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A new parable about "Basicland" from one of my investing heroes - Charlie Munger:
http://www.slate.com/id/2245328/pagenum/all/#p2
"And then came the twin shocks. Hydrocarbon prices rose to new highs. And in Basicland's export markets there was a dramatic increase in low-cost competition from developing countries. It was soon obvious that the same exports that had formerly amounted to 25 percent of Basicland's GDP would now only amount to 10 percent. Meanwhile, hydrocarbon imports would amount to 30 percent of GDP, instead of 15 percent. Suddenly Basicland had to come up with 30 percent of its GDP every year, in foreign currency, to pay its creditors."
The themes are very close to what EJ has written about - unfortunately, with good reason.
Interesting times indeed.
http://www.slate.com/id/2245328/pagenum/all/#p2
"And then came the twin shocks. Hydrocarbon prices rose to new highs. And in Basicland's export markets there was a dramatic increase in low-cost competition from developing countries. It was soon obvious that the same exports that had formerly amounted to 25 percent of Basicland's GDP would now only amount to 10 percent. Meanwhile, hydrocarbon imports would amount to 30 percent of GDP, instead of 15 percent. Suddenly Basicland had to come up with 30 percent of its GDP every year, in foreign currency, to pay its creditors."
The themes are very close to what EJ has written about - unfortunately, with good reason.
Interesting times indeed.