Darrell,
The is *NOT* about you or me , PC's , other components, or
the USA vs Japan.
I am quoting ... from John Makin
The symptoms of overinvestment are declining profit margins
and an inabliltiy to command adequate prices to compensate
producers for the cost .... a chronic lack of pricing power,
in other words....
Excess capacity puts downward pressure on prices and corporate
earnings, which hurts equities at the same time that bonds
get a lift from negative inflation pressure-and eventually,
from the drop in real interest rates that accompanies the
***collapse in investment spending when the excess capacity
becomes obvious.*****
Right now Japan is the major industrial country that most clearly
manifests the deflationary problems with excess capacity in its
stock and bond markets....
End of my quoting.
What the author goes on to question is:
Is there ALREADY over capacity in Asia (Taiwan? et. al)
Is there ALREADY over capacity in China?
China is scarey because no one in the USA has a sense about
what level of capacity they are at.
I full well realize that this last quarter, on balance,
earnings - HERE - were great!
But I am trying to look now, over the horizon.
In conclusion the jist of his 2 cents was that once you
hit over capacity - ALL INVESTMENTS STOP.
Soooooooo, if Asia has hit some kind of over capacity wall,
it will impact us and especially certain segments of the
production markets here in the USA.
Darrell, at this time, I don't know if I buy this logic
or not, I did want to throw it out on this thread for
discussion if deemed warranted.
Regards,
John McCarthy |
