Off with our heads!

[mookiemookie]

Originally Posted by Neal Stevens

Boy, you call Mookie on something and he brings his A-game!

I was very sick, completely exhausted and didn't feel like typing all of this out. The general message of my first post in this thread still stands though.

[Skybird]

Originally Posted by mookiemookie

And again, I ask which customer base is more attractive to sell to? The ones with an average income of $50,000 a year or those with an average income of $750 a year? General income may be rising, but there's a hell of a long way to go before the average Chinese citizen can match the average U.S. citizen's disposable income. And even then you have to be careful using median income statistics, because the rich-poor gap in China is so wide that it skews the median.

I talk of a middle class that now demands and can affords small flats in major cities, wants to buy cars, a TV, etc.

There are the Bugatti and the VW Golf car manufacturers, and while the first exclusively depend on the very rich and thus produce their expensive luxury items only in small quantities, the Golf-type of mass proiduction needs not a small clique of ultra rich, but needsa a numerically stronmg crowd of peoplle buying their more affordable cars. You cannot maintain a huge mass-production economy with a small elite of rich poeople as customers only, you need to adress the mass demand of the less-paying crowd. That is what currently happens in Indsia and China, and takes place faster in China, it seems.

How is anyone supposed to take what you say seriously when you make statements like that? Seriously? The strength of U.S. Treasuries lies in the government's ability to tax it's citizens - one of the richest tax bases in the world.

You cannot tax them endlessly.

Anyhow, you read a different message in the rising demand for US bonds in late autumn and weaylry winter last year. This is not becaseu US bonds are so attractive, but becaseu the Eurozone is becoming weak and unattractive. Stock customers at that time fled in hugh numbers from Euro-.oriented boinds into US bonds and the dollar again - not becasue the US bonds are so attractive (in fact they become the more unattractiove the more the Fed prints dollars and buys these bonds), but becasue the Eurozone is currently bercoming more unattractive.

It is a rubberstrip-effect, somehow, of which we have seen various cycles in the past two or three years, none of them lived long, and then reversed. I expect in the future we will see more of this, becaseu the Euro is struggling and will weaken and dramatically chnage its nature and fundament, Germany will starts to decisvely struggle, and the dollar and the US deficits and debts and bonds are weak factors, too. So people will increasingly flee back and forth between the two, depending on the current relative weaknesses of both. The less weaker will attrct some inverstors back.

At the same time, the Chinese economy is in danger to even overheat, and their growth rates ands stock indices leave both the Euro and Dollar behind.

I think you have it backwards, as well. As the European debt crisis goes on, investors are turning to U.S. assets.

As I alraedy said, many German funds have kicked US bonds out of their portfolio, due to risk concerns. I expect both nations to loose their triple-A ratings in the forseeable future of just some few years, and maybe constantly detoriating in the rating agencies assessments. The reasons for this will be slightly different for both nations, though: structural problems in the American economy of the US, the Euro madness in Germany, plus the high risk of Germany so vitally depending on exports. We have the lowest wage growth in Europe over here, and national demand and consummerism is unlikely to suddenly explode in these times of growing costs and job uncertainty everywhere. Our dependency on exports is what will catch us sooner or later, and bring us down (plus age structure developement and demographic factors constantly ticking against us).

Who bails out Germany, with our debts exploding, debts we mounted for the Euro bailout of others? Will Ireland come to our avail? Spain? Italy? France? And if Germany doesn'T pay anymore, what's up then with the Euro? ASnd millions of people in Europe meanhwile having made their future security investements for their higher age days in Euro, so that a return to other currencies would mess up their existential basis? Where America has been two and one year ago and currently still is, we will be in just a couple of years, I think.

China...? Nothing China gives, is for free.