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rffrydr
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rffrydr
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Joined: 30 Oct 2005
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Location: Sunny California
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 Posted: Tue Feb 19, 2008 10:05 pm Post subject: |
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From the Barbera Archive:
| Quote: | | Last week, Ed Hyman, noted economist at ISI Group, pointed out that his ISI Developing Economic Economic Diffusion Index has now fallen from a late 2007 peak at a very robust reading north of 17% to a recent reading of just +3% making this downside reversal in Developing Countries the fastest reversal ever seen. Sounding off on the same subject, Morgan Stanley Chief Economist Stephen Roach stated, “The acuteness of the pain the consumer is now enduring has laid to rest any argument that developing economies have decoupled with the United States. Evidence has mounted that developing economies are slowing as the spent up, lent up US consumer pulls back. The US Consumer is, by far, the biggest consumer in the world. Americans spent over $9.50 Trillion last year, whereas the Chinese consumer spent around 1 Trillion and Indian consumers spent around $650 Billion. The bottom line for the global economy according to Roach, -- when the US sneezes, the rest of the world can still catch a cold, -it makes no sense to preach the gospel of decoupling in an era of globalization.” |
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rffrydr
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| Posted: Sun Feb 17, 2008 10:33 pm Post subject: |
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GaveKal:
| Quote: | On a cyclical basis, however, so long as the system remains in place China is so
huge that it is virtually unaffected by the peaks and troughs of economic activity
elsewhere. Moderately prudent fiscal policy can ensure that if excess demand
disappears from the external account – as occurred in 1998-99 and looks to occur
once more in 2008-09 – direct and indirect government spending can pick up the
slack. Because productivity continues to rise rapidly, producers have considerable
ability to respond to tighter conditions without a debilitating hit to profitability.
And because capital and transaction costs remain low and are in essence
discretionary – depending on how tightly the government chooses to enforce
regulatory requirements – budget constraints can be softened until the cycle perks
up again. This mechanism is one of the numerous “shock absorbers” in the
Chinese economy, which as we have frequently argued in the past, enable China
to ride out gyrations in cycles of global demand and commodity prices. |
That's a bold statement. I wonder what it means in a country with so little consumer contribution to GDP? This is even more bold if you're using '98 as your model; it was them then, now it's US.
I wonder if they'd be in agreement with Simmons above that this "fiscal stimulus" really means buying US stocks?
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rffrydr
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Location: Sunny California
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rffrydr
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Joined: 30 Oct 2005
Posts: 16939
Location: Sunny California
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