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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: Real Man who wrote (18151)	3/4/2009 1:22:52 PM
From: Hawkmoon	1 Recommendation Read Replies (1) \| Respond to of 71463

L-type stuff does not really exist in emerging markets. Hmm.. maybe not "L-shape" but emerging markets are reknowned for their volatility, as well as hyper-inflation and currency "revaluations" (as what Zimbabwe will be forced to do). The problem for emerging markets, IMO, is that they need to create internal demand, not just the export focused economies that finance their non-democratic (or democratically unstable) governments. And fostering internal demand unleashes domestic economic interests that rival the controlling power elite and make them accountable to their population by creating internal economic forces. These internal economic forces dilute the power of the authoritarian governments. Creating "expectations" and entitlements forces governmental accountability and I think they would rather keep people pliant to the "good graces" of the government in charge. And that's NOT conducive to attracting or managing capital properly. It also gets in the way of rampant corruption and profiteering by the economic elite. Furthermore, these governments don't have transparent banking systems (certainly less transparent than ours). They rely upon western financial surety systems to back their debt and infrastructure projects. Moreover, their economic interests seem focused more on exploiting the natural resources and labor of their economies for exporting goods, then squirreling the proceeds away somewhere outside of their country (western financial system, damaged as it might be). There's a reason, IMO, US T-Bills are still sitting at near 0% rates. There's trillions of dollars of "scared money" looking to be parked and they know their own currencies are dependent upon Western markets. And a lot of that is foreign capital, controlled by foreign governmental officials afraid they might find themselves ran out on a rail from their own countries. Our government might be untrustworthy, but it's far better than the governments of other countries. In sum, I don't see capital returning to the economic periphery until the center gets its act together. But maybe we'll see some kind of miracle take place and governments in emerging markets will attempt to put in place financial and political systems that foster credible internal economic growth. Hawk