Healthcare Bill shows Decline of "US Empire"

According to a UK-based hedge fund manager, the Healthcare Bill recently passed by the US government shows that the country is in decline. How accurate is this opinion and how do investors protect themselves?

David Murrin, co-founder of UK-based Emergent Asset Management, believes the healthcare bill passed recently by the US Senate shows that the US Empire is declining.
In an interview on CNBC, Murrin says the fact that people expect the state to take care of them is a sign that the empire is in decline. "This (empire decline) is actually a dead-set course that societies get into and it will happen very quickly I'm afraid," he said. "As you start to build a system it becomes cohesive because of its success. The fractures in the American system I think are more apparent than ever.”
Murrin failed to bring into the debate that healthcare is effectively nationalized in the United Kingdom, where his firm operates. Murrin is part of a growing chorus of skeptics who believe the US has its best days behind it. The decline in the value of the dollar relative to other currencies, the large public debt and continued fiscal deficits, coupled with the emergence of China has seen world opinion firmly stacked against the world’s largest economy. I have a somewhat different view which you can read here and here.
On China, Murrin is of the opinion China’s rise will be much faster than most people anticipate. "We all know there's going to be a change; the surprise will be the pace of that change. All empires when they decline they underestimate their challengers." To say the US government, big business and the average citizen is underestimating the growth and impact of China would not be entirely accurate. Calls for Yuan appreciation are pretty widespread at the moment.
Murrin believes also that he can foresee markets ten years out and says the peak in commodities, “will be reached somewhere between 2020 and 2025 and it's the period before that that must be watched, as China seems much more willing to take risks than Western countries”.
It’s not clear anywhere in the interview how Murrin and his firm intend to profit from the decline of the US Empire. Anybody who is a long-term short is betting against American ingenuity, its people and of course Warren Buffett, who holds call options on the S&P 500 betting the index, will be higher in 20 years than it is now.
One point I very much agree with, however, is the fact that Murrin calls Africa a "huge opportunity". Murrin and I both agree that Africa has the best demographics in the world and an unsurpassed resource pool. It also has the potential to be a 1 billion strong emerging market off a very low base. "I think Africa, as a generic theme, is the hottest thing in town," Murrin said, and I strongly agree.
My fund invests over the long-term using value investment principles with a focus on the South African stock market and I believe Africa holds significant opportunities for the conservative long-term investor.

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  • Sam Cass

    March 26, 2010

    What does decline mean exactly? It's unrealistic to expect the US to remain the sole superpower. That was a unique period which existed for only 20 years and to some degree emerged from the ashes of Europe after WWII when all competitors were reduced to rubble.

    Also, I think the wars in Iraq and Afganistan are much more likely to lead to decline than the healthcare bill. An overextended military is much more symptomatic of decline than a social benefit that may or may not lead to better economic performance down the road.

    Lastly, declines don't just happen. They occur because of really poor policies. For example, the Roman Empire declined because of constant civil war. The English Empire fell apart because it was contrived. Serving as a colonial power over hundreds of millions of people is not sustainable.

    The US still has one of the largest, fast growing, most educated populations in the world. That's the raw ingredient for continue strength. I don't see that changing anytime soon.

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