This document discusses how the US and other Western nations face strategic inflection points due to rising debt levels and the growth of emerging economies like China, India, and Brazil. It notes that countries like China have experienced much faster economic growth in recent years and may surpass the US economy in size sooner than expected. The document argues that for the US to maintain its competitive position, it will need to grow its economy significantly, reduce debt through asset sales or faster growth, and reinvent industries like manufacturing through innovation.

1. Game On!: Debt, Global Competition
and America's Future
John N. Doggett, JD, MBA, Senior Lecturer
Global Management, Entrepreneurship & Sustainable Energy
McCombs School of Business @ The University of Texas at Austin
john.doggett@mccombs.utexas.edu www.jndoggett.com

2. Strategic Inflection Points Are Scary
 “A strategic inflection point is a time in
the life of a business [or a country]
when its fundamentals are about to
change. That change can mean an
opportunity to rise to new heights. But
it may just as likely signal the
beginning of the end.”
 Andy Grove, Only the Paranoid Survive

3. Japan’s S.I.P.

4. Two Massive S.I.P.s
 New Global Realities
 Europe is tottering on the brink of bankruptcy
 America is sinking under a mountain of debt
 China, Brazil and India are emerging as the
strongest economies in the world
 The location and nature of energy
supply and demand is changing.
 Shale Natural Gas
 Shale Oil
 Geothermal
 Ocean

5. Is The World Going Crazy?

6. PIIGS GET SLAUGHTERED

7. On the Brink of Bankruptcy

8. TOO BIG TO FAIL OR BAIL!

9. EU Banks Sovereign-Debt Protection

10. Deficits Forever . . . ?

11. This is a Serious S.I.P.

12. US Deficit Is At Civil War Levels

13. The Scariest Job Chart Every

14. America is Addicted to Debt
 2000 = $ 5.67 Trillion
 2004 = $ 7.54 Trillion
 2008 = $10.57 Trillion
 Today = $15.06 Trillion
 2015 = $23.69 Trillion (Current Spend)

15. A Warning From The Future?
http://www.youtube.com/watch?v=OTSQ
ozWP-rM

16. Just The Facts, Jack (Billion US$)
 May 2008  September 2011
 China = $506.8  China = $1,148.3
 Japan= $575.3  Japan = $956.8
 Caribbean Banking  UK = $421.6
Centers = $104.5  Oil Exporters = $229.9
 Oil Exporters = $164.2  Brazil = $206.2
 UK = $271.2  Caribbean Banking
 Brazil = $151.4 Centers = $173.0
 Russia = $63.7  Taiwan = $149.3
 Luxembourg = $75.2  Switzerland= $146.1
 Hong Kong = $61.4  Hong Kong = $109.0
 Taiwan = $38.9  Russia = $94.6
 http://www.treas.gov/tic/mfh.txt

17. Is A New Economic Tsunami Coming?

18. How Do We Pay Down The Debt?
 We must grow our way out of this
crisis.
 If the US economy grew by 6%, many of our
problems would start to self heal.
 If we grew at 9%, “Whoa Nelly!”
 So, how do we turn America into North Dakota?
 We must sell “assets” owned by the
federal government and apply to
proceeds to reduce the federal debt.

19. We Have Assets We Can Sell

20. LET’S LOOK AT OUR COMPETITION

21. Was Goldman Sachs Crazy?
 6,100% Annual Inflation (1994)
 Collapse of the Ruble (1998)
 Two Weeks of Foreign Reserves (1991)
 The Cultural Revolution (1966-1976)

22. National GDP in 2010 (purchasing power parity)
Country GDP Real Growth %
1. United States $ 14,660,000,000,000 2.8%
2. China $10,090,000,000,000 10.3%
3. Japan $ 4,310,000,000,000 3.9%
4. India $ 4,060,000,000,000 10.4%
5. Germany $ 2,940,000,000,000 3.5%
6. Russia $ 2,223,000,000,000 4.0%
7. United Kingdom $ 2,173,000,000,000 1.3%
8. Brazil $ 2,172,000,000,000 7.5%
9. France $ 2,145,000,000,000 1.5%
10. Italy $ 1,774,000,000,000 1.3%
11. Mexico $ 1,567,000,000,000 5.5%
12. South Korea $ 1,459,000,000,000 6.1%
13. Spain $ 1,369,000,000,000 - 0.1%
14. Canada $ 1,330,000,000,000 3.1%
CIA World Factbook – September 5, 2011

