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

To: GST who wrote (69859)	9/16/2006 6:37:10 AM
From: KyrosL	Read Replies (1) \| Respond to of 110194

I agree with you that globalization creates many new consumers in developing countries. But so far they consume a lot less than they produce. For example, in China, the savings rate is close to 30%. Unless this trend reverses, it is a prescription for deflation.

To: GST who wrote (69859)	9/16/2006 12:05:52 PM
From: John Vosilla	Respond to of 110194

'If you want to talk demographics, then think about where people live and how they live. Global urban growth is exploding, and along with that comes consumerism' That is huge when you are talking perhaps a billion people rising from the ashes of poverty in agriculturally based rural areas to urban US consumerism in the next 20 years.. The ripple effects and feedback loops of all this are quite astounding when you take a step back and think about it. It is quite sad this administration will be remembered for it's blunder in Iraq and the debts bestowed on the American people rather than presiding over the rapid spread of capitalism and US consumerism to so many places throughout the globe..

To: GST who wrote (69859)	9/16/2006 12:46:23 PM
From: dipanjanc	Read Replies (1) \| Respond to of 110194

Good post, global deflation is hard to conceive. Just back from a three week trip to India. So much has changed in three years since my last visit. People, in general, are a lot more confident and optimistic. The consumption of younger-generation middle and upper class Indians is going through the roofs. The size of the middle-class is expanding rapidly. Even the older Indians are a lot more aggressive about spending and enjoying the good life than they used to be. Unlike China, it is not all cash-driven - credit growth is rampant. Inflation is definitely a big concern among those who do not have the skills and education to reap the fruits of "new economy" and those who have fixed incomes, but I do not think anything could stop the ball rolling. When a non-trivial chunk of one billion plus people get a taste of good life and consumption for the first time and fundamental structural changes happen in how businesses work and trades happen - I admit there are miles to go, in infrastructures and labor reforms, in particular - the momentum is just huge. It was a business trip and my task as a software product development manager was to recruit and train engineers for our team. I had a budget for expanding my team and could either hire three engineers here in bay area - blame the real estate bubble for bay area salary - or fifteen in Bangalore/Hyderabad. Not a hard decision for a manager, particularly if the company already has an infrastructure in India and processes in place to work around the time zone differences and sometimes capitalize on that. The model scales - it is not too difficult to absorb new people quickly. I foresee development of even more product lines getting transferred to India over time. People in their early-twenties, fresh out of college, are getting jobs, salaries and lifestyle their parents could not imagine. Their whole career and consumption are ahead of them. These are big structural shifts and US capital and corporations - their employees and end-customers - are intricately intertwined in this. In a very micro-scale, deflation in jobs/wages for our product line and company location in bay area, but big-time inflation in India.