Global Economy in 2008

Discussion in 'Business & Economics' started by kmguru, Jan 10, 2008.

  1. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    This (quote below) is just an early shot across the bow*. – China is not yet ready to tell the US to go to hell. They need a year or two more to build their domestic demand first, IMHO.

    “… China’s former central bank adviser Yu Yongding will meet Treasury Secretary Timothy Geithner today and tell him the U.S. shouldn’t be complacent about China continuing to buy Treasuries. “I wish to tell the U.S. government: ‘Don’t be complacent and think there isn’t any alternative for China to buy your bills and bonds’,” Yu said in an interview yesterday. “The euro is an alternative. And there are lots of raw materials we can still buy.” …
    The U.S. should take China’s interests into consideration “so that your own interest can be protected,” Yu said. “You should not try to inflate away your debt burden.” China could still diversify some of its Treasury holdings into euros or commodities, Yu added. …”

    From: http://www.bloomberg.com/apps/news?pid=20601087&sid=aoE7033VGQcI&refer=home
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    *But the broadside is coming when China is ready, as I predicted some years ago. It will sink the US and EU, to continue in nautical terms. The US lacked a wise hand on the tiller for the last 8 years and the ship of state does not have a weather helm so small storm will turn her round and blow her down wind, out of control. She can not out run this storm with the current heading.

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    It was not enough that US debt loaded China's economic gun. Now GM will sell them the Hummer factory!

    "-- General Motors Corp. plans to sell its Hummer brand of sport-utility vehicles to Sichuan Tengzhong Heavy Industrial Machinery Co. Ltd., a Chinese equipment maker, according to five people familiar with the situation. ..."

    From: http://www.bloomberg.com/apps/news?pid=20601087&sid=a0Erg3Bcoz74
     
    Last edited by a moderator: Jun 2, 2009
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  3. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Nobel Prize-winning economist Paul Krugman said: “I would not be surprised if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer. Things seem to be getting worse more slowly. There’s some reason to think that we’re stabilizing.”
    (The U.S. has been in a recession since December 2007, and the NBER may take months to decide when a trough has been reached.)

    Even with a recovery, “almost surely unemployment will keep rising for a long time and there’s a lot of reason to think that the world economy is going to stay depressed for an extended period,” Krugman said.
    From: http://www.bloomberg.com/apps/news?pid=20601087&sid=ayAXvw0Mc3CY

    Billy T’s take on this: I still expect US and EU to slide into depression prior to 31 Oct 2014, but respect Krugman, so he may be correct that profits will turn up before that, but not US jobs. Most big US corporations, not going bankrupt, get most their income from non-US sales is part of why profit part of GDP and jobs can go in opposite directions, at least for a while. Joe American is still broke and in debt and tighten his belt. I.e. the profits will not come from selling to Joe.

    A strong dollar hurts US exports and also makes foreign sale profits yield fewer dollars when converted from local currency. You can be sure for these reason also that the dollar’s current (last week or so only) strength will be short lived; however the main reason for the dollar to slide down in value is that few but the FED and central banks trying to hold their currency under valued are net buyers of US bonds now and both buy with freshly printed money. As a result of this flood of newly printed fiat currencies the nominal price of oil, gold, stocks, land, commodities, etc will all increase, but not their real values, with the probably exception of oil until the depression comes. (In some sense, gold never has much “real value” – it is just them most widely accepted fiat money – I.e. like the paper dollar, gold has a high value only because most think it has.)*

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    *For example, tungsten has much higher real value than gold, but sells much cheaper, I think. I could only find one grapical indication of price and it seemed to be a few hundred dollars PER TON, but that seems to be too cheap to me.
     
    Last edited by a moderator: Jun 8, 2009
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