The Shrinking Global Economy (In 3 Awkward Charts)
Submitted by John Rubino via DollarCollapse.com,
Regular contributor Michael Pollaro offers three more charts which tell a story that’s both disturbing and apparently misunderstood by a lot of mainstream analysts.
The US trade deficit (exports minus imports) has been getting smaller. Since a trade deficit subtracts from GDP growth, a shrinking deficit will, other things being equal, produce a bigger, faster-growing economy (that’s the mainstream take).
But other things aren’t equal. It turns out that the components of that trade balance figure are both shrinking. Exports — the stuff we sell to foreigners - have been declining since the dollar spiked in 2014. That’s not a surprise, since a strengthening currency makes exports more expensive and thus harder to sell. So other countries are buying less of our stuff, which though not surprising is a bad sign.
Meanwhile, imports — stuff we buy from abroad — have also plunged in the past year, which is partly due to cheaper oil lowering the dollar value of energy and other commodity imports. But it also means that even though French wine and German cars have become less expensive as the dollar has soared against the euro, we’re not buying more of them. So US consumers, even with all the money they’re saving at the gas pump, still can’t (or won’t) take advantage of a sale on imported goods.
If imports and exports are both falling, that means consumption is weak pretty much everywhere. And weak consumption means slow or negative growth, which contradicts the recovery thesis that now dominates policy making and the financial media.
It also makes last week’s market turmoil easier to understand. Falling trade means lower corporate profits, which, if history is still a valid guide, means less valuable equities. So it could be that the markets are simply figuring this out and revaluing assets accordingly.
(11 votes)
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What will the PhDs do now? QE4 here we come.
"So it could be that the markets are simply figuring this out and revaluing assets accordingly."
No shit shirlock....
If the numbers are not true charts are useless. In Communist Rusia and Romania charts in food production were good but people's guts told other stories.
So, if a Communist, according to acknowledged history, is both a liar and a murderer, what does that make Hillary?
An attorney? :-)
Eventually they will all realize that Krugman just didn't go far enough.
the massive deflationary shock ----- > reactionary central bank helicopter QE for the sheeple theory is looking more and more correct in the inflation vs deflation debate.
Chopper dollars from the sky
A thousand silver dollars high
PM's in the AM
A silver lining nigh
By the time the globalists are done with cramming Chinese shit down our throats, it'll be Klugman.
Nobody is cramming Chinese shit down our throats other than our own purchasing decisions cramming Chinese crap down our throats. Take responsibility for your own actions, man.
I am amused by the irony that the article came from the DollarCollapse.com.
Dollar Collapse? How ironic these days, when every other currency is getting monkey hammered.
Who was it who said "The rumors of me demise are premature"?
Mark Twain (Samuel Clemmens)
I think Jim Willie of the Golden Jackass will be proven to have nailed it: the dollar is going to rise into irrelevance due to its strong demand to service the $9T in emerging market USD-denominated debt, resulting in wide-spread USD debt defaults, which by definition will be a large USD-denominated deflation (already beginning) to the point that a Big Print will be required (large devaluation) thereafter.
I've subscribed to Jim a couple of times. Great big pciture guy. He did say the Chinese would re value last March which did not happen but everything is a moving target. Listening to a 2 hour video just recorded right now.
No, no, no. We're just building more of our own stuff for consumption right here in 'Murica. Less need for buying and selling stuff with other nations. It's a goddamned 'Murican manufacturing renaissance!
- Joe Biden, Summer of Recovery VII
The most 'American-made' items I see being purchased are food, guns, and ammo.
I've come across shampoo that was made in China. It was not marketed as Chinese shampoo either. What the hell besides those things are actually made in America anymore? The cars are only assembled here, all the parts come from elsewhere.
Wait till the Chinks blow up and demolish about 10 entire Ghost Cities. BOOM. Construction and demosition spending through the roof. Muy MOAR NOW!
Lol what the hell are the Keynesian liberals going to say about that? On one hand it's a terrible waste of natural resources and a big generator of pollution to succumb to the broken window fallacy with cities. On the other, it is the most Keynesian form of economic stimulus.
When things are CHEAPER, such as raw materials, commodities and the things made from those raw materials and commodites you don't have to pay as much for them.
THIS IS A GOOD THING. Anyone who only looks at he top line is a pure idiot.
Everyone is buying more for less.
Get the bag off your head Grandpa...you need more oxygen.
..... which is very handy since incomes continue to decline.
