World Trade

2015 has been an 'odd' year. Typically this time of year sees demand picking up amid holiday inventory stacking and measures of global trade such as The Baltic Dry Index rise from mid-summer to Thanksgiving. This year, it has not. In fact, it has plummeted as the world's economic engines slow and reality under the covers of global stock markets suggests a massive deflationary wave (following a massive mal-investment boom). At a level of 631, this is the lowest cost for Baltic Dry Freight Index for this time of year in history.. and within a small drop of an all-time historical low.

Trucks, Trains and now Ships: suddenly everything seems to be in freefall.

The desire to take the American public out of the “of the people, by the people, for the people” business can minimally be traced back to the Vietnam War, to the moment when a citizen’s army began voting with its feet and antiwar sentiment grew to startling proportions not just on the home front, but inside a military in the field.  It was then that the high command began to fear the actual disintegration of the U.S. Army. From that moment on, the urge to demobilize the American people and send them to Disney World would only grow.

No, Ben S. Bernanke will be someday remembered as the world’s most destructive battleship admiral. Not only was he fighting the last war, but his whole multi-trillion money printing campaign after September 15, 2008 was aimed at avoiding an historical Fed mistake that had never even happened!

It's not a good time for this. 

Trump embodies the American zeitgeist, circa 2015 – its virtues, its vulgarity, its inchoate mixture of common sense and incoherence. You may not like Donald Trump, for any one of a number of reasons, but anti-interventionists have to give him some credit for opening up the presidential debate to a critique of US foreign policy that hasn’t been seen or heard since the Ron Paul campaign.

He's right ...

"The United States' provocative attempts to infringe on China's South China Sea sovereignty are sabotaging regional peace and stability and militarizing the waters.What on earth makes the United States think China should and will tolerate it when U.S. surface ships trespass on Chinese territory in the South China Sea?"

"It's not the economy... it's the dollar" - That would appear to be the message from the companies of the S&P 500 who have reported in Q3. As FactSet reports, 18 of the 23 companies reporting so far have cited "the strong dollar" as having a negative impact on earnings. Not record domestic inventories (liquidation beginning), the plunge in world trade, not the economic collapse in take your pick of Brazil (depression), China (credit endgame), India (exports/imports crash), and so on...

The last two US recessions have severely damaged the growth rate in global trade. In each case, the trend growth rate of trade since 1991 (which is when the CPB World Trade Monitor data begins) was effectively cut by at least a percent. Emerging markets have helped to keep global trade afloat especially relative to developed markets, however, even in emerging markets we have seen a step down in the growth rate of trade.

In September, the Port of Long Beach handled a near record 197,076 outbound empty boxes. "They accounted for nearly a third of all containers that moved through the port last month. September was the eighth straight month in which empty containers leaving Long Beach outnumbered those loaded with exports."

250,000 Germans marched in Berlin today in protest against the planned "free trade" deal between Europe and the United States which they say is anti-democratic and will lower food safety, labor and environmental standards.  "This is the biggest protest that this country has seen for many, many years," Christoph Bautz, director of citizens' movement Campact told protesters in a speech.

It is erroneous to believe that free traders have been historically in favor of free trade agreements between governments. Paradoxically, the opposite is true. Curiously, many laissez-faire advocates fall into the government-made trap by supporting “free-trade” treaties. The very fact that governments are negotiating in the name of free trade should be suspicious for any libertarian or true advocate of free trade. It’s time for genuine free trade.

The US and world economies are drifting inexorably into the next recession owing to the deflationary collapse of commodities, capital spending and world trade. These are the inevitable “morning after” consequence of the 20-year global credit binge which has now reached its apogee. The apparent global boom during that period was actually a central bank driven excursion into the false economics of household borrowing to inflate consumption in the DM economies; and frenzied, uneconomic investing to inflate GDP in China and the EM. The common denominator was falsification of financial prices. By destroying honest price discovery in the financial markets, the world’s convoy of money-printing central banks led by the Fed elicited a huge excess of financialization relative to economic output.

“American exceptionalism has to be driven out of our curriculums. We’re not under threat. We are the threat.”