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Strategies & Market Trends : The New Economy and its Winners
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To: Doren who wrote (47727)1/16/2009 5:18:42 PM
From: Keith Feral  Read Replies (3) of 57684
 
There has always been a global economy, but this is the first time that people have been able to get a pretty good idea what it looks like. But, I totally agree that the globalization of the slowdown does make the impact of a recession much more unpredicable.

The destruction of the capital base finally shed blasted through all illusions of inflation since last July. It will take some time before people can really enjoy the benefits of the correction in high prices. We are in the middle of financial chaos that will take time to stabilize. However, this is something that has been brewing since 2006 when the housing correction started. It took the rest of the world a few years to capitulate, as the energy bubble was attracting all kinds of resources to expand the infrastructure for oil and gas production. Now, we have a serious shortage in oil and gas storage. The good thing is we don't have to worry about paying $4.00 a gallon next summer.

So, now we have an inventory glut in housing, cars, and gasoline. It will take some time to work through the classical supply and demand imbalance. In the meantime, the government is going to try and spend as much money on infrastructure before the excess supply is absorbed in the rest of the economy. It's just hard to fathom that auto sales are down to 10.5 million units, down 70% from the peak in 2000 near 17 million cars.
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