How Does America Break Out of This Slump? Here’s How!

This week, President Obama will announce his new economic program to create jobs and to improve the American economy. We are hopeful but not sanguine. It is likely to have some good ideas like refinancing options for American homeowners and payroll tax cut extensions.

Any ideas proposed by President Obama are likely to be small ball.
Every good idea will help but America’s economic problems are structural. This is a fancy way of saying the American economy is stuck in mud and small ball ideas are the equivalent of wading through the mud one laborious step at a time. The mud is getting deeper because Europe, America’s largest economic partner, is facing a severe crisis, a crisis much like 2008 in America.

If the economic conditions are bad, American confidence level is worse. It feels as if the country is going backwards. In a sense it is. Many Americans feel that the best days of America are behind us. We disagree. In our opinion,  no country on earth has the economic hand America has. We need a strategy to use our strengths to break out of this slump. Below we present such a breakout strategy in two steps.

Our Breakout Strategy for America will surprise many readers and may come across as out of left field. But it is a time-honored American strategy that has launched America to greater heights in the past. We are confident it will do so again.

1. Australia

Australia is a small economy but a thriving one thanks to China’s voracious demand for raw materials.  To some, Australia has already become an economic “colony” of China. China imports raw materials from Australia and exports cheap, finished products to Australia. In other words, China is to Australia what Britain was to India and rest of Asia in early 20th century. This is beginning to trouble many Australians.

Australia is a huge continent with less than 20 million people. China has over a 1.3 billion people. China is building a large navy with aircraft carriers and nuclear submarines to dominate its “sphere”. In other words, Australia falls within China’s own, newly articulated “Monroe Doctrine”.

Australia’s prosperity and it’s developed economy is due to its inclusion in the America-led global economy. Australia’s independence and safety from invasion is due to the predominance of the American Navy.

America considers Australia an ally and Americans like Australians. We think it is time to make the bonds between Australia and America deeper. We propose a “merger” between America and Australia in which Australia becomes an integral part of America. Over time, given Australia’s vast size, each of the Australian provinces can become states in the United States.  

This is a win-win proposition that can catapult the Australian economy to the next level. American capital, American technology and America’s specialized workers can add an enormous growth kicker to Australia. America’s working class can move to a growing economy just like American workers once migrated from the South to the industrializing North, then from the North & Midwest to California and the Sun belt.

As America’s workers move to rapidly growing Australia in search of jobs, Australia will the get the immigration it critically needs. In fact, with this merger, Australia will benefit from prosperous “immigrants” from America rather than depending on poorer immigrants from Asia.

The “merged” Australia will instantly become the dominant naval power in Asia. Such a dominant power will have to build new Naval Bases on Australia’s coasts or substantially expand the current Australian Naval Bases. New Air force bases will need to be built on both Australian coasts and inland. America’s skilled aerospace & naval workforces, construction workers will have high paying jobs in the “merged’ Australia and new jobs will be created for Australia’s workers. These construction workers may even have the opportunity to become a construction project manager, especially if they look at places like Raken, ( to see how this can be done. This could open up many more doors for them in their careers, as well as giving them something to work towards.

Americans will travel to the “merged” Australia in large numbers providing a windfall for Australia’s tourism industry. Wealthy Americans will build or buy vacation homes in scenic Australia or simply move to sunny Australia.

We think this new “merged” Australia will become the most vibrant economy in the world for the next decade and this growth will help a great deal in pulling the American economy out its slow growth, stuck in the mud state.  

But that is not all. The “merged” Australia will be the major base of the U.S. Navy. With Guam and the US bases in northern Asia, with Japan as America’s major ally and with the merged Australia in southern Australasia, the already dominant American Navy will now be a local power in Asia.  

In one stroke, this will establish a limiting constraint on China’s expansion and at the same time provide security and great comfort to smaller, thriving economies of South East Asia. Vietnam, Indonesia, Thailand, Malaysia will feel secure and become allies of the “merged” Australia.

This will launch a new growth cycle for all of South East Asia with the new merged Australia. It will bring enduring peace to South East Asia and Australia. This will end up being the most efficient strategy to contain an expansion-minded China and the most efficient strategy to make China a non-threatening, non-expansionist economic giant, if it sensibly chooses this path.

Why would this be relatively easy? Australia’s GDP is about $1 trillion, about 7% of America’s $14 trillion GDP. Australia has about 20 million people, 6.5% of America’s population. The New York Metro Area has almost as many people as all of Australia and California has nearly twice as many people as Australia. Culturally, Ethnically and Linguistically, the merger of Australia with America should be relatively easy and painless.

