This month, I have chosen to go a little further afield than usual with the topic I am handling in Chicane. As it is the column is meant to address almost everything that impacts the world of motoring without actually being a piece about motoring. The topic in question meets the criteria and is thus both contemporary and important.
In a world obsessed with money and power and every combination of the two – there is no man more powerful, I have been led to believe, than the President of the United States. In my lifetime, that truism has only been reinforced umpteen times by people who have presided over economic power, the world’s most prolific war machine and a currency that is the world standard, much of which is largely interlinked. For four years POTUS (that’s President of the United States) is supposed to be able to pretty much run things as he pleases. Or so I thought. However, the recent brouhaha over whether the US can agree to increase its debt has shaken my understanding of POTUS, the world’s economic outlook and perchance has increased my belief in an afterlife.
To my non-economist brain, the concept that one can borrow money with almost no limit is staggering. How much money is there in the world? If the US has more than 14.3 trillion dollars of debt and is now ready to borrow more, when will the balance ever come to zero? Picture a normal wage earner trying to borrow money from a bank, or indeed a customer buying a car on finance. Would anyone lend them money or the car if the question was about how much more they plan to borrow rather than their intention to repay? I know the situation isn’t so simple, but can anyone blame the world’s money markets for being so jittery?
If you look at the US itself, the country is battling to restart its economic recovery, trying to rebuild infrastructure and industry with the hope that it will boost employment and growth. By the nature of the model, it calls for increased government spending on all fronts. As for the government in question, a slow market is usually a lot cheaper to buy goods and services from and the results are seen more effectively. The automotive industry in the US also seems to have understood the need to change on all fronts – products, production processes and operations. But will the market stay economically sound?
With so much linked to the dollar, we also are being affected in our outposts around the world. Whether it is the increasing price of commodities, precious metals, oil or indeed of Japanese made products which we all love to buy, everything is becoming dearer. As it is, importers are groaning under the strength of the Yen, while Japanese exporters are being hit hard at a time when their economy needs the business the most. And China’s Yuan continues to stay apace with the dollar making China made goods ever cheaper.
I would wish for a continued strong dollar. Of course, like so many other expats I too am impacted on my pocket every time my home currency strengthens. If I had the power of visionary foresight I wouldn’t have been so lax about leaving savings in dollar denominated accounts. But now it’s not just us, countries are wondering what they should do – like buying hoards of gold even at these inflated rates.
When you look at all that’s happening perhaps sinking your money in a new car this season is just about the most enjoyable way to see your money go!
I had also mentioned something about the afterlife at the outset of this note. You would have to be a believer considering the sort of debts that countries are racking up. Are we going to leave all these to be settled by future generations? And are they likely to ever be able to do so? And won’t they want to meet the people who put them on the spot? Perhaps what we need is the attitude of a crony who owes me money for almost the whole past decade – whenever I asked him for the amount, even part of it, I would get the answer “Don’t worry, your money is safe. Imagine it’s in your bank.” Or even better, “Don’t worry, If you die I’ll give it to your children.” After that I do two things – never lend money and as a result I really don’t worry.