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

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To: GST who wrote (59482)	4/25/2006 3:15:25 PM
From: mishedlo	Read Replies (1) of 110194

Sure, it is going on in China and America -- the issues that we should address are the ones that go deeper than real estate -- we should be focused on the human capital issues that will make or break this country in a global economy. We are NOT focused on this because people think the biggest issue we face is real estate -- this is absurd. Human capital? If you mean a demographic boomer time bomb, a rising medical crisis, and morally corrupt idiots in Congress setting national policy then I agree. But somehow I feel you are talking about some sort of education gap and I could not disagree more. It is the height of arrogance to assume the US has some sort of monopoly on brainpower. Furthermore, Given the size of India an China, if they choose to crank out more engineers and scientists than we do, then there is not a damn thing we can do about it. Finally even IF we did crank out more engineers etc, more and more projects from design through implementation are being outsourced to India and China. There is no stopping that trend either because of global wage arbitrage. Somehow your analysis never takes wage arbitration into consideration. If it has, I have never seen it. It is just another one of those things that is irrelevant to you, like a housing bust. Well I have news for you. It is all related. 1% interest rates created a housing bubble and not much else. We already had a dot com bust and now we upped the ante and are going to have a housing bust on top of it. We already have PHDs working at walmart. When housing prices drop a lot of retirements that were supposed to happen will not. No one will be able to afford to retire (except the 10% at the top end of the scale). Corporate profits are way up (thanks to outsourcing, reduced taxes, and loose money) but none of that flowed to to wage earners. We had a decline in real wages this recovery. That is part of the REAL story. So is the negative savings rate. The busting of the debt bomb along with housing certainly is not a side show. It is the real deal and a manifestation of horrid policies all across the board. Figuring out the next step in China, or producing more engineers in the US when engineers will be needed in China and not here will not solve a freaking thing. There will be hell to pay when the debt bubble bursts. The housing bubble is part of that bubble and for that matter, so is a large part of what is happening in China (fueled by global wage arbitrage). You are so China focused you do not even know what is a side show vs what is a real problem. Mish

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