The Australia-America Merger – A Time Honored American Strategy

At first, the distance between America and Australia might seem to be a huge obstacle for the merger. No question, the distance seems large. After all, it can take about 20-28 hours to travel to Australia today. If this worries you, think back to President Jefferson and the Louisiana Purchase. In 1803, it took far more effort and more time to travel to New Orleans from Washington DC. Today’s travel to Australia seems trivial in comparison.

The Louisiana Purchase was a brilliant masterstroke, a classic break out strategy for America stuck at that time on the eastern sea board. The Louisiana Purchase enabled America to fully develop the Mississippi & Missouri river basins and become an economic powerhouse. The Louisiana Purchase enabled America to merge Texas into America and stop forever the expansion of Mexico. The Louisiana Purchase allowed a young America to march into the West to launch a new secular cycle of growth.

We think the merger of Australia with America will be the 21st century equivalent of the Louisiana Purchase, a breakout strategy for a still young America to become the greatest country yet again in the 21st century. It will enable Australia to break out of its peripheral role within Asia, the fastest growing continent in today’s world. 

Remember, America did not remain content with the Louisiana Purchase. America obtained control of Cuba and the Spanish territories in the Caribbean to secure control of its southeastern seaboard. This brings us to the second step of our breakout strategy.

2. Ireland

Without much ado, we propose that America offer a similar merger to Ireland. This is even easier than A
ustralia. Irish-Americans are the largest and most integrated ethnic minority in America. This makes the Irish culturally, ethnically and linguistically closer to Americans than virtually any other society. About 36 million Americans claim Irish heritage. In contrast, the entire population of Ireland is about 6 million. The GDP of Ireland is about $220 billion, about 2% of America’s GDP.

America’s corporations constitute a large portion of Ireland’s economy. Their involvement will grow once Ireland merges with America. The merged Ireland will then become the growth economy of Europe.

That brings us to the long term benefit of this merger. We propose that the “merged” Ireland should remain a member of the EU, but with the US Dollar as its currency. This will be sort of like Britain being a part of the EU with the Pound as its currency.

This will make America a de facto “member” of the EU. What a huge step would this be? Instantly, France, the PIIGS and central European countries will ally themselves with Irish-America sidelining Germany. American exports out of EU member Irish-America will create a much larger market for American companies than they have today.

Germany’s drive to remake Europe will face a stiff challenge from America’s invitation for European countries to follow the American model. If successful, Germany have to choose between becoming a German Switzerland or a part of pro-growth, free market capitalist Europe.

In other words, Ireland’s merger with America will force Germany to make a tough choice just as Australia’s merger with America will force China to make a tough choice.

The merger with Ireland will make America a truly European power just as the merger with Australia will make America a truly Asian power. This will give great comfort to Poland, the Balkans and act as a brake on Russia’s expansionist plans.

Just as the merger with Australia will lead South East Asia into a stronger growth trajectory, the merger with Ireland will lead Europe into a stronger growth trajectory.

3. What about Costs? What about the mainstream American economy?

The combined GDP of Australia and Ireland is about $1.3 billion, about 10% of America’s GDP. In other words, the Stimulus Program of President Obama and the two Quantitative Easings of the Bernanke Federal Reserve have been about 50% more expensive than the combined GDP of Australia and Ireland. And what benefits have the QEs and Stimulus brought to American economy?

To put in another way, we let 90% of America’s mainstream economy continue on its current difficult path of slogging through the deep mud of America’s slump. We simply propose to take about 10% of America’s strength and use it for our breakout strategy.

Remember, our proposal is not a cash acquisition. It is a merger, an exchange that provides a share of American global assets to Australia and Ireland for their current local assets. As we all know, the best way to get richer is to make the entire pie bigger.

We think our breakout strategy will work. It is a proven strategy on Wall Street. And it is a strategy stepped in American tradition from the days of President Thomas Jefferson. It is quintessentially American in its bold reach for the Pennant.

4. Who Should Lead this Strategy?

We think this strategy should not be led by any government, at least at this stage. This will work best if Americans, Australians and the Irish engage in public debate. All three are vibrant democracies and this strategy will work best if it becomes the will of the three people. Governments can then follow up to dot the i’s and cross the t’s of the necessary documents.

This is why we offer this strategy for public debate. We are absolutely confident that this strategy will work and work spectacularly. What it will need is Vision and the ability to Jointly go for the big win.

If you disagree, please let us know. If you agree, share it with your friends.

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