Tuesday, May 10, 2005

Bill Cara: Wall of worry?, Tuesday, May 10, 2005, 2:24 PM

Bill, It is nice not to be the only blogger around who remembers Joe Granville. He attracted a huge following based on a good call or two and then made horrible calls for the next 15 years. He was dead certain and dead wrong year after year.

I think a big part of the answer, in regard to strong US growth and poor growth in Europe and Japan, is that the US growth is part and parcel to the strong Chinese growth.

With the peg in place, China trades heavily with the US and both countries benefit. The Europeans and Japanese have protected markets which means their consumers are paying dearly for socks and other capital intensive products that we buy cheaply. Our sales of big cap items is growing quickly.

The Chinese end up with a lot of dollars which they are willing to reinvest in the US. The Chinese economy is growing by leaps and bounds ours is growing at a more modest pace while Germany and its protected market sits with slow growth and a 12% unemployment rate.