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Old 10-23-2008, 06:10 PM   #1 (permalink)
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Financial Crisis

Trade finance: is international trade grinding to a halt? - MoneyWeek


Quote:
Is international trade grinding to a halt?

By Associate Editor Tim Bennett Oct 24, 2008
Tim Bennett

Trade is built on trust – that the goods you pay for will turn up; that the goods you send to market will be paid for. The financial crisis means that trust has now gone. Tim Bennett reports.
What is 'trade finance' for?

Trade finance exists thanks to what the Financial Times's Lex calls "one of the most disruptive technologies ever invented... the humble box". Two features of our modern economy – globalisation and our reliance on shipping – mean that huge volumes of everything from basic commodities to finished goods travel from sellers in one country to buyers in another in standardised metal containers crammed onto cargo ships. But the fact that a shipment can take days or weeks to arrive raises some problems about payment. How can sellers ensure a buyer will pay on time, or indeed at all, and what do they do for cash in the meantime? A buyer's potential headaches include whether the right goods will turn up in the right port, and at the right time – clearly they're not keen to pay up until the goods have arrived intact. Throw in different laws, currencies and time zones, and what looks like a simple deal to ship iron-ore from one country to another could quickly become a nightmare. That's where trade finance comes in.
Trade finance: how does it work?

In short, a bank or specialist trade finance boutique will take payment risk away for a fee. There are many 'trade finance' solutions, most of which have been around since the Middle Ages. The most commonly used is the letter of credit. Drawn up typically for a seller by a bank, the basic letter guarantees payment for goods once they are safely on board a ship, but before they arrive with a buyer. Without it the two parties may not trust each other to honour their side of a deal. There are many variants – for example, a small exporter with cashflow worries may request the bank to pay it cash up front, where payment would otherwise not be due from the buyer for several months. This up-front payment is usually arranged at a 'discount'. In other words, the bank offers the seller less than the total value of the invoiced goods shipped, confident it can eventually collect the full amount due from the buyer later using the shipment as security ('collateral'). As such, trade finance, an industry expert tells Bloomberg, is normally "the easiest, cheapest and (being backed by a shipment of goods) most collateralised form of credit".
Trade finance: is it big business?

Huge. As Jonathan Lynn notes on Reuters, the development of standardised containers and port equipment has "helped spur a 90-fold growth in the annual value of world trade" to around $14 trillion today. According to a trade official quoted in the Lloyds List shipping newspaper, "90% of that is financed in some way by credit". Individual letters of credit can underwrite some massive shipments – Deutsche Bank for example was recently involved in three shipments for Russian clients, each with a value of above $3bn.
How is trade finance coping with the credit crunch

Badly. Steve Rodley, director of London-based shipping hedge-fund Global Maritime Investments, puts it bluntly: "The whole shipping market has crashed." The trouble is that credit is the lifeblood of commerce, but it is built entirely on trust. And that has evaporated. As such, many ship owners can't get banks to issue letters of credit, particularly on cargoes of price-volatile commodities that no longer look like adequate collateral. Even those who can get letters of credit are finding that their counterparties may no longer trust the credit rating of anything other than large, well-established banks, many of which are now charging big premiums. Letters now cost three times the going rate of a year ago, according to Lynn.
How does this affect world trade?

Baltic dry index graph



"Nothing is moving because the trader doesn't want to take the risk of putting cargo on the boat and finding that nobody can pay," says Khalid Hashim, head of Precious Shipping, in the Lloyds List. The freeze has seen commodity shipping rates plunge to "the lowest in more than five years", reports Bloomberg. The Baltic Dry Index – a key barometer of global freight activity and therefore world trade – fell 11% in just one day last week (see chart). As a result, grain cargoes have begun piling up in ports in the Americas, reports The Economist. So bad have things got for Brazil that the government plans to use its foreign-exchange reserves to increase credit lines for exporters in a bid to keep trade flowing.
What's being done about it?

