More Ghost Projects? China’s $350 million ‘Bridge to Nowhere’

From a post I wrote a few hours back

Last week I noted that state owned companies have been taking over property activities in Guangzhou which should add to the existing glut of inventories. The same article says that: Big-ticket spending is already picking up: Since mid-October, Chinese authorities have approved railway and airport projects valued at 845 billion yuan ($138 billion).

It is unclear whether this has been part of the announced mini stimulus. In the past the Chinese government has vehemently denied that this will be in the same amount of the 2008 stimulus at $586 billion. But when one begins to add up spending here and there, injections here and there, these may eventually lead up even more than 2008

Yet again the Chinese government will be expanding ghost projects just to attain their 7+% statistical growth target.

Well, it  appears that China has a $350 million 'bridge to nowhere'.

According to the New York Post

The bridge was supposed to be a key link for trade and travel between China’s underdeveloped northeast provinces and a much-touted special economic zone in North Korea — so key that Beijing sank more than $350 million into it.

Now, it is beginning to look like Beijing has built a bridge to nowhere.

An Associated Press Television News crew in September saw nothing but a dirt ramp at the North Korean end of the bridge, surrounded by open fields. No immigration or customs buildings could be seen. Roads to the bridge had not been completed.

The much-awaited opening of the new bridge over the Yalu River came and passed on Oct. 30 with no sign the link would be ready for business anytime soon. That prompted an unusually sharp report in the Global Times — a newspaper affiliated with the Chinese Communist Party — quoting residents in the Chinese city of Dandong expressing anger over delays in what they had hoped would be an economic boom for their border city.

The report suggested the opening of the mammoth, 3-kilometer bridge has been postponed “indefinitely.”

While the 'bridge to nowhere' may have a geopolitical component—"Foreign analysts have suggested the apparent lack of progress might indicate wariness in Pyongyang over China’s economic influence in the country, which has been growing substantially in recent years as Pyongyang has become more isolated from other potential partners over its nuclear program, human rights record and other political issues"—it doesn’t negate the fact that taxpayer money and resources had been squandered from central planning miscalculation and from the reckless use of the other people's money.

Also this adds to the growing list of China’s malinvestments or ghost projects.

President Obama Hearts Indonesia: US to Boost Investments and Trade

The US has reportedly pledged to bolster investment and trade with Indonesia.

From Jakarta Globe

Francisco Sanchez, the undersecretary of commerce for international trade at the US Department of Commerce, has visited Indonesia three times in the past 18 months. Each time he comes, he is impressed by Indonesia’s robust economy and the opportunities available.

On his current trip, he brought a high-powered business delegation to show them first hand what Indonesia offers. He told the Jakarta Globe he is hopeful that these companies will enter into business deals.

American companies have a long history of investing in Indonesia, but in recent years they have been overtaken by other players, notably the South Koreans, Chinese and Singaporeans. According to Sanchez, US companies cannot wait any longer or they might miss the boat.

President Obama’s seems to be reaching out to the nation where he became a resident of during his pre-teen days.

And so how does the US intend to expand trade with Indonesia?

First through investments in infrastructure projects coordinated by a supposedly “independent” government development agency, (from the same article)

According to Sanchez, US companies have a lot to offer in sectors such as engineering, construction management, waste-water treatment and smart grid technology.

To express its intent to participate in infrastructure development in Indonesia, the US-based Overseas Private Investment Corporation on Tuesday signed a memorandum of understanding with the Indonesia Infrastructure Guarantee Fund to support the development of infrastructure projects…

And next is through Obama’s pet project; renewable energy… (bold mine)

One development that could help boost trade is for the Environmental Protection Agency in the US to classify Indonesian crude palm oil as renewable fuel. The EPA visited palm oil estates in Indonesia two weeks ago and is now reviewing its decision.

To qualify for as renewable fuel, CPO must reduce greenhouse emissions by 20 percent. Discussions are currently underway between the EPA and the palm oil industry.

Instead of free trade, the Obama regime will mainly promote investment and trade through political patronage, where economic or financial contracts (concessions) will likely be awarded to favored networks, friends and allies of the Obama regime in the US and in Indonesia. 

Obama’s global trade policy seems geared towards exporting cronyism.

