Comments on: Chinese and Starbucks Late Stage Growth Obesity http://ContrarianEdge.com/2008/08/21/chinese-and-starbucks-late-stage-growth-obesity/ Vitaliy Katsenelson blog on the economy, stock market, and stocks. Applying Active Value Investing approach. Thu, 18 Mar 2010 00:30:57 +0000 http://wordpress.org/?v=abc hourly 1 By: David http://ContrarianEdge.com/2008/08/21/chinese-and-starbucks-late-stage-growth-obesity/comment-page-1/#comment-128109 David Sat, 23 Aug 2008 03:59:48 +0000 http://ContrarianEdge.com/2008/08/21/chinese-and-starbucks-late-stage-growth-obesity/#comment-128109 Vitaliy: Very good article. The interesting part about your article is on operation leverage. Everyone knows about financial leverage, but so far, I've not seen a single economist talk about operational leverage. There's an interesting <a href="http://cij.inspiriting.com/?p=362" rel="nofollow">blog article</a> that quoted an old book from Austrian School economics: <blockquote> … it will be easily grasped that any increase in general economic activity will have the tendency to produce a disproportionate expansion in the higher stages of production, the rate of expansion being the greater the higher is the stage of production, i.e., the further it is removed from the sphere of consumption. The opposite is true for any decrease of general economic activity. </blockquote> This idea is very similar to your idea of operational leverage. I've not seen any analysis that touches on operational leverage and its economic impact on China. If that blog article is right, then the news will be very bad for the world economy. Vitaliy:

Very good article. The interesting part about your article is on operation leverage. Everyone knows about financial leverage, but so far, I’ve not seen a single economist talk about operational leverage.

There’s an interesting blog article that quoted an old book from Austrian School economics:

… it will be easily grasped that any increase in general economic activity will have the tendency to produce a disproportionate expansion in the higher stages of production, the rate of expansion being the greater the higher is the stage of production, i.e., the further it is removed from the sphere of consumption. The opposite is true for any decrease of general economic activity.

This idea is very similar to your idea of operational leverage. I’ve not seen any analysis that touches on operational leverage and its economic impact on China. If that blog article is right, then the news will be very bad for the world economy.

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