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Winning The Global Export Race

Tyler Durden's picture


It is no secret to anyone that as we said some 3 years ago, the world is now engaged in all out currency warfare whose sole goal is destroying one's own currency faster and more brutally than "the other guy" can. Because while devaluing one's currency is imperative in order to return to a viable debt load, about $40 trillion less than where it is now (as per BCG) by pushing monetary inflation upon one's people and inflating said debt away, just as important is to stimulate one's economy and exports which, all else equal, can only be done by making them cheaper to one's trading partners. It is, after all, a zero sum world.

This is precisely the tug of war that the developed world is caught in currently, where every attempt is made to talk down one's currency, and when that fails, to dilute it by printing more of it (the Fed), to backstop it with collateral of every lower quality (the ECB, although in Europe's case it is more of an involuntary phenomenon), or just to talk, and talk, ant talk (Japan).

Yet while every country with a self-respecting central bank (i.e., currency printer) hopes that they will be the ultimate winner of the currency debasement export race, what has become obvious over the past 30 years, is that when it comes to specializing in exports, there is just one true winner: a winner which is self-evident from the chart below.

So the question becomes: while everyone is scrambling for the peanuts and breadcrumbs of marginal exports while injecting trillions, then quadrillions, then quintillions and so on, to make their exports "attractive", is China merely sitting on the sidelines and smiling, knowing well that when it comes to Ricardian dynamics, there is nobody who can ever catch up or slow down its momentum, benefiting from a (still) cheap labor force that is second to none, and an unprecedented work ethic (the lack of a social safety net does miracles for motivation), even if every country destroys their economy in the process of trying to catch up?

Of course, when every other country's economy implodes, that means the traditional Chinese export partners will no longer exist, and the country will finally have no choice but ending its mercantilist ways, and actually focusing on internal growth. But China, like the US in so many other things, will only cross that particular bridge when it has no other choice.

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Fri, 01/18/2013 - 16:10 | 3167278 diogeneslaertius
diogeneslaertius's picture


currency wars > trade wars > real wars

always resulting in a tighter control grid on the human resources by elites


how many thousands of years now?

every safety net thus far has been a trap. its culture - a noble culture is all that matters in some last analysis.

Fri, 01/18/2013 - 16:22 | 3167308 Au_Ag_CuPbCu
Au_Ag_CuPbCu's picture

Hey, just want to give a shout out to my fellow AG stackers here on ZH.  Silver is going to crash hard Monday…I know this because I just bought a bunch of silver eagles and that my friends is the way my luck runs.  Happy stackin :)

Fri, 01/18/2013 - 16:26 | 3167326 LawsofPhysics
LawsofPhysics's picture

Thanks, so buying opportunity on Monday.  Good to know.

Fri, 01/18/2013 - 16:32 | 3167338 gmrpeabody
gmrpeabody's picture

If I buy Monday..., you may want to wait till Tuesday.

Fri, 01/18/2013 - 17:15 | 3167438 Haager
Haager's picture

That'll make it Wednesday.

Sat, 01/19/2013 - 17:08 | 3169442 The Miser
The Miser's picture

Thursday looks like the day.

Sun, 01/20/2013 - 03:47 | 3170268 MSimon
MSimon's picture

I'm buying gold - plated PCBs.

Fri, 01/18/2013 - 20:27 | 3167990 Son of Loki
Son of Loki's picture

I foresee a surcharge on all property owned by foreigners in the USA. Many countries already do this.

Fri, 01/18/2013 - 22:20 | 3168206 philipat
philipat's picture

QE isn't achieving the goal of pushing down the USD because other CB's are onto the same game. The USD has been in a trading range around 80.

IF the Fed really wants to achieve a lower USD, it seems to me that it will have to use the strong inverse correlation USD/Commodities, especially PM's and allow the latter to rise substantially. The Fed can't have it all and this would appear to be the lesser of two evils, recognising that it can't keep a cap on PM's forever anyway. May as well abuse the role of the USD as the world reserve currency whilst it still is.

Fri, 01/18/2013 - 16:10 | 3167281 falak pema
falak pema's picture

only one winner on this paradigm chart of current globalism / China!!!