Urbanization and the Knowledge Economy

Investing guru Templeton’s Mark Mobius, reflecting on the mainstream view, believes that “Urbanization” will drive emerging market investments. ADB, for instance, has a literature on managing Asian cities here

Mark Mobius writes, (bold emphasis mine)

Over the next few decades, I believe we are likely to see an increase in several types of infrastructure investments due to rapid urbanization, which drives the increasing global demand for resources, mainly from emerging markets. I expect there will likely be many opportunities, particularly in the energy and materials sectors. Rapid urbanization in emerging markets, driven by rural populations migrating to cities in search of work and better opportunities, has put pressure on resources and prompted governments to pump money into a range of urban infrastructure-related sectors such as housing, transportation, sanitation, water, electricity and telecommunications.

I am a skeptic of the urbanization theme.

That’s because urbanization oversimplifies on the evolving trend of the global economic structure. Urbanization puts emphasis on past economic (industrial age) paradigms which it assumes will be carried forward.

Urbanization basically neglects the rapidly growing contribution and the deepening of the knowledge economy which has been reconfiguring people’s lifestyle and commerce.

Essentially urbanization focuses on the economies of scale from concentration and centralization, whereas the knowledge economy has been decentralizing socio-economic activities as a consequence of decreasing trend of communication, connectivity and transaction costs.

The Wikipedia explains the forces of the Knowledge Economy,

there are various interlocking driving forces, which are changing the rules of business and national competitiveness:

-Globalization — markets and products are more global.

-Information technology, which is related to next three:

Information/Knowledge Intensity — efficient production relies on information and know-how; over 70 per cent of workers in developed economies are information workers; many factory workers use their heads more than their hands.

New Media – New media increases the production and distribution of knowledge which in turn, results in collective intelligence. Existing knowledge becomes much easier to access as a result of networked data-bases which promote online interaction between users and producers.

Computer networking and Connectivity – developments such as the Internet bring the "global village" ever nearer.

As a result, goods and services can be developed, bought, sold, and in many cases even delivered over electronic networks.

I would add that increasing specialization will hallmark the knowledge economy. And specialization will diminish the economics of urbanization.

The changing nature of work can be exemplified by the telecommuting jobs, which have been rapidly growing.

These jobs are based on the web, are flexible and are not location sensitive (working from home, or elsewhere).

Wikipedia estimates

that over fifty million U.S. workers (about 40% of the working population) could work from home at least part of the time, yet in 2008, only 2.5 million employees (not including the self-employed) considered their home their primary place of business.

Occasional telecommuters— those who work remotely (though not necessarily at home) —totaled 17.2 million in 2008.

Very few companies employ large numbers of home-based full-time staff. The call center industry is one notable exception to this; several U.S.-based call centers employ thousands of home-based workers. For most employees, the option to work from home is granted as an employee benefit; most do so only part of the time.

In 2009 the Office of Personnel Management reported that approximately 102,000 Federal employees telework.

In the next three years, public and private sector IT decision makers expect telework to increase by 65% and 33%, respectively.

I, for one, am a Philippine based telecommuter.

As society evolves towards the knowledge economy, the incentive will largely focus on diversity dynamics from localized knowledge and commerce.

A study from McKinsey Quarterly seems to validate this perspective as local champions have been outperforming multinationals

we have found that high-performing global companies consistently score lower than more locally focused ones on several critical dimensions of organizational health—direction setting, coordination and control, innovation, and external orientation—that we have been studying at hundreds of companies over the past decade.

That’s how the knowledge economy has been changing the nature of commerce and will continue to do so.

So while I agree that infrastructure will highlight growth of emerging markets because of increased economic freedom and greater degree of free trade, emphasis on urbanization should translate to a lot of misdirected resources—yes they account for as emerging bubbles similar to China’s ghost cities and Potemkin Malls

If free markets will determine where infrastructure trends are headed for, then a more widespread development that caters to the growing forces of technology enabled specialization and diversity should be expected.

Government sponsored urbanization, thus, represents a symptom of bubble cycles at work.

Shanghai Index’s Rally- Impact of Inflation or Indications of Economic Recovery?

