http://www.marketwatch.com/
Pre-rantal Advisory: Explicit scenarios:
The canary is not doing so well.
It seems to me that this is pretty much the wake-up call... the tipping point of a new economic reality is being reached, and the plans that seemed perfectly reasonable 5 years ago are no longer even relevant. Enjoy it while it lasts, and study Chinese....but most of all, focus on the potential big wins, and leave the little financial opportunities alone, they will not matter.
We would do well to leverage these next few years to secure a future not dependant on systemic stability. Food, shelter , relative security first, then an all out drive to secure a strong economic foothold.
Nothing less will likely work, as within a decade or so the buying power of a us citizen will likely be on par with chindia, so that only the wealthy will maintain what we think of as a middle class lifestyle, barring an -actual collapse- of the dollar, in which case we will just be totally screwed.
If you look around at economies that are dependant on the dollar to prop up their currencies, you can see that the real value of the dollar is falling so fast that soon less than a million a year won't do. Do you really think that gold is actually $1500 in anything close to 2006 dollars? Or maybe it could be that the worlds second (soon to be first) biggest currency is so far undervalued that it is hiding the actual weakness of the dollar and euro....hmmmmmm.....
So the probable reality is that when they take the pressure off the Ren, we will wake up to find that western currency dropped 30 to 50 percent in one day, and it will not likely stop there. The US would instantly be in default on foreign debt, and that will be the end of the dollar as the de facto trade currency, with the average Joe groping for balance like the TSA screening a cheerleading squad.
...look to the history books to find out what happens next. It wont be pretty for most of us in the west, though a few will do quite well. One thing for sure, Betting on the status quo is very unlikely to succeed. We have only to look at Russia to see what it looks like when a sprawling industrial power has the rug pulled out from under it.
Ah, but we're their best customer, surely they need us!!!
Weeeeeelllllllll that seems to make sense at first glance, but...Well......... it's one for the money, Two for the show, Three to get ready, Now go, cat, go....
On the off chance that that was a little abstract for some of you, let me elucidate a few salient issues, and draw some not too radical conclusions from them....
They are selling off Tbills at a rate that within 3 years they will own none....that pretty much says it all. They have pulled off the biggest wealth transfer in the history of the world by depressing their currency for so long, and when they have what they can get (which, it seems, will take them about 3 more years, by their reckoning), they will move to the second phase of a now nakedly obvious (to paranoid people such as myself) plan - the property transfer phase.
First, the money. Then, once western currency is cheap in real terms, and buying starts to drop due to the depleted economy, they take the pressure off the Ren, and wallah, their fortunes double overnight, at the same time as our currencies drop like middle eastern protesters.
Step 2 is to buy companies, property, and infrastructure at fire sale prices, and basically they will own enough of America ( and western Europe) that we will never pose an economic or strategic threat. Next, move into production with highly skilled and newly cheap US (and western European) labor, and wallah!! Total success.
But, on the upside, the job market will be great, especially if you can understand and speak a little Chinese.
If i had to guess, which, unfortunately, we all do - This could be where we're headed, everything else is watch the hand......
Hopefully, we have a super secret economic plan brewing somewhere in the dank depths of the obamocracy, but....I think that is stretching the limits of optimism just a bit.
FINALLY!! Someone can share the end game. Thank you. Next please share stratagy beyond, food, shelter and protection.
ReplyDeletewell, ok, so at least thats what *I* would do if I were them.....there is some evidence emerging that there is internal (Chinese) pressure to take their foot off the Ren now, so maybe things will work out a little less bleak - but it still won't change the basic metrics. Enjoy the ride!
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