23. Elephants Emerging from the Mist
 Total World Population = 6,928,198,253
 BRIC Population = 2,868,060,586 (41.4%)
 Total World Land Area = 174,814,000 sq. km. (- oceans)
 BRIC Land Area = 38,471,715 (22%)
 Total World Gross Domestic Product = $63.17 Trillion
(Official Exchange Rate)
 Total World Gross Domestic Product = $74.54 Trillion
(Purchasing Power Parity) (p.p.p.)
 BRIC Gross Domestic Product (p.p.p.) = $ 18.55
Trillion (24.88%)
Source: CIA World Factbook – September 5, 2011

24. The BRIC Middle Class Is Exploding
 McKinsey says 48 million Chinese will
join the middle class every year until
2020.
 Goldman says 30 million Indians,
Brazilians and Russians will join the
middle class every year until 2020.
 Only 312.5 million people live in the US.
 By 2020, the BRIC’s could have 1 billion
middle class citizens.
 This is the greatest time to be an
American entrepreneur!

25. Chinese Banks and The World
25

26. The Conference Board Says . . .
China Could pass The United States BY
2012!
Source: The Conference Board Report issued on November 10, 2010 using
Purchasing Power Parity (PPP)

27. Per Capita Income trumps Size

28. Remember, WE Won the Cold War
WHILE WE WERE SLEEPING,
THEY WERE RUNNING

29. This is a Brazilian Super Tanker

30. An Orange Juice Super Tanker

31. Competing With Innovation

32. Add A Large Dash of Oil . . .

33. Bangalore, India

34. This Is the New India

35. Indigo Airlines

36. Tata Motors People’s Car

37. Tata Motors’ Newest Ride

38. Tata Motors’ Newest Ride

39. Welcome to the New China
copyright - John N. Doggett, 2008

40. Growth at Warp Speed
40

41. China has 6 of the 15 Tallest Buildings

42. Building Skyscrapers Like Crazy
 China is building 24 of the 50
skyscrapers to be completed worldwide
in the next six years.
 This will double the number of Chinese
skyscrapers.
 McKinsey say that China could build
enough new skyscrapers to equal one
new Chicago every year until 2030.
 More than 1,500 new buildings over 30 stories

43. The People’s Republic of Communist China?

44. Shenzhen in 1979
www.lenbracken.com/images/china31

45. 30,000 people lived here in 1983
Source: http://en.wikipedia.org/wiki/Image:57440.jpg

46. Progress Comes at a Steep Price
Source: New York Times, 8/25/2007

47. The Chinese People Hate Dirty Air

48. The Clock is Ticking

49. From China with Love
 Thermal Power Research Institute is
China’s world-leading laboratory on
cleaner coal, has just licensed its latest
design to Future Fuels in the US.
 Future Fuels will pay about $100 million to import
from China a 130-foot-high maze of equipment
that turns coal into a gas before burning it. This
method reduces toxic pollution and makes it
easier to capture and sequester gases like
carbon dioxide under ground.
 Future Fuels will ship the equipment to
Pennsylvania and have Chinese engineers teach
American workers how to assemble and operate it.

50. Canada formally pulls out of Kyoto
 The world’s largest two emitters, China
and the US, never ratified Kyoto.
 “To meet the targets under Kyoto for
2012 would be the equivalent of either
removing every car, truck, ATV, tractor,
ambulance, police car and vehicle of
every kind from Canadian roads or
closing down the entire farming and
agriculture sector and cutting heat to
every home, office, hospital, factory
and building in Canada,”

51. Yes We Can!
INVENT, INNOVATE, OWN

52. American Farmers Will Thrive
 China and India are covering farm land
with factories.
 Global warming is increasing flooding
from the Himalayas.
 Farm commodity and land prices can
only trend in one direction.
 By the end of this decade, finding farm
workers will be a major challenge.
 Farm equipment manufacturers will be
running two shifts, seven days a week.

53. A Great Time To Be a Farmer!
 The world’s appetite for farm products
will soar.
 The world will have more than enough
cash to buy what we grow
 Farm support payments will no longer
be necessary
 Quotas, tariffs and other market
protections will no longer be necessary
 We will be able to sell everything that
we can grow and process.

