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Guest Post: Global Trade Fragility

Tyler Durden's picture




 

Submitted by Azizonomics

Global Trade Fragility

Yesterday I got my new iPad.

Yeah, I bought one like millions of other suckers. Apple can take my dollars and recycle them buying treasury bills and so partially fund, at least for a short while, America’s unsustainable debt position.

But really, I bought one to enjoy the twilight of the miraculous system of global trade. An iPad is the cumulative culmination of millions of hours of work, as well as resources and manufacturing processes across the globe. It incorporates tellurium, indium, cobalt, gallium, and manganese mined in Africa. Neodymium mined in China. Plastics forged out of Saudi Crude. Aluminium mined in Brazil. Memory manufactured in Korea, semiconductors forged in Germany, glass made in the United States. And gallons and gallons of oil to ship all the resources and components around the world, ’til they are finally assembled in China, and shipped once again around the world to the consumer. And of course, that manufacturing process stands upon the shoulders of centuries of scientific research, and years of product development, testing, and marketing. It is a huge mesh of processes.

The iPad is an extreme example of the miracle of civilisation There are less extreme ones. Take, for example, the hamburger. Hamburgers did not exist until the age of regional trade, and refrigeration. The ingredients in a hamburger were not in season at the same time. Cows were not slaughtered at the time when lettuce was harvested. Lettuce was not harvested at the same time tomatoes or onions were typically harvested. For thousands of years previous to this we ate seasonal concoctions, like turkey, yams and cranberries at thanksgiving, as well as smoked and cured foods all year round. In modernity, we have been able to use modern technology to bring about any combination of produce: from greenhouses, to air freighting, to refrigeration, and so.

I look at the global trade system — which we here in the West rely upon for goods, resources, consumption, etc — and I see something akin to the problem with the financial system in 2006. We abandoned robust and aged local systems, local knowledge, artisanship, etc, in favour of a huge interconnected mesh of trade where all counter-parties are interdependent, and where one failure can break the entire system.

This is a beautiful age. We have truly allowed our imaginations to run wild.

But is it sustainable?

My favourite economist (yes, I am joking) notes:

The world economy was, to an extent never seen before, truly global. It was linked together by new technologies that made it possible to ship products cheaply from one side of the globe to the other, to communicate virtually instantaneously over huge distances. But it was also, more importantly, linked together by the almost universal, if sometimes grudging, acceptance of a common economic ideology: the belief that free markets, with secure property rights, were the only way to achieve economic progress; and in particular that a nation hoping to make its way forward needed to welcome foreign trade and foreign investors with open arms. And this shared ideology did indeed lead to unprecedented transfers of Western capital and technology to emerging economies – transfers facilitated by the fact that everyone knew that any country that strayed from the path would be punished by financial crisis, and would soon be obliged to accept the harsh austerity prescribed by teams of Western technocrats.

The year, of course, was 1913.

So a truly global trade system has come crashing down before, and we bounced back pretty well from that. But it was a painful time. That particular collapse seems to have arisen from the complex and internecine system of warfare pacts binding great powers to the whims of smaller ones. When small powers went to war, the great powers were dragged in alongside. It was a hyper-fragile system where one small breakdown could trigger a much larger one, just like the problem that led to the present system of financial derivatives. If one counter-party fails, the whole system can be brought down.

Great powers are once again aligning themselves around smaller allies. China and Pakistan and perhaps Russia seem willing to back Iran, while the United States is reluctantly backing Israel. One spark in the middle east could set the world alight and effect an immediate and devastating breakdown in global trade.

But there is a new factor at play today: the service economy. While nations in 1913 were freely trading, and while the concept of Ricardian equivalence was widely known, no nation took interdependence to quite the extreme that so many nations have today. And many nations have taken this idea so far that without imported goods and energy, their internal economies might completely collapse, or at very best struggle with the adjustment from supranational back to local.

Here’s the situation in the United States:


And for the United States, this hasn’t been a two-way street. America is importing a lot more than she is exporting. In other words, America is now dependent on international trade.

Here’s the United States’ current account balance as a percentage of GDP, (in other words exports – imports as a percentage of GDP):

Simply international trade has become too big to fail.

