U.S. now world No. 2 economy

The dollar going in the crapper has made the European Union’s eurozone is now the world’s largest economy.

“With the euro now trading around 1.56 against the dollar, the size of its annual output (at market value) has exceeded that of the United States,” US investment bank Goldman Sachs estimated last week.

“Brief as the development may prove to be, European policy makers will no doubt derive some pride” from the event.

Well, there, Goldman Sachs is wrong. That development is likely to last a while; in fact the Eurozone is likely to expand its lead in size over the American economy:

the economy of 320 million people — which churns out 15 percent of global gross domestic product — has slowed but shown a degree of resiliency to the US slump that few would have counted on just a few years ago.

Historically thrifty German consumers helped the national retail sector gain 2.7 percent in January, with the trend continuing in February according to the HDE sector association. …

Bank of America economist Holger Schmieding said that “apart from the housing market correction in Spain and Ireland, the eurozone has no major domestic problem,” while Jennifer McKeown at Capital Economics noted: “The eurozone hasn’t built up the same kinds of imbalances that we’ve seen in the US and the UK, too.”

That last line also bears careful notice.

If the continental members of the European Union take note, they may decide, if Great Britain continues to dither about dropping the pound and adopting the euro, that they don’t wan’t the UK to be part of the eurozone.

Gordon Brown, you’re officially on notice to shit or get off the europot.

Free polls from Pollhost.com

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UN: we need more help to feed the poor

Skyrocketing food prices, including from food being diverted to biofuel, is leaving the UN’s World Food Programme in a hell of a bind. The U.S. has already said it will cut back assistance. Food riots are hitting more countries. Pakistan has instituted rationing.

This could get globally ugly.

Fear China’s economy, perhaps, but not Japan’s

Due to, primarily, a combination of its decade-long real-estate driven stagflation, and its declining, rapidly aging population, Japan’s economy is actually diminishing by many standards. It is now just 20th in per-capita gross domestic product, for example, and its share of the world’s economy has slid from a peak of 18 percent in 1994 to just 10 percent in 2006. A study by PriceWaterhouseCoopers says the Japanese economy will be the size of Indonesia’s or Brazil’s by 2050. By that time, population decline will have reduced economic growth to zero, according to the Japan Center for Economic Research.

Actually, I’m not sure we’ll have to totally fear China or India in 2050. China’s size, not just a 1.3 billion population, but a contiguous land area as large as the U.S. including Alaska, can make national policy difficult to implement at the local level, as the failure of Beijing-based environmental efforts and other things show.

India, on the other hand, has even less infrastructure than China, a determination to pass China in population, and the chaos of a corruption-tinged world’s largest democracy. Until India can deliver more clean drinking water to its people, we don’t need to totally fear them either, reservoir of English-speaking engineers aside.

Who we should fear is the EU. A GDP as big as ours, larger population, democratic traditions, a banking/finance control system strong and independent of that of the U.S., a currency gaining world recognition, and an often-stronger, and often-different, take on regulatory issues.