My understanding is that this is one of those economic cycles that come around every century or so, the last being the 1880s through to the 1920s, when the world goes through a economic revolution of soughts. The Modern Era started in the Rennnaissance in the 1570s, with Leonardo Da Vinci and others. Invention of the printing press and global exploration driven by news ideas and technology. This is such a period with global inter-connectedness which will do the following:
1. Allow people in third world countries to catch up on technical skills faster than at any time in the past. Every day more & more of the information we need is on the internet and its going to grow. So how does one differentiate oneself? By having better, more useful, more insightful information.
2. The culmination of that trend is going to be global outsourcing of services. It will start with basic things like accounting, bookkeeping, technical support for call centres, but eventually it will include sales roles and project management.
3. This of course has to push a lot of productivity incentive upon the Western countries who need to stay relevant. The key is for the West to appreciate their strengths.
4. The globalisation of markets will change the way we relate. The distinctiveness between cultures will die. The market will become global. already markets are aligning. Sadly there is no competition between governments so it looks like they will align themselves in their common goal of screwing taxpayers.
The big feature of this credit expansion is that its going to move to Asia. The ASEAN region is currently creating a framework for economic integration which I believe is going to make this a region not just of savings to finance the West, but a region of conspicuous consumption. We are going to see more Indians and Chinese holidaying in the Philippines, Indonesia, whilst these countries reform to embrace the benefits of capital inflows. China and India will continue to rapidly urbanise their populations, with those new pools of labour providing part of the productivity gains, the rest coming from better organisation and technology. Organisation will mostly mean more outsourcing and specialisation.
So what are the implications for markets and commodities?
Andrew Sheldon www.sheldonthinks.com