Anthony Questions Me Closely

On Jan 14, 2009, at 9:16 AM, M A wrote:

Then you are saying that China cannot thrive without the US spending? We are still, "Chimarica"?

***The market is so interdependent that we will never decouple. China will grow stronger, we will grow weaker. Rome never "fell." It just dwindled for 900 years while people migrated out to live off the land, and organize themselves into gangs of kingdoms. the tide turned when the medieval scholastics began rediscovery ancient knowledge (compliments of Islam) and the fusion performed by Aquinas, Albert, etc led to the renaissance, and then industrialization. China is heading into a renaissance, we are not. But that is the political decision we have made.***

I think Schiff is saying China has huge savings from having an export economy.

*** SAvings in Tbills, which is in a bubble right now, which will bust and not be so huge, but still big. How much do they have, and how much have they traded off or otherwise pledged in deals wherein China has built world trade infrastructure that now points to china as opposed to usa?***

China is poised to consume its own production and prosper.

***SAvings is wealth. It is prospering because it has savings, which is carefully invested in money making ventures. China engaged it appears in a massive vendor financing scheme. It's customer, USA, went bust. So now it has to absorb that capacity. USA pays the most for everything. Who in China will pay high prices for what chinese factories can make? I expect the Chinese economy to ride down some, as china adjusts t raising its own standard of living.***

China will eat up resources and cause inflation in the US.

***eating resources does not cause inflation, only printing money does, but the effects can be seen in certain assets classes, such as housing or commodities. USA policies cause inflation in USA.***

Let me ask this; If China has huge savings, what will China spend its money on if they are not buying US Treasuries?

***Invest in China, with chinese, for chinese, and more overseas infrastructure. Instead of spending a trillion to "stimulate the economy" Obama ought to invite the Chinese in, forgive me, to invest and build in a mag lev transport system across the USA. Give them medicine too, and we will be #1 for 250 years again. (Yes, I just said invite the Chinese to build our railroads again.)***

Also, what have your on the ground contacts said about China recently? Are things looking bad? Any news from the man on the street?

***Sure things are tough and people are behaving responsibly. One of My printers shut down in a most orderly fashion. Workers are ataking their savings and heading back to the village. We could do that in USA last depression. Not any more,***

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