The pessimist:
The US hasn't seen the worst yet. Unemployment rates, officially around 9%, are in reality much higher. When those who are out of work, living on savings, run out of money and register for unemployment, the bread lines will start and the deficit blow out. The period now is like that between 1929 and 1932, with see-sawing share prices, bi-polar investors, followed by nearly a decade of flat prices. Share prices are at multiples above the pre-crisis levels, and due for correction. The dollar will drop.
China: Guangdong is dire, factories shuttered and 15-50 million workers sent back to their villages. There's no buying power in the villages for them to set up viable city-oriented service industries. But the government might pull off recovery with pump-priming, if it's targetted right.
Conclusion: short stocks, or stay out of them completely. Long real estate: people always need somewhere to live.
The optimist:
The crisis was one of lack of liquidity. The underlying US economy had been fine until credit jammed up. Now that liquidity is flowing again, orders are starting to flow and industry get back on its feet. China, meantime, has many smart, energetic and committed politicians and bureacrats, focussed on getting China through the crisis and look to be making good progress. Inflation is a danger.
Conclusion: long stocks. Neutral real estate.
Meeker's position: more in line with my hero, the Sage of Omaha: "it's hard to short the US in the long-term". On China, the returned workers can pool money, energy and entrepreneurialism to grow new businesses.
Conclusion: Hold stocks; stop-loss the buggers, hold real estate.
