Category Archives: Globalization

Germany Loses Its Grip

By Delusional Economics, who is horrified at the state of economic commentary in Australia and is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from http://www.macrobusiness.com.au/2012/01/greece-lines-up-portugal/“>MacroBusiness.

And so we roll on…

One of the things that amazes me about the European “crisis” is how symptoms of the underlying problems of the macro-economic system that is the Eurozone get confused with the actual problem. Let’s take the current situation in Greece for example:

New York Times Tells Us Only Chinese Near Slave Labor Could Handle Steve Jobs’ Demands

A New York Times story, “How U.S. Lost Out on iPhone Work,” uses an Obama dinner with Silicon Valley titans to frame its tale of why the US middle class should roll over and die. I am of course exaggerating for effect. But not by as much as you might think. The story by Charles Duhigg and Keith Bradsher does a very good job of explaining why Asia, and China in particular, has come to dominate consumer electronics manufacture, using the iPhone as focus.

The problem with using the microcosm to illustrate the macrocosm is you need to choose the right microcosm.

American Exceptionalism and Euro-Bashing, Adam Davidson Style

Adam Davidson has an article in the Sunday New York Times Magazine, “The Other Reason Europe is Going Broke,” that manages the impressive feat of making you stupider than before you read it. It misrepresents most of the few facts it contains in appealing to American prejudices about our cultural, or in this case, economics superiority, to sell worker bashing.

Davidson uses the spectacle of Europe going into an economic nosedive to claim that one of the big things wrong with Europe is its spoiled workers. The piece is anchored in a glaring, fundamental misrepresentation. It argues that Americans are much better off than Europeans because we have a higher GDP per capita (more on that in due course) and asserts that that is because Europeans are not able to compete in world markets:

Wolf Richter: “German Success Recipe” or Blip?

By Wolf Richter, San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Cross posted from Testosterone Pit.

Despite the Eurozone debt crisis, the German economy has been on a roll, with unemployment at a 20-year low. Exports surpassed €1 trillion for the first time ever. The Federation of Wholesale and Foreign Trade even issued a card to commemorate the moment. For the year, exports rose 12%. In 2012—based on demand from Asia, Latin America, Africa, and Eastern Europe—exports are expected to grow 6% to €1.139 trillion—when GDP is only €2.37 trillion ($3.1 trillion)!

But during the financial crisis, export orders fell off a cliff…

From Bad to Worse for the IMF

By Delusional Economics, who is horrified at the state of economic commentary in Australia and is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.

For some time now I have been pointing out poor economic policy implementations within the European economy and how those policies are likely to effect the real economies of European nations. As I re-stated on Monday, my major concern with the current thinking from European economic leaders is their misguided belief that implementing austerity before credit write-downs/offs is a credible policy for a highly indebted, non-export competitive nation with a non-deflatable currency.

Matt Stoller: Why Does the Dallas Fed President Want to Destroy West Coast Port Unions?

By Matt Stoller, the former Senior Policy Advisor to Rep. Alan Grayson and a fellow at the Roosevelt Institute. You can reach him at stoller (at) gmail.com or follow him on Twitter at @matthewstoller. Cross posted from New Deal 2.0

The FOMC is far more secretive than most government agencies, and after reading the transcripts of its meetings, it’s not hard to see why.

Has the Global Business Cycle Ended?

By David Llewellyn-Smith, the founding publisher and former editor-in-chief of The Diplomat magazine, now the Asia Pacific’s leading geo-politics website. He is also the co-author of The Great Crash of 2008 with Ross Garnaut. Cross posted from MacroBusiness

So, global PMIs for November have passed. Where do they suggest that the global economy is heading?

Is a Eurofix Around the Corner?

After telling readers that the Eurozone leadership looks to be suffering from “dulled reaction times…so out of line with market events that even if they were to snap our of their stupor now, it would be too late,” news reports suggest that they have finally roused themselves.

Or have they?

