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Economy
In reply to the discussion: Weekend Economists Ring in the Old, Wring Out the New: Dec. 30, 2011 to Jan. 2, 2012 [View all]Demeter
(85,373 posts)46. Avoiding the Danger Zones in the Year Ahead
http://dailyreckoning.com/avoiding-the-danger-zones-in-the-year-ahead/
...Generally, you ought to believe that things will turn out worse than they actually will. Why? Because the danger is on the downside. And this is a dangerous market. Europe could blow up at any time. Despite what you read in the papers, Europes debtor nations and the banks that hold the debt are just a few basis points from disaster. Traders and speculators are taking it easy over the holidays. Well see what happens when they get back to work in January.
China, too, is a danger zone. Trouble is, we dont know exactly what the danger is. The economy is still growing at more than 5% per year. If the growth rate goes up...China will put a big strain on the worlds demand for oil and other commodities...which will make it harder for US and European families to make ends meet....On the other hand, China is also showing signs of a slowdown...or even a blow-up. Shanghai property prices are said to be falling...fast. And the size of Chinas bad debts may be greater than Americas subprime or European olive country bonds.
Meanwhile, the US is sitting pretty. For now. Money is fleeing China and Europe for the perceived safety of the USA. Whatever else may happen, theres one thing investors can count on. Ben Bernanke and his merry band of price fixers will print the money necessary to pay off bondholders. But America is dangerous too. It has a doomed currency...an out-of- control military...and a dysfunctional Congress. Sooner or later, it will blow up too.
We dont know which bomb will go off first. But at least we know to keep our heads down in 2012.
...Generally, you ought to believe that things will turn out worse than they actually will. Why? Because the danger is on the downside. And this is a dangerous market. Europe could blow up at any time. Despite what you read in the papers, Europes debtor nations and the banks that hold the debt are just a few basis points from disaster. Traders and speculators are taking it easy over the holidays. Well see what happens when they get back to work in January.
China, too, is a danger zone. Trouble is, we dont know exactly what the danger is. The economy is still growing at more than 5% per year. If the growth rate goes up...China will put a big strain on the worlds demand for oil and other commodities...which will make it harder for US and European families to make ends meet....On the other hand, China is also showing signs of a slowdown...or even a blow-up. Shanghai property prices are said to be falling...fast. And the size of Chinas bad debts may be greater than Americas subprime or European olive country bonds.
Meanwhile, the US is sitting pretty. For now. Money is fleeing China and Europe for the perceived safety of the USA. Whatever else may happen, theres one thing investors can count on. Ben Bernanke and his merry band of price fixers will print the money necessary to pay off bondholders. But America is dangerous too. It has a doomed currency...an out-of- control military...and a dysfunctional Congress. Sooner or later, it will blow up too.
We dont know which bomb will go off first. But at least we know to keep our heads down in 2012.
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