Comment 48856

By Shempatolla (registered) - website | Posted October 05, 2010 at 19:34:56

Mr Rubin hardly has a flawless record on predicting trends. Probably why he is the "former" chief economist at CIBC. In fact oil even at the current rate and slightly higer is having an negative effect on the profitability of outsourcing manufacturing to China.

A couple of things are happening. The Chinese have invested in the same manufacturing technology that we have which circumvents their biggest resource. Namely people. They are experiencing mass migrations from rural areas to the cities in search of work that really isn't there. China has an internal economic and social crisis brewing that no one is really paying attention to. Second the burgeoning nuevo riche class in China along with those fortunate enough to find manufacturing employment are not deaf, dumb and blind. They want a bigger piece of the pie. Prices are rising and the margins are getting smaller. Transportation costs for those giant container ships bringing Wal Marts goods to market are starting to get prohibitive.

Mr Rubin is merely putting some sparkle on stuff that most in the know knew already, and it isn't going to take $140 a barrel oil to do it.

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