End of Globalization

Here's what a collapse in the world's financial markets will do to you...

This is from a NY Times article by Floyd Norris entitled "Sharp Trade Contraction Knows No Borders". Here is the money quote:

The decline in trade, which began last summer, accelerated after mid-September, when Lehman Brothers failed. In the aftermath, credit became harder to obtain for importers and confidence waned among would-be buyers of many products.

The fact that exports are down in almost every country shows both the international nature of the recession and the fact that it has been impossible for any country to export its way out of trouble. Nonetheless, there may be protectionist efforts in a number of countries this year, aimed at improving each country’s trade position at the expense of others.

This is scary. The 1930s was a decade of trade that dried up with barriers thrown up and with the global economy shut down. It sure looks like a bad Hollywood sequel to me. Let's just hope that the script writers have a change of heart and put in a real Hollywood ending where some guy in a white hat steps up to save us all. Who could fill that role?

Here's a bit from an assessment of the "legacy" of the Bush era from the cornerstone of high finance, Barron's, written by Alan Abelson:

No argument that he [Bush] is leaving an economy in absolutely awful shape. Our budget deficit is ballooning toward the trillion-dollar mark and isn't likely to stop there. We are mired in the worst recession since the grandaddy of them all in the '30s; its end is by no means in sight. The stock market after crashing 35% to 40% last year (depending on which bourse you follow) has started off '09 on the wrong foot, not an auspicious omen for the year as a whole.

Unemployment is pressing remorselessly higher, housing is a wreck, industrial production is contracting at the wickedest rate in 35 years, the retail business is in the dumps almost across the board. Detroit is about as near to running on empty as you can get without grinding to a halt. There is a whiff of deflation in the air.

Not all of this, obviously, is Mr. Bush's fault. But it happened on his watch. Not the kind of stuff, we are afraid, that shining legacies are made of.

Here's a nice summary of the grim reality:

It is the norm in our politics for the winners to celebrate electoral triumph by taking a victory lap. However, Messrs. Bush and Cheney, donning entirely new personas, set precedent on its head -- and more power to them for doing so, we say -- by taking what can only be called a defeat lap.

The financial abyss that the reckless indifference of Bush to the real economy and the need for regulation, the fact that Bush remained ideological to radical laissez-faire capitalism to the very end is summarized by:

Whatever contraption is devised to relieve the banks' balance sheets of the burden of their mistakes and transfer that burden to the government's broad shoulders, we are talking humongous sums. The knowledgeable folks at ISI Group, who sedulously strive to err on the side of conservatism in their assays, reckon that the top four banks alone have something like $1.2 trillion in bad assets, a fearsome figure that swells to perhaps $2.4 trillion for the industry as a whole.

The whole article is well worth reading. It is sobering. It is sad. It is the reality that the rabid right wing Republicans have created for the US (and unfortunately passed on to the rest of the world). It will take decades to recover from the eight year nightmare of the Bush admin.