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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (9441)	7/18/2004 6:03:28 PM
From: glenn_a	Respond to of 116555

Heya Mish. The Maudlin article you posted (i.e. "The China Productivity Miracle") was quite something I thought. Statistics on (i) China's productivity growth - i.e. industrial labor productivity annual growth rate between 1995 & 2002 = 17% - that's ANNUAL growth rate, (ii) the Chinese Unemployment rate = 23%, (iii) total # of unemployed in China = 169 million - equal to the ENTIRE US LABOR force, & (iv) % of Chinese presently employed in Agriculture = 50% ... present an extraordinary picture. This combination of rapidly increasing productivity growth with a massive unemployed labor pool represents the inevitability IMO of a huge reallocation of the flow (both production and consumption) of goods and services over the next several decades. Associated with this reallocation of real goods and service, will have to be a dramatic change in the global price structure and hence global monetary regime. Such a situation should dramatically alter relative wealth vis-a-vis China and the rest of the world. To my mind, this relative reallocation of wealth and flow of real goods and services could just as easily happen via inflation or deflation. It's entirely a matter of who in the existing monetary structure bears the relative burden of adjustment - debtors or creditors. But either way, the relative wealth of the U.S. and Europe will decline IMO. In the long-term, the decline in the West could well be only relative, not absolute. In the near term, I am not so optimistic. Regards, Glenn