I am not more concerned than usual about the economy.
Who is going to be surprised if one morning US housing prices are down 10% ? Even Paris Hilton knows about the housing bubble.
Is Euro weakness going to sneak up on currency traders and CEOs?
For the banks who have been expecting GM to go bankrupt for about 4 years now be able to handle the rapid pace of events ?
Will the decline of the US Dollar catch the FED and Treasury napping ? China's cental bank ? Botswanna's cental bank, which is guarded by live lions ? (The actual bank is upwind)
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Most of the near term stress are already baked into prices, hedged out, reserved, re-insured, hypothecated, sold off in traches to the unsuspecting yet solvent, and otherwise fixed.
Continuing, repeated, stress might break things after 3 or 4 or 5 waves of expected problems, but the first 1 or 2, no way.
Loook at how long it is taking GM to go BK, and they are not there yet...
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There is, of course the usuall danger of surprises (two big hurricanes hit critical infrastructure, SARS, tsunami, Kobe earthquake stops Japan exports, etc.)
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The other point is that most things are generally not as dire as statistics and scare articles indicate.
Roughly 1/3 of US homes have NO Mortgage, another 1/3 have under $50,000 (usually a fixed rate).
The US trade defict numbers don't correctly count services, and are amplified by tax avoidance games.
Not all loans made by Chinese banks are bad. Besides, China is geting foreign banks to add capital ;-)
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There will be big changes, but mostly in slow motion, like the price of gold doubling in 5 years. It will look like a sharp move on a 100 year chart, but for those of us are living through it, it seems to take a long time. |
