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

To: mishedlo who wrote (34865)	6/27/2005 2:36:32 PM
From: benwood	Read Replies (1) \| Respond to of 110194

I've been putting a fair chunk money into efficiency upgrades for my home. I've upgraded all my appliances in the past few years culminating with furnace last year and windows plus front-loader washer & new dryer this year. Part of me thinks that a) the cost of these upgrades will escalate in US$ and b) the cost of energy will, with up-and-downs, be a lot higher in 10 years. As far as other investments go, I haven't had a good idea in a year or more, and that was energy & PM, and I haven't felt that confident about adding to those positions except PM on the last pullback. The past 9 months or so it seems like that classical disaster setup where the winner is the one who loses the least.

To: mishedlo who wrote (34865)	6/27/2005 2:46:35 PM
From: GST	Read Replies (2) \| Respond to of 110194

Its like turning a page in a book. The next chapter in the book on the US economy will be how we handle our dependencies -- first on oil and second on foreign capital. For oil, the "peak oil" concept is increasingly well understood and with rising demand for oil in a politically volatile world the risks are equally clear. You say that there is a glut of savings: I do not accept this as an established fact. In the 90s we had cheap oil and cheap foreign money -- now we just have cheap money. We consume the world's savings. You seem to assume that it is our "god-given" right and role in the world economy -- and that there are no alternatives or competitors. I do not accept that on faith. I think that the glut is more likely to be its own form of "peak production" of global savings, and that we face a world where we require huge amounts of foreign capital to stand still -- and standing still is not going to attract capital. The growth of capital supply from China is central to the discussion. Right now China recycles its surplus and the surplus has been large enough to cover our debts. Reduce the surplus or redirect it and you have no other source to replace it -- the growth in the flow of capital from China may be close to its peak now. But the hole in our current account has not reversed, and it feeds on itself as we must not only finance this years deficits but service debt on years prior. At some point, we cross a line and the "glut" of global savings cannot or will not finance our "new" demand plus our servicing our existing debt obligations.