12 June 2009

A new challenge to US domination?

The financial crisis has heralded the start of US decline as WWI did for Europe. The shift of power is becoming more vocal and organised: over the pas few months China and Russia voiced their concern about US budget deficit and mounting debt; they now are joined by Brazil and India, BRIC countries demanding more clout, commensurate with their 15 percent share of the world economy and 42 percent of global currency reserves.

Brazil and Russia joined China this week in saying they would shift some $70 billion of reserves into multicurrency bonds issued by the IMF: this is a clear signal to the US to get their house in order.

According to Goldman Sachs, the BRICs may overtake the combined $30.2 trillion gross domestic product of the Group of Seven nations by 2027, 10 years earlier than previously forecasted.

It will be interesting to see what comes out of their meeting in Russia on 16th June; one sure thing: a multipolar world is being fostered.

Emerging markets is one of my other favorite investment themes.


El-Erian Says Summit Shows `Rebalancing' as BRICS Buy IMF Bonds
Bloomberg, June 12 2009