Reader Comments on
The Bull Market is Dead!
Long Live the Bull Market!
M.A. Nystrom, M.B.A.
Man on the street in (the Republic of) China
February 1, 2005
1. Thank You
Thanks to everyone who took the time to read my article
last week, and especially those who emailed me with interesting
questions and comments. They stimulate my brain and keep me on my
toes (and then there are those that keep my head from getting too
big, too!). If you wrote me an email and I didn't respond, please
accept my apologies. I guarantee you that I read and pondered it,
and if it was really interesting or had a really good question,
then it will likely become fodder for future articles, so stay tuned
and keep the email coming. I'll keep reading them, but if I responded
to every one I wouldn't have time for anything else :).
If you haven't read the original article, take a gander
at it over here: The
Bull Market is Dead!
Now, onto the comments. Since nobody knew their comments would be
published (including me), I'm shielding all identities out of basic
respect. Unless you have a website, and then I assume you want the
link posted. As everything in life, this website is a grand experiment
that is unfolding in real time. If you like it, let me know :).
2. The Comments
Michael,
Have you ever read any of those summaries of the end of the Roman
Empire and how it looks like the US today? I thought of that again
when I read your article. Looking at the pics of some of the Asian
cities, esp China, and then you look at the Rust Belt where I live,
really makes one think. Much of our country looks like it is dying.
Have you even driven through places like Youngstown, Cleveland or
Detroit? Also, look at the people. Not to comment on any one individual,
but overweight, frumpy, dumbass slobs is what we've become, and
the whole world is laughing at us.
For some time I've wondered if we (Americans/Westerners)
are really that much "better" than foreigners to be able
to justify our high standard of living. Yes, we do work more hours
than much of the world, but do we really have the productivity?
I seriously doubt most of the productivity numbers coming out of
the government. It seems like much of our gains are built on outsourcing.
If you consider that there are, geez, 2 billion people, give or
take a few hundred million, between China and India alone that want
to enjoy our standard of living, that seems like an insurmountable
competitive situation. Not until there is some degree of parity
are they going to give up, if ever, largely because there are just
so many damn people that are sitting on the bench waiting for their
turn in the economic game. In our country it seems that there are
fewer and fewer people who are contributing to our economy.
A worry I have is that we will get to the point where
we outsource SO much stuff, especially things like electronic components,
chips, software, even complete systems, that we are completely vulnerable
to the whims of foreign governments. Could we get into a war with
China when they build 1/2 of our stuff, or at least major components?
I think not.
So, thanks for the article and I'm looking forward
to more.
- D
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Mr. Nystrom,
Americans of 2005 are somewhat like the Europeans of 1905. This
century will belong to Asia, just like the last one did to North
Americans - birthrates and demography favour economic growth (and
wars) in Asia over the next 100yrs and lack of growth (and thankfully
war) in North America. Our resourcesare what the Asians need - hope
they don't invade us!
--------
- FM
Michael,
There is little doubt that the US economy is very weak and is being
driven primarily by unsustaible asset (housing) growth. The US economy
has huge debts in relation to assets, something in the region of
$10trillion debts to $7trillion assets. It is also borrowing slightly
over 80% of the world's surplus savings to fund this. In addition
the CPI is being cooked and it is probably at least 4% and probably
closer to 6%. However, the US is not the only country to cook the
books!
Yes it is more than likely that there will in the next 1-4 years
be a major recession or depression. However, the way you have expressed
it is over the top. We cannot say for certain that it will happen,
but it probably will. It will also effect the whole world, including
China.
My most serious concern of your article relates to China. You are
in Taiwan, which is not yet China. Taiwan has been a major economic
powerhouse for years, China is only now coming into the world. The
massive growth in China is a consequence of its investment in production,
something like 43% of all investment is in capital goods. This is
unprecedented and unsustainable. As one writer said, how many cement
factories do you need? There are huge bad loans in China, something
in the region of $500billion. There is also raging inflation and
a bank lending rate which is below inflation. This is leading to
huge building projects and yet more bad debt as people are basically
borrowing money for nothing (exactly as in the USA). In addition
the country has to find approximately 14m new jobs a year. A huge
task. There have already been many riots because of this.
In conclusion China will be the number one superpower and sooner
than people think. Before this happens there will probably be a
very sudden and very painful economic correction in China. I suspect
that this will coincide with the ending of the American dream and
the creation of a new world order. These are both exciting and dangerous
times.
-MB
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Sir,
Your comments about how self-absorbed Americans are… is especially
noteworthy. I had a professor who was a devotee of the Italian mathematician/historian
Vico. Vico claimed history ran like a descending/ascending spiral,
not exactly repeating itself. But it did exhibit the characteristic
of “pulses” of power, concentrated [1930s until now]
and then “blown apart”…ready to be re-concentrated.
But nothing like that Chinese saying [curse?] about
living in ‘interesting times’
- BS
--------
In my view, China still has a way to go before it
cultivates enough domestic consumers to replace the US . Until that
time, China is as much at risk of a global sowdown as the rest of
of the world. We have been at this point in history many times,
and history has shown that we invariably screw it up. Thank you
for a very informative article.
-CP
--------
Just a little comment on your article...While holding
true with a lot that I have read I disagree with one point and that
is this.. Open communication is a real key to understanding.. my
take on the Chinese leadership is that they discourage this in a
big way.
My take on their deciding to enter into the business
world is that infrastructure of a physical realm can only be relied
on if the infrastructure in laws, courts, contracts, and property
rights are also being built...Do you think the Chinese infrastructure
is being built like we did in the 1760-1800 period of our country.
Transparency of the banking system over their seems a little lacking..I.E.
Chinese Aviation.These does not absolve America of its problems
just pointing some long term problems IMHO of China..
- SLM
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Hi Nystrom,
By coincidence I also just read a very similar article
by Dr. Marc Faber at http://www.aireview.com/index.php?act=view&catid=6&id=1233
A couple of thoughts. One, I wonder if this is why
the Australian market is performing so well – it’s still
climbing to new all time highs. I know it’s not really an
Asian style country but it is in the region and perhaps people from
the US and other countries are pouring their money there as well
as the Asian countries.
Two, I also wonder though if US “investors”
will one day wake up as realise this truth that Asia is growing
at a rapid rate that there will be an almighty rush to the exists
leading to another stock market crash in the US. Or will it be a
slow realisation resulting in a slow decline in the US. I think
it will be the former because of the speed that information can
travel in this high tech era. If the crash scenario does happen
then the Australian market should tumble also but provide an excellent
opportunity to jump in for the long term given it is part of the
Asian region.
-JC
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Nice, I guess but you wax endlessly as so many do about the nothings
of change, yeah and I say, SO WHAT ? I can see most all you go on
about and I didn't have to leave home, but what you and all your
brethren don't do is give me concrete ideas of things I can do now
to make my life or my kids life better for that changing tomorrow!
-CM
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Dear Sir,
Please allow me to state what a very regular, normal person like
me thinks: There's no such thing as a bull or bear market. It's
only the result of what the majority does: more buying caused the
bull, more selling the bear. Thus any analysis, any logical reasoning
does not stand a chance if it goes against the mainstream. Everything
depends on us, the majority of people. Myself, I am a bear, a pessimist
that's why I lost a lot by selling my house too early, by shorting
stocks for the last 2 years. However now I do recognise the truth:
the truth is that what others do, not what the logic call. What
are all of us are searching for? Happiness. And what is happiness?
What we perceive, and right now, we, Americans perceive happiness
as spreading democracy, removing tyrants (was not that our beloved
president said? and did not we, the majority voted for him?) so
well,THE BULL MARKET is not dead, this is a new era. We, Americans
are different, so what people analyse by logic does not apply: WE
ARE DIFFERENT.
This is a new era. did you ever see such a big bubble
like in 2000 ending with a little pop like it did? Did you know
that we have the biggest home ownership rate ever? This is a new
era: we are not common people, we are different: we live in this
mighty country, we govern the world, we vote for a president who
is totally different: the right man for the right time as the people
said.
Thank you for listening to a different view.
Sincerely,
A very common, regular person (did you see the Michigan confidence
index?) well, that's us.
--------
Hey,
what's your point of your article?
just random thinking?
you provided no useful information.
-RL
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Hi Mr. Nystrom,
I agree that China is a major factor and may become a superpower
in the next 10 years or so, BUT, just as Japan dominated the 1980s
and talk was of Japan surpassing the US, China is in an economic
bubble (as Japan was in 1989 and the US in 2000) that will burst
in the relatively near future, possibly this year.
Once a country is "all over the news" a major top is near,
as it was with Japan in 1989 and the US in 2000. China has all kinds
of bad loans and major problems that probably will make their bust
a severe one. Just as in the stock market, when people become euphoric
about a country's economy, the top is near. I guarantee you China
isn't immune to economic cycles and their cycle high is probably
near and may have already occurred possibly. One has to think in
contrarian terms when timing markets wether it's the stock market
or an economy.
You don't really think China will keep growing at 10% or whatever
their growth rate is for much longer, do you? It is a bubble. A
country that size can't growth at that rate for much longer. It's
IMPOSSIBLE. I agree that China is and probably will become more
of a factor, but they aren't immune to economic cycles any more
than Japan or the US is.
Sincerely,
Joe Ferrazzano
http://www.JoeFRocks.com/
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I don't own a TV; haven't had one for ten years. Mostly
haven't had one since 1961. Only way to understand what is going
on is to not watch that brainwashing. I think it is good to see
it in a motel room once every six months just to keep up on what
all the sheeple are being told to believe. Looking forward to seeing
your info.
Steve Solomon
Ps--see my website - http://www.soilandhealth.org/
3. Like I said, Thanks.
Whatever happens, always remember that the best things, the most
important things in life are free.
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