The problem is, we know from history that the system of international trade can fail, and as we move deeper into the ’10s, there are a number of obvious threats emerging. The boneheaded answer from certain tenured professors and high-flying MBAs might be that the incentives to keeping the international trade system wide open (and cheap) are enough to force countries to co-operate. Tell that to Binyamin Netanyahu, who seems increasingly fixated on striking Iran, and forcing Iran to retaliate with a closure of the Strait of Hormuz. Tell that to Mitt Romney who seems ever-more intent on starting a trade war with China that (very simply) the United States cannot win, because while the United States is dependent on real, physical Chinese goods, China is “dependent” on America’s endless stream of paper money. In other words not very dependent at all given that China already has a $3+ trillion hoard. Tell that to Barack Obama who — instead of pushing for the United States to mine its own deposits of rare earth minerals has run squealing to the WTO complaining of Chinese price manipulation.

This post is not a prediction. I am not necessarily predicting a breakdown in the global trade system, although there are surely many obvious dangers as well as hidden black swans. I am merely forecasting that the world is extremely fragile to one, and that the consequences to certain countries with a negative current account balance could be, shall we say, painful.

Governments are advised to go out of their way to make sure that back-up systems in terms of medium-to-long-term food supply, fuel supply and medicine supply are in place so that the consequences of a breakdown in the system of global trade can be minimised.

This is an example of a process that the philosopher Nassim Taleb has called robustification.

Unfortunately, governments seem very busy doing other things, which are far less relevant to national security.

Nations ignore figures like Taleb — surely the Nietzsche of our homogenised and manufactured age — at their peril.

 

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Sun, 03/18/2012 - 10:37 | 2266987 sIewie the pi-rat
sIewie the pi-rat's picture

iPads are  an extreme example of the miracle of a "civilisation" that depends on slavery

 

Sun, 03/18/2012 - 11:47 | 2267093 malikai
malikai's picture

Has any civilisation not depended on slavery?

Sun, 03/18/2012 - 13:17 | 2267269 smiler03
smiler03's picture

Just curious, what exactly do you do with an ipad that you cannot already do with something else?

Sun, 03/18/2012 - 13:24 | 2267287 spiral_eyes
spiral_eyes's picture

The miracle is not so much what you can do with it, but how it has been created, all the various resources, labour, ideas, etc from different places, etc. Most of the stuff our civilization produces is pretty "miraculous".

Sun, 03/18/2012 - 13:35 | 2267311 StormShadow
StormShadow's picture

"Pork chops taste good, iPads taste good" - Vincent Vega

Sun, 03/18/2012 - 13:44 | 2267328 Common_Cents22
Common_Cents22's picture

I dont get it either.   I have a tablet i use as a clock.  A laptop is much more functional unless you just use an ipad while reading on the toilet.   Typing on those things sucks.  so people get a wireless keyboard.  now you have two pieces to lug around, then find something to tilt up the ipad.  for the same price you can get a fully functional thin light laptop.  

The new ultra books are super slim and light, fully functional and they will fold over and have a touchscreen convertible tablet as well.  All for about the the same price.

I just don't get the tablet craze.  I guess Americans are total data consumers and don't even need a keyboard to input anything anymore.

Sun, 03/18/2012 - 14:48 | 2267469 slaughterer
slaughterer's picture

You answered your own question in the last paragraph:  the world (not just Americans) just wants to use computers to consume data and no longer to create.  An iPad is perfect for data consumption and recording.  It sucks for production, creation and engineering.   

Mon, 03/19/2012 - 06:23 | 2268853 BorisTheBlade
BorisTheBlade's picture

It's perfect for spying on you though. Don't even ask how you can use it, ask what undocumented features does it have.

Sun, 03/18/2012 - 19:04 | 2267949 Dugald
Dugald's picture

Is it not all about upmanship, See! I have one too, it shows I have money(debt) and intelligence too. It shows that you also, have been suckered by the herd advertising ploy. I wonder how many Life hours are expended world wide staring at tablets.

How long before they are miniturised, implanted in the head with a McCandla/Telmanis neural connecton to one, or even both eyes?

 

Quo Vadis?

Mon, 04/09/2012 - 17:30 | 2329407 Tom_333
Tom_333's picture

I want that! Will have to settle for the Google glasses this year.But wait until 2013...I´ll enjoy the crashfest even in my sleep.

Sun, 03/18/2012 - 15:46 | 2267604 defender
defender's picture

Just curious, what exactly do you do with an ipad that you cannot already do with something else?

Act stuck up at Starbucks?  At least, that is what I usually see people doing with them.

Tue, 04/10/2012 - 03:29 | 2330564 mc_LDN
mc_LDN's picture

Correct. Humans aka Man have always enjoyed a form of slavery. We still all do. These days we call these populations of slaves nation states. Economists, Presidents and Corporates are the new Magicians and Pharisses.

