Trade & Globalization

Any renaissance of American manufacturing must begin by fundamentally reversing our trade policies—both in general and in particular toward China. Over the past two decades, leading U.S. manufacturers, both the venerable (like General Electric) and the new (like Apple), have offshored millions of jobs—by one recent estimate, 2.9 million—to China to take advantage of the cheap labor, generous state subsidies, and low currency valuation that are linchpins of China’s mercantilist development strategy.

The modern economy experiences two types of cyclical debt cycles: the short-term business cycle that produces the familiar oscillation between expansion and recession, bull and bear; and the long-term debt cycle that we are experiencing now. During the 75-year period of these cycles, the debt-to-income profile of the entire economy gradually builds up a stock of household, corporate, and government debt that income is insufficient to service. The credit reset from indebtedness to balance is called a deleveraging.

This presentation was part of the World Economic Roundtable.  A summary of the Roundtable session can be read here.

This presentation was part of the World Economic Roundtable.  A summary of the Roundtable session can be read here.

At the last World Economic Roundtable, Michael Kumhof, Deputy Division Chief of the Modeling Division of the International Monetary Fund, and Raymond Torres, Director of the International Institute for Labour Studies of the International Labour Organization, came to discuss the relationship between inequality and financial crises. 

-- This is a guest post by Jay Pelosky, Principal, J2Z Advisory, LLC.  It was originally posted on the Huffington Post. --

China’s surplus fell from 10.1% of GDP in 2007 to 5.2% in 2010.  Whether its current account will continue to decline or will return to higher levels seen in the mid-2000s is a subject of considerable disagreement.

I've just finished reading a new report by Professor Richard Feinberg, a former Clinton administration official and non-resident fellow at the Brookings Institution.  "Reaching Out: Cuba's New Economy and the International Response," clocked in at a daunting 101 pages but should nonetheless be required reading for anyone following the island nation's long-awaited economic restructuring.

The 23 economies on New America's 2011 Current Account Surplus Watch had surpluses of $1.4 trillion in 2010 and will run an estimated $1.6 trillion surplus in 2011.  The countries on the list, which include such prominent economies as China, Germany and Saudi Arabia, consistently rely on demand from abroad instead of taking measures to grow their domestic market or help other economies expand through international development assistance.

On Nov. 2, Federal Reserve Chairman Ben Bernanke confidently predicted that in 2012, the U.S. economy will grow at a rate of 2.5 percent to 2.9 percent. A few months earlier Bernanke predicted that the economy would expand 3.3 percent to 3.7 percent next year. A few months before that, the Fed projected growth in 2012 to be somewhere between 3.5 percent and 4.2 percent.

These shifting forecasts tell us two things: The U.S. continues to experience excruciatingly slow growth, and economists continue to have little success predicting it.