If the global economy has become highly integrated, as so many say ("globalization"), isn't it illogical that parts of it will decouple by a wide margin and just keep going strong, despite weakness in the US, EU and Japan (70% of global nominal GDP)?
The reason for the question was the hyping of "decoupling" by a bunch of talking-head econo-analysts as the way forward for the global economy.
The answer finally came - in spades - today:
Chinese exports contracted by 17.5% in January, the steepest in 13 years, and the third month of contraction. Imports contracted even more (43.1%, the worst since data begun being collected in 1995). Full details here.
Instead of decoupling some of its newer cars, the global economy train has derailed in toto. And it really doesn't look very good going forward, either; inventory-to-sales ratios in the US are zooming higher. Remember that the US and Europe account for 50% of Chinese exports.
The reason for the question was the hyping of "decoupling" by a bunch of talking-head econo-analysts as the way forward for the global economy.
The answer finally came - in spades - today:
Chinese exports contracted by 17.5% in January, the steepest in 13 years, and the third month of contraction. Imports contracted even more (43.1%, the worst since data begun being collected in 1995). Full details here.
Instead of decoupling some of its newer cars, the global economy train has derailed in toto. And it really doesn't look very good going forward, either; inventory-to-sales ratios in the US are zooming higher. Remember that the US and Europe account for 50% of Chinese exports.
Those talking heads also used to say that the world would run of oil because of demand from billions of Indians and Chinese, who will all get to middle-class due to globalization and drive Chevy Suburban. On which side of that debate were you? :)
ReplyDeleteHeh. Take that, Schifftards.
ReplyDeleteGreenie, play nice.
ReplyDeleteAs far as I am concerned, Hell should be secretary of the treasury (any interest in the position by the way? We really need a better one than we have).
Hell was more prescient than almost everyone and his track record is WAY better than most. Go back over his posts, I did.
On a different note, I do ask you how you come to a 'Causus Belli' interpretation when we read statements from the Chinese like this in the newspaper:
"Mr Luo, whose English tends toward the colloquial, added: “We hate you guys. Once you start issuing $1 trillion-$2 trillion [$1,000bn-$2,000bn] . . .we know the dollar is going to depreciate, so we hate you guys but there is nothing much we can do.”.
It is almost as if they are saying "put a 'kick me' sign on my back and then go ahead and truly kick me". Bizarre. Psychoanalysts must make a fortune in China.
About oil...
ReplyDeleteI have always scoffed at Peak Oil (in caps) and concentrated on Peak Debt as a much more dangerous and immediate threat to our economy and society. I have often posted to that effect on The Oil Drum - and been attacked there, too.
But, resource depletion and environmental degradation are extremely important issues, nevertheless. Had the debt party, with its attendant Permagrowth, gone on for a few more years, I have no doubt that scarcity and high commodity prices would have become even more pronounced.
Remember how people died of electocution a couple of years ago trying to steal copper from high voltage wires? It happened in the USA, not Upper Volta.
Weell, I too am an Engineer by training. I have been ranting for years about the stupidity of Globalistation because, IMO, what Globalisation does is opening the "internals" of every country to every other country - to mess with! The interfaces disappear!!
ReplyDeleteA stable, predictable system requires "Narrow", well-defined interfaces to enforce the internal design rules of each subsystem. If one does not have that, Chaos will eventually follow and the system collapses.
Not that people don't instinctively know that: Real wars have been fought thousands of times over borders, taxation and trade rights but we all got caught up in the party and thought that this time would be different e.t.c..
I suspect that Decoupling will be coming real soon now as every country realises that just keeping *their own people* from forming an angry mob and torching parliament with the government inside is plenty of work already.
That task alone takes priority over other countries problems and preserving constructs such as "free trade" or their standing within "the international community".
It will be fun to watch "Tranzis" all over whine, bleat and loosing elections to nationalists ;-)
The fact of the matter is mass consumer extintion and disconnect's. Plain vanilla no frills survival are spike saving's. Will people listen? Nope, but hope will spring eternal longer than .gov economist models. The Numbers posit fact of the matter but did i see a uptick on the dry bulk index? I heard 2 million defaults on home loans this year are conservative numbers. Will listen carefully and spend even less. Many Mid Caps now getting butchered by moody's rating's. How ironic! Kiss earnings good bye untill 2011 and see who crawls to solvency 2012. Got to love group think geocorporate myopic view of humanity and timeless economic laws they forgot. There arrogance is unmatched since the time of Hadrian. Hell understands human nature and the pending social acrimony we all will see to the full effect more now sadly see. Nature punishes to its terms not our's. It's more than overdue for the global reboot to value's we can live with is my plea.
