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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: mishedlo who wrote (66159)7/15/2006 9:38:12 AM
From: GST  Read Replies (1) of 110194
 
<your assumptions all act as if the US is irrelevant now>

The days of the big US consumer driven economy are over. American consumption will stall out here -- I don't know of anybody that strongly doubts that to be the case. American consumption will stagnate and could decline. That in many ways would be a very good thing insofar as Americans consume far too much in the first place. The issue then becomes "what happens to the global economy", and this is where we part company. The global economy is now far bigger than simply American consumption. Wealth exists outside the US and hundreds of millions of people with money and unmet needs are buying and selling from each other without as much need to buy things from us or to depend as heavily on us as final consumers. To assume that the world cannot transit from a US centered pattern is naive given who has money to invest and spend (people outside the US) and who does not have money to invest and spend (people inside the US). Of course there are still going to be lots of Americans investing and buying things, it is the aggregated numbers that show the extent of the weakness. So my expectation is not so far-fetched -- US stagnation with slower but positive economic growth and for US consumers a future where they are increasingly "poor" as oil rises, the cost of borrowing rises and others in other countries focus more on non-US markets and raise the price of their labor to us. For the US, the future is increased irrelevance and economic stagflation.
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