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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: pogohere who wrote (53919)2/15/2006 3:32:15 PM
From: GST  Read Replies (2) of 110194
 
<lack of money in the hands of consumers in the US will result in lower prices as there will be less pressure on commodity prices>

No, on the contrary, demand for commodities is soaring due to the explosive growth of demand in Asia. Every time you stop to fill your tank with gas, you are competing with somebody in a huge city in China that you have never heard of to buy increasingly scarce oil. The person in China is sitting in his car with the engine turned off for hours waiting in line at the gas station due to chronic shortages. When he goes home he pulls a cool drink from his new refrigerator -- the one that sucks up electricity produced by oil and gas (the same oil you are trying to buy for your car). His refrigerator is made of steel -- he lives in a new house wired with copper and faced with bricks.

Every year, tens of million of new Chinese consumers are added to the demand side of the equation. Cities larger than anything you have ever seen spring each year from empty fields. They are not going to do without cars, computers and refrigerators. The idea that US consumer demand is now the key element in setting global commodity prices is out of touch with reality.
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