Perhaps the Gods / God are waiting for humans / us to wake up? Perhaps until we've broken our chains of ignorance we are doomed to be slaves forever.

Some revolutionairies of the Jesus / Ghandi type are required soon. Except we're it this time. We've been shown multiple times in history. Time to stand on our own two feet.

Sun, 03/18/2012 - 14:35 | 2267437 Matt
Matt's picture

Those people are not slaves; they choose to work in the factory rather than live on the farms their families have worked for thousands of years. Unless, of course, their ancestral farmland has been flooded for hydro projects or confiscated to build a ghost city.

Sun, 03/18/2012 - 18:39 | 2267918 ekm
ekm's picture

In Roman times people chose to become slaves temporarily to pay their debts.

In communism people chose to become slaves and in order to "spread the wealth around".

A slave is a slave, whether forced or by choice.

Mon, 03/19/2012 - 17:49 | 2271059 Matt
Matt's picture

Oh, does Foxconn OWN their workers as property? If so, I wonder what value they list them as being worth as assets on their balance sheet.

Voluntary indentured servitude is not the same as being a piece of property owned by someone else, to be bought, sold, or done with as you please.

Are the Foxconn employees able to leave their place of employment, and move somewhere else? If the answer is yes, they are not slaves.

Tue, 04/10/2012 - 03:34 | 2330570 mc_LDN
mc_LDN's picture

Again I disagree. Your definition of slavery seems to be teh antiquated one where one is in physical iron chains. The bauty about todays world is they realised they didnt have to be iron anymore. When your a slave but dont think or realise your one you are infinitely more productive. A little like Chickens who are free range.

Tue, 04/10/2012 - 03:33 | 2330567 mc_LDN
mc_LDN's picture

A broader vision is required. If Im a slave and the efforts of my toil benefit someone else against my choosing that makes me a slave. Speaking relatively about whether one is better off as an A team slave a Z team slave alla Bankers vs Farmers the fact remains you are all still benefiting an elite that benefits from your efforts in the manner it can cream of international trade profits and war profits. If man had no ability to accumulate resource as he does there wouldnt be the possibility of elites accumulating others resource for their own use and beenfit.

Tue, 07/03/2012 - 03:19 | 2582869 jacklance
jacklance's picture

i agreed, even they mark up their life style, i.e using television, refrigeration and cell phone which they never chance to see in village life.

Sun, 03/18/2012 - 10:40 | 2266988 dick cheneys ghost
dick cheneys ghost's picture

Jim Rickards just tweeted that IRAN wants to be attacked......so that they can take out the House of Saud...

 

Spreading Disinfo??????

Sun, 03/18/2012 - 10:46 | 2267006 GeneMarchbanks
GeneMarchbanks's picture

So weird... I just tweeted that Rickards is an imbecile.

Sun, 03/18/2012 - 11:19 | 2267046 Sad Sufi
Sad Sufi's picture

Rickards is a war-mongering fool, for sure. We threaten Iran in a 100 ways, yet "they are the dangerous agressor." Crazy thinking.

Sun, 03/18/2012 - 11:37 | 2267076 dark pools of soros
dark pools of soros's picture

that's because you are suppose to be able to poke a slave 100 ways and it never flinch lest you beat it some more..  or so the thinkin goes

Wed, 03/21/2012 - 14:50 | 2277374 MeelionDollerBogus
MeelionDollerBogus's picture

The Rickards position on Iran is completely incongruous with his take from Currency Wars.

I bought the book. It's a good book. His nonsense about Iran having/seeking a bomb is tiring, war-mongering bullshit. Sorry, Jim, you're great on finance but in the pocket of the Pentagon, as is even clear from your security clearances for writing Currency Wars.

Sun, 03/18/2012 - 11:20 | 2267047 Blindweb
Blindweb's picture

I've been amazed at how Jim Rickards carefully dances around taking a moral stance on anything.  Being a rational well read, particularly in complex systems, person I assume he understands things like blowback and the US's dependence on oil.  It should be quite obvious to him that we're in the Middle East to exploit resources, yet he never condemns it.

Sun, 03/18/2012 - 11:31 | 2267064 GeneMarchbanks
GeneMarchbanks's picture

He's intelligent enough to understand that he indirectly benefits, along with 330 mil, from the petro$ supremacy. Moral stance? Like when LTCM was 'negotiated'?

