Chimerica..a Ferguson's postulation

No, this Ferguson is not Alex but Niall. Niall Ferguson is an imminent Historian who has written some best seller books particularly on history based on a particular theme. His first book that i read was "Empire', a grand Tour De Force narration of the British Empire.

Presently i am heavy on his latest one, "The ascent of money', a bit too heavy and intellectual but wow such a great read.
I love the way he simplify complex issues and try to enlighten readers on the fundamental underlying themes or reasons for major historic financial phenomena eg the recent sub prime loans crisis that triggers a world wide recession.

This man, Niall no doubt is a very clever man, Scottish to the core and reminiscent of that great Scotsman that wrote the ground breaking book, "The wealth of Nations, " Adam Smith.

The most insightful postulation that Ferguson offered in his book is the postulation of Chimerica.
He opined with facts that the symbiotic relations between China and America(thus the term Chimerica)
To quote the book,
" Welcome to the wonderful dual country of 'Chimerica'-China plus America-which accounts for more than half of global economic growth in the past eight years.For a time it seemed like a marriage in heaven. The East Chimericans(the Chinese) did the saving.The West Chimericans(Americans) did the spending. Chinese cheap imports kept down US inflation.Chinese savings kept down US interest rates.Chinese Labour kept down US wage costs. As a result it is remarkably cheap to borrow money and remarkably profitable to run a corporation. ...."

I love this part(scary thought though.),
"Maybe as its name was always intended to hint,Chimerica is nothing more than a Chimera-the mythical beast of ancient legend that was part lion,part goat,part dragon. Perhaps on reflection, we have been here before.A hundred years ago, in the first age of gloablisation,many thought there was a similarly symbiotic relationship between the world's financial centre,Britain,and continental Europe's most dynamic industrial economy,Germany. Then as today there was a fine line between symbiosis and rivalry.."

We all knew what happened then between Britain and Germany and we certainly hope(but must not ignore) the fine line relationship between China and America let us all pray that the symbiotic relationship that has spurred such abundant economic growth last 10 years will not turn into a bitter rivalry that can lead to a military fare.

As i finally finish reading the final chapter in his book, Niall Ferguson again give us a subtle warning that all economists and financial policy makers must read and understand financial history for we have been to this road before and present and future leaders must not take the same road that can finally lead us to Armageddon.

Scary but can be true!!!