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April 26, 2014

Beneath the turmoil of world markets, whether in Europe and China and such emerging markets as Brazil or in consumer habits and increasingly systemic unemployment in our country, there is a new if uneven movement to de-globalize. It has been recognized by the business press and such dignitaries as President Obama and Fed Chair Janet Yellen and I welcome it. Evidence of the first of what I hope will be a tsunami of a return to running our own businesses, regaining our sovereignty and building our own things and providing our own services can be found in shrinkage of our trade deficit, which was down roughly from 12% from 2012 to 2013. Our market is not the “sponge” it once was to soak up offshore production of goods and services, and with Europe and its debt problems and emerging markets and their currency value problems, it was inevitable that China with its export market emphasis would feel the heat – and so it has- breakneck growth in China has slowed due to a shrinking customer base.
Some of this reduction in demand for foreign goods, of course, may be attributable to wage inequality as the average American consumer (hit with sticker shock in gas, food and healthcare prices) has less disposable income to buy Chinese toys and Indian and Central American textiles. Dollar stores are performing dollar for dollar better than Wal-Mart. More than a trillion dollars in education debt has also dampened demand for everyday goods and services students and graduates might otherwise have purchased from both here and abroad as they are imprisoned by debt with no relief in sight. They are staying home with the old folks in droves instead of marrying and building houses, which tend to reduce construction employment and lumberyard activities in the broader economy
These and many more I could identify but for time and space constraints are results of allowing Wall Street and its minions to have their unregulated international greedfest while millions of Americans suffer systemic unemployment, wage inequality and loss of social mobility, and in the main are the same people who are now telling us that we cannot have healthcare and a minimum wage. Greed knows no end; shame is not in their lexicon. The connection between such banking and corporate misconduct and our continuing near-recession for the many (but not the rich) among us is not correlative; it is causal.
If I may say so, and as I predicted, the chickens are coming home to roost as aggregate demand is at best stagnant if not tanking in our economy. It was never rocket science: When people are broke and/or underpaid (whether due to corporate and banking greed for overseas cheap labor, Roaring Twenties and/or derivitives-bailout games or whatever), aggregate demand tanks, and when aggregate demand goes south, unemployment soars. After all, when few are buying anything beyond the bare necessities for survival, we don’t need anybody working to provide or sell goods and services, so things get worse.
Wall Street’s party in shaping trade treaties and pillaging offshore cheap labor isn’t over by any means, but some globalized companies are leaving the party earlier, and even more are discussing departure. Wall Street and its handmaiden multinational corporations are trying to fight off those who want to leave the party; they are attempting to cover their bets (and balance sheets) with such diversionary tactics as complaints of protectionism, intellectual property theft and new trade barriers. Let’s not be fooled; let’s bring American production back to America, share new wealth provided by our newly-invigorated economy, and go from there. I will discuss in Part II the shale oil and gas boom, the “why” of increased manufacturing here, and the implication of global GDP growth over global trade growth (a first since WW II). GERALD E

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