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achilles28
Registered: Apr 2005
Posts: 7534 |
05-15-09 04:37 AM
Thats true. I don't see how China will ever become autonomous without raising their per capita GDP enormously. They need a broad, thriving middle-class to make that happen (something America once had). And from what I know, half the Country is still rural living on rice paddies.
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Pascal
Registered: May 2009
Posts: 99 |
05-15-09 04:42 AM
As soon as China allowes its currency to become fully convertible, is the day China loses its competitive advantage, and the dollar will again reign supreme. It's the history of the last century. The US pressures a country to unpeg its currency, then the multinational banks raid that country's treasury by short selling the currency. This happened to Japan in the 80's, and will soon happen to China.
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ByLoSellHi
Registered: Jul 2006
Posts: 11230 |
05-15-09 04:55 AM
Actually, I think you guys are right on topic here with what Roubini is saying, but you're laying out the opposing case pretty well.
I've thought at times that China's competitive advantage, in reality, is in its peoples' willingness to work harder, longer and for less than almost any other emerging economy, and in its willingness to subject itself to almost insane levels of industrial pollution (by water, air and even touch).
These sacrifices are the reason you can buy durable goods for probably 30% (in real dollars, adjusted for inflation) of what we used to have to pay for them.
How long will they continue to subsidize our consumption of inexpensive 'stuff' with their poor standard of living and compromised environment and health (and uneven, lumpy economic growth leading to societal stress)?
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Debaser82
Registered: Aug 2008
Posts: 3477 |
05-15-09 09:28 AM
Quote from ByLoSellHi:
Gold is still a barbaric relic whose value rises only when inflation is high.
Real estate crashed practicly globaly.
Stocks crashed the hardest since 1929.
All comodities crashed 50% to 80%.
Currencies plunged.
And yet Gold has done just fine during 'the biggest deflationary crisis of the last 100 years' as Roubini calls it himself.
Where was the inflation that supported gold?
Why don't you like gold, Nouriel?
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makloda
Registered: Mar 2006
Posts: 6650 |
05-15-09 09:50 AM
Roubini should know better. Gold did terrible during the 80s and 90s even though consumer prices gained ~100% from 1980 to 2000. Gold is not a systematic risk-free inflation hedge. It is a risky asset.
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Brendan R
Registered: Aug 2007
Posts: 447 |
05-15-09 09:59 AM
the demise of the dollar is total nonsense as everyone would go down with it and there is no hedge against it, not even gold.
What would replace the USD? Euros, GBP, JPY? The resulting depression of a dollar destruction game would mean the end of the world as we know it. Back to the age of stone. The world is based on international trade. If the dollar goes, so does world trade, so do all the developped/developping economies. Goodbye cars, refrigerators, friendly neighbours,... This would mean war. Hopefully nonsense.
I guess Roubini is facing the challenge of facetious actors. Making sure he stays in the limelight by upping the ante. Well, at some stage, you make a complete fool of yourself. Roubini, you risk becoming catalogued as the sub 1% scenario forecaster, i.e. forecasting events that stand less than 1% chances of occurring in the next 10 years.
FYI, I believe the dollar will strenghten as the second wave of deflationary pressure is about to hit. As a consequence, I expect wealth destruction effects to overpower any quantitative easing effect. It's not only the pool of dollars that is in circulation that matters, it's also the velocity at which it circulates. Velocity has been decreasing, I believe attempts at reflation are doomed.
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