Everybody is caught up in the unwind of our late, great, leveraged real estate bubble. In a short order it will be old history. Where is the next bubble, that should be ridden for the next several years?? 1. China The Chinese government will inflate their way out of anything. It is absolutely dependent on economic growth for survival - social chaos is right around the corner - more than westerners can really grasp. For some color read here: http://www.feer.com/authors-corner/2008/november/Street-Justice-in-Fujian 2. Inflation and Hard Assets The global currency regime is broken. With each new economic crisis we get closer to the day of reckoning. The solution to every new problem is to print more money and inflate our way out of it. We will reach a point of no return on the US debt, when even good economic times cannot balance our budget. Then watch the USD collapse and hard assets/inflation take off. I will see it in my lifetime, I am certain.
well, i was around during the savings and loan debacle....astounded the US inflated themselves out of it. perhaps, they can now deflate themselves out of this. in any case, the world will survive, and prosper once again. cycles are key....time seems to solve things.
#2 I agree. I am not so sure about #1. The Chinese are not as rebellious as some Western theorist usually assume. East Asians are generally conformist which makes them much more resilient to shock than their Western counterparts. So I don't think the Chinese gov will be under massive pressure to make changes that could harm them in the long run. These people think long-term, like 20-50 years down the line.
Looks like there is a bubble building in cash. The same amount of cash now buys a lot more oil, metals, real estate, shares and so on. Just look at charts upside down to see the building cash bubble. :eek:
When you are starving this very instant, drinking contaminated water and with no economic prospect ... you don't have the luxury of thinking '20-50 years down the line.' And the government can't afford to wait 20-50 years when the country is awash in riotous chaos. My in-laws lived through the rioting in Indonesia when Suharto was overthrown during the Asian financial crisis. (Remember that one?) Mother-in-law took a brick through her rear windshield. Wasn't so long ago ... They escaped China just as the Great Cultural Revolution was getting underway. Listen to the people in Guangdong province tell of watching hundreds of bodies floating down the Pearl River and its many tributaries. Nobody fished them out for fear of being accused of sympathizing with 'criminals.' It is still in living memory, and that same restlessness still simmers below the surface ...
Yeah, Jim Rogers says if China don't fix their water problem next 5 to 10 years, it's game over for them.
I see a bubble bursting in the whole local, state, federal Government complex. The federal government can always borrow as it needs, but local government has to balance its budget. Starting with pension programs that make an auto worker jealous. Government employment is the last stand of unions. Each level of Government from city to federal is a uncoordinated mess. For example education, a school in a small town has oversight from the town, township , county, state, federal. For some programs paperwork needs to be sent to each level of government, a costly effort. Programs will need to be cut back and outsourced to private industry.