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

To: Skeeter Bug who wrote (98893)	6/24/2009 1:55:48 PM
From: Hawkmoon	Read Replies (1) \| Respond to of 116555

HM, but they owe themselves, correct? they don't rely on the rest of the world to funnel trillions into their economy. you don't see this as a difference? How do you figure? What Japan and China, and Europe to a lesser degree, have done is engage in "Manufacturer Financing". They keep HUNDREDS OF MILLIONS of their people employed by selling stuff to US consumers. And now their customers aren't buying and they haven't yet found the way to motivate their own people to spend. They produce goods designed FOR American consumers, sell them to American consumers, and then park their profits in US T-Bills and Mortgage bonds because they can't obtain a better yield domestically (and it would skew their favorable currency arbitrage)... That's the "trillions" that they rely upon to sustain their economies. Without it, they have to convince their domestic population to spend. But they won't spend to the same degree Americans will. The Chinese saving rate is over 40%. The Japanese used to save 16% of their income, but that's now reduced to under 6% due to their aging population raiding their savings which doesn't necessarily foster economic development. I don't have all the answers, but it strikes me that those exporters need our markets as much as we need their capital and credit. But mercantilist policies seldom ever last forever and eventually the balance of trade has to find equilibrium. Hawk