 

Sun, 03/18/2012 - 13:09 | 2267243 Fuh Querada
Fuh Querada's picture

Rickards is buddy-buddy with the military, That's whay he can afford his swipes at the Fed. He is an ice-cold analyst and carefully avoids value judgements outside of the US.

Sun, 03/18/2012 - 10:42 | 2267000 duncecap rack
duncecap rack's picture

Great article, thanks. I have been wondering if the breakdown of global trade happens when the basis of global trade, the usd loses its cach`e. Now that more and more countries have circumvented it as an intermediary it's fall cannot be far off. How do you trade if you do not have an accepted medium of exchange?

Sun, 03/18/2012 - 14:48 | 2267470 fockewulf190
fockewulf190's picture

How about gold and silver? Only been around for 5000 years or so.

Sun, 03/18/2012 - 10:44 | 2267002 AssFire
AssFire's picture

They think if we are all joined by trade we will be thrilled by our diversity...If that doesn't work they will say we are "all in peril together" and make something up bigger than fake 911 attacks. 

"The world needs to come together as one to fight... the aliens, meteors, asteroids, hemorrhoids etc.."

Mon, 04/09/2012 - 17:34 | 2329419 Tom_333
Tom_333's picture

I want my 911 - the Porsche - where´s the g-m war? Stop with the semitic foreplay and just get it on. Trust Krugman.It will be a bonanza for ..."development".By the way the oil revenues out of Iran can easily pay for the rebuild of that country

Sun, 03/18/2012 - 10:56 | 2267019 alexwest
alexwest's picture

# For thousands of years previous to this we ate seasonal concoctions, like turkey, yams and cranberries at thanksgiving

REALLY, 'thousands of years ' OF thanksgiving.. are you stupid ?

you should probably stop eating shitburgers and blubbering on Ipad.

buy decent cut of fresh meat and grill it at home, then buy decent HP-PC , and
code couple lines on C# /Java

alx

Sun, 03/18/2012 - 11:10 | 2267039 Blindweb
Blindweb's picture

seasonal concoctions, like

As in an example of a seasonal concoction, not an example of what we've eaten for thousands of yearsIt should have been obvious considering I can't think of any cultures that have existed continuously for thousands of years, outside isolated tribal ones.

Sun, 03/18/2012 - 11:42 | 2267084 Baleful Runes 4 U
Baleful Runes 4 U's picture

"I can't think of any cultures that have existed continuously for thousands of years, "

uh, china (but it would be more accurate to phrase that in the plural)

Sun, 03/18/2012 - 11:07 | 2267027 GeneMarchbanks
GeneMarchbanks's picture

'Nations ignore figures like Taleb — surely the Nietzsche of our homogenised and manufactured age — at their peril.'

If that is even partially true then I might suggest that we are well and truly near the end. Are we living through a Machine Age? Of course, but all things come to an end.

Sun, 03/18/2012 - 11:00 | 2267030 DanDaley
DanDaley's picture

"If something cannot go on forever, it will stop."  Stein

"The center cannot hold." Yates

Pick your poison.

Sun, 03/18/2012 - 11:06 | 2267036 Blindweb
Blindweb's picture

There's plenty of people working on redudant systems, e.g.; http://en.wikipedia.org/wiki/Transition_Towns

 

Sun, 03/18/2012 - 12:59 | 2267220 mess nonster
mess nonster's picture

As a co-founder of a 'transition town" type movement in my local community, I must honestly say that I think Rob Hopkins is an idiot. Why? because his ideas are too little, too late. The anchor of any kind of robustness, or redundancy, or resiliency, is this:

Local ability to produce the basic needs (food, clothing, shelter) of the community from resources at hand.

I live in a remote agricultural community where some vestiges of traditional productive culture still exist. If the shit hit the fan tomorrow, we'd all starve to death. That tells me the situation is far worse everywhere else.

Of course, what little we do now will go a long way towards making a difference. Maybe that's Rob Hopkin's attitude, when faced with the daunting task of trying to build resilience into a local economy, from scratch, with people (all of us) who don't know sit about production. One has to start somewhere, even if it's with face-painting in the kindergarten. But it's also important to not lose track of reality, and to keep a sober assessment of whether the local farmer's market is really building resiliency, or whether it's just an exercise in collective fantasy.

The Transition Town movement is sometimes too much like a Renaisance Fair in my opinion.

Sun, 03/18/2012 - 11:06 | 2267037 847328_3527
847328_3527's picture

Global trade (and finance)  is dependent on all the markets functionaing efficiently---esp Asia, USA and Europe.. We saw this in 2008 when the people who said, "China is safe" were proven seriously wrong.

