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

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To: mishedlo who wrote (66189)	7/16/2006 11:10:24 AM
From: GST	Read Replies (2) of 110194

<The disagreement is the timeframe. It seems you expect it to be immediate, while I expect it to take place over 10-20 years and possibly more.> It has been taking place for the past 20 years, and it will continue for the next 20 years. I don't expect it to be immediate. I first met the President of the Bank of China in 1986 -- and at that time there was no way people could imagine a large trade relationship with China because the currency was not convertible. That was short sighted to say the least. It took time, but the currency issue fell by the way side. Now 20 years later many people have trouble grasping the scale of development that has already taken place, and the scale of development that is still going on today and will go on 20 years into the future. We are at transition point with China where their demand will be understood as increasingly important and ours will become less so. The credit boom in the US has run its course for the most part. We are the most extravagant and wasteful people on earth. It is time for us to become smarter and more modest consumers. Global pricing is going to help drive the point home as the end of cheap oil, cheap credit and cheap labor is upon us. In China, their growing wealth is the platform for a new spending boom. We should fear this boom mainly for one reason -- if they consume in the same pattern as we have they along with America will destroy the atmosphere of this planet via global warming. Our economy grows and recedes like the tide in the bay. That is no big deal. Housing prices can overshoot, and we will have a recession. Big deal. And in this recession we will have inflation. That will come as a surprise to those who do not see the transition in the global economy that is well underway. But in the end, if we destroy this planet it will have far worse consequences than the ebb and flow of our finances.

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