Electric, good insight.
My feeling is that global economics has become to intricate to evaluate reasonably. (If we accept what the FED professes -- in particular, Greenspan -- the experts don't know quite what to do.) More to the point, my curiosity is piqued when folks discuss SE Asia, Russia impact on US economy: Does the 4% figure reflect impact on the Americas (excluding US) and Western Europe? If not, what affect will be seen in these economies, and by extension what fraction of US GDP is (presumably) driven by "the rest of the world"?
From occasions that I staggered into Econ/Fin classes (wearing a baseball cap to disguise bed-head), I vaguely recall that currencies have a profound impact on exports, pricing, production, labor, etc. Now, this USD/Yen/Yuan malady doesn't look like a bed of roses (although the thought of wallowing in a bed of roses ain't pretty). So, I'd expect the import/export scale to tip a bit further, which -- while initially good for US consumers -- can't be good for US corporate profits... er, if we accept the unit/sales, economies of scale mumbojumbo. On the other hand, it could be a curative for labor capacity, wage inflation worries. <g>
I agree with you that the fundamental issue with US equities is irrational valuation, and that "cover stories" are just that. I also have the feeling that non-domestic issues will seep in and exacerbate [Reader's Digest word] the value game. Luckily, internet commerce creates radical paradigm shifts such that we can discard everything that we've come to accept as real. <g>
Speaking of which, time to crack the whip... I'm researching the new GS Leprechaun & Yeti Growth/Retirement Fund... looks like a winner.
gt, alan |
