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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (66620)7/21/2006 9:41:52 PM
From: bond_bubble  Read Replies (1) of 110194
 
Russ, I think you are underestimating Chindia consumption. Suppose BA and Bully Wannabes stop consuming. Why do you think, it implies that Chindia stops consuming? What will Chindia do with all those accumulated reserves? Wont they (the govts) build hoover dams, roads, buildings etc and keep the economy going? And all of these consumes lot of raw materials doesnt it? Why should raw materials fall just because Americans stop consuming? Wont Chindia increase social programs and increase consumption by its population to compensate the withdrawal of American consumerism? What is the purpose of those accumulated reserves?

Ofcourse, crater here refers to GSE defaulting on those reserves. If that happens, USD should be falling like crazy against all currencies as noone will want to hold USD bonds or provide ANY raw material for USD. Doesnt that mean high price for raw materials for the then meager consumption by America?
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