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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Haim R. Branisteanu who wrote (85619)8/28/2007 4:40:07 PM
From: carranza2  Read Replies (1) of 110194
 
Were are living in interesting times

Isn't that ancient Chinese curse the truth?

It seems to me that healthy US consumption has been based on a Niagara Falls of credit-driven liquidity. Now that it is being slowly tightened, the repercussions are being felt globally.

Excess liquidity cheapens the currency. Always has and always will. Chinese growth has been driven on the back of the genuinely cheap dollar and the falsely strong yuan. But growth is growth, no matter how you get it. The price the Chinese will pay is the depreciation of their reserves and the slowing of internal growth as consumption in US markets slows.

In a word, deflation and recession.

And that is why I am largely in cash, waiting for the price of blue chip US shares to fall more. Their earnings are increasingly overseas, and this is good. They are very healthy, very productive, cash rich, and getting cheaper by the day.
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