This is one reason the Fed Central Bank (aka, American Middle Class) will be bailing out the EU imo.

Sun, 03/18/2012 - 11:15 | 2267042 GeneMarchbanks
GeneMarchbanks's picture

The 2008 crash was US-centric stemming from sub-prime and the death of globalization. Now the corpses are slowly surfacing.

'This is one reason the Fed Central Bank (aka, American Middle Class) will be bailing out the EU imo.'

You're delusional if you believe i) Fed = American Middle class ii) that either of those two can bail-out anyone.

Sun, 03/18/2012 - 11:09 | 2267040 Frank N. Beans
Frank N. Beans's picture

"...striking Iran, and forcing Iran to retaliate with a closure of the Strait of Hormuz."

With 3 US aircraft carriers in the Strait, that's not very likely sir.

 

Sun, 03/18/2012 - 17:02 | 2267746 Errol
Errol's picture

Runes, +10 for link to Millennium Challenge

+100 to VanRiper for resigning.

VanRiper is a 21st century Rickenbacher, exposing the vulnerability of high-value sitting ducks.

Sun, 03/18/2012 - 12:15 | 2267147 Bleeding Fart
Bleeding Fart's picture

With 3 US aircraft carriers in the Strait, that's not very likely sir.

 

You should start an Intrade market on that. Currently greater than 1 in 3 chance for strike by the end of the year. Though, it has traded higher. I do wonder what their record is.

Sun, 03/18/2012 - 12:09 | 2267140 luna_man
luna_man's picture

 

 

Foul!...Prior to seeing the picture (hamburger), my mind was set on beans and rice!... Now, debating on fries or onion rings!

Sun, 03/18/2012 - 12:11 | 2267141 Argos
Argos's picture

Aluminum is not mined, it's smelted from bauxite.  Sorry to get all engineer nerd on you, but I hate obvious mistakes.

Sun, 03/18/2012 - 14:28 | 2267422 spiral_eyes
spiral_eyes's picture

bauxite is mined. therefore aluminium is mined. 

Sun, 03/18/2012 - 15:14 | 2267530 Matt
Matt's picture

Are you sure? I thought Bauxite grew in shrubberies and is picked seasonally by migrant workers.

Sun, 03/18/2012 - 16:06 | 2267640 css1971
css1971's picture

Does bauxite contain aluminium? Way to fail on your set theory.

Sun, 03/18/2012 - 12:31 | 2267179 VyseLegendaire
VyseLegendaire's picture

Who are you and why are you on my Zero Hedge?

Sun, 03/18/2012 - 12:49 | 2267205 onebir
onebir's picture

Move along folks, nothing to see here... Global trade's been critical for quite a while.

(& 'bought a new ipad' => 0 credibility ;-)

Sun, 03/18/2012 - 14:34 | 2267434 spiral_eyes
spiral_eyes's picture

yeah global trade has been critical for a while. who's talking about it? not many people.

Sun, 03/18/2012 - 12:53 | 2267211 toadold
toadold's picture

Well what happens to even internal trade in the US if the communication and GPS sattelites are taken out of action. The degree to which they are used to track, control, and move inventory is far greater than the general public realizes. Freight companies keep track of their trucks with them.  If they go down you can kiss "just in time" delivery of goods goodbye, especially the fresh and to some extent the frozen. When you go to the grocery store be prepared to buy canned stuff and local produce if you want fresh, and be prepared to pay for it.......The local tree rats will start to look tasty. 

Sun, 03/18/2012 - 13:08 | 2267240 mess nonster
mess nonster's picture

The global integrated system will stay in place until it has the ability to force every individual to make a moral decision, for or against a fundamental moral directive. To stay on the moral track will mean exclusion from the global economy. To choose against the moral directive will mean one continues to interact (and survive) within the global ststem. 

The system will grow in complexity, and it will not be compromised until this moral choice has been faced and decided by every person on earth. Only then will it collapse. That it will and must collapse is obvious. But don't bet on a collapse any time soon. I don't think any of us has had to face this choice yet, but the moment fast approaches.

 

Sun, 03/18/2012 - 15:26 | 2267559 Matt
Matt's picture

Just because you cannot track your parcel on UPS.com doesn't mean the truck will get lost or take longer to get there. Air Traffic without GPS might have to be thinned a bit, but the world did exist much the same as now, prior to GPS being made available to the general public. I'm pretty sure they had fresh vegatables in winter in the 1980s.

