Great Depression question (insurance, Sears, credit, debt)
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I don't mean to sound daft but -- was there deflation or inflation during the depression?
massive deflation of assets and cash was king.
Even though FDR tried to confiscate gold and start the printing presses full steam, deflation existed because most assets were massively overpriced.
Things are different now. Our debt is not held domestically (aka by wealthier Amerians) and not in 30 year bonds. Also, commodities are more global (refrigeration/preservation of food, more elaborate transport, global trade, etc). Therefore, we can have a depression and the cost of basic essentials still go through the roof, in dollars.
The depression and likewise today... is a deflationary environment.
-chuck22b
Chinese manufacturing is actually up. Russians are buying more cars than Germans and demand has exploded.
It takes time for the Chinese to get their new customers in queue. The head fake seen on their markets does not reflect their day to day economy. The people are doing just fine!
Chinese manufacturing is actually up. Russians are buying more cars than Germans and demand has exploded.
It takes time for the Chinese to get their new customers in queue. The head fake seen on their markets does not reflect their day to day economy. The people are doing just fine!
I don't know where your getting your information, but from what I can find, Russia isn't doing so well (commodities dropping, supplies stockpiling, stock exchanges dropping and closed, companies asking for help), and China will be fending for itself trying to spur domestic consumption. Overall, we're seeing a massive global deflationary market.
The Chinese economy is about 10% of World GDP. Where as the US, Eurozone, and Japan, makes up almost half of world GDP and are hurting... it's essentially a global slowdown.
There are no single saviors... we're going to see more isolationism in the mid term and a lot of hurt domestically. Unless the world can agree on a massive injection of cash/credit. Which it looks like the central banks are cooperating with each other more so than in the past.
If all the central banks can agree to injecting/printing mass amounts of their own cash reserves to increase the money supply it may offset the deflationary spiral.... But devalue the developing nation's currencies.... the Yuan and other currencies that are already currently devalued will instantaneously jump up causing their goods to be very expensive.
I don't know where your getting your information, but from what I can find, Russia isn't doing so well (commodities dropping, supplies stockpiling, stock exchanges dropping and closed, companies asking for help), and China will be fending for itself trying to spur domestic consumption. Overall, we're seeing a massive global deflationary market.
The Chinese economy is about 10% of World GDP. Where as the US, Eurozone, and Japan, makes up almost half of world GDP and are hurting... it's essentially a global slowdown.
There are no single saviors... we're going to see more isolationism in the mid term and a lot of hurt domestically. Unless the world can agree on a massive injection of cash/credit. Which it looks like the central banks are cooperating with each other more so than in the past.
If all the central banks can agree to injecting/printing mass amounts of their own cash reserves to increase the money supply it may offset the deflationary spiral.... But devalue the developing nation's currencies.... the Yuan and other currencies that are already currently devalued will instantaneously jump up causing their goods to be very expensive.
-chuck22b
The Chinese will bite the bullet and let the US economy collapse, find new customers (they already have begun identifying other trade partners over the past few years)
Switzerland has a massive account surplus and will always be known as a strong banking center of the world. Australia/NZ have a very robust inventory of natural resources, as well as Canada.
Europe will hurt, with the UK leading in the amount of hurt. However, the epicenter is the US and it will eventually stop there. I don't buy the headfake.
But, what do I know? I just predicted the end of Fannie/Freddie back in February and the massive government bailout as early as last year.
The Chinese will bite the bullet and let the US economy collapse, find new customers (they already have begun identifying other trade partners over the past few years)
China's trade policies are centered around building a future consumer base, which is exactly opposite the US which is hell-bent on destroying any potential future consumers of whatever it might be exporting, which apparently will be hamburgers and french-fries.
Quote:
Originally Posted by chuck22b
The Chinese economy is about 10% of World GDP. Where as the US, Eurozone, and Japan, makes up almost half of world GDP and are hurting... it's essentially a global slowdown
But, I don't see where China is going to be hurt that bad. If China was exporting cars and durable goods and machine tools, I'd say okay, they'll get hit fairly hard, but they aren't. China is Wal-Mart. It Wal-Mart going to go out of business? No.
The US economy is 72% consumer spending in health care, retail, services and hospitality. If the US goes into a major recession, it'll be health care, services, restaurant and hospitality that get crushed, and China has nothing to do with that.
What's the first thing home-owners and businesses do? Cancel contracts. Lawn service, landscaping, repro/IT, pest control, security, and other contracts canceled.
All consumers cut back on entertainment, restaurants and hospitality. Laid off employees aren't going to be paying "health insurance" premiums, so the insurance companies and medical takes a hit. None of that involves China, who will still be exporting stuff to Wal-Mart, Target, Meijer, Kroger's and everyone else, except probably K-Mart and Sears who'll be done.
China's trade policies are centered around building a future consumer base, which is exactly opposite the US which is hell-bent on destroying any potential future consumers of whatever it might be exporting, which apparently will be hamburgers and french-fries.
But, I don't see where China is going to be hurt that bad. If China was exporting cars and durable goods and machine tools, I'd say okay, they'll get hit fairly hard, but they aren't. China is Wal-Mart. It Wal-Mart going to go out of business? No.
The US economy is 72% consumer spending in health care, retail, services and hospitality. If the US goes into a major recession, it'll be health care, services, restaurant and hospitality that get crushed, and China has nothing to do with that.
What's the first thing home-owners and businesses do? Cancel contracts. Lawn service, landscaping, repro/IT, pest control, security, and other contracts canceled.
All consumers cut back on entertainment, restaurants and hospitality. Laid off employees aren't going to be paying "health insurance" premiums, so the insurance companies and medical takes a hit. None of that involves China, who will still be exporting stuff to Wal-Mart, Target, Meijer, Kroger's and everyone else, except probably K-Mart and Sears who'll be done.
China produces a lot of plastics and junk stuffs. The dispensables and "extras" that consumers can in the most part forgo (electronics, decorative stuff, clothing/textiles, etc.).
In the US, we still produce most of our own food products, personal care items, medical items (drugs), and essentially most of the stuff for day to day living (we still mostly produce these things because there are heavy regulations on food, personal care (creams/lotions/tooth paste, etc.), and medical supplies).
Wal-mart has also moved into purchasing more of its produce from local/State farms. If people are just buying the "essentials"... America still won't be importing much from China.
America holds to benefit the most if China or other developing nations demand more durable large capital goods. America still produces most of those. Caterpillar, GE turbines, etc.
-chuck22b
Last edited by chuck22b; 10-09-2008 at 07:18 PM..
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