IS AMERICAN DOMINANCE NEARING AN END? – AT 8:17 A.M. ET:   The International Monetary Fund is predicting that China will overtake us, and soon.  From MarketWatch:

BOSTON (MarketWatch) — 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.

According to the IMF forecast, whoever is elected U.S. president next year — Obama? Mitt Romney? Donald Trump? — will be the last to preside over the world’s largest economy.

Most people aren’t prepared for this. They aren’t even aware it’s that close. Listen to experts of various stripes and they will tell you this moment is decades away. The most bearish will put the figure in the mid-2020s.

COMMENT:  Not happy reading.  But let me point out that it wasn't long ago that Japan was predicted to be the world's new superpower.  It never happened.  I think China will give us a run for the money, but my friend Gordon Chang, a real China expert, points out that China has serious problems, including an inability to control its population, especially in the distant provinces. 

China is taking enormous economic strides, in large measure because it makes things.  Physical products actually come from China, the way they used to come from the United States. 

I wouldn't count America out, but China's sheer population – more than a billion – favors it for the future, if it can keep control of its population.  America, though, is favored by its innovative spirit and sense of entrepreneurship, if those bedrocks can be nurtured.

We thought we were done in 1942, after Pearl Harbor and the Japanese sweep through the Pacific.  And then again in 1957, when Sputnik went up.  And then again in 1975, when we gave up in Vietnam.  We came back stronger each time, and we were lucky enough to have a Reagan in the 1980s who boosted America's morale and restored our confidence. 

Well, today we have Obama, a man who doesn't  really believe in his own country.  We need change we can believe in.

April 25, 2011