For a global view
For a global view ...Pick up the Financial Times any day during the week. Spain's growth is slowing as is Europe, but what's up with the Middle East and China? Because the FT is based in London, they naturally have a more global view. While around here, it feels like all you see is about Bernanke and the Fed meeting, the FT is talking about all kinds of things. The edition yesterday had one article that scared me and one that soothed me.
The scary article was a followup story (I didn't read the original) about the slowing economy in Spain. Now I don't follow this closely, but I know that Spain and Portugal have been part of the European boom, and have been leading it. As the poorest countries in the EU, they've benefited the most from the free trade within the EU. Well, if they're slowing, and they are, this doesn't bode well for Europe. Their housing numbers are scaring them. Housing prices haven't fallen yet, but they expect them too. This was all from a speech by the Finance Minister of Spain who has confirmed a slowing economy. I have to say I felt a little different about our slowing (and Japan's) when I thought "everyone else was growing". Well, they're not. It's helpful to get a view outside the U.S. Yes? Doesn't everyone say we're in a global boom? A global economy?
The somewhat soothing article was a strange story just focused on the uneasy relationship between the Middle East and China. China is investing tons of money in the Middle East, shoring up their relationships there, to insure the resources (oil, nat gas) that they need. And of course the U.S. and other countries are sending tons of money to the Middle East, paying for that oil. Because of this growing investment, the Middle East's financial reserves have grown 30% this past year - to over a Trillion dollars. They're looking to invest that money somewhere. The story was supposed to be about how China and the Middle East are so interested in each other. The Middle East would love to invest in China but find it difficult, and how China is investing in the Middle East. This made me a little uncomfortable. "What about us?" I was thinking. Well, never fear, the quotes in the story from financial ministers in the ME were something like this, "There is such a thing as excellent return on investment. But there is also safety to consider." Basically they still feel a lot safer investing in what they consider more stable markets like the U.S. and Europe. Good news for us! Sorry China! None or not much of that Middle Eastern oil money for you!
On balance though, these two articles and many others, don't make me feel better, they make me feel worse. The only places that are booming are dependent on the places that are suffering. If our economy slows we need less oil, and we will buy less lead-paint-covered toys. And those other countries? Australia? Brazil? those with natural resources everyone wants? Again, only so desirable in an expanding worldwide economy.
Just stuff to think about. (and once everyone gets completely depressed and gives up, the market will bottom and we can buy retail and tech for a nice rally into the end of the year / Christmas)