theobannion

Emerging Markets and the Global Monetary Merry-Go-Round

I find it stunning that the US is bending over backwards to do business with China, one of the world's worst human rights abusers, while keeping in place a blockade on Cuba because "it's a communist country."

I guess there are communists, and there are COMMUNISTS, some offering bigger markets than others.

SOB.

On Oct 06 09:25 PM derryl wrote:

> "I’m less sanguine than they are about decoupling – in the absence
> of a safety net it is hard to see how domestic consumer spending
> ramps up in China – but the monetary point is a fair one."
>
> The lack of a safety net is certainly a constraint but I would suggest
> that nations like China have time on their side in the effort to
> switch from exports to domestic consumption. About a billion Chinese
> still live like they have for thousands of years, poor but fairly
> self-sufficient. China plans to introduce pensions for these people
> which provides them some money to participate in the consumer economy.
> If the Chinese fund these pensions by taxing those who are currently
> using their recent riches to bid up asset prices, then bubbles can
> be constrained at the same time as the consumer base is massively
> (albeit shallowly) broadened.
>
> Decoupling was never going to be sharp and total, but I believe the
> trend will be supported by fairly intelligent Chinese fiscal policy.
> I don't know how long the monetary merry-go-round can spin either,
> but when it stops China had better be prepared to do some serious
> import buying with its newly valuable currency backed by large fx
> reserves.