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Signs of the Times

http://www.chinadaily.com.cn/usa/business/2011-06/10/content_12671724.htm

With long-standing trade inbalances at the heart of the issue of national debt.  It is only logical to looks for cues from the markets on what the solution/end result of this issue will be. 

The link is an anecdotal story reflecting China's interest in improving its ability to recruit top talent internationally.  To me, this adds to the mounting evidence that global trade could be significantly slashed in the upcoming years.

The most telling signal from the market, in my opinion, is the relatively low P/E ratios of the shippers.  DSX ~ 6.5X Earnings, DRYS ~ 4X Earnings. 

Using market prices as a forward-looking indicator, one can easily derive the economic assumptions that would cause these shippers to carry such a low P/E...they won't be making the same amount of earnings in upcoming years, due to a broad decrease in global trade.

With energy prices increasing, the attractiveness of finished-goods global trade is diminished.  The amazing lack of Yuan appreciation and shocking PPP, tell me that China is still willing to sacrifice the general well-being of their citizens to keep a firm grip on the balls of (still) willing trade partners.  The situation wreaks of mistrust, and introspective, social-program-only national deficit solutions skirt the real issue here.  

If China is willing to go the extra mile to recruit international talent to improve its domestic quality in an industry as complex as the auto industry, it illustrates the changes that could be unfolding in the upcoming future.