Are you suggesting that there is TRUE PRICE DISCOVERY in food (agriculture) and energy "markets"?
You are a moron of the highest order!
Take away all the government subsidies and tax breaks and QE and SNAP and let's see what the real cost/price of food and energy is!!!
I don't think the sheep will like it!
The US ecenomy is built on keeping the population fat. If we eliminated all subsidization of food, which is really subsidization of excess food and entertainment because people would prioritize food for survival, eliminate all forms of welfare and the public deficit, the economy would collapse by 50% almost immediately. No more Redskins tickets, eating out every night at Shipotle, and skinny people do not need pharma.
I for one would love to see more thin women in this country, but hey, that's just me!
Or it could be the first sign of deflation, especially if credit becomes more difficult( due to deficits and credit card overspending ) , rising interest rates impact economy negatively, or income does not grow in order to sustain consumption. Most depressions start with currency wars, protectionism and international trade reduction. " Everyone buying more for less" is not the result
With almost 8 BILLION on this rock all competing for the real resources that are required for a decent standard of living, there will be NO dflation in any of those things. Remember, the government SUBSIDIES food and energy big time! SNAP, tax breaks, agriculture etc.
You are correct, currency wars, trade war, world wars. Cut the population in half (real deflation) then yes, "growth" can return once the producers have cut the consumers down to a managable size.
SAME AS IT EVER WAS!!!!
Amen!
Why can't people understand the simple arithmetic that 8 billion people, and 1 planet of resources, makes people poorer, whereas 4 billion people, and 1 planet of resources, makes people richer? Is it something about "it is difficult to convince a man of something when his paycheck depends on his not understanding it"?
please be the first to off yourself then. good, now only 3,999,999,999 left to go. thank you for helping solve the world over population problem...
Basic arithmetic says you don't have to kill anybody.
You only have to do 2 things:
1. Stop paying people to have children.
2. Give people the resources they need to prevent unwanted pregnancies.
And, by the way, SmallerGovNow2, the MORE people there are, the BIGGER government gets.
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RIP David Bowie, there will never be another! His last album, Blackstar, may contain prophetic warnings. Anyway, "looked a lot lot like Che Guevara" Panic In Detroit!!!!https://m.youtube.com/watch?v=QPI0PF8VWAM
According to a blog cited by The Burning Platform, there are literally no trade ships moving across the North Atlantic, which is unprecedented: http://www.theburningplatform.com/2016/01/11/no-trade-no-commerce-no-economy/. There are links to websites that allow for live tracking.
The economy shrinks and almost everyone gets a little bit poorer. The way for companies to remain profitable in the face of this is to downsize - and the easiest, simplest way for a company to downsize is to buy its own stock.
The decline of the Middle Class is happening not just in the USA, but everywhere.
Smaller Middle Class -> fewer consumer goods purchased -> less trade.
please, there has not been a "middle class" in Mexico and South America for a long time.
:-)
I just read that USA "consumers" are hunkering down, partly to pay increasing insurance bills, or something to that effect.
Yes, insurance is the biggest item in many family budgets nowadays. Time was it was food, then housing, then taxes, now insurance.
deleted by author
Never been to mexico???
Still believe that the human population and global eCONomies can grow exponentially forever in a closed system with finite resources?
LOL!!!
Good luck with that! Now jump you fuckers!!!
Yep, we just need to put bit more into the executive bonus plan to incentivise executive performance, that should do it.
World economic crash .... outbreak of nuclear war .... the FED will .... provide liquidity .... and slam the PM .... socialists are the real "bitter clingers" ?
Demand has been dropping because of wage stagnation and the bank failure that just occurred that hurt a lot of people as they had to borrow money, lost jobs and the new jobs don't pay as much. Foreign countries protect their markets with taxes and we don't so it's just not a higher dollar it's we are being taxed out of other markets because these countries are protecting their manufacturing for good reason.
Meanwhile, on the Baltic........ 415
Part of the solution is simple. Buy more US made products to help the econmy here. Don't buy phony US brands that make products overseas. Balance the US-centric purchasing with paying down your debt.
That will happen when the world loses faith in the dollar and everyone who has one would prefer something else, anything else, of real value. Not before. The only alternative to American self-sufficiency (aka isolationism) is world war.
wrg
<-- 'The Great Dictator' America playing ball
with the world
(Charlie Chaplin hah ha, this time CabalA$$LickerLiarAddictObamma)