Monday, December 22, 2008

Anecdotal Retail Experience and China 911

Holy crowds Batman! I understand that this was the final shopping weekend before Christmas, but I was overwhelmed by the crowds of shoppers flooding into retail stores on Saturday in New Jersey. Now, it should be noted that shopping is something of an Olympic sport in NJ and the winter weather on Friday night probably compressed much of the weekend shopping into one small period on Saturday afternoon, but the amount of foot traffic was out of control on Saturday night.

We'll see how the retail numbers turn out in a couple of weeks.

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Tom Friedman's piece in the NY Times today is worth a read.

Here are the best paragraphs:

"With unemployment now soaring across the U.S., said Stephen Roach, the chairman of Morgan Stanley Asia, Americans — “the most over-extended consumer in world history” — can no longer buy so many Chinese exports. We need to save more, invest more, consume less and throw out most of our credit cards to bail ourselves out of this crisis.

But as that happens, we need China to take our discarded credit cards and distribute them to its own people so they can buy more of what China produces and more imports from the rest of the world. That’s the only way Beijing can sustain the minimum 8 percent growth it needs to maintain the political bargain between China’s leaders and led — not to mention pick up some of the slack in the global economy from America’s slowdown.

However, if I’ve learned one thing here, it’s just how hard doing that will be. China’s whole system and culture nourish saving, not spending."

"Moreover, China can’t just shift production from the U.S. market to its own consumers. Not many Chinese villagers want to buy $400 tennis shoes or Christmas tree ornaments." This is especially important. Most of the goods that China produces are specifically made for the US consumer and have very little global appeal.

Cheers!

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