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The Greatest Economic Boom Ever

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As the Dow crashes upwards by hundreds of points Fortune publishes a "new era"(ie late 1920s/1990s) style article proclaiming the great global BULL. But this bullishness just marks the coming top of a 3 year parabolic run up culminating in a blow off. I think the end of august should see an implosion on a truly monolithic scale. Crash helmets :0

http://stockcharts.com/h-sc/ui?s=djia

http://money.cnn.com/magazines/fortune/for...sion=2007071209

The greatest economic boom ever

A lot could go wrong. And it may not feel like a day at the beach to most Americans. But for your average globetrotting Fortune 500 CEO, right now is about as good as it gets, says Fortune's Rik Kirkland.

FORTUNE Magazine

By Rik Kirkland, Fortune

July 12 2007: 9:46 AM EDT

(Fortune Magazine) -- Just how red-hot is the current worldwide expansion? "This is far and away the strongest global economy I've seen in my business lifetime," U.S. Treasury Secretary Hank Paulson declared on a recent visit to Fortune's offices.

That may come as news to many Americans, whose boom-time memories are stuck in the 1990s, when Silicon Valley was the epicenter of our growth fantasies. But the fellow now occupying Paulson's old office at 85 Broad Street in downtown Manhattan shares that upbeat view. Just returned from a ribbon-cutting ceremony in the Middle East, Goldman Sachs (Charts, Fortune 500) CEO Lloyd Blankfein waves out toward the East River as he explains how the rise of the "BRICs" has altered his strategy and his travel schedule. (BRIC is an acronym Goldman coined in 2001 reflecting the rising economic power of Brazil, Russia, India, and China.)

Hank Paulson takes on the world

In a wide-ranging interview with Fortune, the U.S. Secretary of the Treasury explains why, despite the "strongest global economy" he has ever seen, it still "pays to be vigilant." (more)

"I helped make my career by being very disciplined about opening offices," he says. Yet in nine months Blankfein has announced or opened offices in São Paulo, Moscow, Tel Aviv, Mumbai, Qatar, and now Dubai. "We've never done anything close to that before," he marvels. "The week before Dubai, I was in Turkey, and before that, Russia and China. I'm really living the BRICs-plus-Middle East kind of life."

These days more and more CEOs are livin' la vida BRIC. GE's (Charts, Fortune 500) Jeff Immelt devotes 12 weeks a year to foreign travel and is looking for his company to grow "twice as fast outside the U.S. as inside - 12% a year, vs. 6%." Immelt expects to see even more robust growth - 20% a year - in emerging markets, which last year accounted for $30 billion of GE's nearly $170 billion in sales.

John Chambers, who last fall opened Cisco's (Charts, Fortune 500) new Globalization Center in Bangalore, seconds the notion that "this is the strongest global trend" of his career. "There is a unique balance today," he says. "More than half of GDP growth is coming from emerging countries. And yet the developed countries are also doing pretty well. It is something we have never seen before."

At Boeing (Charts, Fortune 500), Jim McNerney and his team, just back from the Paris Air Show, have booked 634 firm orders for their new 787 jet, which they will unveil in Seattle on 7/8/07 (ah, marketing!). That's more than for any launch in industry history, and thanks go "predominantly to Asian and other emerging-market buyers," says Laurette Koellner, president of Boeing International.

While the current pace isn't quite a record - according to the IMF the world grew at a 5.4% average annual rate from 1970 to 1973, vs. a projected 4.9% from 2003 through 2007- there's really no contest. When our ties were fatter and we were thinner, total world GDP was $13 trillion in constant dollars. Today it's more than $36 trillion. Not to mention, as investor Jim Rogers notes, "there are three billion people in places like Eastern Europe, Russia, India, China, and all of Asia who weren't participating last time around but who now are." Back then, Germany and Japan led the charge. Now the emerging markets are running fastest, along with Europe, which has - for the first time in years - pulled ahead of the U.S. in GDP growth.

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As the Dow crashes upwards by hundreds of points Fortune publishes a "new era"(ie late 1920s/1990s) style article proclaiming the great global BULL. But this bullishness just marks the coming top of a 3 year parabolic run up culminating in a blow off. I think the end of august should see an implosion on a truly monolithic scale. Crash helmets :0

http://stockcharts.com/h-sc/ui?s=djia

http://money.cnn.com/magazines/fortune/for...sion=2007071209

I was repoting on another thread the DOW is up 270 points 2% in one day!

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They heading towards hyperinflation ?

I sold my house in February (changing jobs an location but still renting) and when I rationalized it with my parents I said my worst fear was that there was not a housing correction and general slow down from this debt driven economy. I know that seems like common sense if I want to buy another house but unfortunately I think this may be the start of us entering into a new game the one I hoped would not happen. As you point out Hyperinflation, the worst possible outcome, worse than a recession or slowdown!

DOW now 290 or 2.15% today

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Deflation are usually the next thing after low interest rates.

Will we not get hyperinflation before hand? I was hoping we would get a credit crunch and this would lead to effectively lead to deflation in assets such as housing, possibly knocking onto other areas, It still seems that we are in a period of low interest rates.