Fri, 01/18/2013 - 16:13 | 3167288 diogeneslaertius
diogeneslaertius's picture

NWO moved their main base to China and was setting up auto mfg infrastructure pre ww1


they put into powr both kai-shek and mao


they are currently cooking down the old world western countries - indonesia etc. have come along well - all thats needed is a decade or two of cultural debasement as the slave nations come to power under a one world order (even before the official IPO)

Fri, 01/18/2013 - 16:57 | 3167378 James-Morrison
James-Morrison's picture

The Chinese are so glad that we are glued to tube, illiterate and have not read "Trojan Horses for Dummies".

Sat, 01/19/2013 - 06:34 | 3168567 Mountainview
Mountainview's picture

Only possible conclusion: Buy CNY !!!

Sat, 01/19/2013 - 09:13 | 3168619 ATM
ATM's picture

CYB and I own some.....

Sun, 01/20/2013 - 03:49 | 3170269 MSimon
MSimon's picture

kai-shek made his nut selling drugs. You can look it up.

Fri, 01/18/2013 - 17:20 | 3167457 bank guy in Brussels
bank guy in Brussels's picture

There's really another big winner on the above chart ... South Korea

Up in every category and big-time in most

In fact South Korea is one of only two places in the world with consistent 5%+ plus growth over five decades, along with Taiwan ... a much longer record that China's boom, which has been recently sharp but is much more fragile

And South Korea is a decent place, with human, social and labour rights, health care for everyone (given by their autocratic ruler General Park half a century ago!), low gov't debt, and they even have had a fifteen-year moratorium on the death penalty ... They are nearly a European Enlightenment country

And they are at the technological cutting edge of the world right now ...



Fri, 01/18/2013 - 17:54 | 3167585 LawsofPhysics
LawsofPhysics's picture

wait a minute, where the fuck are the financial "products"?  LMFAO!!!!

Fri, 01/18/2013 - 18:23 | 3167700 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

When the f*ck are the ideologues on Fox News gonna notice this fact around the world: when you make sure the society works for EVERYBODY in it, guess what IT"S A BETTER COUNTRY. Even Henry Ford knew he had to pay his workers a decent wage because THEY WERE HIS CUSTOMERS. Gee does GERMANY have any labor rights? Does Korea have universal health care?

Fucking scorched earth elite in the US: rape and pillage and then move on to the next country you can buy and rape and pillage. Stupid pusher kills all of his junkie customers then constantly has to find a new neighborhood to work over...

Fri, 01/18/2013 - 18:54 | 3167775 Flakmeister
Flakmeister's picture

I guess there are a few people here that notice these things.....

I'll take some liberties with Hegel.... "purity of ideology and nothingness are the same"

Fri, 01/18/2013 - 20:32 | 3167994 Son of Loki
Son of Loki's picture

+1,000 on SK and Taiwan.

Fri, 01/18/2013 - 16:11 | 3167284 LawsofPhysics
LawsofPhysics's picture

Tme to fix some "imbalances."

Fri, 01/18/2013 - 16:29 | 3167333 BattlegroundEur...
BattlegroundEurope2011's picture

"Not until all the slaves are on equal footing with each other"


Fri, 01/18/2013 - 16:35 | 3167344 kaiserhoff
kaiserhoff's picture

You don't have to outrun the bear to avoid being eaten.  You just have to outrun the other guy.

Fri, 01/18/2013 - 17:05 | 3167400 LawsofPhysics
LawsofPhysics's picture

"Everyone shall work for Chinese wages!" - NWO

Fri, 01/18/2013 - 21:49 | 3168153 SaveTheBales
SaveTheBales's picture

If Monster Boxes are any guide, price-suppression and abundance don't mix, so good luck with that.

