Deglobalisation

In a previous entry, I tried to explain in detail the myth of globalisation, and how this globalisation was nothing else than a cheat for extracting unsustainable corporate profits and hide the inefficiencies and losses behind distorted trade imbalances.

It seems the system is now in agony, and like in the Madoff investment scheme the losses cannot be hidden anymore.

There is an excellent piece in FT, written by Gideon Rachman on the subject of Globalisation-in-Reverse at Davos. Here is a short quote:

But this year the forum has had to confront a new phenomenon – deglobalisation. The world that Davos Man created is slipping into reverse. International trade and investment is falling and protectionist barriers are on the rise. Economies are shrinking and unemployment is growing.

The symptoms of deglobalisation are all around us. Last week, it was reported that global air cargo traffic in December 2008 was down 22.6 per cent compared with December 2007. Abhisit Vejjajiva, prime minister of Thailand, told the forum that tourist receipts in his country had fallen by about 20 per cent year-on-year, in line with the general decline in international travel (and stripping out the effects of the temporary closure of Bangkok airport). In the US and Europe, governments are scrambling to bail out not just banks but also car companies. But, as the European Union has long acknowledged, “state aid” to national industrial champions is a form of protectionism.

Then there is “financial mercantilism”, the talk of this year’s Davos. This is the growing pressure on banks and financial institutions to retreat from international business and concentrate on domestic markets. Trevor Manuel, South Africa’s finance minister, captured the fears of many when he warned that his country and other emerging markets were in danger of being crowded out of international capital markets and of “decoupling, derailment and abandonment”.

Financial protectionism is driven by the logic of the market and political pressure. Banks that have lost confidence and capital in the credit crunch are retreating to the home markets they know best. And because so many banks have been bailed out by national taxpayers, they are also coming under political pressure to lend at home rather than abroad

In the context of deglobalisation it is really funny to watch the blame game of who was at fault: the developed deficit countries which engaged in creative financial engineering or the surplus emerging market economies which engaged in creative protectionist and monetary engineering?

My answer is that it always take two to tango and as in any game there are always winners and losers. This time the losers are countries and the winners are corporations.

The next stage will be the surprise of learning how much each country lost in this deceiving economic game of musical chairs and who was swimming naked. For that we just need a change of tide.

Adam Yamaguchi made an interesting little documentary about the economy of Tinian. I believe the clip is foretelling. This what mercantilist emerging economies will face when the false competitive advantages offered by globalisation are gone.

http://current.com/users/Adam_Yamaguchi/all/0.htm

I believe Adam Yamaguchi is wrong with his conclusion that Saipan represents the future of US. I believe it represents a time compressed version of what will happen with China's manufacturing provinces.

The big question is how will we get out of this post-globalisation crisis....

Will it be through a global financial Coup de Grace?