LilBob

5 Anomalies in the Current U.S. Markets

On Aug 31 11:02 PM schoolchildren wrote:

> Last I checked lilBob, China had quite a pile of reserves - probably
> more than any country in the history of capitalism

Unfortunately those reserves are held by China's central bank which strictly controls the value of the Yuan and national wage-rates. The several trillion you're talking about will not be made available to the average consumer.

5 Anomalies in the Current U.S. Markets

Sorry Doc, but the initial supposition upon which you base your succeeding arguments is inherently wrong. Global markets will not become powerhouses of economic growth because one of the side effects of globalization is an averaging out of incomes for working class peoples in all participating economies. As soon as any developing nation tries to approximate western standards of living, that nation will see investors flee to cheaper labor markets. The notion of developing nation-particularly Chinese-consumption becoming a buoy for existing capital markets is a fallacy. Declines in spending by developed world consumers will-in the long run-exceed increases in spending by developing world consumers.

Also, while the United States had the accumulated consumer capital of the WWII generation to sustain it through the early stages of out-sourcing, developing nations have no such resource, ergo there is nothing to sustain these nations financially once they start to experience capital flight.

Consumer spending in the developing world will never over-balance declines in spending in developed world markets.