Saturday, April 16, 2011

The grind

Businesses seem to be doing well; however, I'm not sure about businesses in China. The 'money bubble' of China ought to burst or implode soon - I dislike opaqueness, that will be the reason for the country's downfall or 'slow grind' as suggested by Michael Pettis.
It is interesting being a contrarian because it's difficult being pessimistic when the world craves a recovery or vice versa. I want to believe that people are not ahead of themselves, especially after the deflation of America's consumption bubble and that businesses are doing rather well. What I see wrong now is at a structural level.

America cannot support its own economy without another round of quantitative easing. A pause by June would start a process that will inevitably start later. Bill Gross has outlined easily how America's 'entitlements' will ruin the dollar and American inflation.
I believe that that inflation, due to America's free financial borders, will pour into other countries, to which other countries would erect barriers which could cause a severe grinding pause to the global economy.
China is sitting on idle investments and infrastructure whereas Europe, largely, is quite unproductive. I don't know how this tripod is going to wobble or topple...
I do believe that in the coming months and years it's going to be very difficult to preserve one's value of money.
Do remember that for some reason the world has not imbibed into the financial system, the effects of $120 / barrel of oil.
I grow weary of posts that seem similar to each other

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