Aug 06
21
Global Economy – And Fear Factor
Interesting take on the impact of fear on the global economy from Cliff Droke.
He postulates that the lengthy spate of terror attacks over the last year are serving as a shock absorber on society and distracting the people who respond to the markets with knee jerk reactions with matters other than the data.
make reference to in the ongoing discussion of the global economic
boom is the effect that mass psychology has on the economy. Although
consumer sentiment indexes do exist they are interpreted with
a rather straight-forward conventional approach instead of from
the contrarian psychological standpoint. Bombings, and equally
significant the fear of bombs has been the X-factor
of the global economy and U.S. stock market this year. This will
be the focus of the second half of our commentary.”
He goes on to show a number of graphs that co-relate bombings with market performances. Pretty interesting. He also suggests that global economies will continue to perform reasonably while so many companies are providing materials for the world's tallest building project in Dubai, due to be completed toward the end of 2008.
Meanwhile Stephen Roach continues to focus on the Chinese economy right now and the fact that the bankers are putting the squeeze on both interest rates and the ratios of assets to lending by banks.
Roach seems to think that the global economy can still have a soft landing…
But is there another side to this? I had a coffee yesterday with someone that I met recently whose history had been investment banking – he now runs one of the largest heavy duty server re-sellers in Australia. He had lived in Malaysia for some years before moving to Australia (American by birth). His view of the East, having spent about 6 years there, is that we (Caucasians that is) are the minority and that we had better get used to the idea of being treated like a minority with all that goes with that. Its not just about economics. It is about race. And white people are not going to be in control of anything ever in China, particularly when it comes to wealth creation.