Hi Jay.
I've been posting on FADG, irritating the WarMongers:
Message 19372109
Yes, China has done well, the last two years. They stand in the neutral corner, in the Clash of Civilizations, quietly getting richer. An island of peace, in a world being consumed by fundamentalist passions.
The U.S. has kept buying everything China makes. This process is still dependent on ever-higher trade deficits, and now record government deficits, and record consumer debt. All this is dependent on very low interest rates in the U.S. At some point, interest rates will rise, cash-out refis will stop, consumers will start to get scared about their debt levels, and consumer spending will do what business spending did in 2000-2002. It hasn't happened yet. I'm uncertain of the timing, but I'm quite certain it will happen, as the unsustainable trends I pointed out 2 years ago, have simply become more extreme, and still have not been resolved. Half-trillion-$ federal deficits will bring closer, the day of higher interest rates. At which point Americans will have to start living within their means, and China will sell a lot less to the U.S. |
