But Don Poo-Poohs the China Crash Theme--A Popular Idea
on this board. While I remain persuaded by Russ's work in this area, for short-term Train Wreck risk, my view is that the world has been flooded now for several years with massive liquidity. Our trade deficit and rising commodity prices are a massive transfer mechanism wherby wealth is shovelled from the West-- squarely into the face of teeming populations with latent, pent-up demand.
I saw that Ed Yardeni's comments that a global boom is underway also drew heaps of snickering laughter on the board. Not from me. I have been stunned by the uptick in economic activity in Japan and Germany after years of moribund stagnation.
So I agree with Coxe. Totally. The reasonable man's view that the US bond market has had enormous risk lying in wait, has finally stepped forward to be validated.
And, the commodity advance IMO is both a function of the dollar, and, demand. It's a false dillemma to try and choose between the two.
My understanding of the industrial revolution tells me the transformation driving through Brazil, China, India, Russia, Eastern Europe, and Central Asia--all the recpients of massive truckloads of liquidity (I see it as a collision of cash and historic hunger)--cannot be stopped on a dime. You can shoot it full of all sorts of holes, and it will keep on keepin' on.
The commodity whoosh may indeed by a Flying Pig with great risk, but the pig, IMO, has just started to fly |
