Wall Street Strategies Special Report
By Charles Payne, CEO and Principal Analyst
The Rise of China, India and the New World Order
At this point everyone knows things are different in what we used to call the third world. All of a sudden this
so‐called third world is charging ahead, not content to simply be participants in global prosperity but to
actually move to the head of the class. Sure, for many it looks impossible for this to really ever happen, and
yet this world has seen the rise and fall of empires many larger, and nearly as rich as America is now.
In the past, missteps by empires played the primary role in their eventual demise whereas our arrogance and
complacency were missteps that led to a tipping point. Yet, at the same time would‐be rivals are coming on
hard. Make no mistake, whereas wars assisted in the fall of many empires in the past, this time around it is the
mentality of war and the determination of war being seen from countries like China, India, Brazil, and Russia.
And, down the road, it will be Vietnam and Turkey, and the so‐called Asian Tigers.
For the first time since America became the preeminent power on the planet, other nations think they can
compete and even take our country down. Just as the rest of the world is looking at America as being
vulnerable, America has become a nation of self‐loathing, where farfetched agendas are pushed upon the
public through guilt trips and fear mongering. It feels like we are coming apart at the seams so it's
understandable the rest of the world would look at America as the “Jersey Shore” of nations, not nearly as
talented as it thinks and on the cusp of imploding at any moment. So, yes, the rest of the world, led by China
and India, coupled with our own uncertainty, pose the ultimate threats.
It was only yesterday that China, India, and Brazil were seen with sympathetic eyes as maybe fun places to visit
or build a factory for dirt‐cheap labor. It was only yesterday that the only reason Russia got a seat at the table
was because of its nuclear stockpile. Now these countries are breathing down our necks. They want the good
life, that much is clear, but there is something else to this. What is that intangible that seems to drive these
people?
You remember the movie “Butch Cassidy and the Sundance Kid” when the railroad hired the best collection of
bounty hunters in the country to hunt down the infamous bank robbers?
Pausing from the relentless chase:
•
Butch Cassidy‐ “who are those guys?”
•
Sundance Kid‐ “hey, Butch?”
•
Butch Cassidy‐ “What?”
•
Sundance Kid‐ “They're very good.”
Those bounty hunters were not only the best at their jobs, but they had a sense of determination that even
had them contemplate for a moment taking a suicidal dive off a mountain into a running, rock‐filled, stream as
to not fail in capturing Butch and Sundance. That's the difference between those bounty hunters and China
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and India, where people are ready to take the dive...in fact they're lining up to take the dive. So, the question
goes back to what else is driving these people beyond increased prosperity.
I think America has become a target because it represents the West and represents all the past sins of the
West, real and imagined. President Obama began his tour in office apologizing to the rest of the world for
those sins and in the process of becoming a global rock star, cemented the notion that not only is America
vulnerable but it would be an honor to bring the nation to its knees. Nobody is silly enough think America
could be felled militarily, but instead through its insatiable desire for comfort and decades of avoiding hard
landings. Our most vulnerable point in generations saw an attempt to sneak in socialism as an economic
policy, but that has been defeated. Unfortunately, the path of destruction that is our massive deficit spending
and mountains of debt isn't being avoided. On the contrary, it has actually gotten worse even as its dangers
have become public knowledge. America is vulnerable, but the jihadists’ aspect of those that want to go
beyond merely being richer or more powerful than us goes back to another empire, the British Empire.
The 1845 edition of Madame Tussaud's catalogue, Commissioner Lin and his favorite consort, comes to mind.
It was modeled expressly for this exhibition by the celebrated Lamqua, from life, through the instrumentality
of a gentleman resident of Canton for nineteen years...dressed in magnificent Chinese costumes, lately
imported. Madame Tussaud and Sons had the great pleasure in introducing the above figures to their patrons,
which was done at a great expense.
