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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Mr.Gogo who wrote (47899)	5/10/2012 7:19:40 PM
From: Jurgis Bekepuris	Respond to of 78758

OT, We probably should close this discussion, since it is OT here. :) You are assuming that China will crash. I am not so sure. If China does not crash, but continues to grow even at slower pace, commodity deflation will be short lived, since they will consume a lot of commodities. There is also a question of how rest-of-the-world goes. If Lat America, India, SE Asia continue doing well, they will offset some of the Euro weakness. There are big differences from Japan (as far as the explanation from your youtube video goes). Japanese companies had huge debts that they were paying down. US (and Canadian and Euro) companies have very little debt, especially after couple years of refinancing. Actually they are quite overcapitalized. So there may be holdback to expansion due to consumers (and government) demand destruction, but companies are not deleveraging. Japan also was suddenly very expensive place to do business compared to other countries. Due to wage inflation in China, it's the opposite situation in US - it is becoming more attractive place to do business. So IMHO, the business situation is rather good. There is risk of consumers deleveraging. I don't think the situation in consumer land is very bad in US. I think it is getting better although there are people in hole due to RE downturn. I think the biggest risk is high sovereign debt in Eurozone and US, which leads to the risk of US+Euro government deleveraging through austerity measures and so pushing Eurozone and US into recession. I don't have a great answer of how to deal with this. IMHO, part of it is balancing govt sector austerity with private sector growth, so that economy muddles through without a huge drop. Whether such balancing will be done and will work out is a tough guess. Printing money is another part of solution and it is being done and will continue to be done. This is inflationary though.