I CAN'T SEE WHAT TURNS THIS MESS AROUND...
OK...EVENTUALLY SOME SHORT COVERING WILL KICK IN...
AND SOONER OR LATER SOMEONE WILL THINK THEY SEE A "BARGAIN..."
BUT IF WE ARE TRULY ENTERING A "NEW ERA"...WHO DEFINES "BARGAIN"... IF THE DOLLAR IS GOING INTO A LONG TERM FUNK...I DON'T KNOW WHAT A BARGAIN LOOKS LIKE IN DOLLAR TERMS...
IF THE CHEAP LABOR & FREE TRADE PARADIGM RULES...WHAT HAPPENS TO THE US ECONOMY....?
IT SEEMS THAT THERE ARE THREE ECONOMIC PARADIGMS IN THE GLOBAL ECONOMY TODAY...
THE ASSET BASED PARADIGM...AS IN THE US...
THE COMMODITY BASED PARADIGM AS IN RUSSIA, ARABY, MEXICO, CANADA AND OTHERS...
AND THE LOW COST BASED PARADIGM AS IN CHINA, INDIA AND MOST OF ASIA...
THE US HAS RELIED ON ASSET INFLATION TO PROVIDE THE "MEANS OF CONSUMPTION"...AND HAS ABANDON THE "MEANS OF PRODUCTION " TO CHINA, ETAL...!
THE COMMODITY COUNTRIES RELY IN US CONSUMPTION TO CONTINUE...AS DO THE LOW COST PRODUCERS IN ASIA...
BUT THE US ASSET INFLATION IS NOT SUSTAINABLE... DID ANYONE REALLY BELIEVE THAT ANY KIND OF INFLATION ....ASSET OR OTHERWISE WOULD HAVE A GOOD RESULT...
CURRENCY COLLAPSE IS ALWAYS INEVITABLE IN INFLATIONARY ECONOMIES...BE IT GERMANY IN THE 1920'S...OR THE US TODAY...
SO WHAT TURNS THIS AROUND...?
MY HUNCH IS THAT THE US IS GOING TO HAVE TO GO BACK TO THE PROTECTIONIST MODEL.... TARIFFS TO PAY FOR NEEDED SOCIAL PROGRAMS WILL BE NECESSARY...THE RICH WILL HAVE TO BE TAXED MORE...THE INCOME DISTRIBUTION WILL HAVE TO EVEN OUT...
US POLICY MAKERS WILL SOON REALIZE THAT: ALL "REAL" ECONOMIES ARE LOCAL!!
TRUE...INTERNATIONAL CAPITAL CAN BE "BORDERLESS" ....BUT IT IS SELDOM "ALLOWED" TO BE! FOR OBVIOUS REASONS OF SUSTAINABILITY...
SOMEHOW, THIS NOTION OF "SUSTAINABILITY" BECAME "OPTIONAL" LIKE THE BUSHIAN WARS...OF LATE!!
THAT'S WHY TARIFFS AND PROTECTIONISM HAVE SUCH A LONG, LONG HISTORY!!
A HISTORY THAT HAS BEEN SURPRESS OF LATE AS ECONOMIC HERESY FROM THE "OLD DAYS...!"
BUT, HISTORICALLY, THE NOTION OF "FREE TRADE" IS THE OUTILER...THE ECONOMIC HERESY...NOT THE NORM...
PERHAPS GOING BACK TO THE OLD RULES...WILL BE THE WAVE OF THE FUTURE..?
