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Slow Build-out After Recovery without Changes in Free Trade Policies

July 18, 2009

Analysis of:Fed: Unemployment rate could top 10% in 2009 | www.bizjournals.com

The QueERI-International model of the global economy integrates international trade effects at the industry level of detail with production and employment through an interrelated system for 72 countries comprising 90% or more of world output. Employment growth is measured at an industry level. The recovery of the American economy, when combined with the open markets leads to a continued decline in American-based manufacturing jobs.

Why MOst Macro Economists Were Wrong About Asia's Strength

March 10, 2009

Analysis of:NOBODY talks about decoupling anymore | www.economist.com

Decoupling of Asia from the rest of the world, and most importantly, the United States was always more a hope than a reality.  I've been working with detailed trade flow data for Asia and the rest of the world for years and could easily see that much of what is traded within Asia is used as intermediate inputs in finished products shipped to the United States and Europe.  Asia's economy is linked to the rest of the world because it is overly dependent upon trade with most of that trade with the United STates.  One interesting statistic is that in 2006 the United States trade deficit equaled 3.5% of the GDP of all other countries except the United States.  In terms of GDP associated with traded products the US deficit share equaled almost 7%.  If Asia could decouple, then it must wean itself from dependence upon exports as the major driver in their economies.

Strong relationship between extension of consumer credit and personal consumption

December 16, 2008

Analysis of:America must keep consumer liquidity flowing | search.ft.com

An econometric model estimation based on the period 1995 through 2008 shows that for every 1% decline in credit (revolving and non-revolving) measured in constant 1995 $s there would be a .4 of 1% decline in consumer spending.  Similarly for every 1% decline in employment adjusted by real wages, there would be a nearly 1% decline.  Thus a fall in employment compounded by a decline in credit extended would cut consumer spending by nearly 1.4%. 

The Paradox of the "Real Economy" versus the "Financial Economy"

October 13, 2008

Analysis of:The Geo-Politics of the Credit Crisis | globalstrategyproject.org

Financial engineering caused the mess The REal economy feels the pain Collapsing markets and confidence increase the pain Only Government Intervention Can Solve the Problem Sell the Gold and Buy Stocks is the Best Advise

The $ 850 billion dollar sure thing

September 15, 2008

Analysis of:Made (again) in America | money.cnn.com

The US economy could be $ 850 billion stronger if the trade balance were simply put back into near balance. A good majority of these jobs would be higher paying manufacturing jobs. The adjustment process could take 10 years or more and would require a shift in our prevailing economy position with respect to obligations under WTO rules.

Republican Orthodoxy Is Out of Line with Reality and the Flow of History

September 27, 2007

Analysis of:The Battle Over Health Care | www.nytimes.com

The Republican Party by adhering to its core orthodoxy that "markets are always better than government regulation, and management must be, by nature, evil and eliminated, is on a path to being as much a minority party as it was in the 1930's, 1940's, 1950's, and 1960's.  The truth is that failures of regulation have led to the crisis in health care, home mortgages, trade, the loss of manufacturing jobs, dangerous pollution, global warming, and even the Iraq War.

Looking for a New Global Economic Paradign to Replace "Free Trade"

June 21, 2007

Analysis of:Global Trade Talks Collapse | news.yahoo.com

The Potsdam meetings confirmed what analysts already know -- concentrating on solving the problem of "agriculture" will forever doom global trade talks and lead to an impass that will surely force changes in the underlying views of the Atlantic concensus that "free trade" is always preferable to "managed trade."

What Me Worry?

February 28, 2007

Analysis of:Recession unlikely, economists say | www.businessweek.com

The Chinese meltdown has more to do with China's overheated and speculative culture and dependence on exports with the United States, than with short-term developments and conflicting economic statistics on the state of the American economy.

Alan Greenspan's remarks and actions by the Chinese government triggered the fall.  The Greenspan remarks are being blamed for the US sell off, but in reality it might be more likely that it is a recognition by the Chinese investors that China's overheated state of growth is driven by exports to American consumers.  Thus a recession in the United States will put the kibosh on Chinese growth.

And like Japan before it, when the speculative bubble collapses, it takes down growth throughout the economy.

Unlike most countries, China's growth is dependent upon outside stimulus rather than self initiated growth.  Once that cycle starts, it opens the door for speculative investments helped by cheap money and easy credit.  Once it slows, this cycle reverses.

But the relationship between China and the United States is weak.  It is a unidirectional bias with China dependent upon the United States, rather than the reverse. 

Would David Ricardo Be Proud of a $768 billion trade deficit?

February 23, 2007

Analysis of:News Release: U.S. International Trade in Goods and Services | www.bea.gov

- For 2006 the US trade deficit reached $763 billion, a new record.

- Exports of goods and services totaled $1437 billion.

- Imports totaled $2201 billion.


The trade deficit with China totaled more than $220 billion, a new record, double the deficit typically run with Japan.

Continuing on this course, we will reach a trillion dollar deficit within a few years, even if we are highly successful at exporting. The simple dynamics of imports being almost twice exports insures that even rapid growth, well above the historical norm, in exports will not reduce the deficit.

Would David Ricardo use the argument for "free trade" to support the position of most business leaders that we are better off with an open economy, or is he turning over in his grave when he hears his simple, two country, two product, theory invoked to explain the benefits of trade to the simple minded and self interested business executives who profit from this over indulgence.

Additional facts on Chinese demand for ores (including iron ore)

October 26, 2006

Analysis of:China's ire at North Korea tempered by ore | www.iht.com

While it is true that China has some dependence on North Korea for iron ore for the less efficient state owned mill, the reality is that overall imports of ores, mainly iron ore was over $ 18 billion measured in constant 1995 prices and exchangew rates.  In current terms the value is significantly greater than this.  Thus the $35 million import from North Korea is insignificant and could be made-up in less than a day by any of China's main suppliers.  The chart attached shows the changing pattern of Chinese demand for ores and a forecast for future growth in demand basedon a global trade and industry model.

Corporate Values in the Age of Globalization

April 27, 2006

Analysis of:Corporate Values | www.themanufacturer.com

The Economy depends upon a circular flow.
If all companies become highly efficient or out to protect their bottom line, then it is possible that this highly competitive economy will find itself in economic distress.
Companies that see workers as stakeholders tend to do better financially those those who don't.

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