I too have been wondering about a bubble forming in China, and wondering why basic commodities like copper, zinc and nickle are up so strongly. It has occurred to me that total world consumption has probably not increased that much, and by simply switching production from say the US to China doesn't increase the total demand.
The only two answers I can come up with is that the Chinese are stockpiling, stockpiling the raw materials and the finished product. Or, there has been an increase in demand, unseen by the rest of the world, internally in China & S.E. Asia. A couple of billion people, slightly increasing their standards of living and consumption may well have a huge impact on the supply of commodities. But I have not seen that addressed in any article directly.
I do agree that there is gross over-production of goods, and that it is deflationary, and shows no sign of abating. It is quite a mixed economy, hard to figure out how to play it in terms of investing.
I think the US is committed to low interest rates for years to come. This will produce bubbles in real estate, banking, stock markets and other large capital activities. I still think the US dollar will fall because of all the liquidity. I haven't got a clue about gold.
Deflation of manufactured goods, inflation of just about everything else. Good deal for America. Let them sell us goods, we will print dollars for exchange. They apparently have a penchant for paper with dead US Presidents printed on it. Kind of like what happened when the white man first started trading with the Indians in North America. They traded beads for fur pelts. Good deal/bad deal.
I hate to think what a real slow down in Asia would do to the USA. >>"Much of the dollars bought in that intervention could well end up in U.S. assets and will be held by the Fed, which holds some $786 billion of Treasuries on behalf of foreign central banks, mostly from Asia" >>
They won't have the dollars to prop up Uncle Sam.
above quote from:http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=3589111 |