``Any market where the Federal Reserve has engaged in purchases – agency securities, mortgage backed securities, providing funding for consumer loans, the commercial paper market, to name a few - the Fed is replacing rational buyers rather than jumpstarting the private sector. Why would a rational person buy securities that are artificially inflated in price? If the Chinese dare to buy these securities anyway, then they must be as guilty as the U.S. of currency manipulation. Indeed, that’s what it comes down to: the U.S. wants to have a weaker dollar and China wants to be in control of when to allow the yuan to appreciate. Insulting China is not the right way to go about it. China has to recognize that a stronger yuan is in its national interest. While the U.S. is accelerating its market interventions with implications for the dollar, China is working hard to allow for more exchange rate flexibility.”- Axel Merk China and the U.S. Play Chicken: Currency Manipulation

Are there signs of financial market divergence or decoupling out there? Probably.

That’s if we read into the performance of China’s Shanghai index as a possible indicator of a potential market reversal (see figure 5).

Figure 5: Stockcharts.com: Does the breakout in the Shanghai Index presage financial market recovery or inflation?

The Shanghai index (SSEC) appears to have been in a bottoming formation since it reached its most recent lows early November.

The SSEC broke through its major bear market trend last December [see December’s China’s “Healing” Equity Markets: The New World Market Leader?]. This despite the downside pressures in most of the world’s major bourses, most especially the US markets.

At Friday’s close, amidst all the gloom and doom, the Shanghai index significantly broke to the upside (red arrow) and way above its resistance levels (horizontal blue line). Since the SSEC is up 25% from its November lows, technically this suggests a transition into the advance phase of the market cycle.

And the SSEC’s pretty impressive breakout comes even amidst predominant consolidation in most of the global markets. Seen at the chart above: the S&P 500 pane below main window, the Emerging Market index-mid pane, and the Asia Ex-Japan index lowest pane.

A Head Fake Shanghai Index Rally?

Some skeptics hastily retorted that the recent recovery in credit growth, (as discussed in Will “Divergences” Be A Theme for 2009?) which may have possibly aided the mighty lift in China’s major index, could have been a function of either “bills discounting” (see figure 6, left window) or maneuvers to please policy makers. In other words, government manipulations aimed at juicing up the market.

Perhaps.

But the same argument has been made before suggesting that China’s government will support “so-and-so levels” as the bear market unfolded. This apparently hadn’t been successful as the Shanghai Index lost 71% from peak-to-trough.

So if the Chinese government failed to prevent its bear market from blossoming why should they succeed today?

Figure 6: US Global Investor: Bills Discounting and Composition of Baltic Dry Index

Anyway going back to the rationalization of “Bills discounting” as driving the markets, according to US Global Investors, ``A recent surge in China’s bank credit growth may have captured, at least partly, an artificial demand spike for short term discounted bills as companies took advantage of borrowing at the lower bills rate to earn the higher bank deposit rate. Commercial banks could have also moved off-balance sheet loans back onto their balance sheets to demonstrate compliance with government mandates.”

Next, we read objections about how short term credit growth will only boost economic growth over the interim, which subsequently could translate to the risks of rising bad loans. In addition, we read that the prospective deterioration of corporate profits amidst an intimidating environment should further weigh on China’s stock prices.

It’s odd to hear such objections when the same parties seem to be in favor of massive government interventions in the marketplace.

The difference is that there seems to be a preference over seeing credit growth happening in the US and NOT in China. This stems from the assumption that the US is the world’s irreplaceable ‘aggregate demand’. For me, such observation reflects a smack of prejudice, linear thinking and denial.

Moreover, the idea that short term credit growth will lead to future bad loans is absolutely correct. But that is the underlying principle behind all these government interventions, because excessive credit growth, whether undertaken by the private sector or the government, eventually becomes a bubble. And as much as it applies to the US, it should apply to China too.

Lastly the toll from bear market in the Shanghai index was a substantial 71% decline on a peak-to-trough basis. This means that the market could have already discounted such profit deterioration.

Shanghai’s Rally A Function Of Home Stimulus?

So instead of looking at the markets burdened with biases or reading today’s grim economic outlook as tomorrow’s outcome, our preference is to try to view markets objectively based on the political setting.

We would like to add that the rise in the Baltic Index which we mentioned last week in What Posttraumatic Stress Disorder (PTSD) Have To Do With Today’s Financial Crisis, appears to have been corroborated (see figure 6, right window). Iron ore shipments from Brazil to China has been surging from the start of the year while the same shipments from Australia to China appears be picking up too.

