Tougher Times Ahead

[Dagabond]

Fact #2. The debts today are far greater; and their collapse, more impactful.

Of course they friggin are how many more people are on the planet compared to then...

"The speed and the pace with which world trade is contracting is one big alarm bell," he said.

Then stop ringing the fckin bell ya dickheads...

and start talking growth and what we all are doing to remedy the situation...

[hypnodoc]

Maybe the opportunities are all in China?

The recession is dragging U.S. corporate sales down the toilet, so strong profits reports have been few and far between.

However, last week, Coca-Cola reported an impressive quarterly profit of $1.4 million, or 15 cents per share. That's pretty good compared to the $1.8 million, or 19 cents per share loss Coke reported in the same period in 2007.

And that's even after taking a $1 million, or 11 cents per share, loss on its fuel hedging program.

I'm not telling you this because I think Coke's stock is a great buy, but to show how what's happening across the Pacific Ocean continues to be the brightest spot in an otherwise gloomy global economic picture.

Profits From Abroad

In Coke's case, it didn't make those profits in the U.S. In fact, its North American sales declined by 1 percent in 2008.

Case volume in the U.S. actually fell by 3 percent, but get this: Case volume was up by 2 percent in Europe, Mexico by 6 percent, Brazil by 7 percent, India by 28 percent and by a whopping 29 percent in China.

It isn't rocket science, folks. Investing in the U.S. is dangerous, but the Asian economies are still growing like weeds.

The National Development and Reform Commission, China's top economic planning agency, expects retails sales to increase by 14 percent in 2009. On top of that, disposable incomes in China have increased 118 percent over the last eight years and are still expected to double in the next five. That's a whole lot of opportunity and profits for smart retailers.

Look at what the people running Coca-Cola are doing. Last year, Coke spent $2.4 billion to buy Chinese Juice Company, Huiyuan Beverage.

And that's not all. Coke just announced that it is going to invest another $2 billion in China over the next three years to build new bottling plants, distribution centers, expand its sales force, and R&D facilities.

All told, Coke has already invested $1.6 billion since it first entered China in 1979. "Coca-Cola is proud to be a long term partner of China, and our commitment and confidence in China never wavers," said Asian Coca-Cola CEO Muhtar Kent.

All that success isn't lost on Coke's competitor either.

• Pepsi is going to invest $1 billion of its own in China over the next four years.

• Japan's Asahi Breweries just paid $667 million for a 19.9 percent stake in Tsingtao Brewery, China's biggest beer company.

There are plenty of other retailers that are jumping on the Chinese bandwagon:

• Barbie goes to China. Mattel opened its six-story House of Barbie in Shanghai, its first stand-alone store in China. "There's no reason why in five to 10 years, China shouldn't be the biggest market in the world for us," said Richard Dickson, Barbie's general manager.

• Chinese love Apple. Apple is opening a second store in Beijing. You know why? Apple's sales in China jumped by 49 percent in the last quarter.

• Door-to-door? No problem. Even multi-level marketer Amway is kicking butt in China, where it increased its sales by 28 percent in 2008.

Examples of American companies doing big business in China are Yum Brands (YUM), Phillip Morris International (PM), and Fuel Tech (FTEK).

That isn't a rush-out-and-buy-today list. It is a list of companies that understand the opportunity in Asia, have established sales channels, and have bright futures because of that foresight.

[ZAP]

Last week I was fortunate enough to have a breakfast presentation by Bill Evans, the chief economist for Westpac.

He said that Europe is MUCH worse than the USA. We are also fortunate in Oz that the Liberals managed to payoff most of the government debt, so Krudd can now spend spend spend to stimualte our economy.

In the USA they also have huge reserves to inject into the economy. The problem is Europe where the EU is falling apart as nobody wants to help any of the EU members. Germany and France told Austria to GF when they asked for help in preventing their largest bank go down the toilet.

In Australia, we will see a steady decline of up to 0.6% negative growth, the US$0.55 and interest rates down to 2% by the end of this year. Next year, we will see China start to pickup and this will stimulate our economy with the resources. This is because China will just make decisions to improve the situation without any opposition (must be good being a comunist leader :hiwelcome: )

12 months after China picks up, the USA will start to get back in to possitive territory.

So it should be 2010 for Oz and China, 2011 for the USA and 2014 for Europe if they do not trash the EU and start to kill eachother again.

I doubt we will see the same impacts that the USA and Europe will experince in the next 24+ months. We will see 9% unemployment, but this is where the strongest survive. I am actually expanding my business, I just need to ensure my clients pay their bills

[Dagabond]

According to Uncle Jim Rogers China will be the new world power in the 21st Century, Americas time in the 20th Century is done the same as the UK's was done in the 19th Century.

His advice is teach your children Chinese/Mandarin and invest in farming/water treatment. Farms will be the new corporate plays driving the lambos and Ferraris taking over from the corporate leaders around now.

His point of view is let them fail stop bailing the idiots out and let the market do its job.

[tab]

Well that's what free-market is supposed to be all about.

Saw on the tellie tonight that the UK is that far in the sh*t they are firing up the printing press to churn out another 75 million pounds.

[Dagabond]

[tab]

Is that really your uncle?

[seventytwo]

[Dagabond]

Having posted that it's interesting to note that Soros Rogers partner who set up the Quantum Fund became famous for "breaking" the Bank of England, forcing it to devalue the pound. Soros had bet his entire fund in a short sale on the prediction that the British currency would drop in value (it did), a coup that netted him a profit of $1 billion. In 1997, Soros was blamed for forcing sharp devaluations in Southeast Asian currencies.

Men behind the cue stick as it were...

[seventytwo]

There are many people to blame for the poo we are in and I have no doubt he has been in part to blame.

A $4000% increase in share price is a pretty good effort though.