If a solar flare or something took out the satellites, sure it would be hectic for a couple weeks, but I doubt it would permanently end flying bananas from the tropics to our supermarkets in winter. Closing Hormuz might, however, simply due to cost of fuel.

Sun, 03/18/2012 - 17:13 | 2267770 Mesquite
Mesquite's picture

Solar Flares...Now there's a serious concern...Not only GPS satellites, but low voltage control and comms (banking) and the dandy..the power grid..which stops the cooling pumps in all those nuke stations..and y'all just know that'll be LOTSA fun..(Japan only lost four, was it..and Japans reality, minus gov't bs, is not to be envied..)

Guess one best appreciate every day..Take care all..  

Sun, 03/18/2012 - 13:14 | 2267258 Heroic Couplet
Heroic Couplet's picture

Does the Chinese government regulate that is Apple is going to sell in China, Apple has to locate 51% of IPad manufacturing in China? Whereas the US power-that-be Republicans lay down and play dead and let China ship anything into the US?

Not to mention currency. If the US forces China to pet the yuan peg to the dollar, some of the advantage will be gone. Again, ask the Republicans. Last I heard, China does regulate Walmart so that Walmart does not sell food in China, thus China protects its mom and pop grocery stores. In China, Walmart only sell trinkets.

Sun, 03/18/2012 - 13:15 | 2267263 malek
malek's picture

So the -unproven- idea that Apple buys T bills makes it OK for you to buy an iPad?

You must have a degree in Tormented Logic.

Sun, 03/18/2012 - 14:36 | 2267438 spiral_eyes
spiral_eyes's picture

did you even read the article? it was a joke, and if it is true it actually makes it worse because it takes capital out of the productive economy and puts it into gov't waste.

Sun, 03/18/2012 - 13:44 | 2267329 UBIGDummy
UBIGDummy's picture

The only way, for the US to survive this into not escallating to WW3 with Russia and China is this.  

Israel, attacks Iran, using our Mid air refuling.  Iran, launches its long range missiles, but do to limited numbers, effictiveness, and the fact their aircraft would not be able to make it there and back, they then turn their rageand attack an American Naval ship or one of the surrounding bases..  Getting the United States into the war from a defensive position, therefore showing China and the Ruskies that, "HEY THEY ATTACKED US."  We are just defending ourselves.  The gig is up if IRAN refuses to attack US targets.  

ALA PEARL harbour again.  

 

 

Sun, 03/18/2012 - 16:03 | 2267635 css1971
css1971's picture

If I was Iran, I'd attack Saudi. It would make any victory by Israel or the US, phyrric.

Sun, 03/18/2012 - 20:24 | 2268123 StychoKiller
StychoKiller's picture

Iran is definitely sitting in a target-rich environment...

Sun, 03/18/2012 - 13:53 | 2267345 AnAnonymous
AnAnonymous's picture

Ah, the world is organized to support US citizen consumption.

US world order.

Wed, 03/21/2012 - 15:33 | 2277497 MeelionDollerBogus
MeelionDollerBogus's picture

the is re-organizing, however it can, to remove US control of global resources. It's using the US dollars to do it & bilateral agreements for local currency with the potential for direct oil and gold trading.

Sun, 03/18/2012 - 14:00 | 2267368 Rip van Wrinkle
Rip van Wrinkle's picture

ipads....a  human's alternative to battery chickens.

Sun, 03/18/2012 - 14:00 | 2267370 q99x2
q99x2's picture

Now many experiences are good. Next week a 10K race and a mid-term exam. Meditation is a wonderful tool to practice the teaching. What need have I for this iPad thing. I am dancing with existence. All is Bliss.

And the the MF'rs passed more emergency powers for themselves of Friday so they can take over every business and resource in the US in the case of a National emergency such as - a UN war against the Mid East. They bought 1 and a half 40 calibur bullets for every person in the US -to be used by DHS and ICE agents. Took all the old persons medical money and put up 2 Billion dollar Sky-Net and a 3.2 Billion dollar DHS headquarters building in DC.

Time to paint the 30 foot poster maps of who owns Brown Brothers - Harriman, the FED and Goldman Sachs and where their families live for the upcoming occupy protests. The world will locate the Rockefellers. the Rotheschilds, and the rest of them this year.

All is Bliss. All is Bliss. Within the silent sound.

St. Paddys Day is over. Time to hit the noon AA meeting.

