Global: Market crash is on its way
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- I’ll keep defying gravity and stay in the bear camp: the Economic Time® has to keep worsening in the sense that unemployment must keep rising, particularly in the West
- Crucially, with earnings growing faster than revenues, something has to give in order for earnings to keep barreling-along: costs have to keep being slashed, or revenues have to rise strongly. But the former (cost cuts) will kill the latter (revenue increases)
- Your thoughts on Asia's recovery in comparison to Europe and the U.S?
- Still a massive excess supply of goods out there, what with unemployment set to increase, courtesy of cost cutting in the West leading to less consumer demand, ergo less exports
- Stimulus packages are going to start running out of steam in 2Q10, so what happens then? Monetary easing cannot go on forever
- Your thoughts on Obama's comments on China (see the wire stories below)
- All politics are local
- This means that EVERYTHING that Obama says will be against the backdrop of
- his party’s poor showing at the recent two state elections
- Next year’s mid term elections,
- His waning popularity, and
- Good old fashioned horse trading with the Senate in order to pass his health care reform
- Of course, he will bellow something about “working together “ and “stakeholder” stuff, but the real music is backstage: “how can I attract more votes at home for my party, my self and my legislation?”
- Is Obama attempting to highlight China as currency manipulators?
o Of course he will, as this cheap argument appeals to his voters
o As I pointed out in my recent book on Trade Myths: currency levels have nothing to do with trade balances. Otherwise, how come Germany and Japan – with ever stronger currencies – have huge trade surpluses, whilst the US – with a wilting dollar – has an ever larger trade deficit?
o The reason is that globalisation has left trade balances behind: once you include the very successful activities of US Multinational Corporations operating abroad, you will find that America has a global trade surplus of about $ three trillion, whilst China has a global trade DEFICIT of about $ two trillion.
- Other talking point
o Our Hong Kong”democrats” wish to introduce minimum wage – styled on France’s.
o This is another nail in the coffin of Hong Kong’s competitiveness: our cartels already see to it that we are pricing ourselves out of the property market, and a minimum wage will further erode our competitiveness in terms of labour costs…
