Remember The BRICs?

By: Andrew_McKillop

A now nicely mythologised theme for government-friendly, politically-correct good news suppliers such as The Economist or Financial Times, and related propaganda outlets, is that the BRICs (Brazil, Russia, India, China) can still save us.

The term was coined by Goldman economist Jim O'Neill in November 2001, possibly to cheer us all up after the September 11th street theatre events staged in New York and Washington.

Although the BRICs theory of these 4 countries somehow "powering the global economy for decades to come" has taken a lot of downsizing since the early 2000s, and more in recent years, Jim O'Neill is back with his BRIC theory. Repeating that his children if not our children must be taught that as the West declines, the developing world rises up and becomes prosperous. At least some of the good things on their ex-beggars banquet table will be handed over to his children, if not yours, we are told. Its always nice to believe!

Speaking at the UK Daily Telegraph's "Festival of Business" 19 October, O'Neill's basic line was that BRIC growth "isnt so bad". Even more basic and downsized from the 2001 theory, BRICs now means only China, for all kinds of reasons, both political and economic. Russia is no longer a "friendly liberal partner", and its economic growth, like that of Brazil and India gives every impression of being "inspired" by the economic performance of European countries, even those Eurozone Specials called the PIIGS.

So Jim O'Nell, 2012 style, had to tell us why China is doing an awful lot better than its own national statistics would have us believe.

THEY LIE, WE LIE
Speaking to Daily Telegraph readers, O’Neill voiced that he is “growing suspicious” that the UK’s economic data is not accurately reflecting real growth. “The guys that publish the (UK) GDP data are worse at it than the Chinese,” he said.

 Next week, the UK Office for National Statistics (ONS) should report that the economy grew at an annual rate between 0.7% and 1% in 3Q 2012, he said. However he said he could guarantee that the initial estimate coming from statisticians "will be later revised".  Maybe it was 1% after all? Maybe it was zero? What counts however, said O'Neill, is "the UK's economic potential depends far more on how businesses ride the growth coming from China and the rest of the world’s new economic powers", while handing out copies of the all-new prospectus from Goldman Sachs Asset Management.

Showing his lively sense of humour that has never quit him at Goldman, where humour is often not appreciated, O'Neill added that "it doesn't make any sense" to use exactly the same economic formulas to record and analyse growth, and recession, in different places around the world.

Keeping the humour flowing, O'Neill told his Brit audience  that "People should not be as obsessed about this [eurozone] issue as they seem to be in this country – and certainly our political leaders should not be blaming all of our problems on them [the euro members]". What people should do, he said, is not only hand over their assets to Goldman Sachs but also forget about nearl-metaphysical things like the US fiscal cliff , "or whether Greece will survive in the eurozone or not. It's what is going on in China, Brazil, Russia, India, and some of these other nations that are becoming so important to us as well."

The BRICs are back, even if that only means China!

The stats handed out by O'Neill were supposedly awe-inspiring, but this can cut several ways: awesomely bad, awesomely fake, or only rubbish? He claimed as an awesome fact that "China's growing economy created the equivalent of a new Greece every three months" at least in 2011. Greece in 2012 should be a whole lot easier to beat, unless China's ecnomy really is falling off a cliff. His claim that the BRICs combined, in 2011, produced as much new and additional output as the GDP of Italy can also be read several ways, with all kinds of statistics, inflation corrections, purchasing power and terms of trade corrections, and all the rest.

Tiresome but real facts like Brazil being in zero-growth, this year, India's statistics being even more fanciful than UK (or Chinese) statistics, and Russia being a Black Hole did not however faze Our Jim. Goldman needs new customers, and he was there to sell the GS snakeoil.

POST CRISIS FUTURE
"This is the big opportunity for Britain's post crisis future in terms of raising our exports to these nations," Mr O'Neill argued. He pointed to Germany, which he said now exports more Mercedes to BRIC countries than it does to France, insulating itself from the effects of the eurozone crisis - while it sets itself up to make the downhill run with China's falling imports. China is rebalancing, even Jim O'Neill says so, but what that means has radically different interpretations comparing the real world, and the Goldman Sachs crystal ball.

The now tired and outdated elite theme that the BRICs are the world's future financial powerhouses was also based on a claimed "natural alliance" between these would-be powers. Since 2001, a lot has happened to split apart that un-natural alliance, including basic economic change. Oil exporting Russia, for example, takes an unfriendly view of Brazil's talk about joining OPEC "by about 2015", depending on how fast and much it ramps up exportable surpluses of oil. China and India are big importers of oil and even less inclined to "BRIC solidarity" if Brazil joins OPEC.

Conspiracy theorists have a field day on the BRIC theory of world prosperity, even as it fades out of sight. Is (or was) this theory part of a larger globalist exercise? Perhaps the idea is to reduce the prosperity of Europe and the US, while raising up selected parts of the rest of the world, for mostly unexplained reasons - but (of course) with the final goal of world government.

O'Neill, waxing philosophical, told his audience that an inevitable tide of history has lifted up the BRICs and carried them to the fore. Tides also turn, in fact regularly, but O'Neill and the guys and girls at Goldman are heavily averse to that real world reasoning, based on simple fact. As we know, even the statistics are beginning to show how fast growth is declining in the BRICs. Now reduced to China-only, the 2001 theory no longer fits with reality, although we can expect that O'Neill and GS will take a long, long time to say that out loud.

By Andrew McKillop

Contact: xtran9@gmail.com

Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

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