Fri, 01/18/2013 - 16:16 | 3167296 newdoobie
newdoobie's picture

I tell this story to everyone I meet and share it on the net, but all I hear is  "crickets"

Fri, 01/18/2013 - 16:20 | 3167304 PUD
PUD's picture

You cannot breath the air in China. Fruit trees have to be pollinated by hand because the bees are all dead....China will die too...maybe by a different sword but die they will. There are limits to "growth" earthly limits as well as debt/money limits

Fri, 01/18/2013 - 16:22 | 3167310 azzhatter
azzhatter's picture

I always laugh when people say China labor is getting too expensive. All these plants will move back to US. Yeah right. US is becoming more uncompetitive, not less. Nobody is going to close a $200 million dollar plant in China and move to US to pay higher labor costs. Sure, there are quality issues and shipping costs but nothing that would make the shuttering of a plant a viable strategy. And there are many more more options than the US. Africa probably has a good 30 year run for slave labor, India, Indonesia, When people move product back to US it will be automated, not to increase jobs

Fri, 01/18/2013 - 16:46 | 3167365 Spitzer
Spitzer's picture

Low currencies are bad for exports, contrary to popular keynesian beliefe.

The USD has been falling for 10 years yet the trade deficit is wider.

The Euro rose over the same period of time and German exports went higher

Fri, 01/18/2013 - 17:05 | 3167390 akak
akak's picture

Not to mention how the debasement of currencies punishes imports, and savers, and investors, and the overall economy and society as a whole, through the inevitable economic distortions caused by the debasement and the resulting unproductive (or counterproductive) malinvestments.

This myopic and idiotic, neo-mercantilist focus on exports, Exports, EXPORTS, in disregard to ALL other considerations, is the height of economic idiocy.  Which must be precisely why it is so popular among the Keynesians and most other pro-Establishment, pro-status-quo shills.

Fri, 01/18/2013 - 19:50 | 3167887 Ghordius
Ghordius's picture

+1 both. if it does short term "wonders", who cares about mid- or long term?

Sat, 01/19/2013 - 17:59 | 3169538 falak pema
falak pema's picture

there is ONE major historic impediment to avoiding imports : cheap imported oil going market priced, our blood line of first world that has made the world addicted to fiat pump since 1973 spike. 

We needed to get off that addiction in 1979. We didn't and Reagan was all for opening the ME oil tap and saying :  what's all this peak oil nonsense? Our Saudi freinds can jst pump it up if we do a little bit of housekeeping on our side.

That decision just made the fiat bonzanza four times bigger in 2008....

So there are some commodities that are vital to the industrial model. Importing them becomes "non negotiable"...


Fri, 01/18/2013 - 17:06 | 3167406 LawsofPhysics
LawsofPhysics's picture

Yes, the Germans have done great, now about those PIIGS...

Fri, 01/18/2013 - 17:46 | 3167560 viahj
viahj's picture

it's PFIIGS now, the F is silent (for now)

Fri, 01/18/2013 - 18:06 | 3167631 Black Markets
Black Markets's picture

Also "made in America" is a stamp of a poor quality/poor build product.

Look at American made bikes, cars, planes, beer, tools, appliances... all dreadful.

Who here would drive an American car or drink American beer? Not me, I would rather have a skateboard and drink my own piss.

Fri, 01/18/2013 - 22:53 | 3168260 11b40
11b40's picture

What a crock of shit. Enjoy your piss.

Fri, 01/18/2013 - 18:30 | 3167726 GreatUncle
GreatUncle's picture


$200 million dollar plant in China - was possible before.

The problem now is you can't make the savings to raise $200 million dollars and build that plant in the US.

Get this then, go to equal, then you have to reduce operating costs lower by $200 million in the US then it may happen.

That means if you think China is slave labor what would $200 million under be that is lower than slavery.

So it will never happen unless you kick free trade out of the window, means tarrifs to protect your own industry.

Sat, 01/19/2013 - 00:10 | 3168374 brown_hornet
brown_hornet's picture

One musn't ignore tranny costs, which are probably headed north.

Fri, 01/18/2013 - 16:26 | 3167325 Kreditanstalt
Kreditanstalt's picture

Economies with less of a social welfare burden are more productive.  Simple, so simple that North Americans can't comprehend it...when COST is taken into account, lower living standards mean greater productivity.

Why pay some western worker $10-$20-$40/hour+benefits+pensions when you can hire a foreigner - even if HALF as well-trained - for 1/10 that amount?  I don't blame business for outsourcing at all...it's LOGICAL.

