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

To: yard_man who wrote (12744)	10/4/2004 9:57:43 AM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 116555

do you remember the symbols of EUR bond funds

To: yard_man who wrote (12744)	10/4/2004 11:12:55 AM
From: mishedlo	Read Replies (2) \| Respond to of 116555

An interesting article in the International Herald Tribune. Excerpts: iht.com U.S.-China tandem powers up growth LONG BEACH, California One Saturday last month, 83 cargo ships from Asia arrived in southern California's twin ports of Los Angeles and Long Beach. Forty-six anchored offshore while the others waited dockside, some up to three days, for workers to unload them. Congestion at the nation's largest port complex has reached near-crisis proportions since late July, when the volume of goods entering hit new highs. It is not uncommon, on any given day, to see at least two dozen ships stacked up outside the harbor. "It looks like the invasion of Normandy," says Captain Manny Aschemeyer, executive director of the Marine Exchange of Southern California. "When you see 30 to 40 ships at anchor, it's pretty stunning." The stunning rise of imports from Asia, and particularly China, has pushed the U.S. trade deficit to a record high. Last year, the trade gap with China alone was $124.1 billion, the largest ever with a single country. So far this year, the red ink with China is running 28 percent ahead of last year's level. <snip> Analysts say that Chinese and Japanese purchases of U.S. securities have helped keep interest rates low, in turn spawning the U.S. housing boom of recent years. And equity from rising home prices has been a major enabler of the consumer spending boom, the major component in U.S. growth. "So long as foreigners are willing to buy U.S. assets so that we can spend beyond our means, temporarily we'll get by," says Sung Won Sohn, Minneapolis-based chief economist of Wells Fargo. "Longer term is a different issue." A pullback by foreign central banks from US Treasuries could undermine the dollar, forcing a sharper rise in interest rates. That could puncture the interest-sensitive housing market, depressing consumer demand and producing a serious recession. That scenario is why many economists believe the fate of the U.S. economy hangs not on the outcome of the presidential election race between George W. Bush and John Kerry, but on the actions of central bankers and investors around the world. "The people who have control are the Japanese and Chinese monetary authorities and Greenspan," said Ed Leamer, director of the Anderson Forecast at the University of California, Los Angeles, referring to the Federal Reserve chairman, Alan Greenspan. "And then the thousands of bond traders around the world making investment decisions," Leamer added. "That's where this economy is going to be decided." If foreigners stop supporting the dollar, "there is going to be a huge realignment of global living standards," said Peter Schiff, president of Euro Pacific Capital in Newport Beach, Calif. "Americans are going to have to live within their means, and unfortunately the means are very low." <snip> One way or another, the U.S. economy may not be able to run for ever leveraged to the hilt, with oil prices surging and a weak job market threatening consumer confidence. Eventually, Leamer says, interest rates will rise more sharply and the economy will head south. "This will happen sooner rather than later," he says. "Probably 2006." If that happens, Captain Manny Aschemeyer may finally get some relief from those bottlenecks at Los Angeles and Long Beach ports. Bernard Wolfson is a business reporter for the Orange County Register.