Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: mishedlo who wrote (20199)	1/2/2005 11:53:58 PM
From: Rational	Read Replies (3) \| Respond to of 116555

My prognosis: Chinese banking sector may meltdown, knocking the U.S. banks in its wake and making it impossible for the U.S. to raise enough funds to wage war and pursue other Republican agenda. I would term this as financial Tsunami hitting global financial sector. The excess money created everywhere will eventually perish because the vast majority in every country is becoming poorer and is likely to wage war like Al Qaeda. Everyone talks about excessive borrowing. There is an equal amount lent as borrowed. No one talks of this excessive lending, starting with Central banks that fill the pockets of bankers (not retained but paid out as bonus and raises), builders (not retained in the coffers of the companies), and all others, while loading the debt on the rest of the society through a propaganda of historically low rates. The excessive money will have to shrink. Part of it will melt down due to house prices collapsing in certain areas. The rest will sink due to bond prices falling dramatically. Only good stocks will outperform everything else. China will see a lot of social instability due to the brewing resentment of "have-nots" about "haves." The disparity has been artificially accentuated by a low yuan value (vis-à-vis dollar/euro/yen) which creates vast amounts of fiat money by government decree in the accounts of a few private individuals (exporters, expatriates and bribe-collecting government functionaries). The current President of China has already visualized the simmering upheaval, but he cannot do much other than telling these private account holders, "sorry." If, instead, he prints more money the social instability will be hastened. I believe he is a smart guy and will default on the private accounts fattened by the government. There will be massive outflow of capital from China. Smart Chinese and Hong Kong residents therefore do not hold much in local currencies but real assets.