Seems timely to me. There are many folks out there who have been warning for quite some time. The events seem to be coming to a head:
1) unprecedented US trade defecits (>6 % GDP) - including >26 bil to China in July alone
2) China holding 1.3 trillion $ in foreign reserves - and threatening to sell if trade battles begin (as anti-trade legislation makes its way through congress)
3) A US $ that has lost better than 30% of its value vs. the Euro in the last 4 years?
4) A housing market that is literally collapsing before our eyes?
5) Hedge funds going belly-up and the almost daily report from one company after another that their "bottom line" or "material operations" are being negatively impacted by "unprecedented" conditions?
6) A sudden intervention by the worlds central banks - >200 bil ECB and >50 bil FED? Maybe they did it just for fun and giggles?
7) A continuing negative savings rate in the US?
8) Knowing that the US consumer continues to drive the world economy. Yes, Asia is growing briskly. How long does that continue when the American consumer stops spending. These are, after all, export economies. I wonder who they export to?
It seems to me that most of you have been drinking too much CNBC and Bloomberg kool-aid.
I can't speak for anyone else, but I don't watch CNBC or Bloomberg, or
FoxNews or CNN. I don't even have cable. (I do want NBR on PBS)
But I do know, that CRISIS is one of the most overused words on TV
and many people more knowledgeable than I have said this is not a
crisis, not even close. Are people in hedge funds going to lose their
money, yes, and they should. Is the real estate market going down
and probably be in a recession for the next few years...yes, and it
should. Are some companies going to complain about unprecedented
conditions, yes, especially if your a financial company.
Of course international companies are enjoying great earnings; IBM,
CISCO, etc
What to do?? Stay with the large caps, have a decent amount in
international stocks. (I wish VG had a international bond fund).
But I wouldn't start buying gold, we're not going into a depression,
the world is not coming to an end.
1&2 If china would let its currency float, this wouldn't be a problem,
of course by linking their currency to ours, the Yuan has been dropping
as well. We're tied at the hip, either jumps off the cliff, we both go.
3. So? The trade deficit will be balance by the $ dropping, making
our imports cheaper, except for China.
4. How much have home prices fallen?? 2% %5 I hardly use the word
"Collapsing" to describe it.
5. So what, hedge funds are what .02% of the MF market?
6. Basically yes, $50bil
Heck, there is a guy in Omaha that's worth
that much.
7. So, some people will have to work until their 70....where do think the
SS is going to get it's money anyway. If everyone started to save $, and
retired early this economy would then be in a crisis. Fortunately people on
this board are a minority....
pass the kool-aid, and the Vodka ;-)
TJ