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Will we not get hyperinflation before hand? I was hoping we would get a credit crunch and this would lead to effectively lead to deflation in assets such as housing, possibly knocking onto other areas, It still seems that we are in a period of low interest rates.

,

I think we have a strong bubble worldwide, in everything, and I think everything will deflate. If you think about it, rates have went lower since 1982, it goes in short cycles inflation/crunch, inflation/crunch, as rates goes to 0 debt rise more and more as it goes to 0, they can't re initiate inflation once they reach 0 because nobody will demand debt, since they cant have interest rates that are -4 ..:)

Edited by carseller

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It looks like a weird kind of stagflation

hyperinflation in commodities,with benign inflation(wage erosion) in the better-paid parts of the world.

the fly in the ointment for most of this is debt,there's simply too much of it.

..it permeates most investments,and is eerily similar to the US in the late 1920's.

if the whole credit system goes pop,THAT'S when you get a depression.and it COULD happen.The big boys probably aren't very pleased about losing margin on credit,but it's been necessary to draw enough people in.......a credit crunch will suit them nicely by enabling them to take over the distressed defaulters of whatever asset at fire-sale prices.

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It looks like a weird kind of stagflation

hyperinflation in commodities,with benign inflation(wage erosion) in the better-paid parts of the world.

the fly in the ointment for most of this is debt,there's simply too much of it.

..it permeates most investments,and is eerily similar to the US in the late 1920's.

if the whole credit system goes pop,THAT'S when you get a depression.and it COULD happen.The big boys probably aren't very pleased about losing margin on credit,but it's been necessary to draw enough people in.......a credit crunch will suit them nicely by enabling them to take over the distressed defaulters of whatever asset at fire-sale prices.

It's my impression banks are just banks. They are not really after real estate that are falling in price when being foreclosed, and the banks will default, go bankrupt. It's not to the benefit of banks, not at all.

Edited by carseller

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As the Dow crashes upwards by hundreds of points Fortune publishes a "new era"(ie late 1920s/1990s) style article proclaiming the great global BULL. But this bullishness just marks the coming top of a 3 year parabolic run up culminating in a blow off. I think the end of august should see an implosion on a truly monolithic scale. Crash helmets :0

http://stockcharts.com/h-sc/ui?s=djia

http://money.cnn.com/magazines/fortune/for...sion=2007071209

http://www.bloomberg.com/apps/news?pid=206...amp;refer=rates

An interesting piece on the current goings on between stocks and bonds...

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I agree with carseller, we are heading for a massive deflation. Deflation will happen as in '29 imo, only after SM crash when confidence evaporates. I would only worry about inflation if it spreads beyond asset prices - which is the symptom of credit inflation anyway.

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I agree with carseller, we are heading for a massive deflation. Deflation will happen as in '29 imo, only after SM crash when confidence evaporates. I would only worry about inflation if it spreads beyond asset prices - which is the symptom of credit inflation anyway.

If the FED choose hyperinflation, they are out of work. I do not think they will commit suicide.

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Guest Charlie The Tramp

Reminds me of the 2 week period prior to the 19th October 1987. Get in said the Loadsa money guys with those strange red braces, I earnt a fortune today with a telephone call and yesterday with a click of a mouse. :rolleyes:

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My perception is that the Dow is currently the last great white hope for the financial markets.

Most other investment forms are looking shakey at the moment and the only good news is from company earnings.

Is this the case? And if company earnings start to wobble what will happen then?

Surely the US is due for a stall on retail sales as MEW becomes more difficult. I saw that credit card spending is up in the states, is this the last big hurrah for consumers?

http://www.baltimoresun.com/business/bal-b...iness-headlines

Can someone hypothesise the potential next steps for the Dow? Is this going to play out into a slow decline or will there be a EUREKA moment when the markets trigger is all screwed?

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Deflation are usually the next thing after low interest rates.

Can you have inflation without deflation ?

I wonder if we'll get deflation and Japan will get hyperinflation ?

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If the FED choose hyperinflation, they are out of work. I do not think they will commit suicide.

Usually its the government who press the hyperinflation button to fund there spendthrift ways. But that will probably require markets to stop buying gov. debt first or collapse of tax receipts.

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Guest grumpy-old-man
Deflation are usually the next thing after low interest rates.

agreed.

and there is a link between a deflationary economy & a depression. :ph34r:

"At the Crest of a Tidal Wave" by Robert Prechter (originally recommended by Durch, cheers) was a very good (& very hard) read.

Edited by grumpy-old-man

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Can you have inflation without deflation ?

I wonder if we'll get deflation and Japan will get hyperinflation ?

nope.

look at the chart..it's telling a different story.

the risks to hyperinflation are great...at least in the US....UK is very similar,although nobody in authority dare speak it.

the easiest gauge for making money is how well your investment is doing versus money supply.

..if you are beating 13%p.a,you are making money,any less than that and you are losing....simple equation.

Edited by oracle

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I don't quite understand it when people are talking about future economy actions in very deterministic context. We might be in a huge bubble but its burst is not 100% guaranteed. It is very very probable but still not assured.

Instead of talking "when" we should be drawing the burst probablility chart against time.

Edited by refusnik

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