Sun, 03/18/2012 - 18:21 | 2267847 Zero Govt
Zero Govt's picture

OMG... the global goofball (NWO) organisers have their filthy fingers/designs on fucking up international trade, regulating and centralising it and making a complete sham of it, like central (monopoly) command healthcare, transport and that shambles US property

"...a huge interconnected mesh of trade where all counter-parties are interdependent, and where one failure can break the entire system."

Wrong on both fundamental points meddler. All independent parties are independent. Got it? You skilless unprioritised (dis)organisers will centralise it and make one mistake and one huge fuk-up ...look at those losers at the Fed and they're destroying money they're 'responsible' for

Like the internet where there is no central command, just millions of individuals connect and disconnect if and when needed.. any part of the system breaks those individuals find their own reconnections

No central system has a clue how to even describe this global trade, let alone get a handle on its logistics. Thousands of decisions beats 1 decision by thousands of times

Leave it alone Azizonomics  ...free trade and commerce is so bloody superior to Govts centralised meddling it's a 'No Contest' on hundreds of counts you meddling village idiots can't even imagine.

Go sort your train sets, State housing, hospitals and schools out, they're (all) a shambles with housing 3 years in the freezer cabinet with NO SOLUTION and NO CLUE HOW TO FIX THE MESS GOVT MADE ...absolutely clueless, totally incompetent

Everything Govt touches Turns to Crap

Sun, 03/18/2012 - 18:28 | 2267896 spiral_eyes
spiral_eyes's picture

If you're suggesting the article is pro-central planning, you are so completely and unbelievably wrong. The only suggestion, really is that governments think about whether or not domestic markets are able to access resources, components and goods in case of a breakdown of the global trade system. That's not "central planning". That's risk assessment, and in a free market this kind of thing would be done undertaken by individuals and companies. But this isn't a free market.

What you don't understand is that today's system of "free trade" is not free trade.

It runs on government subsidies. The reason why Chinese goods can undercut American goods so easily is the massive military subsidies the American taxpayer throws at policing the world. You stop paying for those military subsidies and as far as I can tell suddenly we have to go back to a system with more local and domestic sourcing and probably much less global sourcing. 

Genuine free trade takes into account the costs of doing business. In other words, manufacturers would have to pay either insurance or mercenaries to get their goods to market halfway across the world. If you want complex items that have to be shipped five or six or a hundred times across the world from resource extraction, to component manufacturing, to finished-goods manufacturing, to shipping those costs add up. 

So your so-called "free-trade" is actually a product of government subsidies. I want real free trade, without ANY subsidies.

Sun, 03/18/2012 - 18:44 | 2267919 Zero Govt
Zero Govt's picture

Have you heard of the "market mechanism" ?

whenever there's a shortage or break those commercial sharp cookies come flooding in ...sorted.

the US Govt cannot solve ANYTHING.. we're at 3 years and counting on the frozen in limbo housing crisis caused by US Govt meddling and the Big Boys on Wall Street getting their greedy criminal hands on it ...3 yearszzzzz

How many fuk-ups would you like me to list og Govt meddling? Every Dept of Govt has made a complete shambles of everything they touch, political footballs that do not perform

Leave commerce alone, leave trade alone

Go sort healthcare out, education out, housing out ...then we'll talk

Sun, 03/18/2012 - 18:52 | 2267937 spiral_eyes
spiral_eyes's picture

We've never had a breakdown at this level of trade balance we're at right now.

And I'd argue the gov't's level of military spending is preventing the market mechanism from rebalancing this problem until it is too late.

So yes, this is the government's fault for creating a massively subsidised system and then assuming that that system can last and thrive forever. 

But if the market is being prevented from correcting itself, then who can mitigate the problem other than the state?

Do I expect the state to? Nope, I expect the state to keep on doing exactly the wrong thing, and investing time and energy and money into bullshit like mass warrantless wiretapping, more Solyndras and more drone strikes. But the least I can do is make some recommendations.

Sun, 03/18/2012 - 19:31 | 2268004 Zero Govt
Zero Govt's picture

the Govts military spending has zippo to do with trade or that academic figure, the trade balance

How'd you connect those 2 dots??

The only thing that's 'subsidised' regards Americas trade (which does not need Govt support) are those propped up diseased dinosaurs like GE, Haliburton et al

There is nothing "too late" ...if something breaks commerce will fix it (10 times faster than the US Govt ..see 'unfixed in a hurry' US housing etc)

Seems to me anything that the US Govt is subsidising is the problem... so just cut the bloody budget and let the commerce right itself on a commercial (profitable) basis. Nancy Peloski will be pleased as she's looking for $4 Trillion in savings for her failing inept shamblic Super Committee

The only recommendation you need make is ensuring a free market is in place, it sorts out anything faster than any other organisation ever devised... ie. no Govt intervention, especially no Govt intervention!