Lin Tse‐hsu was born in 1785 in the province of Fuhkien. A scholar as a student, he joined the government and
moved quickly up the ranks. On December 31, 1838 he was ordered to go to Canton as High Commissioner
and Supreme Commander of Canton's naval forces to investigate port affairs. His real job was to find a way to
suppress the importation of opium into China.
China was in terrible shape by the time Commissioner Lin went to work as he calculated the country would not
be able to have an army, or even have the funds, to equip one in a couple dozen years based on the
widespread use of opium which some pegged at every man under 40 years old with hardcore addicts pegged
at 4 to 12 million. This scourge of opium transformed a country that was isolated yet content, and dealing with
the rest of the world on their terms.
Even when it came to trade, China dictated terms in the late 18th and early 19th century. The Emperor only
wanted China to export luxury items that were unique to China. The main item was tea to the British along
with porcelain, silk, cotton, and rhubarb. In return, China demanded payment in silver. Because the British
were on the gold standard they had to get silver coins from other sources, but primarily Spanish coins mined in
Mexico called "Carlous.” Prior to 1810, 350 million of these coins had been traded for exotic items from
China. Britain and the rest of Europe began to worry about the outflow of so much silver and the need to find
a different commodity to replace the precious metal.
In 1781, the British began exporting opium to China for medicinal uses such as the treatment of dysentery and
cholera. But, soon, the Chinese began mixing opium with tobacco and smoking it. Some history books claim it
was the British that taught the Chinese this trick and new use for opium. It didn't take long before the British
trade deficit reversed as opium poured into, and silver poured out of, China.
Between 1821 and 1837, opium sales increased fivefold. The silver in China began to leave the country as
China couldn't export enough tea and silk to balance trade. In 1820, 9,708 chests (150 pounds) were smuggled
into China, and by 1835 that number grew to 35,445 chests, an increase of 400%. When Commissioner Lin set
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out on his journey from Peking to Canton he knew the task would be daunting. He would have to bring
foreigners (mostly British and U.S.) to heel but also deal with deeply entrenched corruption of Chinese officials.
Like the Federal Reserve and Ben Bernanke, Lin had a duel mandate, his was to not only stop opium from
coming into China through Canton, which was the only port open to foreign traders, but to stop domestic use
of the drug. Ben Bernanke is still trying to figure out what his duel mandate is. If Lin could stop demand he
could stop the outflow of silver from China.
The outflow took a toll on China's copper money. Normally an ounce of silver was equal to $1,000 in cash, but
had climbed to $1,600 cash. Many taxes and dues of various kinds were collected in cash but had to be paid at
Peking in silver, in part because it was more difficult to transport copper money. At one point it was
suggested that China move to the jade standard. Apparently this was the situation in ancient China, and it
worked for a while. It didn't fly in part to the difficulty of indentifying true jade as there are numerous
substitutes. But, this made me think the day may come when America has to consider moving to a coal‐
standard since we have so much of it and will not use it for fuel. Upon arrival at Canton, Commissioner Lin
wrote a letter to the Queen:
"The way of heaven is fairness to all; it does not suffer us to harm others in order to benefit ourselves. Men
are alike in this all the world over, that they cherish life and hate what endangers life. Your country lays
twenty thousand leagues away, but for all the way of heaven holds good for you as for us, and your instincts
are not different from ours. Nowhere are there men so blind as not to distinguish between what brings life
and what brings death, between what brings profit and what does harm.”
The letter further stated:
“Ever since the port of Canton was first opened, trade flourished. For some hundred and twenty or thirty
years, natives of the place have enjoyed peaceful and profitable relations with ships that come from abroad.
Rhubarb, tea, silk, are all valuable products of ours, without which foreigners could not live.”
After talking more about benevolence, the letter got to the point:
“But there is a class of evil foreigners that makes opium and brings it for sale, tempting fools to destroy
themselves, merely in order to reap profit.”
“...our great, unified Manchu Empire regards itself as responsible for the habits and morals of its subjects and
cannot rest content to see any of them become victims to a deadly poison.”