And since today’s marketplace has been heavily distorted by the massive government “inflationary” interventions, the surge in Baltic Index could likely be a function of the activation of China’s $586 billion stimulus (see figure 7).

Figure 7: US Global Investors: China’s $580 billion Stimulus

Based on the above distribution, China’s stimulus program appears heavily tilted (about 85%) towards infrastructure spending. Thus, the jump in Baltic Index could be deduced as China’s thrust to realize the “pump priming” of its economy.

Remember China (GDP $4.22 trillion 2008-CIA) is a rapidly developing third world economy in contrast to the US (GDP $14.33 trillion 2008-CIA) which is the largest most advanced economy in the world.

Yet, when compared to the US, it is likely that China’s stimulus policies has greater chances to work simply because its economy is still largely inefficient due to significant State control of important sections of the Chinese economy’s capital and production structure. According to Gavekal, “the state sector accounts for about 35% of output, and it decisively controls all upstream and network sectors of the economy”.

And because significant parts of the economy are under state control the issue of “crowding out of the private sector” isn’t much a concern in the same way as it is in the US.

On the other hand, of the proposed $884 billion stimulus package for US President Obama only $137 billion or 15.5% is said to be allocated to infrastructure spending.

Inflation Spillage Effect; Jigsaw Puzzle Falling Into Place

Yet, we can’t also discount the idea that Shanghai’s Index performance may have accounted for as our expected “spillage” from the inflationary actions undertaken by many global governments.

For instance, Brazil seems to be the indirect beneficiary of the US government’s bailout of General Motors.

This from the Latin American Herald Tribune, ``General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.

``According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012."

While much of the money printed in support of the US economy seem to be sucked into a vortex of losses within its financial sector, some of these appear to be sloshing over to parts of the world as in the case of GM-Brazil.

Eventually as the global forcible liquidation subsides the impact of these spillages will become increasingly evident.

And the next thrust would probably see inflation seeping into the commodity sector, on the backstop of a combined global infrastructure stimulus. This should translate to a vigorous rally in the commodity sector which should likewise lead to the resurgence of equity benchmarks of emerging markets, including the Philippine Phisix.

Remember markets aren’t just about the conventional notion of economic demand and supply but importantly about the demand and supply of money relative to the demand and supply of goods and services.

As a caveat, we are not talking here of real economic recoveries but one of the after effects from inflationary policies in the context of the present political setting.

And as we long argued, we believe that US Federal Ben Bernanke will fervently use its inflationary policies to achieve either of the two goals, one to reignite the economic growth engines abroad in order to support the US economy through the export channel, or two, reduce the real value of debt.

The US, in contrast to mainstream views, won’t lift the world this time around. At best, it would be the other way around-the world lifting the US economy. At worst, it would be a manifest decoupling.

And as far as we are concerned pieces of our jigsaw puzzle seem to be falling into place or events are beginning to shape as we predicted them to be.

Prepare for the next super inflation.

Global Markets: The End Of The World? Or Overestimating Global Consequences?

``I cannot find a single convincing argument that tells me that astrologers won’t do better than economists…The problem is the arrogance of these economists, they’re making people rely on theories that have not worked, do not work, and are really dangerous.” Nassim Nicholas Taleb

If you look at today’s prevailing sentiment, especially from those within the US, the perception is that the global financial realm looks likely headed for a meltdown. This leaves investors the Hobson’s choice of running to the hills for cover or burying one’s money under the ground.

Of course, such sentiment has been bolstered by falling asset prices, which if we borrow George Soro’s “reflexivity theory” basically means irrational beliefs or convictions reinforced by market actions can help shape reality- or that market trends have the tendency of molding fundamentals than the other way around.

In the US signs of a deepening economic slowdown, tighter access to credit, rising cost of money, declining collateral prices, forcible liquidations, rising bankruptcies and foreclosures, the seeming paucity of capital, diminishing consumer spending, decreasing business spending, falling corporate profits and a continuing gridlock in the global financial system compounded by high food and energy costs have combined to impinge on the country’s socio-ecosystem.

