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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (75750)12/15/2006 12:50:34 PM
From: GST  Read Replies (1) of 110194
 
My take is that the US and Chinese credit cycles are joined at the hip. People talk about overcapacity in China -- but the buzz I am hearing is job hoping and factories that can't find enough employees. The Chinese are smart. They turned the place into the wild west of capitalism and the money flowed like water. It has been gut wrenching and the negatives are huge -- pollution, mass migration and immigration have changed the face of China forever, and their are plenty of scars on that face as we both know. The question now is what is next. What I think you will see is a heavy political hand on the tiller -- two hands actually as the other is Uncle Sam -- and the new direction will be Asian free money consumerism. You can like it. You can hate it. But you can't ignore it. As for the implications for financial markets they are the following:

1. The dollar is cooked.
2. Long rates in the US will rise due to scarcity and currency risk premium.
3. Money supply globally will continue to surge.
4. The Fortune 500 will speak with a Chinese accent.
5. Wall street will eat dim sum for breakfast.
6. The domestic US economy will have slower growth and higher inflation.
7. People lower on the educational scale will live like slaves -- wherever they are found in the US, China or elsewhere.
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