THE COMING WARS…

Nguồn : Vững Đại Phát

Obama has little choice. He is trying to copy the successful business model of China, Japan and Germany by making the US companies more competitive in the global market….

After years of pressuring China to increase the Yuan value, the US government gave up the effort and devalued its dollar instead. The $600 billion QE2 of money printing was just the first step; others to follow. Many currency traders expect the USD will lose at least 12% of its value by June 2011. However, we should not expect China and other export economies to sit quietly. Counter measures or outright retaliations are coming and the start of a series of trade wars and currency skirmishes are not too far off.

Obama has little choice. He is trying to copy the successful business model of China, Japan and Germany by making the US companies more competitive in the global market. He hopes American exports will cure some of the unemployment problem; he thinks the devalued currency will bring the deficit down and reduce the debt load of the USA. It might be feasible if he operates in a vacuum of a lab test; but in reality, there are actions and reactions, and the complication of internal politics and economics in each country ensures that nobody could predict the outcome.

One thing is certain: with the continuous de-leveraging of major economies, including China, the go-go days of global free trade and WTO agreements are over. Countries, big or small, powerful or weak, will start defending their turf and throw all sorts of defensive mechanism to frustrate competitors. Disputes, lawsuits, unofficial barriers, currency manipulation will be the new normal. Free trade is not dead, but it will take a few steps back. Only actual shooting wars or major technology break-through will prevent or this coming challenge.

The new reality will not help the US or Europe to reclaim their crown of economic superpowers. The inherent weakness in their societal structure is too big to resolve (mature development of economy, consumer-oriented demands, government spending, entitlement and welfare programs…). However, the result of the coming wars will also slow down the BRICs, especially China and will cause them to turn inward for natives.

Meanwhile, there are huge sums of money accumulated during the boom time looking for a decent return. Which direction would they head to? Gold and precious metals will benefit, given the tradition of being used as a hedge in uncertain times. Bargain prices of real estate in stable, developed countries with positive cash flow could be a good bet. While stock and bond returns will be mediocre, there are always gems in those companies with promising technology and marketing savvy. Commodities and agriculture products are expected to be stable: demand is slower but the growth of world income and population will continue. Emerging market equities could be attractive in short term, but the ride will end with the burst of the bubble.

In short, there won’t be any seismic change across the landscape. However, economies will take a time-out to adjust and invent. This process might take from 5 years to 10 years. Meanwhile, with the slow- down in the growth rate and global changes, people will have more time for themselves, for each other, for little finer things that require patience and devotion. After the party and the orgy, we will all need the solitude and introspection of a quiet Sunday morning to enjoy the sunshine and the smell of a good cup of coffee; or maybe
the laughter of a child and the singing of a bird. Is life wonderful?
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