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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (55404)	9/23/2009 11:50:40 AM
From: elmatador	Respond to of 217869

Countries enjoyed positive terms of trade whereby the fruits of their labor was expensive and their imports were cheap. Such countries consumed a high percentage of their GDP and exported to pay for their imports of goods and services. If they want to get richer, and increase their GDP, they just had to consume more. Once a month they will go and enjoy the low cost of holidays abroad. What was going on was the following: they were subsidized by the low cost goods and services provided by the countries at the periphery. If their economies got out of hand, they would concoct an Abracadabra and voila! Money will flow in form the countries at the periphery in a process called “flight for quality”. Their economists made sure that there were theories ready-made to prove why they were entitled to be rich and the poor deservedly were poor. Their institutions (IMF and World Bank) were mechanisms through which they would execute the macroeconomic policies. At any given moment, they would retrieve from a file cabinet the last case and would point: this is it. Happening again and they would go there and would lecture the shirtless on how to put their economies in order. And that meant milk them for the last cent. That went on for about 50 years. The circumstances changed and they denied that change. No matter what, they were fat and lazy and complacent. Slowly, almost unperceived, the tide changed. Globalization, de-regulation, liberalization. Poor countries got more educated, mastered technology and they did what they have been doing for the last 10.000 years. They worked hard and harder. The rich countries did not want any economic activity. It was detrimental to the environment, they would say. They had rule of the law. They had rights for this and rights for that. And they acted ruthlessly on whomever tried to change the status quo. The last case with no flying zone, oil for food, starving 25 million and then go inside and hit them hard with Shock and Awe.

To: TobagoJack who wrote (55404)	9/23/2009 12:00:40 PM
From: KyrosL	Read Replies (2) \| Respond to of 217869

I expect the dollar index will settle between 60 and 70 and bounce around there for the next few years. At that level a lot of manufacturing in the US becomes competitive again versus most of the rest of the world, especially Europe. Also, outsourcing of services becomes unprofitable. If by "return to natural size", you mean "living within our means", I fully agree. A diminished dollar, especially with respect to Asian currencies, is essential for this. There are no longer any "strong dollar policy" statements out of Washington, as the dollar is approaching its all time lows. A rapidly diminishing US trade deficit is the main driver of US GDP growth, and Washington has figured it out.