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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: GST who wrote (53931)	2/15/2006 7:58:36 PM
From: KyrosL	Read Replies (3) of 110194

Your belief that strong consumption in China will prevent it from collapsing, if US demand collapses, is mistaken. China has one of the highest savings rates in the world (more than 30%). Chinese consumption as a share of GDP is around 40+%, compared to 70+% in the US. Most of the energy and raw materials consumed in China are used to: 1. produce goods for export. 2. build factories and infrastructure to further increase exports. Converting the high savings export and investment oriented Chinese society to a consumer society will take decades. A collapse in demand in the US due to a collapsing dollar will result in a collapse in China along with a collapse in commodity demand.

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