Simple "World" Math...

I’ve heard the comments too many times to count and wish to dismiss such rubbish. “The BRIC (Brazil, Russia, India, China) countries will lead global growth and thus double-dip recession is off the table”. You’ve no doubt heard about the torrid growth coming out of the emerging markets. I can not dispute that and fully agree…Brazil is humming long at 5% clip…Russia was at a 5% clip till last year where it dropped 8%...India is moving at a 7% clip…....and last but certainly not least China is flying at a 8-10% pace. So no question these countries are Emerging.

Here is what I wish to question. The United States, Europe, Japan and the U.K. account for 65% of the World’s GDP. Arguably, this 65% is seeing no growth or very little if any. All of these 4 places have serious debt problems that continue to move above and beyond the 100% debt to GDP level.

Let’s take a closer look at the BRIC’s. Add these 4 countries up and you get 15% of the World’s GDP. All these countries are growing nicely, except Russia, and have very little Debt to hamper their growth.

So my simple math problem is how does the 15% carry the other 65% of the bums???

Let’s take a real-life example…I’ll even make it Politically Correct….Wife makes 65% of household income or let’s call it $65,000 a year for simplicity, and Husband makes 15% of their income or $15,000 per year….Now factor in that Wife has growing expenses at 10% of her income which would be $6,500 this year and she can’t cut any expenses because they are Fixed.  Now husband has a nice bump in income at 8% of his salary this year which works out to $1,200 and he has no growing expenses.

So his $1,200 bump can help make a dent in Wife’s $6,500 increase, but it doesn’t carry her the whole way. So how the heck can the BRIC’s carry the rest of the INDUSTRIALIZED World on it’s back???

Even the math doesn’t add up.  I strongly oppose this opinion that the emerging markets will carry the rest of the world into the Holy land.  I Don’t think David takes down Goliath this time…oh and by the way I don’t have a unicorn ranch either…prepare accordingly.



Just in case you wanted to see the numbers:

(% of World’s GDP)

E.U – 28%
U.S. – 24.5%
Japan – 8.7%
U.K. – 3.6%

Total Industrialized = 64.8% of World’s GDP = Not growing with Significant Debt

Brazil – 2.7%
Russia – 2.1%
India – 2.1%
China – 8.4%

Total Emerging = 15.3% of World’s GDP = Growing quickly with barely any Debt