“Validated Carbon Credits”: a Correction, a Confirmation, Questions, and No Hint of an Apology

The Gibraltar regulator confirms by email that James Richards company Baron Traders Limited is registered in Gibraltar.

Moron from Scam Companies “Validated Carbon Credits” and “Baron Traders Limited ” Threatens This Blog

By Richard Smith

I posted this a few days ago, about the screechingly obvious fake Gibraltar company Validated Carbon Credits, a trading name of Baron Traders Ltd and its lying “CEO” James Richards. Two comments to the post have caught my eye:

It´s obvious your posting is not only slanderous but based on pure conjecture without any circumstantial evidence whatsoever. Why is it you don´t have a “contact us” link? Did you even bother contacting the company / individuals to try and establish some facts?

This was purportedly by a lady called Karen Johnson, who guilelessly provides an email address, bubblybosun@gmail.com, which, a quick Google reveals, is a handle used by none other than James Richards, the aforementioned lying CEO. Rather than dwell on that, or on the fact that “she” evidently doesn’t understand the meanings of the words “circumstantial evidence” and “slanderous”, I responded as follows:

“FTAdviser” Tricked Into Lending the Good Name of the Financial Times to Carbon Credit Scammers

This is Naked Capitalism fundraising week. Over 620 donors have already invested in our efforts to shed light on the dark and seamy corners of finance. Join us and participate via our Tip Jar or read about why we’re doing this fundraiser and other ways to donate, such as by check or another credit card portal, on our kickoff post and one discussing our current target.

“When Offshoring Backfires”

This is Naked Capitalism fundraising week. Over 175 donors have already invested in our efforts to shed light on the dark and seamy corners of finance. Join us and participate via our Tip Jar or read about why we’re doing this fundraiser and other ways to donate on our kickoff post.

Readers may know that I have strong feelings about offshoring. There is plenty of evidence that the case for offshoring and outsourcing are considerably overdone. First, direct factory labor is only a small part of the total wholesale cost of manufactured goods, typically 10% to 15%. While offshoring clearly reduces those costs, there are offsets: increased managerial/coordination cost, greater transport and inventory financing costs. I’ve had some executives in different lines of business tell me their company decided to outsource/offshore despite the fact that the business case was not compelling. Second, offshoring increases risk, particularly the risk of getting stuck with inventory you can’t sell.

This VoxEU article does a nice job of looking at the tradeoffs between cost savings and customer responsiveness.

Eurozone Leaders Ready €80 Billion Band-Aid for Banking Industry Gunshot Wound

I must confess I don’t stay on top of the blow by blow of the ever-devolving Eurozone mess. The broad lines of the trajectory look all too predictable. The officialdom could patch up things for quite a while if the powers that be let the ECB monetize the debt (eventually, you could have an inflation problem, but with the EU and global economy so slack, “eventually” will take quite a while to show up).

However,everyone in positions of authority seems to believe in certain-to-fail-much-faster austerity instead. So the permissible short-to-medium term fixes involves lots of complicated programs, multi-party negotiations, and in some cases, political approvals. The timeline for the governmental maneuvering seems badly out of line with what Mr. Market requires. And to make matters worse, an earlier deal on a Greek funding, which involved bondholders taking a 21% haircut, is now deemed not to be punitive enough to banks. While that is narrowly true, having this deal come unglued could be the detonator that sets off a crisis chain reaction.

And from a wider vantage, none of these remedies address the real issue

Rob Parenteau: Blinded by Faith – Sinking the Eurozone

By Rob Parenteau, CFA, sole proprietor of MacroStrategy Edge, editor of The Richebacher Letter, and a research associate of The Levy Economics Institute

Wolfgang Munchau has raised a very important point in his current Financial Times article, “Why Europe’s officials lose sight of the big picture.” The eurozone, Wolfgang points out, is more like a large closed economy than a collection of small open economies, and this has implications for fiscal policy outcomes, yet these implications remain largely unrecognized by policy makers within the region. Wolfgang noted: