WHY DOES HIGH PRICED REAL ESTATE SELL SO EASILY IN CHINA?

China appears to have a huge "grey" economy, meaning that it is fueled by grey or unreported income. On July 19th, China's most famous researcher on grey income, Dr. Wang Xiaolu, stipulated that actual urban household income may be 100 percent higher than the official data reported by the government. He also concluded that China’s per capita disposable income in 2008 should have been 67 percent higher than the official data.
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SO MANY ARE CONVINCED THAT DEFLATION IS AHEAD…WE ARE NOT CONVINCED

For years, a few have believed that inflation will be the long-term outcome. We have been among them. We mentioned months ago in our commentary that there would be short term deflationary influences within the U.S. and developed economies in the last half of 2010. Even though the developed economies are struggling to grow, and we predicted that there would be concerns about deflation, we want to reconfirm with our readers that our long-term view that inflation is looming in front of us…and history bears out our thesis. Click here to read full article...

IS WAR ON THE HORIZON IN IRAN? MANY SIGNS POINT THAT WAY

Although many have predicted over the past five years that Iran would be at war with the west or Israel, such an outcome has not developed. We seldom comment on war preparation activities and have not done so recently, and although it is not our normal modus operandi, we would like to point out that currently many signs point to the potential for hostility with Iran to develop. Please note the following points.
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EMERGING MARKET GDP GROWTH: THE PAST TWO DECADES, AND OUR PROJECTIONS FOR THE NEXT DECADE

According to the IMF, World Bank, and the United Nations’ historical data, GDP growth rates have varied widely for emerging markets over the last fifty years. We will focus on the past twenty years from 1990 to the present so that we may draw conclusions to help us project future growth in the developing world. Once we are able to make an educated guess of the GDP growth, we will be able to compare it to the more thoroughly analyzed and widely predicted growth expected for the developed world.

In the 1990’s, we saw a secular decline in demand for oil and commodity prices that caused oil-producing developing nations to slow their growth. For example, Russia fell from 12% of total emerging market GDP in 1990 to only 3.3% in 2000 (source: Jonathan Anderson chief emerging market economist at UBS - see chart below). By the year 2000, the best GDP growth was found in China, Brazil, Mexico, India, Korea, Taiwan, Argentina, Hong Kong and Indonesia. China, after two difficult decades, had once again returned to the top of the rankings.

Between the year 2000 and the present, emerging markets were dominated by the fast growth of China, which greatly increased its share of emerging market GDP from 15% to 24%. India, Indonesia, Brazil, Turkey, Russia, and Korea grew nicely, although at a slower rate.

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The second quarter was very eventful. European sovereign debt came under suspicion, and many waves of fear flowed through global bond, currency, commodity, and stock markets.

The source of this anxiety and fear was the projection of future economic activity. Global bond, stock and commodity markets are a discounting mechanism of future events. They rise and fall prior to economic events which shape business activity in future years.
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DOES THE OIL LEAK IN THE GULF OF MEXICO HERALD A BIG DISCOVERY?

Let us look at the oil spill from another angle. Among oil industry watchers there has been a great deal of information about the size of the field under the big spill. Respected industry watchers have said that there is good reason to expect that the field extends many miles deep underground and horizontally from the site of the spill.
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In Part I, we discussed the history behind the current worldwide de-leveraging, which is the primary factor determining today’s economic landscape. In Part II, we explored the reasons for the current market volatility, and discussed the current game of tug-o-war between two contesting sides; those who anticipate a deflationary depression and those who anticipate inflation. As the contestants pull the rope in one direction and then the other, the market becomes volatile and fear spreads as both sides shout their views from bullhorns. Both Part I and Part II are available below.Click here to read full article...

“Entire ignorance is not so terrible or extreme an evil, and is far from being the greatest of all: too much cleverness and too much learning, accompanied with ill bringing-up, are far more fatal.”
-Plato


THE NEW ECONOMIC REALITY - PART II

Last week, we began to discuss this subject, sharing our views on the history and economic back drop for the past twenty years. If you missed it, you can go to http://www.guildinvestment.com/ARThome.aspx?ModuleId=0&Itemid=389&SType=F for a copy of the letter. Click here to read full article...

THE NEW ECONOMIC REALITY

THE DE-LEVERAGING OF THE DEVELOPED WORLD WILL CONTINUE FOR ANOTHER DECADE

There is too much debt throughout the developed economies, and not enough growth to service that debt.Click here to read full article...