30th October 2013
The mighty Forbes magazine will surely not lose any sleep over this, but Mindful Money does not agree with its power list. President Barack Obama is beaten by Vladamir Putin to take the number one spot.
Now it’s a great list and certainly well worth a read. It is also worth consider the methodology.
As Forbes says, four factors were taken into account to select the 72 people that matter from the 7.2 billion people on the planet: how many people they have power over; the financial resources they control; if they have influence in more than one sphere; and how actively they wield their power to change the world.
Now we are sure Mindful Money readers will have watched with interest and some concerns about their investments as the US nearly pitched itself over a debt cliff or hit the ceiling or whatever metaphor you need to describe the fact the world’s largest economy nearly pressed the self-destruct button on its economic credibility, if not quite the economy itself.
Vladamir Putin doesn’t have to stress so much about getting any financial measures passed in the Duma. But one small detail – Barack Obama won the stand-off.
In addition, the US is growing. Not by much of course, and not by comparison with previous recoveries but at least by 2 per cent. It is anaemic growth as BlackRock’s Russ Koesterich describes it, but it is still better than the UK, which is supposedly experiencing a mini-boom. The US is in debt to China certainly – it needs to get it under control but it has time to do so – that is the benefit of the being the reserve currency.
But perhaps most important of all, we think one huge change is still not properly factored into anyone’s thinking and certainly not this list’s. That is the re-emergence of the US as an energy sufficient economy, thanks to shale oil and gas. Obama’s hand is certainly strengthened vis a vis his European peers (even if they are upset with him for listening in to their phone calls). But the US will be less tempted to overstretch itself to secure energy supplies – a definite strength not a weakness.
And while Putin can still turn the gas taps off for Central and Eastern Europe and even send a few chills through the EU, partly because the EU needs a coherent energy strategy, all this does is underline Russia’s status an emerging market that has few economic tricks beyond its resources. Not a bad place to be, but it hardly ranks as an engine of world growth. The US still holds such a significant role.
The US is approaching energy self-sufficiency again and US business is benefiting hugely. That is why a huge amount of investors’ cash is backing the US and avoiding Russia. Obama, we suggest, even as he approaches the final few years of his term, can call the shots globally in a way Putin can’t. At Mindful Money, we think the world’s investors are right and Forbes is wrong.