I'm in Hong Kong, SAR, China. The flexibility of the economies in Asia never cease to amaze me. Except for a blip in 2007, Hong Kong, China, Taiwan, India, and Singapore continue to grow unabated (the last reported 15% GDP growth in 2010) in the midst of continuing malaise in Europe and the U.S. Previously, such a situation was unlikely because the economies of the West and East were interlocked. The export-oriented Asian economies emerged with the rise of the European and U.S. consumer. This simple calculus is no longer true.
Just like the U.S., the foundation for these economies was built a generation ago. For example, the importance placed on education and the great respect for teachers form the bedrock of a society's innovative capacity. It is therefore no accident that the transition between low cost manufacturing to high value innovation in these economies occurred within 3 decades. Today, the purchasing power parity of the economies in the largest Chinese cities approaches that of the U.S.
Why should we care? Because we can no longer depend on the fact that these economies rely on the U.S. consumer and will indefinitely pay for his excesses through the purchase of U.S. Treasuries. The growth engines of these economies are increasingly domestic. Add to this, the per capita public and household debt burden in the U.S. is at a historical high and highest among the G8. The opportunity cost represented by the interest payments is the seed corn for the education of future generations and thereby, the country's standard of living.
Unless we seriously wrestle with public and household spending, we will have nothing to sow for the future.