Stock Market of China and USA Essay Example | Topics and Well Written Essays - 1250 words

Stock Market of China and USA - Essay Example For 20 years America has been borrowing unprecedented quantities of money to play its stock-market casino. Even after the latest falls, the US stock market is worth 120 per cent of GDP, compared with 40 per cent for much of the 1980s, and far above its previous peak of 72 per cent in 1972. Meanwhile, the US trade deficit stands at a record 4 per cent of GDP; no country has ever been able to sustain a deficit on this scale for long. The US currently absorbs 64 per cent of all global capital flows to finance its deficit. Capital has been sucked out of the rest of the world, including many developing countries, to enable America to indulge itself. It is no coincidence that Citicorp, the giant US bank, has its largest branch outside New York in Buenos Aires. For years Americans deluded themselves that they were actually making this money rather than borrowing it. With the ever-rising stock market fuelling the illusion of wealth, they embarked on an orgy of personal spending, building up an average credit-card debt of $7,000 per household and allowing the proportion of their incomes saved to fall below zero for the first time since the 1920s. But now the casino has closed for business, and America finds that it has run out of chips. And then there is China. This year its economy will grow by 8 per cent, and with the vast majority of its GDP dependent upon domestic trade, it remains well insulated from the downturn in the global economy. Moreover, earlier this month China joined the World Trade Organisation, a momentous event utterly eclipsed by events in America.