Stephen Roach had a pretty good article today on MS global economic forum. He believes that investors are overestimating consumption outside of the US. He is probably correct. If the rest of the world was confident that the domestic demand existed then the CA deficit wouldnt be getting nearly 1 trillion dollars and there wouldn't exist a reason for on going massive support for the dollar. Former MS economist Andy Xie had a got article about the isssue of domestic demand outside the US a couple of months ago. It was his belief that Asia wouldnt decouple from the US led growth model until there was protracted downturn in consumption in the US. This is the conclusion Roach reaches as well. If there hypothesis turn out to be correct what are the ramifications for the capital markets? Demand for large purchases like cars and houses are clearly sliding. Real Estate is a very long, slow cycle that could take years to bottom. Does the rest of the world continue to purchase our debt or do they decide to stop buying and concrete efforts to encourage more consumption? I dont know the answers, but it is a problem staring everybody in the face. I dont think another stock market bubble is likely because the market is too savy to let markets run up another 20 percent from current levels.