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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: orkrious who wrote (22905)	12/6/2004 9:40:24 AM
From: Wyätt Gwyön	Respond to of 110194

don't these policies now cause imbalances throughout the world that didn't exist before? no doubt. russ has a whole laundry list of them. and it causes all kinds of imbalances domestically for the mercantilists, since they must take various steps to curtail consumption. imo this makes it harder to transition to a service-based economy from high-end manufacturing. Isn't it likely that some Asian countries are now buying euros with their dollars? there have been reports that Japan is doing a lot of Euro buying, on the theory that their real "competition" for exporting to America is Europe. so maybe Euro buying by the Japanese is their way to "kill them with kindness". It's also fairly certain that they are buying commodities with their dollars, rather than hoarding them, which is causing prices of commodities to rise. i think this is what the Chinese are having to move to instead of simple recycling (custody buying of USTs and Agencys). again, they can't "afford" to recycle as much as the Japanese, just as the Japanese themselves couldn't afford to recycle much until the mid-1960s. i don't know if their direct use of USD for these purchases is as much a problem as the incremental demand increase, which obviously increases pricing pressure. as Faber has pointed out on many occasions, the Koreans and Japanese saw annual per-capita oil consumption rise from 1bbl to around 17bbl as their economies advanced over several decades. China is still at just 1.7bbl. can you imagine what it will do to prices if OPEC must increase supply sufficiently to meet 17bbl in China (or even half that)? and, we can imagine a similar situation for other commodities.