration had others accepting their subordinate position relative to the Middle Kingdom. The PRC always says it does not seek hegemony (alike white people do), but it has given the rest of us reason to doubt.

It appears that Robert "Americans are from Mars, Europeans are from Venus" Kagan is set to come out with yet another of these eminently dispensable books on why America remains the indispensable nation. (I partly blame deforestation on this cottage industry of delusional Americans thinking they have an exceptional right to sacrificing trees in publishing books "proving" that the USA can still p*ss the highest in the global political economy as if everyone else doesn't have more pressing problems to contemplate.)

Anyway, the FT's Edward Luce--a fine writer among many working for that publication, simply lays out the facts that indicate Kagan's assertions are questionable at best:

Start with its economic facts. Mr Kagan says that in 1969 the US had “roughly a quarter” of the world’s income. “Today it still produces roughly a quarter,” Kagan wrote. “America’s share of the world’s GDP has held remarkably steady.”

That would seem pretty conclusive. Here are more precise measures. In 1969, the US accounted for 36 per cent of global income at market prices, according to the International Monetary Fund’s World Economic Outlook. America’s share had fallen to 31 per cent by 2000. Then it started to plummet. By 2010, the US accounted for just 23.1 per cent of world income. In one decade America lost 7 per cent of world share. More than half that loss occurred before the Great Recession.

The overall point is that the American rate of decline is accelerating compared to its challengers' rise. Not by a small margin, but it's being caught up with by leaps and bounds. Consider, also, that even if the US were to (somehow) reach growth rates above the "new normal" and China had more subdued growth rates in line with those of other LDCs, the seemingly inevitable overtaking will happen in a dozen years or so:

China’s economy, meanwhile, was barely an eighth the size of the US’s in 2000. Today it is 41 per cent – and that is based on current exchange rates...Indeed, as Arvind Subramanian writes, China would surpass the US within 12 years even if its growth slowed to 7 per cent a year and the US hit an unlikely annual pace of 3 per cent.

Failing that, America #1 cheerleaders then run into fallacious territory that shifts the goalposts of hegemony such as making GDP per capita the new indicator of preponderance. Which, as I've argued, is preposterous.

Kagan is just as mathlexic as the veep and the rest of the products of America's mediocre educational system. Stick a fork in them; they're done. (Out of mercy for these unenlightened and hubris-filled white man's burden-loving folks, you may even want to show them how to use a "calculator" or a "spreadsheet".)

As I've said, the global challenge nowadays is not how to preserve the crumbling, crisis-filled American order but to replace it with something better and more representative of new voices on the world stage. Leaving Americans to do this task is akin to leaving Gary Glitter or Roman Polanski to organize your children's party.

Since you obviously don't know what you're doing, America, you should at least step aside and let others try their hand at fixing the mess you've made. You can't even fix your own country, so why should anyone expect you to fix the world? Does "lead by example" mean anything to these grandiloquent sorts? If Kagan's book or those of his other America #1 cheerleading colleagues at least acknowledged that question, they'd be worth reading. But they don't.

Or so someone now says. Publicity-seeking economic commentators like making bold predictions that sometimes cause them to lose face. Alike various doomsday cult pronouncements that the world will come to an end at a certain date, there is no hiding from being discredited when giving certain dates for things to pass since you can't obviously weasel your way out of them. When you make a public pronouncement, it's on the record. For instance, Wolfgang Munchau is probably eating humble pie at the moment after his 7 December deadline for the euro's abolition came and went with nary a whimper. We're still waiting, bub.

I bring this up because Peterson IIE stalwart Arvind Subramanian makes similarly bold claims about China. More specifically, he takes a look at various economic indicators, extrapolates from them, and argues that 2021 will be the date when the world's most systemically important currency will be the yuan and not the dollar. Along the way, he looks at the rise and fall of eras of British (Pax Britannia) and American (Pax America) dominance and believes that China's rise is more imminent than most believe. Certainly others have made such predictions before--especially more political-economic types alike LSE IDEAS' erstwhile Senior Fellow Martin Jacques. However, Subramanian's take is potential unique in that he is an economist looking at marco data to make similar arguments--and sets a date to boot.

While it is true that linearly predicting China's economic progress based on recent years' performance should lead you to believe that America's eclipse is imminent, others would beg to differ. Certainly the US is going nowhere. With its "new normal" annual rate of growth between 1-2%, it surely isn't keeping up the pace to maintain a decent lead, compelling certain USA#1 cheerleaders to shift the goalposts of the seemingly inevitable American eclipse. The American has-beens may try to portray themselves as the still-ises, but the numbers certainly indicate otherwise.

At any rate, do catch Subramanian's new book on Eclipse: Living in the Shadow of China’s Economic Dominance. What follows is the press blurb to accompany the clip above:

In his new book, Arvind Subramanian presents the following possibilities: What if, contrary to common belief, China's economic dominance is a present-day reality rather than a faraway possibility? What if the renminbi's takeover of the dollar as the world's reserve currency is not decades, but mere years, away? And what if the United States's economic pre-eminence is not, as many economists and policymakers would like to believe, in its own hands, but China's to determine?

Subramanian's analysis is based on a new index of economic dominance grounded in a historical perspective. His examination makes use of real-world examples, comparing China's rise with the past hegemonies of Great Britain and the United States. His attempt to quantify and project economic and currency dominance leads him to the conclusion that China's dominance is not only more imminent, but also broader in scope, and much larger in magnitude, than is currently imagined. He explores the profound effect this might have on the United States, as well as on the global financial and trade system. Subramanian concludes with a series of policy proposals for other nations to reconcile China's rise with continued openness in the global economic order, and to insure against China becoming a malign hegemon.

I certainly think the RMB will become a major world currency. Perhaps it can even help stabilize what Robert Gilpin calls the non-system of flexible exchange rates that has made the world economy lurch from crisis to crisis more frequently given the lack of American stewardship. But, my inclination is to believe that it will be more important in Asia than in the rest of the world as it evolves to being more multipolar than unipolar. That is, while China may surpass the United States in terms of nominal GDP, trade and other indicators, but it probably will not aspire to global hegemony as it so often indicates in an echo of its Communist past. Pax Sinica? The Chinese may eventually become able to take up the lead in the international monetary system, but will they be willing? (As a counterpoint, the US too was reluctant to take up such a role in WWII's aftermath, so you never know.)