The US services sector is the most dynamic component of the US economy, accounting for over three-quarters of total US employment. The services sector also accounted for more than 78 percent of US Gross Domestic Product (GDP) since the turn of the century. Without question, this sector dominates the economy and will be the springboard for future US economic growth. During the period 1998-2008, for example, services industries added nearly 14 million jobs, in contrast to the loss of over 2.9 million jobs in goods-producing industries. Screw the energy sector – which once accounted for over 50% of Britain and U.S.’s GDP – now accounts for less than 20% of their respective GDP. The financial service industry is far more important. MUCH MORE IMPORTANT!
A vibrant US financial services sector requires having access to clients not only in the US, but in markets around the world. And why are these non-US markets essential for future economic growth and job creation? The answer lies in the growing market share of non-US markets — more than three-quarters of the world’s GDP, about two-thirds of the world’s equity market capitalization, approximately two-thirds of the world’s debt markets, and 95 percent of the world’s consumers, are now found outside the United States.
Those in the power and money echelons of the “developed” world scramble day after day to hold the pieces of their collapsing financial tower of cards in place (and manipulating public perception that all is well), knowing full well what the final outcome eventually will be. There is simply no more incremental debt capacity at any level in the U.S. and Europe: Sovereign, household, financial or corporate. This is a simple fact. As the financial services industry learnt, additional debt capacity will only mean new loans based on incrementally more hideous collateral. Quality collateral is already taken for currently performing loans. Everyone knows that a steady deleveraging of U.S. and Europe will remedy the situation but may take a few decades.
The only way to avert disaster globally is to look into the future, at neither toward the US, and certainly not Europe. Without the ability to create debt out of thin air, be it on a secured or unsecured basis, the ability to “create” global growth, at least in the current Keynesian paradigm, goes away with it. There are two places where there is untapped credit creation potential, if not on an unsecured (i.e., future cash flow discounting), then certainly on a secured (hard asset collateral) basis. These are Africa, and Central Asia.
While the Europeans, Americans, Chinese, Brazilians, Arabs etc. are all busy screwing each other – Iran (and most of Central Asia) has kept largely out of the orgy…so much for the high moral principles of the Rapist regime in Iran! A transformed Iran, and Central Asia with it, would create massive export opportunities for the U.S. and Europe and in the process generate massive opportunities for the financial services industry world-wide. It would be a massive engine driving the world out of financial disaster.
Iran has one of the lowest levels of foreign debt (about $12.5 Billion). This means Iranians have a net per capita foreign debt of $170. Peanuts compared to the rest of the world. Iran ranks 84th on the list of nations with foreign debt, one notch below Jamaica! According to some estimates Africa and Central Asia can create $10 trillion in secured debt EACH, using their extensive untapped resources as first-lien collateral. Long-term opportunities for the financial service industry in Africa and Central Asia are huge!
But if you have to pick between war-torn, generally financially (and functionally) illiterate African populations versus Central Asia’s essentially literate and resource rich regions for debt collateralization – Central Asia beats Africa hands down for an immediate take-off.
Central Asia is nothing without two ‘critical’ leading nations: Iran and Turkey. These two must collaborate and not see each other as competitors. And they must become fully integrated into each other and integrated into the region. Iran’s language – Farsi – is lingua franca for over 100 Million Central Asians from Afghanistan to Tajikistan! Turkish forms the lingual basis of a variety of Turkish dialects also useful for over 100 Million Central Asians from Azerbaijan to Turkmenistan. Much like Canada – Central Asia could become a union with two official languages and function effectively on that basis.
Yes, Central Asia has a trillion or two’s worth of energy resources! But more importantly, it has 10 Trillion or 20’s worth of financial service industry capacity. And in the condition the world is in today, taking advantage of this untapped financial service capacity is far more critical. Quite simply, the region – and especially Iran – must be transformed.
Iran and Central Asia’s new generation will be the most fortunate new generation on the planet. With literally 5 Million expatriates in the Diaspora outside Iran, Iran can also benefit from an influx of expertise along with resources that can rebuild the region with its own financial and intellectual capital. Iranians will be able to lift Iran to new heights – last witnessed some 2000 years ago in the history of Iran.
The potential is huge. The opportunities are immense. I can’t wait to go home – all we need now is “change we can believe in” (inside Iran).