Globalization is nearing death and is going away. Or, at the very least, it’s severely maimed and slipping into a coma. Get used to the idea.
What we are witnessing now are the beginning stages of a global depression that is the consequence of a 25 year credit bubble and a global expansion that went bust. This wonderful bubble has been responsible for global economic growth and rising incomes all over the planet, especially in the developing countries, much to the chagrin of the American middle class, who got the “homo-hammer of outsourcing”.
Additonally, I for one, think it’s rather assinine that our government is moving more toward socialism, when socialism has proven to be a total failure, viz. the Soviet Union and Comrade Gorbachev. (Yeah, “take that wall down”—-remember?) I guess the folks in the White House are either ignorant, or have a rather short memory of economic and geopolitical history—or both. It should be of great concern that their ignorance on this matter is casting a dark cloud on our fate in history.
Quick history lesson. The two biggest factors that contributed to global economic growth were…..
1. the fall of socialism (USSR and Eastern Europe)
2. the Internet.
Lower interest rates didn’t hurt the cause either.
The fall of socialism opened up more markets and gave capitalism access to a very large pool of low-cost labor in China and the Eastern bloc countries in Europe. The internet allowed firms to hire intellectual expertise and brainpower anywhere on the planet, and allowed information to flow freely and rapidly. Local markets became, in effect, de-localized.
So, what do “they” do now? They will reverse an expansionary trend, and shift things over to a contractionary trend via the “miracle” of socialism. Hey, asshats, let’s intervene into the capital markets with the greatest “stimulus” in the history of mankind. Let’s enact legislation that will serve to drive social policy for the next decade, rather than support the entrpreneurial community responsible for economic growth and job creation. Instead of promoting ideas and fund ventures which only serve to help the rich get richer, let’s pour trillions of dollars into government “projects” that will put people back to work building bridges and filling potholes. When those projects are done, we’ll simply come up with something else for people to do. Problem solved. Hey, slow or no growth is the great equalizer. It’s good for everybody, if economic equality is what you’re after. Thanks, Comrade Stalin!
All this sets us up for a potential rising tide of de-globalization. That is, a move back toward nationalism and protectionist policies—the putting up of trade barriers and measures to protect local economies, as said economies tank.
I believe we might be heading down that path, similar to the early 1930s when a severe recession was turned into a depression by “deglobalization”. Smoot-Hawley passage enacted tariffs on over 100 products imported to the U.S., all in the name of protecting the American worker and job creation stateside. This created a reactionary backlash from other countries that contributed to our Great Depression.
Now our government wants to repatriate capital, bring jobs back home to the U.S., free ourselves from foreign oil (ask least in speech), and spend money on U.S. infrastructure. These are the seeds of the protectionist mindset—-and as economies all over the planet implode, the seeds will germinate into a new era of deglobalization and slower or even negative growth.
Our stock market, as usual, is correctly forecasting this egregious page in history.
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