The report in the NY Times Global Biz section that “China’s Exports Rise 46%” has me wondering if there’s really and economic recovery going on. The argument in my head begins with “How much of this increase is coming to the USA?” The NY Times piece attributes orders from the US, EU and Japan with almost half the growth and while an Econographer piece on the same topic has some fancy charts showing China’s balance of trade may not be so grand going forward, I keep wondering “How much of this is US related?”
I suppose it’s symptomatic of being a) in the US and b) being part of the “Me Generation” but seems to me that this is one of those stories which is being positioned as somehow related to US-China relations. In fact, a Bloomberg piece on the topic says”
“China has kept its currency at about 6.8 per dollar since July 2008. Record loan growth is threatening to stoke inflation and has prompted the central bank to twice this year raise the amount of cash banks must set aside as reserves.
Persuading China to allow the yuan to climb this year is one of U.S. President Barack Obama’s stated goals. A group of 15 senators last month called for stiffer tariffs on Chinese imports, saying an undervalued currency gives Chinese exporters an unfair advantage. “
Yeah, yeah, sure…whatever. But how much of this was due to the US increasing its imports?
Tracking back to the People’s Daily Online, I finally stumbled over this nugget:
Being as it’s a bit early (and the caffeine is late showing up for work this morning) it takes a second or two to stitch all this into a meaningful picture, but the bullet points in a PowerPoint might be something like:
- China’s Exports are up 47.5% in February
- China’s imports are up 44.7%
- China’s trade surplus with the US is DOWN 27% which means…
- China will be buying less US debt.
Oh…that makes sense, now, doesn’t it? China had been selling the US goods and accumulating our debt paper. Now, they seem to be importing more from the US which means less paper will be bought.
Now, I don’t claim to be a whiz-bang economist (I think of myself more as an economically literate business writer) but just reading the articles it seems like China is deliberately managing down its relationship with US which leads to the biggest question of all: Who will buy the mountains of US debt which need to be pedaled in order to fund things like a massive government debt which the Obama administration seems determined one way ors the other to add onto with health care insurance?
This all continues to weave into an emergent economic problem which no one is talking about, but it boils down to “If China buys less debt, and if people are going to be hornswaggled into buying US government debt for their 401(k) accounts, what must necessarily happen to interest rates?
The dynamics of a ‘recovery’ generally include a lot of new business formation activity and part & parcel of this is banks being ‘loose’ (relatively speaking) with their small business loans. People I talk to aren’t seeing that yet.
Moreover, the MainStreamMedia has more or less unquestioningly reported that the unemployment rate is under 10%, but I don’t see many people questioning how it is in the last year that the civilian labor force in America has managed to shrink by a million people.
Moreover, in 2007, the number of people employed in the US is listed at 146,047,000. In the latest month, the number of people working was 138,641,000. You do the math.
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Sometime between now and a week from Friday, whole national outlook going forward ought to resolve into better focus as we will have new trade figures out tomorrow, our assessment of port traffic next week, maybe some new rail traffic figures, a forecast on when healthcare will be done and we’ll be past options expiration on the 19th.
In the meantime, small mysteries, like “How much of China’s trade with the US is new business and how much is resupply?” will have to keep monkeymind occupied. What little data there is suggests that recovery is still a long, long ways in our future.
Related: Trader Bart’s reconstructed M3 shows that despite all the pump-priming, there’s still a terrible mess in M3. Even though there has been nominal growth in M1 (cash) the problem is that velocity of money seems to be decreasing which means less turnover and that means less economic activity. So if the annual change rate for M3/M3b is declining at, oh 4 percent annually here lately, there’s still a deflationary tone to the Big Picture.
You should be able to see why the democons are desperate for a make-work/make-spend bill like healthcare – obviously thinking that will solve things. That’s because the previous administration played out most all the war spending cards….and massive public works projects are hard to come by let alone cost justify.
D1 Vs. D2
Last week in Peoplenomics, we got into the question of “When will this really be a Depression?” in which we got into the rhyming of the times and such. An alert reader found an article this week that’s very much on point called “What do the new data tell us? Quick read – lots of charts, well worth considering.
Trade Wars, Redux
If you’re looking for the rhyme on 1930′s global tariffs, how about Brazil which has slapped a tariff on a wide range of American goods because of US cotton subsidies.
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I keep telling people that all we need to do is tariff outsourced IT & customer service jobs which have fled the US by the 10′s of thousands for places like the Philippines and India and we could fix the job depression overnight.
Wonder how long it will take for IT and CSR jobs to get subsidized like farmers got in the previous depression? Could be a while yet…
Something [else is] Fishy Department
It was only a couple of days back – maybe last week – that I told you about the report that claimed mercury was found in virtually all fish being tested in the US and while some give the reason as ‘coal plants’ that doesn’t hold water since the tests included fish in coal-free zones like Washington and Oregon so unless we’re talking Chinese coal plant plumes…
But now we see how the Obama administration has closed comment on a federal plan to hijack American fishing rights in waters that include oceans, coastal areas, the Great Lakes and even inland waters.
The way this is developing is in “zoning uses” of these waters.
It doesn’t take very much ‘conspiracy theory’ to see the pattern here that’s developed over the past several dozen years. first, the “public” gets excluded from large areas of “public” land such that what were once ‘rights’ become privileges which are sold for user and/or license fees.
And now, the government’s about to go after fishing… I read once that some huge fraction of the population goes fishing…over 76% of Americans have at one time or another drown worms in their quest for record bass, trout, pike, or just as a reason to sit out on a lake and suck down a six pack and some sandwiches. Ah….
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Definition of the Day: What’s the difference between a socialist government and a communist government? The socialist government doesn’t have all the guns yet.
War Pool
Lemme see here: I think there was an article in the JPost this week that said Iran had less than eight weeks to give up its nuclear ambitions OR… and this morning we see that Iran’s president says the US is playing a ‘game’ in Afghanistan – creating – then fighting ‘terrorists‘. But at the same time Veep Joe Biden says the US is ‘determined’ to stop a nuclear armed Iran.
Place you bets in the office ‘war’ pool accordingly.
Ring Around the Congo
I didn’t have time to drop by the recent Lunar and Planetary Science conference here in Texas, but a BBC reporter did and there’s a dandy picture of a 30-40 km wide crater-looking area in DR Congo.
More to the point is the little chart of largest impact craters with the most recent pegged at about 35.7 million years ago. Kinda makes you wonder “When’s the next one due?”
Also out of BBC’s science coverage comes word that the Large Hadron Collider will have to be shut down for a year to address design flaws.
So, until the tweaks get made, I’ll just have to limit my physics experiments to 3.5 trillion electron volts, I guess, or finish up the 20 TEV collider I’ve got penciled in for the west pasture here at the ranch…that project is on hold until I figure out how to borrow $1.6 trillion on my bank card.
Free: Zillion Dollar Marketing Idea
Don’t know as you’ve noticed, but the world’s oldest “flying car” is going on the auction block shortly in Atlanta. Not that the thing really flies, but here’s my plan: We sell it to Toyota as a marketing tool!
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Me? I’m still saving money for one of those Oscar Meyer weinermobiles.
Aging Records
I think the old saying is “aging ain’t so bad, and it beats the alternative…” Oldest woman in the US is 114 and lives in Iowa. A woman in Georgia (the country) claims to be 130.
Yeah, I know, old news… (sorry)