ReplyDeleteWell, I think it is prudent to keep oil, and oil depletion in mind at all times, because our civilization at this point in time is structured around the very presence of oil. It is everywhere. And it is largely responsible for the evolution of our transports (based on oil), and hence, the way we have been thinking about our relationship to time and space for quite some time now.
ReplyDeleteNo more oil means... what to our relationship to, our conceptualisation of time and space ? A revolution, my friends...
One major disadvantage of thinking in terms of concepts, and evacuating the world of objects, and bodies, is the ability to reason in abstractions about the simple fact that those mortgage foreclosures mean physical bodies without shelter, without jobs, without occupations, and that conjuncture is absolutely "perfect" for certain things happening.
They happened in Vienna, in the 1890's.
They are what contributed to the existence of the rise of fascism.
We are repeating history all over again, my friends.
When will it stop ?
A smug attitude toward the apparent folly of peak oil arguments is kind of like chastising those who lived within their means a few years ago.
ReplyDeleteI was called cheap (among other names) for living small
fajensen said...
ReplyDelete"what Globalisation does is opening the "internals" of every country to every other country - to mess with! The interfaces disappear!!
A stable, predictable system requires "Narrow", well-defined interfaces to enforce the internal design rules of each subsystem. If one does not have that, Chaos will eventually follow and the system collapses."
The funny thing about this statement is we absolutely agree! It is because of such things that I absolutely see the imperative to finish globalization.
The global integration of the world was-is and will be a mess/ugly. My biggest concern is that the world is messier still if we do not finish it.
Hindus and Muslims in India though they could solve their issues by just separating into two geographic camps- all they got for it was the most dangerous nuclear standoff on this planet.
And we all know what a basket case the middle east is concerning maintaining purity of borders, ethnicity and religion.
The funny thing about your use of the term "Tranzis" (i.e. someone who favors the power of transnational bodies over national institutions) is that I again think I agree with you.
Managing globalization from a central government office seem like another 'make work' welfare program for the governing class if ever there was one.
I guess it kind of depends on your views of certain international institutions. Transnational organizations that often seem incompetent, corrupt or simply useless- the UN and the EU often come to mind really do seem a waste.
But I am not sure why watching the nationalist forces re-elected would be fun to watch. there are a lot of scoundrels hiding behind nationalism as we saw all to recently in Serbia- it makes my skin crawl just thinking about such people.
But if those are the kind of characters you want to sign up with - "whatever floats your boat".
And I don't think any election 'setback' says much about our future. It is a simple fact that the number of languages on this planet being spoken regularly is diminishing daily, etc...
The boundaries of the world are slowly rearranging whether we want them to or not. The market is forcing boundary destruction for new efficiency gains, even as it is simultaneously differentiating and creating new systems, processes and boundaries.
Well, there are a few of us utopian, non pragmatic people out there (I think I can harness Cottonbloggin to this one, although I will back off, if he does not agree), who really would like NEW ideas, and are not satisfied with the "transi" solution, or the "nationalistic" solution we have seen thus far on the human scene.
ReplyDeleteSo few people seem to realize that being "pragmatic " and "realistic" is really being cynical and pessimistic...
Deb, why would you think I too would not like the same thing? Why wouldn't all of us want it?
ReplyDeleteMy only issue is that 1) you have to have a better NEW idea and 2) it has to work.
It is absolutely true that I am more than a little cynical on these things (the stuff I see people do to each other in my line of work would make most people's skin crawl) and that I have come to suspect there probably isn't one, but if it truly exists, and it works, by all means, let's do it.
Do you have a better idea? Please share.
But just because it is a NEW idea does not make it better- and there is a good chance it might not be as new as we thought anyway, i.e. it may only be new to you and me.
