The IMF Bombshell

I'm a proud American, most of the time. Our leaders have certainly let us down and led us into some moments in which pride is hard to come by. However the IMF just dropped a bombshell that was most unexpected, even for someone who feels the chances of a secular bear market in the US are very high and very close. The IMF predicts China will overtake the US as the world's #1 power in the next five years with the US declining and China expanding. Forecasts are always tricky, the further out you forecast, the less accurate they tend to be and China is facing many problems now that may make this forecast true, but through the timing off.

I just wrote this weekend about the problem of US Treasuries/Debt. It's Ironic that within a week or so, the S&P has put the U.S. on a downgrade watch, China has talked of diversifying out of 60+% of their American debt holdings and now the IMF prediction. It all fits well with my opinion of a secular bear market, but goes way past that in its implications and the implications for our debt.

While forecasts may be difficult, trends show clearly the trajectory and how the IMF came t it's conclusions. The most clear fact in the article is this, a decade ago the US economy was 3x the size of China's. That's a rapid decline and one that has left the US middle class falling lower and lower while the richer get richer by escalating China through their business doctrine.

More on this later.