It's The United States, Stupid

Well, it finally happened. CNBC, specifically Mark Haines, admitted this morning that they change their views more than daily depending on their guests' opinion. Today, amongst all the positive earnings from US industrial multi-nationals, they had a series of guests bashing the US economy. Guess what, the US economy is weak, led by housing. Foreign economies are showing signs of strength, but it is not the monolithic picture that it is made out to be. The worst guest of all, an American no less working for Credit Suisse in London, made a self proclaimed unpopular statement that the US is no longer the center of the universe, that it is the middle class of emerging markets driving the world economy. It is sad that CNBC puts people like this on without presenting a balanced view or asking the guest hard questions (they do, when it suits the host's personal agenda, on both sides of the spectrum).

There is only one question that needed to be asked of this analyst. Here it is: What created the conditions that allowed a middle class to form in these emerging markets, or the developed markets, for that matter? It's the United States, stupid. Is there really anyone sane out there that thinks the world's economic situation (or political) would be better off if the US hadn't acted the way it did over the past 60 years? Before I get 1000 posts, yes the US made mistakes along the way. The worldwide benefits of a global economy are starting to be realized, particularly since the fall of the Soviet Union. Emerging economies, sources of raw materials and cheap labor, starting from low bases are of course experiencing faster growth. The US created the conditions that allowed for this growth. The US continues to grow rapidly. There is no other country on Earth that approaches the size of the US that is as dynamic as it is here. Sure there is emerging market growth now, but what happens when these markets mature? Will they foster a spirit of openness and free trade? Will they resolve their massive domestic problems? When Brazil runs out of trees to cut down and iron ore to dig up, will the masses go back to accepting the massive wealth disparities that have and continue to exist there? When China runs out of cheap labor, brought on more quickly by a "one child" policy, will they retreat into another Cultural Revolution? Will Russians continue live with (or not) a declining life span and turn further back toward dictatorship? If the world is relying on any or all of these scenarios to take the place of the US in world leadership, it would be overly optimistic, to say the least.

As for the commentating world fretting about US domestic demand, that story plays well somewhere, however not CNBC's audience. If the US economy makes up 20% of the world's economy, then Caterpillar, Honeywell, etc. should be selling 80% of their products elsewhere. They can, thanks to the conditions created by the United States.