Collective Losses

By | 2017-09-29T07:16:35+00:00 September 29th, 2017|Global Market Update|

Are people just selfish? Soviet propaganda poster from the 1930s. Source: Eurasianet That’s the question I asked when looking back at the some of the big collectivization movements in the 20th century. After the Communist Revolution in Russia, the central government set food prices too low. Peasants in the countryside chose to consume their produce rather than sell it, and there were food shortages in the cities. The government’s response was to collectivize the farms – giving farmers a small share of a larger, [...]

Trade Uber Alles

By | 2017-09-08T07:36:36+00:00 September 8th, 2017|Global Market Update|

How did Germany get so lucky? Source: Global Sourcing Blog China entered the World Trade Organization in 2001. This has an immense, positive impact on their exports. With trade came growth, and China’s growth meant low-skilled jobs were at risk. In the US, workers who lost their jobs had a hard time finding new employment, and often dropped out of the workforce. Our labor participation rate peaked in the year 2000, and has fallen steadily since, despite our growing economy. But this didn’t happen [...]

Rebooting Expectations

By | 2017-07-17T12:21:31+00:00 January 12th, 2017|Global Market Update|

What’s happening in the global economy? JP Morgan Global Manufacturing PMI. Source: Bloomberg It’s no secret that the US stock market is approaching record levels. Business news reports seem to be obsessed with the Dow’s flirtation with the 20,000 mark – which first neared about a month ago. But far more important than Disney or IBM’s price – stock prices, after all, determine the level of the Dow Jones Industrial Average – is the status of the global economy. And the world economy has [...]

The Great Wall of Debt

By | 2017-07-17T12:21:37+00:00 November 8th, 2016|Global Market Update|

What effect does China’s debt have on its economy? Photo: Severin Stadler. Source: Wikipedia The Great Wall of China was built over the course of several centuries to protect the Chinese Empire from invasion by mostly northern nomadic tribes. It stretches about 1,500 miles, although with all the extensions and branches, there are over 20,000 miles of fortifications. In the short run, the Great Wall served to discourage raiders and helped rulers manage trade. In the long run, however, it became economically unsustainable—absorbing labor [...]

Great Expectations

By | 2017-07-17T12:21:39+00:00 October 21st, 2016|Global Market Update|

Is the market suffering from a case of mistaken identity? Public Domain. Scene from “Great Expectations.” Source: Wikipedia In Charles Dickens’ novel “Great Expectations,” his main character Pip is a poor orphan who suddenly starts to receive money from an unknown source. He thinks his mysterious benefactor is the cold and eccentric Miss Havisham. Miss Havisham is wealthy but mysterious, and she had taken Pip on as a companion for herself and her adopted daughter, Estella. In reality, though, Pip’s money was coming from [...]

Chinese Fortunes

By | 2017-07-17T12:21:41+00:00 September 30th, 2016|Global Market Update|

What’s happening in China? Forbidden City in Beijing. Photo: Saad Aktar. Source: Wikimedia Anyone who wants to understand the global economy needs to have a sense of what’s happening in China. China has the second largest economy in the world--almost 2/3rds the size of the US. Last year they grew more than the US and Europe combined. They’re essentially tied with Canada as our largest merchandise trading partner, providing 15% of our imports and exports--$300 billion worth. So what happens in China affects the [...]

The Tiger and the Dragon

By | 2017-07-17T12:22:04+00:00 April 21st, 2016|Global Market Update|

The Tiger and the Dragon Is India on-track to overtake China? Photo: Jeff Kubina. Source: Animal Photos China’s growth has slowed. We know this from innumerable reports. The reduction in aggregate demand resulting from China’s economic shift from manufacturing to services is at the heart of the bust in commodity prices. But what about India? They have over a billion people, most of whom are trying to emerge from poverty. And they have a competitive democratic system—rather than a Party-led autocracy—along with a free [...]

Chinese Dreams

By | 2017-07-17T12:22:05+00:00 April 18th, 2016|Global Market Update|

What’s going on in China? Photo: SP. Source: Pixabay Given the size of their economy, it’s an incredibly important question. The global economy totals about $78 trillion. The US is about 22% of that, Europe is 20%, and China is 13%. Together, our three economies make up 55% of the world’s commerce. So it’s crucial to understand what’s happening. We knew that China couldn’t export its way to prosperity forever. Eventually, it became limited by the size of its trading partners. So China has [...]

The Law of the Jungle?

By | 2017-07-17T12:22:06+00:00 March 30th, 2016|Global Market Update|

Croplands are monocultures. Jungles are diverse. Which is better? Photo: M. Connors. Source: Morguefile It depends on what you want. If you’re looking to get as much food as possible with the least energy input, then you want managed fields. On the other hand, if you’re looking for new types of plants that can survive the stresses and strains of nature, then you want a diverse wilderness. I thought about this while considering China’s state-managed capitalism in comparison to America’s entrepreneurial system. There is [...]

A More (Im)Perfect Union

By | 2017-07-17T12:22:07+00:00 March 15th, 2016|Global Market Update|

Are we in danger of a breakup? Illustration: Gerd Altman. Source: Pixabay There’s a currency union that’s driven the world economy for the past 25 years. It’s not the euro, important as that is. No, I’m referring to the connection between China and the US. Our two economies account for over a third of all global production – and trade between us is increasingly important. For more than 20 years, China has kept its currency tied to the dollar—appreciating the yuan modestly since 2000. [...]