And the inference is that trade, finance, credit and labor linkages, aside from unpredictable tide of capital flows, effects from intertwined currency regimes and consumer sentiment channels in a more intensified and interlinked world raises the risks of a contagion-a global recession or even a world depression. (The latter has been a popular topic searched at my blog. Besides, google search shows 3,020,000 links, compared to world recession of 546,000-meaning a surge of topical resource materials)

Meanwhile, emerging markets former darlings of global investors predicated on economic growth outperformance appears to have now been consumed by the conflagration of soaring food and fuel prices or mainstream’s definition of “inflation”.

So, from the chain of linkages shown above, the world “recouples”.

Add to this dimension is that since globalization has so far bolstered the faltering US economy via the underlying strength of the global economy fed by the transmission link of dollar links and currency pegs, manifested through via the export and financial assets channels; thus, a softening of the ex-US economic growth tends ricochet back to the US economy, reinforcing a vicious countercyclical trends around the world.

Shrinking US Deficits Mean Lower Liquidity and Higher Risks

Figure 1: Gavekal: Shrinking Global Liquidity via US Trade Deficit (HT: John Maudlin)

As we have pointed out previously pointed out in Global Financial Markets: US Sneezes, World Catches Cold!, the slackening of the non-petroleum trade deficits (largely indicative of slowing demand growth in the US) have been replaced by a surge in petroleum imports (oil imports now comprises almost 50% of total), which makes the overall deficit marginally lower but still significant see figure 1.

However, the recent decline in Oil and commodity prices seem indicative of two important dynamics: one global economic growth could be in decline (see Philippine Economy: World Financial Markets Allude To Diminishing Risks of Inflation) and second, diminishing trade or current account deficits have translated to reduced US dollar based liquidity circulating throughout the world financial system.

Since most of the world transactions remain anchored to the US dollar the US current account deficit functions as the world’s working capital. Hence the decline in the trade or current account deficits leads a contraction of liquidity in the global marketplace and a potential dollar squeeze that leads to a financial crisis somewhere.

Figure 2: Economagic: US Current Account, S&P 500 and US Dollar Index

Figure 2 from the Economagic shows that in the past, significant improvements in the US current account (see blue circles) have coincided with a recession, weakening equity price values and a rallying US dollar trade weighted index.

We have been seeing many of these factors in motion-recession still unofficial, faltering US equity benchmarks, global credit crunch, and consolidation of trade weighted US dollar index-as the current account balance deficits have markedly improved.

So the point is global liquidity have been greatly impacted by the ongoing deleveraging process in some of the major developed economies and the pronounced transfer of wealth from oil consumers and oil producers which can equally be seen as a transfer of wealth from the private sector to the public sector (which likewise adds to the tightening). Thus, the risk environment remains elevated for MOST of the world’s financial markets.

But When The Parasite Is Removed, The Host Will Thrive.

It can also be said that we can’t disagree with the analysis that the world risks transiting into a recession, considering that OECD economies constitute nearly 2/3 of GDP (nzherald.co.nz).

But then again, given the high levels of risk aversion and the impact from contracting liquidity, we can’t also read too much of the aggregate as representative of all the parts, lest be engaged in the fallacy of division- what must be true of a whole must also be true of its constituents, because of the following:

1. There are inherent nuances in the risks profiles of every nation due to the idiosyncratic political, economic and financial/capital markets structure or in the policy directions by respective authorities, see table 1.

Table 1 Economist: Country Risks Scores

This from the Economist (underscore mine),

``The credit crunch continues to depress ratings in the developed world. While the emerging world largely dodged the subprime bullet, it is beginning to feel the impact of the credit crunch and the slowdown in the OECD. Inflation is also having an adverse effect on emerging market risk scores. Inflationary pressures are in part due to high fuel and food costs, but also sometimes reflect overheating and capacity constraints. Central banks are generally behind the curve in tightening monetary policy and will have to raise interest rates aggressively to rein in inflation. This will create strains for companies and households which have borrowed heavily in the boom years, particularly if output growth slows.”

Whether the problem is inflation or from spillover effects from credit crunch or a combo thereof, the different configurations and policy directions determines the disparate risk profiles of each nation. So it would be ridiculous to lump the Philippines in the same category with Zimbabwe or Iraq in as much as it would be ludicrous to classify the Philippines with that of Switzerland or Finland.

Thus, the different risk profiles will result to diverse outcomes relative to economic wellbeing or financial market performance.