54. Impact of MIT Alumni Entrepreneurs
 MIT Alumni founded 25,800 currently active
companies in 2009.
 The firms employed 3,300,000 people.
 These firms generated annual world
revenues of $2,000,000,000,000.
 If currently active firms founded by MIT
graduates were a country in 2009 they would
have been the 11th largest economy in the
world.
Economic Impact of MIT Alumni Entrepreneurs - Entrepreneurial Impact: The Role of MIT,
Roberts and Eesley, MIT & Kauffman Foundation for Entrepreneurship, February, 2009

55. “Recruit” The Right Immigrants
 Immigrants started 25% of U.S. public companies
that were venture-backed.
 The market capitalization of publicly traded
immigrant-founded venture-backed companies in
the U. S. exceeds $500 billion.
 40% of U.S. publicly traded venture-backed high-
technology manufacturing companies were
started by immigrants.
 50%+ of the employment generated by U.S. public
venture-backed high-tech manufacturers has
come from immigrant-founded companies.

56. APPLE REINVENTED CREATIVITY!

57. The iPhone Didn’t Exist before 2007

58. Apple = 4% Sales & 52% Profits

59. If You Thought the iPhone Was Hot

60. iPad = 96% Of All Tablet Web Traffic

61. Apple Stores = 20% Retail Growth

62. Apple Passes Microsoft

63. WE CAN REINVENT MANUFACTURING
 The Chevrolet Sonic is Transforming
the face of American Manufacturing
 The plant is 50% smaller
 Wielding Robots are clustered together instead o
being spaced along the line
 The first coat of rust proofing is 1/100 as thick
 Many employees make $14 an hour instead of
$28 an hour . . . With the UAW’s blessings.
 All of this so the Sonic can be
manufactured in Detroit instead of
Mexico.

64. Made in Detroit

65. RETHINKING ENERGY

66. Exploding Energy Consumption

67. China and Energy
 In 2000, the US used twice as much
energy as China.
 In 2010, China used 4% more energy
than the US.
 Americans use 5x as much energy per capita.
 In 2007, China became the largest
emitter of Greenhouse gases.
 Today, 80% of China’s energy comes
from coal. The # for India is 70%.
 China consumes more coal than the
US, Europe and Japan combined.

68. Coal Is King in China

69. China Dominates Fuel Demand

70. Chinese Car Ownership Explodes

71. Massive Energy Investments
 The World Energy Outlook for 2011
says that $38 Trillion in new investment
is needed to expand the world’s energy
infrastructure between 2011-2035
 Electric Power = $16.9 Trillion
 Oil = $10.0 Trillion
 Natural Gas = $9.5 Trillion
 Coal = $1.1 Trillion
 Biofuels = $0.3 Trillion

72. Oil Fuels America’s Deficit

73. Small Hydro Projects
 Putting many small hydro dams on
rivers to generate 5 to 10 MW of power.

74. Is This the Golden Age of Gas?
 The International Energy Agency says
total recoverable resources equal over
250 years of current consumption.
 From 2010, global natural gas use
could increase by more than 50% and
account for over 25% of world energy
demand in 2035.
 Power generation will be the dominant
sector for natural gas demand and
Russia will have to increase by 3X.

75. Shale Gas = 50% Supply in 2020

76. Shale Gas Everywhere You Look

77. Shale Gas Is Revolutionary
 Shale Gas increased America’s gas
reserves by 40% in this decade.
 Shale Gas reserves outside of North
America could increase the world’s gas
reserves by 50% to 160%.
 That is equal to 211 to 690 years’ worth
of gas consumption in the United
States at current levels.

78. THE OCEAN IS FILLED WITH
ELECTRICITY

79. French Tidal Power Plant Online in 1967
http://en.wikipedia.org/wiki/Image:Rance_tidal_power_plant.JPG

80. Tidal Power Growth
 45 Wave and Tidal prototypes will be
tested in 2011 and 2012. Only 9 were
tested in 2009.

81. Korean Tidal Power Plant Online in August

82. Real Projects; Real Power
 1,320 MW Incheon Tidal Power Station
built around islands west of Incheon.
Construction will start in 2017.

83. Ocean Wave Power

84. Capturing Waves

85. Sea Dog Pump = 22% Conversion

86. Ocean Powered Fresh Water

87. Cheap, Available Fresh Water
 What happens to global stability if
every country with access to the sea
can get all the fresh water it needs?
 What happens to global agriculture and
hunger if every country with access to
the sea can get all the fresh water it
needs?
 What happens to global economic
growth if every country with access to
the sea can get all the fresh water it
needs?

88. Ocean Currents = Electric Power

89. Ocean Thermal Power Potential

90. Ocean Thermal Power

91. FINALLY . . .

92. This Is Not About A Car
http://www.youtube.com/watch?v=SKL25
4Y_jtc&feature=player_detailpage

93. The Future Is In Our Hands