The latest spin of nonsense for 2008….The economies of China and India will pull the US out of recession.

For the last weekly write up addressing issues in 2007, the Doc highlighted three ridiculous spins that some market representatives were trying to sell to the public at large. They were that inflation was well under control, there was no housing bubble and we had a GoldiLocks economy.  All three of these were criticized by the Market Doctor team and rightfully so.  Well a new bit of spin is hitting the markets in 2008 and this deals with the notion that the economies of China and India will help pull the US out of its recession, or should we say slow down.

Remember, the world’s leading power-house economy, despite the presence of bubbles, has been fueling the progress of globalization and has been the major force behind developing the economies of China and India.  It is the massive consumption of the US that has increased demand for infrastructure in these new promising economies.  However, without the presence of robust consumption from the US, the prospects for robust growth in China and India are bleak.  The problem is that these economies have not built a significant middle class population to spur internal demand.  So in case you may argue that the demand for infrastructure goods in China and India (e.g. buildings, highways etc) will keep the US alive and kicking is a misleading stretch.  Without the massive power of the US economy firing on all cylinders, the rate of progress of developing nations will slow to a snail's pace. 

China…the new world’s economic power?  Not just yet. Lets see how it does with a sputtering US big brother.