I referred the following quote in the comments during the week but in a video on Bloomberg Stephen Roach said that no country has ever devalued its way to prosperity and the US won’t be the first.

A few times since the tech bubble burst I’ve heard or read people pointing back to some very specific indicators/factoids from when the bubble was inflating with the tone being that an extreme bursting was obviously going to happen.

Sometimes I get the feeling that we are now confronting things that come the middle of the next decade people will look back and say things like “with an $8 trillion dollar deficit of course the market…” and then they’ll fill in with whatever does in fact happen. Another one might be “well the dollar cut in half in just ten years so of course…”

My stance on this line of thought has been the same for a while which is there is visibility for lower, but still positive, stock market returns, higher interest rates than we’ve had for most of this decade, like maybe ten year treasuries in the sixes or sevens and the slow realization that the US will not be the most important economy in the world in the 21st century.

If it is not clear, I do not believe the US will be some sort of post-apocalyptic outpost where we barter with gasoline or whiskey. I even wonder whether many of us will even notice. In fact if this turns out to be correct I suspect history would say this shift started in the late 20th century, maybe with the Plaza Accord?

Something that should be obvious toward this point is that capital has clearly flowed into other countries. Look at the five largest companies in the world and the US does not dominate as it used to; Gazprom is on there along with a couple of Chinese companies.

A skeptic might note that part of the problem with the tech bubble was all the companies that were larger than $100 billion. I don’t think $100 billion is the key number anymore, maybe its $200 billion or $250 billion but maybe this is an issue; Gazprom made a high on Friday in dollar terms and has a $347 billion market cap. Or maybe it isn’t; Petro China (PTR) is down 47% and according to Yahoo Finance has a market cap of $253 billion.

The market cap issue is something to be aware of. Petrobras (PBR) is up to $283 billion, China Mobile (CHL), client holding, is down to $334 billion. The more important thing is that significant capital has rotated into these countries during this decade and I doubt any of us are surprised. At the same time the US market has had a big round trip to nowhere.

The ascendancy of these countries, possibly at the expense of the US, is a big, big macro theme and however you are capturing it now you may need to capture more of it. Don’t take that as bigger bets but maybe the path is more smaller bets. Instead of owning three or five other countries maybe you need seven or eight.

I write about this a lot but I think it is becoming more obvious that this will be important for our financial futures.

The picture is from Phantom Ranch which is at the bottom of the Grand Canyon.

Last 5 posts by Roger Nusbaum

• The Big Picture for the Week of November 15, 2009 - November 14th, 2009
• Process Drilldown - October 23rd, 2009
• Sunday Morning Coffee 10-18-09 - October 18th, 2009
• A Little Followup From This Morning - October 8th, 2009
• Wednesday Roundup - October 7th, 2009