<Does that sum it up nicely?.>
Pretty good matrix, and fairly close to my view with some twists:
agree on 1-4.
5: This process might be interrupted if US firms realize 3 is in play and may trap them with bottlenecks, especially in China. They might just freeze and re-assess the situation.
6: Evidence is mixed, although may be true now in new housing. Jan. showed 370,000 houses for sale, a fairly hefty 4.1 month supply. Question is are there new buyers at 5% mortgage rates to move them? In automotives, there is now evidence of an inventory glut, but will easy money move them? Probably, and will just use up more scarce input inventory: very imbalanced situation.
7: This is my critical and most important point. This is the "tipping point" IMO. This won't be cured without a bust, or major tightening (by all three in the symbiosis: China, Japan, US). I still think stuff will happen on the later point , but it will be ineffective and half assed.
8: agree
9-15: Up in the air, serious input goods inflation makes even weaker currencies a suicide policy. Just a question of when someone in the symbiosis wakes up to it? My guess is China first, but there seems to be a strong underlying desire by all three to drive off the cliff.
16-20, 22-24: agree
21: Agree, but would a crack-up and monetary meltdown, be even worse? I think so.
25: Agree, would add, "as if rampant inflation and train wrecks, followed by busts, don't matter." |