We are burdened with unions, minimum wages, border controls, lack of free labour movement, massive military spending, high taxes, social welfare costs, big government and deficits.

Other economies, where people don't have i-gadgets and junk but also no debt, are more productive, nimble TIGERS!

Fri, 01/18/2013 - 16:36 | 3167347 debtor of last ...
debtor of last resort's picture

There are debt slaves and labor slaves, indeed.

Fri, 01/18/2013 - 16:41 | 3167357 smacker
smacker's picture

Has it occurred to you that the Western political elites have spotted this disparity?, and are now trying to close the gap on behalf of their donors and paymasters.

Fri, 01/18/2013 - 16:53 | 3167373 Kreditanstalt
Kreditanstalt's picture

I'll discount the opinions of anyone who "hates the rich" or wants to "tax the rich".

Every employer should have the absolute right to source the cheapest labour and lowest costs and taxes possible - WITHOUT taxpayer money, government favouritism or state protection of any kind.   The only problem is government interference in the economy. 

Government itself is the more serious threat...much more than the media-created "evil corporations" bogeyman.

Fri, 01/18/2013 - 17:22 | 3167469 debtor of last ...
debtor of last resort's picture

I work for the bogeyman, i see things, hear things, experience things. It's not about 'working for', it's financialisation.
Multi's are the same alimentary canal as government and tbtf.
In other words, globalized fascist fucks.

Fri, 01/18/2013 - 17:31 | 3167505 smacker
smacker's picture

As a passionate believer in open free market capitalism, small government and not punishing people who become rich by honest means etc etc, on principle I have to agree with you on this.

However, it does create a huge problem for many (most?) of us in the West, does it not? Very few of us would be paid as well as we are (or were) if we had to compete with low-priced foreign labour in a free-for-all market. I for one do not want to see Western wages engaging in a race to the bottom, which would adversely affect many features of our societies.

I admit to not knowing what the solution is...

Fri, 01/18/2013 - 17:42 | 3167541 Bananamerican
Bananamerican's picture

"terriers and barrifs"-George W Numbnuts

Fri, 01/18/2013 - 17:54 | 3167582 viahj
viahj's picture

in the 'human' world there is no equilibrium.  the US worker was raised from slave to a comfortable level, even wealthy in the eyes of those who did not rise with them.  that cannot be stabilized, there is always someone who wants your job and will take less for it.  the US worker is now on the downslide while others rise.  that is 'human' economics.  central planning seeks to equalize all and will always fail but in the process they will destroy much wealth and liberty.

Fri, 01/18/2013 - 18:12 | 3167660 smacker
smacker's picture

Yeahbut...don't forget that such debates about wages usually only affect some employees. If wages were driven down to compete with cheap foreign labour, the corporate elites would unlikely be affected and may even benefit through presenting higher corporate profits and therefore earn bigger bonuses. And of course the political elites themselves and the armies of state apparatchiks would not be affected, not least because cheaper foreigners would not be eligible for the jobs, eg: a cheaper foreigner who didn't demand the expensive security measures could not compete with Obama for his job.

The bottom line of all that is that you'd end up with a society that was even more financially polarised than it is today. If you want to examine one country that I know a little about which is like that, take a look at Brazil.

Fri, 01/18/2013 - 18:10 | 3167646 Pants McPants
Pants McPants's picture

The above comment is a textbook example of someone who either doesn't understand free market economics or doesn't believe in free market economics.

How can you tell?  Read/listen to first word of the next sentence/paragraph after someone espouses his or her support for the free market.

If that person uses a conjunction, chances are you're dealing with at best a misguided soul....at worst a charlatan.

Edit: I'm referring to Smacker's comment

Fri, 01/18/2013 - 18:15 | 3167670 smacker
smacker's picture

And your comments are a textbook example of someone who has a black & white view of issues and doesn't understand "pragmatism".

I'm referring to Pants McPants's comment.

Fri, 01/18/2013 - 18:24 | 3167709 Pants McPants
Pants McPants's picture

Let's stay on topic: do you understand the contradiction in your post above?

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