2. Doomsayers could be overestimating the risks associated with the chain effects from global linkages while underestimating other variables such as domestic investment and consumption patterns aside from regionalization trends or policy levers available to authorities.

Figure 3: ADB: Emerging Asian Regionalism

For instance, while it is true that Asia remains sensitive to world trade, where 67.5% of exports represent final demand OUTSIDE of the integrated Asia, regionalization has not been CONFINED to simply trading channels but to other aspects such as tourism, equity markets and bond markets (e.g. Asian Bond Market Initiative), foreign direct investments, trade policy cooperation and macroeconomic links as shown in Figure 3.

In addition, learning from the Asian Financial Crisis of 1997, it is noteworthy to cite the region’s attempt to undertake insurance measures such as monetary cooperation like the Chiang Mai Initiative (CMI), or a resource pooling strategy consisting of bilateral currency swap arrangements to cushion potential recurrence of external shocks. Another is the Manila framework, “a regional surveillance mechanism to monitor economic development and issues that deserve attention by the participating members.” (ADB)

Next, in the perspective of policy leverage, the humongous currency reserves of China ($1.81 trillion as of June 2008- Bloomberg) and the rest of the emerging market rubric which accounts for 76% of the $4.9 trillion global reserves in 2007 (Michael Sesit-Bloomberg) allows for much leg room for domestic investment spending or stimulus.

Investment bank Merrill Lynch estimates that Emerging Markets are expected to pour a huge amount of these reserves into infrastructure expenditures as shown in Figure 4.

Figure 4: US Global Investors: Expected Share of EM Infrastructure expenditures

According to khl.com, ``Annual infrastructure spending in emerging markets (EM) - Africa, Middle East, Latin America, Eastern Europe and Asia - is expected to jump +80% over the next three years, according to financial management and advisory company Merrill Lynch.

``The company's latest forecast said EM infrastructure spending would rise from US$ 1.25 trillion to US$ 2.25 trillion annually over the next three years, thanks to more aggressive government spending programmes, fuelled by decades of under-investment in power, transportation, and water, and higher analyst estimates.” (highlight mine).

So while the much dreaded consumer goods and services inflation wanes in the following months, we can expect EM governments to address its policy leverage by renewing its focus to build internal productive capacity.

Here in the Philippines, infrastructure expenditures are expected to climb to $50 billion from 2007-2010 (chinapost.com).

From the investor's point of view, areas where such huge investment undertaking will take place should translate to massive growth potentials and outsized prospective returns.

3. As we have repeatedly been saying, the problem of systemic overleveraging and the attendant market prompted deleveraging process has been mostly an Anglo Saxon or US-Europe affair with very little or minimal exposure in Asia or in the Emerging Market economies see figure 5.

Figure 5: IMF Global Financial Stability Report Update: Bank Writedowns and Capital Raised

Figure 5 from IMF shows that writedowns far exceed capital raising activities mainly seen in the US. From the IMF, ``However, disclosed losses have thus far exceeded capital raised and banks face difficulties in maintaining earnings due to falling credit quality, declining fee income, high funding costs, and exposures to “monoline” and mortgage insurers.” (highlight mine)

Thus, it is essential to understand the distinction among countries baggaged by cyclical or by structural variables. This also means countries affected by countercyclical factors are likely to experience shorter term pain compared to the structurally impaired markets whose recovery are likely to be protracted due to the sizable market clearing process coming out of severe malinvestments.

So we can’t buy on the notion that the world will evolve towards absolute “convergence” based on financial market performance and or in the economic outlook in as much as we can’t expect total “divergence”.

Under today’s environment, economic and financial market performances will likely be discriminatory than a holistic episode as seen during the recent past.

To quote Peter Schiff of Euro Pacific Capital (emphasis mine), ``The world is over-reacting to our problems, almost to the extent that we are under-reacting. Investors are over-estimating the global consequences of the collapse of the American consumer. I have long argued that American consumers have been functioning as global economic parasites, feeding off the productivity of the rest of the world. When the parasite is removed, the host will thrive. While those who have loaned us money will finally recognize their losses, the truth (belatedly recognized) will set them free. Once they move on, the world will enjoy enhanced growth, as it reclaims the savings, resources and consumer goods previously sent to America on credit.”