IMF bombshell: Age of America nears end

Commentary: China’s economy will surpass the U.S. in 2016

Brett Arends
MarketWatch

BOSTON — The International Monetary Fund has just dropped a bombshell, and nobody noticed.

For the first time, the international organization has set a date for the moment when the “Age of America” will end and the U.S. economy will be overtaken by that of China.

And it’s a lot closer than you may think.

According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016 — just five years from now.

Put that in your calendar.

It provides a painful context for the budget wrangling taking place in Washington, D.C., right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world’s hegemonic power.

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World job crisis is a threat to democracy, says IMF head

International Monetary Fund meeting dominated by fears that US job crisis will add to currency tensions with China

Larry Elliot
Guardian

The International Monetary Fund was seeking to defuse growing tensions over global currencies yesterday amid fears that the US will respond to its stubbornly high unemployment figures by slapping tariffs on Chinese goods.

With China refusing to bow to pressure from the US and Europe to revalue its currency, the annual meeting of the IMF was dominated by concerns that Washington is on the point of losing patience with Beijing. Finance ministers and central bank governors gathered in a gloomy mood, expecting no quick fix to the problem – despite a warning from the IMF that failure to tackle the global jobs crisis could threaten democracy.

Latest figures for the American labour market, released on Friday, showed 95,000 jobs were shed in September, adding to the problems of the Obama administration ahead of next month's mid-term elections.


The poor outlook for jobs in the US has alarmed the Federal Reserve, which is expected to announce a fresh wave of quantitative easing next month, and added extra spice to the row between Washington and Beijing.

Dominique Strauss-Kahn, the IMF's managing director, warned that "we face the risk of a lost generation", adding: "When you lose your job, your health is likely to be worse. When you lose your job, the education of your children is likely to be worse. When you lose your job, social stability is likely to be worse – which threatens democracy and even peace. So we shouldn't fool ourselves. We are not out of the woods yet. And for the man in the street, a recovery without jobs doesn't mean much."

Tim Geithner, Obama's treasury secretary, said: "The United States believes that global rebalancing is not progressing as well as needed to avoid threats to the global economic recovery.

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