Hell's original idea has been the greenback- focus on energy as the basis of all life on this planet. And while I don't have a problem with his basic idea, I still think the same integrity issues that got us into this mess in the first place will still be around if we make his currency change over.
Instead of having to trust the integrity of central bankers, we will simply have to trust the integrity of scientists. And while there have been/are/will be a great many wonderful scientists (as there have been/are/will be a great many wonderful bankers), I am sure I needn't remind you that the history of science is replete with fraud.
Thai, by what metric to you deduce that "The market is forcing boundary destruction for new efficiency gains, even as it is simultaneously differentiating and creating new systems, processes and boundaries."?
ReplyDeleteSimilarly, you intimate that enforcing boundaries between India & Pakistan created a nuclear arsenal. What about the peacefully well-enforced Canada-USA or the modern India-Bangladesh borders? Turkey-Russia? Are not there simply far too many ways to play the Good border / Bad border game without taking numerous other factors into play?
AVL, you make a very good point, it is that PLUS everything else.
ReplyDeleteIndia-Pakistanis really is different than India-Bangladesh or America-Canada. Though I would submit that most people's concerns over globalization are really of the India- Pakistan or America-Mexico variety than (say) America- Canada. I seriously doubt most Americans (or europeans for that matter) really think about Canada at all whereas its heathen ways probably keep Saudis awake all hours of the night (well, probably the Dutch keep them awake more than the Canadians, although Montreal does have a wonderful nightlife).
I guess my point is that where there are problems, national boarders don't help nearly as much as we think and where things are good, the boundary is rather unnecessary if not a downright pain in the (you know what).
As for a measure (metric) of diversity (boundary) destruction? This too is a very good question I have never really thought about before. Do you have any thoughts?
I know languages are dying out (think New Guinea), ethnic groups are being swallowed up (think Brazil, Africa and South East Asia- e.g. Muang), ecological and biological diversity is on the decline just about everywhere in the world, etc... but a metric????...
Perhaps something having to do with the number of different responses surveyors might get to questions like: "What language do you speak?", "What is your ethnicity?", "What is your religion?", "Who in the world so you see as your kin?", etc...
I need to think about this one a little
As for a metric for 'new structure' or boundary creation- easy. Just look where new economic growth is occurring (or at least not shrinking). The boundaries of these new structures would be holding their own (or growing) against everything else in the world.
Thai, c’mon, language destruction and formation is a dynamic that moves down and up a spectrum of gray and does not adhere to academic definitions.
ReplyDeleteI recall a grueling group convo with a Kiwi, Aussie, Scot and Brit and I'll argue forever that we clearly were not all speaking the same language as we simply failed to communicate any of our major points.
And whats easily observed by me living in the hillbilly mountains of a southern state...and visiting inner-city urban cores? Again, the academics can claim it’s English we’re all using, but communication is very unique and not easily shared/copied/understood.
Then there's text-speak.
Need I say more?
As for boundaries, they’re like all relationships; they only bother us when...they bother us.
We don’t abandon the concept of relationships or kinships on the basis of a bad relationship or bad kin or a bad boundary or 2 or 3 or 4. The need for boundaries - and enforcing them - seems as dynamic and intrinsically human as the propensity to invent words, grammar and song. Sloppy, irrational but endearingly human endeavors. They’re not going away, rather, the academics are choosing different ways to ‘count’ them.
A flawed temperature metric wont make a rainy day dry or a freezing day toasty.
Thai, let me pre-empt a few points on languages.
ReplyDeleteI know academia will claim a distinction between a dialect and a language.
But I’m from the school taught by a Linguistics PhD who simply confessed that “grammar is descriptive, not prescriptive". So cast-aside the goofy rules of grammar and just observe whether people are sharing a conversation and an understanding or not.
Academics will also claim a distinction between a written language versus its spoken equivalent. I counter by asking: what happens when a typical American educated in a public school system – that’s funded at the nation’s median funding level - is forced to write a paragraph without spell check or grammar check?
Ahhh, so much for the warped metric of using academia's writing skills as the metric for the state of written English.
The masses speak (write) the greater truth on how our languages possess a dynamic that defies academia's metrics (and ‘standards') with regards to language creation and destruction. I suspect the Romance languages are showing similar dynamics as possibly also are Hindi, Arabic and Eastern Asian tongues.