“For this reason, we have decided to inflict very severe penalties on opium dealers and opium smokers, in
order to put a stop forever to the propagation of this vice.”
Furthering justification for tough action came from the following:
“I am told that in your own country opium smoking is forbidden under severe penalties.”
“This means that you are aware of how harmful it is.”
But better than to forbid the smoking of it would be to forbid the sale of it and, better still, to forbid the
production of it, which is the only way of cleansing the contamination at its source. "
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Historians doubt the queen ever got the letter, and the pressure become more intense as Commissioner Lin
did receive a letter from his own Emperor on Feb 19, 1840. That letter stated: “you are not merely a governor‐
general in charge of two provinces, you are a substantive.”
The final line stated: "if measures are not taken to root out this evil once and for all you will be called into
account.” By then, war was unavoidable as there had been a series of skirmishes, including a British blockade
of the Pearl River into Canton to prevent a Quaker‐owned ship from entering. As the opium trade dried up,
Lord Palmerston, the British Foreign Secretary, initialed the Opium War in order to be compensated for lost
commerce associated with the opium trade. British forces won most battles with ease, and worked into the
other parts of China until they finally defeated the Chinese at the mouth of the Yangtze river, bringing an end
to the war in August 1842.
Throughout it all, China tried every tactic they could to try and stop the opium trade and none worked. In a
letter to Captain Charles Elliot, Lin incorporated all the angles.
The 4 considerations:
1. Foreigners must surely dread the anger of Heaven, which could punish them and their seafaring efforts
through gales, dragons, crocodiles, and the giant salamander.
2. The legal aspect of China having the right to govern its people and sphere of influence.
3. The commonsense angle that China was the source of rhubarb (believed needed to purge European
kids every quarter or so to cleanse their bodies) and tea "without which you could not exist" and silk
"without which you could not make your textiles" and sugar, cassia, vermillion, gamboge, alum, and
camphor.”
4. Finally, the heartlessness to continue selling opium has made you the object of widely spread popular
indignation, and it is dangerous to incur the resentment of the masses.
China's humiliation was only beginning.
The First Opium War was about power and the spread of the British Empire. Or, as U.S. President John Quincy
Adams put it, the seizer of a few thousand chests of opium smuggled into China by the Chinese government
was no more the cause of the Opium War than the throwing overboard of the tea in the Boston Harbor was
the cause of the American Revolution.
Of course, America won its freedom from Britain, but China tumbled into a series of additional wars and
failures.
There were the Treaties of Nanking and Tianji otherwise known as the Unequal Treaties that saw:
¾ The opening of additional ports and unrestricted foreign trade in China.
¾ Fixed tariffs that saw Chinese import duties decrease to 5% from 65%.
¾ Cessation of Hong Kong to the British.
¾ Assignment of extraterrestrial rights to the British.
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The defeat and treaties saw other nations wanting similar accommodations. Moreover, it led to the Taiping
Rebellion, a wide‐ranging civil war in the south considered by historians one of the deadliest conflicts known to
mankind as more than 20 million people died. The British and French were called upon to help fight off the
rebels. The Boxer Rebellion saw the Righteous Fist of Harmony (hence the name boxer), which saw the
Chinese get assistance from an international force that included British, Japan, Russia, France, U.S., Germany,
Austria‐Hungary, and Italy. China paid these nations the equivalent of $61.0 billion in silver for their aide in
putting down the Rebellion, and by 1912 the dynastic era in China had come to an end. That bitter pill has
never been swallowed, but instead clenched between the teeth of people that went from trading in tea and
silk for silver to being the subject of late‐night television ads featuring a crying Sally Struthers asking money to
help those poor, helpless people.
The last decade has changed that. In fact, over the past decade China's economy has surpassed all those other
nations that came to its aid (for a price) during the Boxer Rebellion, except one. The big question now is when
China will pass the last name on the list, the United States. A couple of years ago I was in Jackson Hole, home
of former World Bank President Paul Wolfowitz, and he told me China and India would be more than half the
world's GDP within twenty years. I was in denial even though this wasn't a newsflash to me. Jim Rogers had
been telling me the same thing for almost 10‐years and still I resisted the notion. I just didn't want to believe
America could fall to number two. Ironically, what we are probably looking at is one of the shortest reins of a
global economic powerhouse in history.
