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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 411.49+0.6%Jan 8 4:00 PM EST
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To: elmatador who wrote (79550)9/13/2011 9:59:49 AM
From: THE ANT  Read Replies (1) of 219162
 
Again lets sum up the situation in as few words as I am able.In 1981 the US(Developed World) started to increase their debt to GDP.The US went from about 140% to 390% by 2007.This was done by central banks and finance systems gone wild.While this was going on the developing countries outside Europe had little access to this credit.This helped keep down commodity prices as the developing world could not participate in the frenzy.As asset prices were not included in developed world calculation of inflation it gave the Central Banks further room to run wild
Now low interest rates and easy credit create artificial wealth as asset prices rise ,but only stay up if credit conditions remain liberal.Now throw in a bubble euphoria and assets go up further(my three legs of asset price stool:credit,euphoria/dysphoria,future cash flow)We now have the entire developed world with asset values 100% overvalued in late 2007 (per PIMCO)
On the other hand in the developing world around 2005 they had almost no access to credit and were closer to dysphoria than euphoria.That is why property was selling for 6-10X cheaper in Brazil at that time
The first to notice the disconnect and move assets from overvalued developed world to developing did the best.The transfer continues but at what point is it to late?The time to shift assets to the developing world will end long before the shifting of businesses
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