Nickel77,

Thanks for this, a very interesting read.

It is important to understand that the world markets are not as affected by the US economy as we often think. Other powerhouses have emerged over the last number of years, while at the same time the USA has continuously diminished as a world economic power... and it has done that to itself by shipping its jobs and manufacturing to those emerging powerhouses.

IN the last few years I have had an opportunity to speak to 2 economists about this. The first one told me a few years ago that the port authority in New York had to acquire adjacent property in order to store the huge number of shipping containers it was collecting. Because of the trade imbalance, many more containers were coming in than going out.

On the other side of the trading scheme, Asian companies shipping to the USA were considering, and pricing in, new shipping containers as one-use products rather than reusable ones, as they did not expect to get them back from the States.

The second economist told me that although the US economy looked weakened, it was not as weak as it appeared because of how GDP was calculated. He said that many American companies owned their manufacturing plants in foreign lands, and even when they contracted out the work to others, their profitability was increased. As American firms making much more profit, they were seeing a tremendous economic benefit which was not captured by the GDP calculation. That profit was flowing back into the US. Although there was very significant manufacturing job loss in the States, it was the position of his firm that the increase in competiveness and profit by American firms was substantial and offset much of the loss of money in the economy due to job loss.

Try to tell that to the people in Pittsburgh and elsewhere that have lost their jobs. But it seems to me that the argument is logical.

Anyway, my point is that we often here that stocks are in the toilet because the US economy is failing, because of the sub-prime mess, etcetera. But it would appear that although those things do have an impact, the scenario is much more complicated than that, and the world economic transition has been going on for much longer than people recognize.

Thanks again for the article.

Cheers,

Bluenoser