has a great newsletter. The most recent issue has some excellent
(albeit short) analysis of why the emergent global economy is going to
keep US long-term interest rates and inflation in check.
It is now widely understood that there is no
strictly delineated American economy, no clearly defined Japanese,
Chinese, or Indian economies, and certainly no unified Euro economy.
Witness the French fury with the Americans (the reasoning? By working
40 hours a week, Americans are forcing the French to give up their 35
hour work week), while the smaller countries in the Euro Union are
quite annoyed that the French and the Germans get to break the deficit
guidelines while the smaller countries are expected to toe the line.
Longer term U.S. interest rates have not risen because they are no
longer harbingers of future U.S. economic activities alone. They now
reflect the capacities of the global economy, which is, in fact, that
new and very real paradigm. It's a big world out there, with a whole
lot of people who will labor at a fraction the cost of U.S. labor. And
make no mistake, they may earn pennies to our dollars, but their
pennies buy for them what our dollars buy for us. Take a trip to China
and see what your dollar can buy. Small wonder that the West is pouring
money into China, small wonder that the standard of living in China
(the eastern portion, at least) has risen in a stunning way.
Of course, if we are all in the same boat and there
are no real limits to corporate activity globally (any limits will be
seen an non-competitive damage and routed around), aren't we on our way
back to the bad old days of Victorian/Industrial England? [John Robb's Weblog]