Sun, 03/18/2012 - 19:40 | 2268039 spiral_eyes
spiral_eyes's picture

I explained this above, but it appears to have gone between your ears and out the other side:

"What you don't understand is that today's system of "free trade" is not free trade.

It runs on government subsidies. The reason why Chinese goods can undercut American goods so easily is the massive military subsidies the American taxpayer throws at policing the world. You stop paying for those military subsidies and as far as I can tell suddenly we have to go back to a system with more local and domestic sourcing and probably much less global sourcing. "

Every penny we spend on policing the world is a subsidy to importers.

 

Sun, 03/18/2012 - 20:15 | 2268098 Zero Govt
Zero Govt's picture

the US Navy couldn't catch a Somali pirate (their boats are too small to come up on radar screens)

whatever gave you the completely erroneous idea the US protects international or US trade? ..or even has that role/task to carry out??

i'd agree the US military machine is (mis)used for commercial interests such as protecting or consuming foreign oil assets but general goods need no military protection and shouldn't be labelled as needing such an expense/subsidy (no other countries need it either) 

Sun, 03/18/2012 - 20:33 | 2268135 spiral_eyes
spiral_eyes's picture

If the Pax Americana is an unreality, the bottom line is the US gov't wouldn't be spending the money on maintaining it. It's not even necessarily about Somali pirates. They're a flea on the elephant's ass. You put Ron Paul in as President, and he brings the troops and carriers home and it would create a power vacuum. Most likely, that vacuum would be filled by other nations, e.g. China and Russia ("Pax Sinica"), whose citizens and corporations would pay for it in taxes, thus making exports from those countries less competitive. And of course insurance costs would rise. You try insuring a cargo ship without the American navy patrolling the oceans and see what the cost of insurance would be.

And I'm not really arguing that that "should be the case". I'm just arguing that that is the way it is. Truth is that there have been very few periods in history where goods have flowed freely around the world (or even around a region, e.g. Europe under Rome) and they have all been dominated by a military-industrial hegemon. 

Personally I believe local and regional trade and supply chains are more robust, and while this era of global trade has had some miraculous and magical results, it is really very fragile — we know for a fact that such systems have collapsed very quickly before — and we should all hedge against and prepare for its demise.

Sun, 03/18/2012 - 21:01 | 2268207 Zero Govt
Zero Govt's picture

Let's create a "power vacuum" then.. bring the US Navy home (and even better the troops fighting illegal wars) and cut the bloated massively military budgets

I repeat international trade does not need military protection.. no trade boat or tanker has a military escort nor do they need one. Like society criminality is microscopic, a fear blown out of all proportion to expand the budgets of Govt

it's the 'presense' of various Govts military muscle that ups tensions on the seas.. trade just tries to skip around the bloated egos and vacuous posturing of political egos and get on with its business

"insirunce costs would rise" ..would they? Wouldn't a halved military/naval budget contribute more to the bottom line of commerce??

"military-industrial hegemon" .. commerce leads, Govt follows along pretending it's something it ain't. As a countries commerce expands it fills the coffers of the bloated parasites in Govt who go on ego trips like spending on military muscle. 

You need to ask Greek shippers if they need a big navy for protection as they are still, i believe, the biggest shippers on the globe

"it is really very fragile" ..where is sea trade fragile, please be more precise what no doubt erroneous threats you see?

I'd agree local trade is easier/faster but i disagree international trade is any more fragile ...,my supply Kiwi fruits from New Zealand is unbroken for the last 20 years

Sun, 03/18/2012 - 21:26 | 2268251 spiral_eyes
spiral_eyes's picture

"my supply Kiwi fruits from New Zealand is unbroken for the last 20 years"

The bottom line here is you're only talking about modern history. Throughout the last 2,000 years we've had less than 100 years of real global trade, and for every single one of those there has been a naval superpower who has acted to guarantee shipments. Otherwise, it's too easy for states and pirates to hijack traders and take their stuff.

I agree we should get rid of the military subsidies. My view is that this would lead to more localised trade patterns, which overall is more robust. If it doesn't, all the better. I like international trade. I don't like it being subsidised by expensive aircraft carriers, nuclear missiles, and petrodollar warfare.

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