In his book "The World if Flat", Tom Freidman predicted China would overtake the UK, Germany, and Japan by
2015, and the U.S. by 2040. Now, some are saying they will mark that last belt‐notch by 2015. Of course, we
forget that China was the world's largest until 1890. Mao was inspired by the Boxer Rebellion, which is said to
have begun with his ignorance and stubbornness. However, soon the war became popular with the educated
elite who saw the fighters as brave and righteous. I think what's going on now is a continuation of that
rebellion, and I think it’s all hands on deck. For those in America hoping that unrest or inflation derails the
Chinese economy, I say it's going to be a long wait. Sure, inflation is a problem and China doesn't have much
experience in slowing down a locomotive without derailing it, but even if it jumps the rails I bet it starts right
back up. There was a report in the Shanghai Times this week that the Chinese government is deliberately
trying to knock down housing prices in top tier cities by 30%! Talk about a hard landing.
Our elected leaders reacted with shock and indignation at the thought of hiking the retirement age for social
security a single year 35 years from now. As for unrest and revolution derailing the nation, I don't think it's
going happen anytime soon. It's an unusual mix now, communistic brain but capitalistic cardiovascular system,
but it’s working. The late Daniel Bell, sociologist and professor emeritus of Harvard, said capitalism might co‐
exist just as happily with Chinese authoritarianism as with American democracy. By the way, when the
revolution comes to China it will happen via those online gaming communities.
China's charge back to the number one position in the economic pecking order is fraught with ironies. This
time they are selling the West junk, not porcelain and silk. China isn't getting silver this time around but they
are building a war chest of foreign currencies, including $42.0 trillion. Moreover, this time around the opium
isn’t our addiction, instead consumers to cheap plastic stuff and our government to cheap borrowing. We all
know that debt can become an addiction, and for consumers symptoms include ignoring monthly credit bills or
buying stuff and then returning that same stuff.
Many consumers actually try to hide their addiction from family and friends, but not the government. Despite
shocking near‐death experiences in Europe our government continues down the same dangerous path,
although there is nobody at the end of the road to bail out America. Or maybe it could be a combination of
China and the IMF? But, how happy must China be that its top two trading partners are Europe and America.
5
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Ivan Illich said: “In a consumer society there are inevitably two kinds of slaves, the prisoners of addiction and
the prisoners of envy.”
The Apple iPhone is created from components made in nine different countries and cobbled together in China.
If they were assembled in the United States it would spark the creation of 50,000 jobs or more, and add $5.4
billion to our export total. The margins would be slimmer, however, so I get that part. Still, it shows how
American consumerism is making China richer. The factory that assembles the iPhone hired 400,000 new
workers in China in 2010.
By the way, the first FoxConn contract was assembling channel knobs for an American maker of black and
white televisions, and then it made components for the Atari 2600. The company's amazing rags to riches
story is tied directly to America's consumerism. I remember in June of 2007 all the excitement over the
iPhone. I have a niece who lives in the South Bronx. She is married with two children, and while she and her
husband work hard they don't make much money she was there on June 29, 2007 to get her phone. Before
she set out to be a first adopter I told her she should just buy a $30.00 cell phone and buy $570.00 in Apple
stock. Too bad because that phone is obsolete now but that stock is up 300%. So, there are ways to make
money off our deep plunge into serfdom as individuals and a nation. But, making money off the demise of
America is a hollow victory at best. We need the government to suck it up so gains in the stock market, and
any U.S. asset, isn't offset by a worthless dollar.
