US Economy : Comments

-USA: An economy with super gigantic size propelled by over-extended consumption. Nearly 75% of the economy is consumer driven. The difference in size between first and second in the world (USA and Japan) is more than 100%... This difference in economic size has only increased over the last thirty years... What kept this unsustainable growing was the simple equation: Americans consumed more than they produced and finally borrowed to keep that ever GROWING appetite alive.. Both at the private and state level debt has become a way of life.. But what is debt? Its a draw on future earnings...From where will the earnings come from.. Americas are overpaid, so as workers are uncompetitive (so not much of help from remittances)... Americans have only shipped out industries and services to all over the world (So little room for major Job creation and wage increase).... All this while gap was being fulfilled by the financial sector. The financial sector became the only and gigantic sector, contributing in a big way to employment and wealth creation)... The phony wealth creation through stock market bubble and then through credit bubble, created an illusion of permanency... Americans then borrowed on that phony wealth to keep their standard of living alive.... So now all that phony wealth is disappearing and the country is standing in front of a MAJOR AND PRO-LONGED ADJUSTMENT.. Comparing the US with Japan will be flawed on bot in terms of degree of importance in both political and economic way to the World and also in terms of current global landscape.... I presume only a handful of analysts are trying to asses that, most are making the ANALYSIS THEIR ASSUMPTION BU SAYING " AS THE US ECONOMY STABILISES, ..... " IN MY COMMON SENSE ANALYSIS I SEE THIS AS THE BEGINNING OF THE WAY AMERICA IS IN THE WORLD....

CHINA: The problem with China is over-investment and under investment. So when their govt. says that they will spend another 0.5trillion, I don't understand how that could solve... So China is going face deflation in their economy in 2009... Only when they adapt to a more leaner US economy, will they be able to emerge stronger...


EMERGING MARKETS: Most of them are commodity producers.. So they are going to face not only economic issues but also social unrest...

INDIA: As a country we need are under-invested so channeling More funds into investment is a welcome step but ..
INDIA HAS MADE MAJOR OVER-INVESTMENT IN THE CONSTRUCTION INDUSTRY.. BOTH RESIDENTIAL AND COMMERCIAL AND ALSO CONSUMER CREDIT.. A stress from that side will immediately choke fund flows to other important sectors of the economy. Banks,which look healthy, will be facing MAJOR ASSET QUALITY PROBLEM IN THE DAYS TO COME....

CONCLUSION: THE ADJUSTMENT PROCESS THAT IS ON IS A NATURAL CORRECTIVE PROCESS, DECADES OF BAND-AID POLICIES ARE NOW OVER, WHAT WE FACE IS WORLD THAT WILL EMERGE STRONG AND VIBRANT... BUT TILL THAT TIME WE NEED TO KNOW HOW TO PLAY THESE TSUNAMI'S....