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China: The One Global Market with Gains Behind the Gloom

China's $600B stimulus package is for China - not for the whole world. China knew how expensive infrastructure projects could be when commodity prices were skyrocketing.

Now is their first biggest chance to plunge headlong into infrastructure projects while commodity prices are reasonably cheap and buying competition from the West will be almost non-existing for the next several years thereby preventing commodity prices from running up dramatically.

Also, if they don't spend their $1.9T cash reserve; US and Europe are going to borrow every cent of that money and will be asking for more.

However, if they dont help US and Europe in any meaningful way, the West might start legislating trade barriers against China and other developing countries specially now that the West is starting to realize that investing in housing instead of in business during the 2001-2006 years was a dumb idea to shore up their economies against the Tech meltdown.

Most investment in manufacturing and technology from 2002-2007 went to China and India. The West will have to start looking inward in order to prevent more capital investment outflow to those countries. A tough situation while the US is in a quagmire while companies such as MSFT and Intel are even considering ramping up investments in China and India.

The reason is simple. China and India constitutes the biggest baby boomers of the 21st Century. Developing countries' baby boomers dwarf the West's baby boomers by the billions. More so, they are basically "hungry" of anything western since they were practically "brainwashed" by western movies and TV shows during their childhood and early adolescent in the 80's, 90's up to now. The next global boom will be fueled by consumerism in the developing countries - not the West.

US baby boomers in their 50's and 60's are more interested in banking, finance, insurance and housing rather than technology, manufacturing or even sales and marketing. What do you expect when you reach that age? Just consider the current financial crises as their post mid-life crises.

They will go thru it and plunge headlong after acquiring a considerable knowledge and experience this time. Also, more of them will be controlling the US govt in the future - global banking and financial services is going to be the future of the US economy in the next 20 to 30 years.

Meanwhile, China economy will still suffer in the short run and their stock market will still be beholden to the US and Europe market gyrations.