How does the US economy affect us?

[Dolby]

As a newbie on finances & economies, I'm interested in how the US economy collapsing effects us?

 

[boramk]

As a newbie on finances & economies, I'm interested in how the US economy collapsing effects us?

Basically:

The USA is the worlds largest buyer, very very large.
The world moves on finacially through what they sell to the USA.
We, the other countries, live off the money we get from the States (to cut the story short)

The USA economy is NOT collapsing, simply going through recession (a period in which the economy does not grow or even gets smaller)

This implies the USA has less money to spend, thus less money to spend on us, thus effecting us in a great way.

 

[kaspaas]

The effects will however be much less than a few years ago.

Eurozone is now a larger economy than Yankee-land.

The Yanks lived above their means - one of the causes of the sub-prime crisis.

In Europe the people lived within their means, and their financial system is not as bad as the Yankee one.

Also, during the past 20 years India and China became economic forces to reckon with.

Yes, the economic collapse to depression looming in the US will affect us all, but the effect should be less than the effect of the oil price and Eskom combined. Add Tito to the equation, and the Yanks problems fade from our economic radar screen.

 

[boramk]

The effects will however be much less than a few years ago.

Eurozone is now a larger economy than Yankee-land.

The Yanks lived above their means - one of the causes of the sub-prime crisis.

In Europe the people lived within their means, and their financial system is not as bad as the Yankee one.

True, the USA won't have the effect it used to.
Europe has surpassed the USA's GDP. Well, If you combine 20 countries what you expect?

Also, during the past 20 years India and China became economic forces to reckon with.

Also true, but China (don't really know about India) largely relies on the USA buying their cheap goods.

 

[Peon]

Conspiracy talk: could the US be trying to sabotage the Chinese?

 

[LancelotSA]

To add to the above posts and to put it simply...

The US loves to buy goods and spend their dollars.
A lot of this spending is done on cheap imported Chinese goods.
China needs raw materials to make these cheap goods.
They get a lot of these raw materials (steel etc) from us in SA.

Now in a recession...

US spending decreases as times get tough.
Lower demand for cheap Chinese goods.
China lowers production of cheap goods.
Slower production of goods means less demand for raw materials to make them.
This means less exports of raw materials from SA.

Very simplified... but an attempt at showing the direct effect on us.

As stated, the US is becoming less of a force but the above is how they affect our economy. As the world economy matures we now see demand from other sources rather than just the US, hence the reason developing economies do not suffer as much as they used to.

 

[Ou grote]

To add to the above posts and to put it simply...

The US loves to buy goods and spend their dollars.
A lot of this spending is done on cheap imported Chinese goods.
China needs raw materials to make these cheap goods.
They get a lot of these raw materials (steel etc) from us in SA.

Now in a recession...

US spending decreases as times get tough.
Lower demand for cheap Chinese goods.
China lowers production of cheap goods.
Slower production of goods means less demand for raw materials to make them.
This means less exports of raw materials from SA.

Very simplified... but an attempt at showing the direct effect on us.

As stated, the US is becoming less of a force but the above is how they affect our economy. As the world economy matures we now see demand from other sources rather than just the US, hence the reason developing economies do not suffer as much as they used to.

Even simpler:
There scriptwriters strike had a greater effect on us, than their subprime issues...

 

[LancelotSA]

Why? The Chinese are already sabotaging the US, by unfairly taxing their imports from the US, they also don't float their currency, to put it on a level which is as judgmentally fair as the $. They are also doing little to keep their economy environmentally clean, while the US government is investing much more for that.

Ha ha ha you used the US government and environmentally clean in the same sentence....

Are you sure you should be?

 

[LancelotSA]

They have strict regulations on the fuel they use, they also spend the most on alternative energy development.


Their carbon efficiency is better than both China and South Africa.
http://www.nationmaster.com/graph/env_car_eff-environment-carbon-efficiency

Carbon emissions per GDP is lower than most developed nations, lower than China, and S.Africa.

http://en.wikipedia.org/wiki/List_of_countries_by_ratio_of_GDP_to_carbon_dioxide_emissions
http://www.nationmaster.com/graph/env_co2_emi_kg_per_2000_ppp_of_gdp-kg-per-2000-ppp-gdp

Their, Environmental agreement compliance, is also better than China and South Africa.
http://www.nationmaster.com/graph/env_env_agr_com-environment-environmental-agreement-compliance

They may have one of the highest overall emissions, is because of their productivity, but they do the much more to ensure that their productivity is one of the cleanest, and spend more on research to develop clean tech, than other countries do.

Besides of course signing any protocols which demand certain reductions within certain time frames....