[MrBill]

$this->bbcode_second_pass_quote('', 'T')he world needs higher interest rates to tackle a clear inflation threat, even though economic growth is likely to be hit harder than most observers expect, the Bank for International Settlements said on Monday.

The Swiss-based BIS -- a meeting place and think tank for the world's central banks -- gave a gloomy outlook for both inflation and growth in its annual report, published after a three-day meeting of central bankers from over 100 countries.

BIS General Manager Malcolm Knight said central banks faced their greatest challenge in years, with growth slowing even as inflation pressures intensified

[manu]

And the meltdown continues.

[MyOldTDiIsStillGoing]

$this->bbcode_second_pass_quote('wisconsin_cur', 'I')nterview on Bloomberg TV:



4. Move out of the dollar, don't trust in Euros or oil, look to edible commodities as a way to preserve wealth.

[ROCKMAN]

Thanks Mr. Bill. A clear picture.

In my relative youth during the economic collapse of the early 80's I didn't pay much attention to what level capital decline occured...you have any memories?

Essentially my question is: should we have a true price shock/economic decline is there any reasonable expectation that there would be sufficient capital in the world market to pay for the necessary adjustments to power generation as well as all the other adjustments to "business as usually" we've been needing for the last 20 years? We may finally accept the changes that are need to our energy consumption habits but will there be significant capital available to impliment even the minot changes let alone a few trillion to build nuclear palnts, evryone buy hybrids, etc?

[MrBill]

Back during the stock market crash in 1987 I was trading futures and options on the CBOT and WCE as well as physical grain for import and export, so I was more concerned about weather, freight markets and 'the soybean complex'.

So my own recollections of what happened are sketchy at best. But generally the stock market drop was blamed on program trading, and therefore the fall-out was short and sweet, while the rally resumed by year-end.

The problem as I see it at the moment is that domestic firms, say, in Australia, Canada, western Europe or the USA, for example, look at decisions to invest on a more or less global scale now, so they will go to where the money is being made; where they can source raw materials; and where there are paying customers. They are much less constrained to their domestic market as they may have been in the past, so conversely investment conditions at home have to remain attractive to induce them to stay.

The rest is a long, rambling post that never really arrived where I expected it to, so read at own risk, or not!
$this->bbcode_second_pass_quote('', '
')Here and now we are talking about a confluence of events such as: global imbalances; a credit crisis; falling home values in several countries; gathering inflationary forces on a more or less global scale that will ultimately lead to higher interest rates; against a backdrop of slower growth. While higher food and fuel prices contribute to lower discretionary spending from a tapped-out US consumer as well as reduced corporate profits.

Sure someone somewhere is making money from higher food, fuel and fertilizer prices, but that is being offset by farmers leaving land idle because they cannot afford the higher price of triple-F or in some cases high quality seeds as well. Rural poverty and higher food prices for the urban poor have pushed millions further into subsistance, while frustrating the desire of many more to climb up the economic ladder.

If I had to venture a guess I would say that the income spread between the developing world and the developed world will continue to converge, but not at higher levels of income and better living standards as many globalization proponents have suggested, but at lower levels. That I believe is due to post peak oil resource depletion AND not enough research, investment and development into viable alternatives. Basically, too little, too late to avoid a rough transition period to a new economic reality.

But that means more competition for capital from the developing world. Given higher growth rates and higher nominal interest rates that puts the USA in a tough position given that TPTB are more inclined to keep real interest rates low, while at the same time running budget deficits on a federal, state and municipal level that are going to strain bond markets.

Given a fixed economic pie at any one given time there will be competing needs for capital to fund infrastructure, health, education, entitlement programs and such things as military spending. But also capital will have to potentially choose between private infrastructure projects that offer higher returns to funding public infrastructure projects that might be less attractive, but is none the less necessary.

All at a time that rising energy prices increase the cost of production as well as reduce consumer spending on other goods and services. While those countries or segments of the economy that produce food, energy, fertilizer, plus other metals and commodities, will be both generating capital, but bidding for it at the same time.

The rich world (however you define it) starts from a stronger, initial position, but wealth consumed is not the same as wealth invested. We (collectively) still need to produce something that someone else is willing and able to buy at a profit. That is a lot different than living on credit and not having the economic means to repay it with interest.

[ROCKMAN]

Fairly palatable Mr. Bill.

And leads to the thought: With capital flocking to the best market one could assume market quality will hinge on growth potential (especially when viewed from the ratio of value input/ value output.) Thus my simplistic knee jerk reaction would be to expect limited capital availablity in the US as a result of more atractive opportunites in China (and India perhaps). I've recently started calling this the new "China Sydrome): China's economy is so hot it cuts right through the earth's core and burns out collective butts.

[MrBill]

Where you start from matters, but it is not enough.
$this->bbcode_second_pass_quote('', 'T')he Conference Board of Canada has tabled a blunt assessment of Canada's place in the world. In a new report, it argues Canada is falling behind its industrialized peers when it comes to innovation and its "mediocre performance" in six key areas is a recipe for future problems.

The Conference Board's report -- entitled "How Canada Performs: A Report Card on Canada" -- graded Canada's performance against 16 other industrialized nations in categories such as the economy, the environment, education, health, society and innovation.

[Kingcoal]

Switzerland is the greatest innovator in the world? They make nice watches, but damn.

[MrBill]

As a percentage of their GDP. This is a relative and not an absolute measure. The Swiss make excellent machines for boring through mountains for example. Not the type of thing you see at airport Duty Free. Also the precision for creating fine watches is the expertise needed for other high-end manufacturing. Like the Germans they have been exporting mainly capital goods like automated machines to support manufacturing in Asia, but also selling them fine Swiss watches as they get wealthier.

[alokin]

What the Swiss do they do right houses, watches, shoes,pruning shears, knifes, everything.
You really can buy this stuff it's simply well designed, functional and long lasting.
I cannot understand the B for the US we had to buy an (old) Ford car (crab), a Whirlpool fridge (horrible look, most unpractical), a forgot the brand vacuum cleaner (didn't work, changed it for something Asian).

[MrBill]

You forgot chocolate! ; - ))

Too bad they never mastered brewing though. Give me German or Czech anyday over a Swiss beer. But on a hot day gimme either! ; - ))