I know there are folks out there still saving confederate money in the hopes it comes back one day, and at the
rate we are debasing our currency now they might be right. I'm going to discuss investments that should do
well as China, India, and the rest of the world. Right now, China owns about $900.0 billion in U.S. debt directly,
and probably $400.0 billion indirectly through UK sources.
In the past year UK ownership of U.S. debt has soared to more than $500.0 billion, and there is no doubt in my
mind 4/5 of that is really China. However, I'm not 100% sure why, it might make less of a domestic ripple for
China if they ever decide to dump wholesale. Whatever the reason it is clear the United States is smoking the
dope. This is our opium. In fact, I'm sure all men under 40 years old have partaken in the opium of debt. I'm
sure most men under the age of 40 has bought a flat panel television made in China, and most are hardcore
addicts to the plastic products that flow out of China these days.
In the meantime, China's currency manipulation continues to make it difficult for American businesses and
entrepreneurs to sell their wares there. All of our government officials from the Obama Administration have
been over there asking for fairer trade.
It's only a matter of time before Tim Geithner goes back and appeals to the Chinese leadership to consider four
things:
•
Angering the heavens.
•
America's legal rights.
•
The commonsense approach because surely China doesn't want to kill the goose that lays the golden
egg.
•
Running afoul of public opinion in America because at some point we might rise to prominence again.
Interestingly China is playing up its role as villain to manipulate US policy and spending. By becoming the de
facto spokes‐country for third world countries, China has pressured America to fork over hundreds of billions
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6
of dollars to those countries in order to play ball on the next global climate control treaties. The rationale is
that these countries and China were not in position to benefit economically while the west was enjoying its
industrial revolution.
Any deal we enter will be expensive to US taxpayers and prohibitive to business but that is the goal of the EPA
these days. In addition, China understands its strength in alternative energy is a lightning rod for liberals in
America and justification for ultra‐expensive laws and policies to force feed their agenda that has nothing to
do with economics and everything to do with appeasing environmentalists.
I want to chuckle when President Obama says we have to hurry up because China has taken the lead in solar
and wind energy. Germany was first out the gate to try and conquer the world with renewable energy and
appease Mother Earth. They poured billions of dollars into solar panel production and tax subsidies for
installing them. Spain followed right on their heels. Well, now Germany, the cloudiest country in Europe by
the way imports most its solar panels from China and solar panels coupled with a crumbling housing market
damn near sent Spain into the economic dustbin.
For the record for every job that was created from solar power in Spain, 2 jobs were lost. But we are being told
the final validation for the need to wreck our fragile economy even more is to catch up with China. The same
China whose currency is 40% cheaper than it would be in a free market exchange and where the all‐American
success story, Apple, assembles its products to maximize its margins. But the joke is on the White
House...maybe.
While China is talking the talk on renewable and clean energy, it is sucking up all the fossil fuels it can get its
hands on. Maybe the White House understands this, but needs a boogeyman to push their agenda. However,
forcing draconian limits on crude, natural gas, and coal is going to cost the average person a fortune and
hasten our more to second place...maybe third in the world decades sooner than even Tom Friedman
reckoned.
While this administration is pressuring coal companies, demonizing oil companies, and mounting complaints,
China is on the move. Last year deals included $20.0 billion in Venezuela to explore their Orinoco Belt, $7.0
billion in Brazil for a Repsol property, $3.1 billion stake in Bridas in Argentina and $23.0 billion in Nigeria for
three oil refineries and a petrochemical plant. Some say the Chinese are like Japan back in the 1980s, which is
going around overpaying for everything. I disagree. Six years ago the Chinese cut a deal with Rosneft to send
oil via rail using a $6.0 billion loan to make it happen. China got the oil for $17.0 per barrel up to 48.4 million
tons. The deal expired last year and was not renewed, but they got their money's worth and are now funding
the largest infrastructure project in Russia, which will be the world's longest when completed in 2013 and cost
$25.0 billion. There is also a pipeline through Burma to import more oil from the Middle East and Africa.
