Some weeks ago, I wrote that US manufacturing would lead the western world out of its recession. That is still my view. The US and Germany are both producers of very high quality manufactured goods where innovation and technical skill form a substantial component of products. There are similarities in the macro environment for both countries. Germany is benefiting from the regaining of its economic hinterland, its large investments into R&D and engineering skills, and from the relatively low value of the euro. The United States has low cost producers on its doorstep, large investments into R&D, and a low value dollar. It is also becoming self sufficient in many forms of energy.
In short, the US will lead the Atlantic Community and Germany will lead Europe.
The major difference between those economies is that most US GDP is internally generated whereas most German GDP relies on internationally tradeable goods. Both are reliant on Asia – the US for capital to fund Federal debt issuance and Germany for tradeable goods markets.
Whither Australia in this mix? Under present leadership, probably nowhere. Not a leader in sight in the present Federal Government. Generational opportunity sacrificed on the altar of latter day socialism. Why create wealth when you can spend other peoples?
How out of touch is the Mistress of the Peoples’ Republic of Canberra? As Germany has (re) discovered the benefits of a market economy driven by entrepreneurship and less regulation, so Australian political leadership publicly disparages its entrepreneurs and wants to fight the next Federal Election between the so-called privileged few v. the workers. Arise Karl Marx from your London grave. Australia (at least Julia and Wayne) wants you.
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