Tuesday, June 23, 2009

Turning Point

Just when the 'concept' of the subprime crisis was rearing its head - one of the beliefs I accepted was that the engine of world growth - the American consumer - has been tamed. I was and still am worried that even though Americans can still consume a whole lot more than any other nation(ality); they will be much smaller in absolute terms as compared to the roaring 2000's (ref. emerging economies)

I just read a post on Pimco that was pretty heavy!
But I got the basic idea, saying that people are already deciding how to garnish their omelets when the eggs have still not been bought.
"Reluctant lenders and reluctant borrowers" - that captured me (not my imagination; me! ) because it destroys the entire notion of hot money that had fuelled growth over the path 4-6 yrs.

I am still scared of the idea that some large institutions (or countries) may dump USD.
I am still scared that the factories that are idle in China have not been labelled under Net NPAs, and that they may never function for a long while.
I am scared that the assets that China is building are hiding some large underlying factor.
A pegged Yuan, low inflation, high growth, CA surplus, large reserves, large reserves dumped onto domestic economy and still not stirring inflation - I do not get the logic.
I still believe that commodities are going crazy - 920$ an ounce for useless gold - behavioral economics anyone ?

I somehow (intuitively) believe that we are at a large turning point in history.

If only I could be more qualitative.

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