The Next Bubble

Don't kid yourself, the Chinese gov is extremely paranoid about this right now. They have 24 million entering the workforce each year on a net basis, and need rapid growth to employ them. There have already been significant layoffs in the southern industrial region, and small protests there.

This is why they just announced a 1.5 trillion infrastructure program. They will do anything to keep everyone employed.

 

Cash and Bonds

 

You are watching too much CNBC, I hate that word now.....

 

I see a massive bust in retail

the entire retail infrastructure was based on pure imported goods financed with credit

No matter what, that level of overconsumption is gone

 

It will be interesting to see whether we reinflate, or swing to the opposite extreme and become a nation of savers. If Americans begin saving again, we might see a movement against free trade ... hmmm. I suspect we reinflate ... too many vested interests at stake, but that is not something I would bet on.

 

Its rather obvious, government debt bubble.

 

Couldn't that also be called a "bubble in fear"?

What does that say about everything else?

 

Sounds like they will soon have plenty of new "resources" to provide organs for the black market.

All China will do is create more "criminals" and they are good to go.

 

I'd actually bet on price inflation but not before uptrends in commodities have established themselves. Inflationary measures by governments and related bodies don't come unexpected. In democracies populist policies are common. Also, people in charge will act just to justify their positions and offices. They perhaps fear what the voters would think of them if they are there and just do nothing, letting events take their own and natural course. Won't happen. Bailout and stimulus packages are likely to continue in any form and size deemed necessary. But for trading purposes price inflation isn't there without uptrends.

 

Another article below re: my point about China. PRC only has two strategies to address growing unrest: 1. security crackdowns (but don't kid yourself - authorities are not omnipotent), and 2. Rapid economic development. The government risks massive scale rioting if growth were to stall a meaningful amount over a meaningful period.

In the article a Chinese guy is a local 'Hero' for stabbing 6 police officers to death in revenge. The public openly supports him by wearing his image on T-shirts and such:

http://www.nytimes.com/2008/11/27/world/asia/27shanghai.html