China has crude oil supply contracts with Argentina, Angola, Azerbaijan, Canada, Indonesia, Chad, Iraq, Iran,
Kazakhstan, Burma, Nigeria, Peru, Russia, Saudi Arabia, Sudan, Turkmenistan, Uzbekistan, Venezuela and soon
Singapore. But it doesn't stop there. Last week PetroChina gave Ecana $5.4 billion for a 50% stake in its
Cutback Ridge natural gas field. The week before that, China National Offshore Oil Corp (CNOOC) cut its
second deal to invest with Chesapeake Energy for a piece of another natural gas fracing deal. It's not just the
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natural gas assets China is gaining, but a technology that has lead to such economic prosperity and revival that
North Dakota has the lowest unemployment rate in the country. And what are we doing? We are using food
for fuel and in the process pushing food prices up around the world and making it more expensive for poorer
Americans to get to work.
I'm not trying to judge how the British handled events leading to the Opium Wars, but I used a lot of sources
for research inducing "The Opium Wars through Chinese Eyes" by Arthur Waley, and I'm convinced the country
is on a determined course.
We can tilt at windmills literally or we can figure it out and that means kicking the habit. That means kicking
the debt habit and putting real pressure for true free trade. We must also become more competitive. We
must use our own natural resources and let the free market dictate adoption of renewable and so‐called clean
energy. By the way, the top 11 solar companies in the world that are publicly traded are off an average of
more than 75% from their all‐time trading highs.
China isn't the only nation driven grievances from past western domination. India is also charging hard and
there is no doubt in my mind driven by a determination to usurp the west. I also have to believe they think
their treatment was unfair and lead to things like pandemics, the Great Famine of 1876 to 1878 that may have
killed 6 to 10 million people, the Indian famine of 1899 to 1900 that killed between one to 10 million.
We all know of Gandhi and his nonviolent movement. India and Pakistan were formed in 1947 and soon will
be the number one and number four most populated countries in the world. India is still a backwater country
in so many ways. My niece just returned from a visit to attend a friend's wedding and outside of the Taj Mahal
she said it was the dirtiest place she'd even been and asked me and my wife not to go.
The country is charging ahead from a very deep hole. In 1921 life expectancy was 25 versus 55 in England and
dropped to 23 years by 1931. In 1935 only 4 out every 10,000 students enrolled in college. In 1935 the nation
of 350 million people only had 16,000 books. In 1934 there was only one hospital bed for every 3800 people.
Even now the average person in India earns less than the average person in Tunisia, Algeria, Egypt and many
other nations on the brink civil war and upheaval. This is why I say income inequality and pure poverty are not
the cause of upheaval. Take Mumbai which is home to Mukesh Ambani's 60‐story private residence that boost
six floors of parking, a movie theater that would make most mall theaters blush, a couple of guest apartments
and 600 full‐time staff. His home cast a shadow on the slums of Mumbai where 60% of the people in that city
live on $2,675 a day. These slums are rows of tin and cardboard homes in neighborhoods with names like The
City of Dreams. Some actually have cable television and satellite TV.
I assume there is some resentment toward the ultra wealthy by people in Mumbai, but I think most are
inspired and proud and see the tallest single residence in the world as a beacon of hope. How proud were
those New Yorkers that watched a series of buildings spring up, breaking one record after another and forming
the most famous skyline in the world. The Chicago's World Fair saw technology for skyscrapers and elevators
and help to spark the Industrial Revolution in America. Just think there were the Woolworth Building, then the
Empire State Building and finally the Twin Towers. Now America only has one building among the top ten
tallest in the world, the former Sears Tower is now named the Willis Tower after a British insurance company.
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Which takes me back to the fact there is lingering resentment toward the British in India that manifest itself in
UK acquisitions made by Indians. Take Indian entrepreneur Sanjiv Metha who bought the registration of the
East India Company from private investors in 2005. He said people "rejoiced because an Indian has bought the
EIC‐ it is a symbol of redemption." Indian companies are said to have overpaid for recent takeovers of UK
companies Corus, Jaguar, Land Rover, Tetley, Imperial Energy & United Spirits among others.
