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Originally Posted by bearprofits
The US will not go quickly into the toliet, it would take 2/3's of the world Economy with it. Asia needs the US as well as Euro and GB to buy it's goods as the vast majority of it's citizens can not afford them.
What we are seeing is a world wide move in manufacturing from the established manufacturing countries to emerging countries with lower labor and governmental regulation costs.
...... Sounds good in the short run, but we are seeing the cost and effect of large scale movements of business that have never been seen before.
If you like moving averages, plot one of the wealth of all countries, and your respective country is moving in that direction. Exception being the Middle East as it is benefiting from the current oil scenario. A collapse of the world's economy and the need for oil no longer exist.
fwiw.
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I see you have found a function for moving averages at LAST. - But please don't take offence, I am only joking.
You are correct regarding the parameters you have listed, but miss on one resounding development.
You see by creating industrial economies of scale, China & India, are changing the consumption habits of consumers world wide. More and more people are begining to afford their cheap goods, and its changing life styles in a global manner.
Put in other words:- if 300 million Americans spend $10000 annually, on average consumtion of consumer goods that indirectly go towards boosting trade & world economy. Then 2.5 Billion Chinese & Indians need spend only $ 1200 on average to break even, and create the same effect.
Most important keep in mind that while you are gradually adding the new consumers to the market, you aren't taking off the American consumers either.
Remember, that true markets can only florish with volume.
In effect, we are seeing a development of social consequence, like the industrial revolution of the 1700's when mass production changed peoples' lives, & consumption habits. Only this time the cascading effect will be massive world growth, because of the sheer difference in numbers. - from tens of millions back in the 1700's to hundreds of millions today.
This does not mean that the States or Europe will imeaditely go away as an industrial base. Because consumers buying affluent products like BMWs or supersonic jets, will keep heading to these markets were choice of price is secondary to quality & brand name.
But it does mean that Europe & the States, will not be affected by structural problems arising from a strong currency. On the contrary, such importers being affluent, do not really care about the exchange rate when importing - what to them are considered a "strategic choice of goods". And subsequently, Economies in Europe & the States will be geared towards continued investing in high tech products.
And that is primarily why, the Eurodollar excahnge rate will never reverse to 1.20 -->1.30 levels again in the foreseeable future. Because the market makers funding the expansion in Asia, are pooling their wealth in Euros & Gold. This is neccessary in order to be trully hedged in investment. - Don't put all yr eggs (investment money) in the Asian basket.
Another resounding development is the Global war on terror.
As a function, waring activity always brings boom & wealth to one part or sector market in the world.
Capital being faint hearted always, flees to safer heavens on breakouts of bloodshed & what can best be described as unsetteled policies.
What we are seeing today is the fleeing of mid eastern investments out of the States, & into Asian markets. Like a domino effect, this has fueled other global funds & banks into the region, primarily because of the prospects of volumetric growth potential in Asian & world markets.
War on terror has been a catalyst in fueling money out of the States, and into Asia. And this is in effect the biggest mishap of the current US adminstration.
If one keeps in mind that the war on terror campain is likey to continue for the next coming 10 yrs at least, then you can visualize, the investments that will be pouring into Asia during this period to fund capacities for her volumetric growth.
Finally Oil:-
Growth in the Asian markets, is being funded by petro-dollars of course.
Strategically, petro-dollar holders know that China, & Japan are world BIG consumers & importers of Oil. By investing in their volume economies, their consumption will only increase twice fold in future, creating a continous steady demand for the Oil producers.
Most important, invested capital in Asia, is being funded by continually raising Oil prices, so that such investors do not bear the blunt or risk of breaking new grounds in exotic - (could be unsafe) markets.
So like Iris said - though, I suspect in the reverse sense - the Best for Oil & money makers is yet to come.
Best Regards.
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