There is no doubt the determination to beat their old colonial master and the current symbol of western might
is a serious driving force and why Indians are too busy to join in the revolt of the youth crossing North Africa
and Middle East and moving toward the subcontinent. The country is crowded, dirty, loud and dirt poor, but
many economists believe Indian is the best positioned country in the world for the next 20 years.
So, what about America, are we prepared for this fight or will we go quietly into the night with the only sound
and lights flowing through our kids' window as they play video games around the clock?
These days while still peddling fear and urgency to turn America into a land of windmills and solar panel farms,
President Obama remembers to also mention that America has the largest economy ‐by far, of any in the
world. It's an odd thing because it's not said in the manner of a championship team but more in the tone of
the best team that just lost their best player. There is a crestfallen essence to the line that sounds more like
taps than reveille.
Yes, America is still the best, the richest, the mightiest nation in the world, but...nobody would deny we are in
trouble and our lofty perch with majestic views of the world now feels like we're standing on the edge of a
slippery rock of a sheer cliff. What a sight to behold:
•
20% of world's GDP
•
1 recipient of foreign direct investment
•
40% of the world's assets
•
40% of the world's assets
•
5% of the world's population
But we are like Tiger Woods these days and nobody is afraid. An Egyptian dictator says he'll hang around in
defiance of the U.S. President because he can get money from Saudi Arabia. North Korea is building nukes,
Iran is building the capacity to build nukes, Germany rejected its natural instinct to go deep into the socialist
bag when the Great Recession happened and in the process thumbed its nose at the White House.
America is sliding down many matrix that measure prosperity and lifestyle beyond gross output. Once, we
boasted the most college grades (25 to 64) as a percentage of population in the world today we are number 12
on the list at 40.3%, Russia is number one at 54%. Yes we have the best universities in the world but how
many Americans are attending them?
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Foreign‐born students are now 55% of PhD candidates in engineering, 45% of PhD candidates physics, and 80%
post‐doctoral candidates in chemical and material engineering. I actually like the idea of foreign‐born
students attending our universities and staying to become productive members of American society but fewer
are coming and fewer are staying these days. In 2001 there were 200,000 student visas in 2006 the number
shrank to just 65,000.
In 1968 Peter Drucker coined the term "Knowledge Economy" and it's
here now. We must reform our education system, make the curriculum
more difficult and challenging while encouraging creativity and
independent thought. We must dump bad teachers and allow students
to pick their school with vouchers that force schools to compete. Right
now we are just churning out high school graduates that really aren't
ready. An article in WSJ last week reported on ill‐prepared high school
graduates.
It's shocking stuff, it’s real, and it can't be played around with anymore.
So, how do we tie these trends together and form a cohesive
investment strategy.
One country, once driven to excellence after breaking away from a
colonial master and setting the world on fire in the process, is at a
crossroads after putting it in park for too long. Two other countries
that once comprised over half the world's GDP are on their way to
doing so once again.
High School Grads
Graduation Rate
College/Career Ready
Statewide
76.8%
40.8%
NYC
64.5%
22.8%
White
79.2%
42.5%
Asian
78.5%
50.1%
Black
60.4%
12.7%
Hispanic
57.0%
13.3%
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Other nations have gotten a taste of the apple or have an idea about how sweet it must taste. Coming out of a
disastrous economic meltdown, we are on the cusp of the world being a wonderful place. With everyone in
the mix there will be other unique challenges like the fight for food, already sending prices soaring and other
commodities, too. Heck, there is even a chance America might get into the game, too. The next 10 to 100
years could belong to the rest of the world while old powerhouses, America, Western Europe and Japan fade
in importance and influence.
Investors must have exposure to Brazil, China, India, Turkey, Indonesia, Vietnam, Chile, Argentina, even
Myanmar, Chad, and other sub‐Sahara African nations.
© 2011 Charles Payne All Rights Reserved
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