The World Trade Organisation (WTO) has hastily scheduled a meeting of key financial institutions on 12 November specifically to discuss the impact of what the director-general, Pascal Lamy, calls "very difficult conditions in international financial markets" on trade finance. Anxious to be seen to act, ahead of the key meeting the WTO raised its trade finance programme by 50% to $1.5bn. But Lamy wants a global solution, warning that "uncertainty... could fuel protectionism" (see below).
What if these moves fail?

"It's one more thing in a big negative melting pot" is how one Danish shipping chief executive summarised the trade finance crisis on Bloomberg. The FT agreed, noting that if the November meeting of the WTO fails as comprehensively as July's world trade talks in Doha, the prospect of Smoot-Hawley-style unilateral action (US legislation in the 1930s that raised US tariffs, slowed global trade and helped turn the crash into a depression) can't be ruled out. Even if that is avoided, "without trade finance, global commerce will shrink".
For news about Letters of credit, here's a handy google news search i've been checking:

letter of credit - Google News

I love this quote:

"without trade finance, global commerce will shrink"

"shrink" - ha!

Maybe if we think about all the other problems the western economies have, and then if these start being refused more regularly - and I fear they will, there are a lot more banks, globally, that are going to the wall - the collapse of this system will be epoch-altering.

Stock up on tinned goods (nothing dry unless you've got a reliable water source and ability to clean it - where do the chemicals to clean your water come from? are there significant stocks of those chemicals?) and shotguns.

I'm only semi-joking.

------

So, the markets are tanking, currencies are dying, credit is in chaos, banks are collapsing and more will go, corporate defaults of junk bonds are going to go up (and the FED has been taking those as collateral), hence corporate bankruptcies on a large scale are expected, house prices are going through the floor, peak oil could well be upon us, there's no manufacturing base any more (at least in the US and UK, effectively), and and and...

The sky is falling?

I genuinely feel we need to get away from authorities and large organisations, have collective will to keep ALL organisations small and medium sized if possible, cooperatives/mutual in structure with small entrepreneurs also - but no power kept in the hands of a small cabal, relative to the size of the governed/administered. I mean all, not just government, but businesses, health services, insurers, banks, etc, etc, etc.

The currency system needs to be changed. Fiat, debt backed being replaced by something with no debt attached at inception. Hopefully something along the lines of complementary currencies as they're called now. Something that encourages work, encourages production and discourages the formation of elites.

The big problems we have are due to strict dogma, authority and power. Dogma is force against history and critical thinking. Authority is a force against natural progress, critical thinking and freedom. Power corrupts. Absolutely.

Open minds and critical thinking can be brought through media and education. Authority can be dissolved by proper checks and balances which are relative to the size of the governed and grow/are broken into smaller pieces as populations change. Power will always corrupt, but petty power in small doses can't hurt too much. right? *crosses fingers*

Oh, and yes, ^^^ this is a form of SOCIALISM. Including markets, hard work and security for all. Efficiency isn't the aim. Satisfying human needs and progress are.

These are just sketchy thoughts at an early hour of the morning, for me. What do you think is going to happen? How do you think things will go in the coming 4 or 5 years? Utopian? Dystopian (why have all those rights been taken away, why so much random authority in the last few years has been built up - on a threat that has killed much fewer people than traffic...?) Not much change?

Where do you think we are and where do you think it's going?
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Old 10-24-2008, 10:30 AM   #2 (permalink)
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Thanks for posting this.

Yikes. I'm pessimistic about the direction of the economy, and that shipping graph makes me more so.

How everything will shake out depends on a lot of things. Will the political configuration allow the proper countermeasures? Will those come soon enough? How will people react when they start losing their jobs? It's still early in the game.
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Old 10-30-2008, 07:39 PM   #3 (permalink)
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Over the next decade, maybe less, maybe much less... The US MUST fix it's budget deficit. It either goes into it's social programs, bigtime, or it goes into its military budget.

Military all the way. lack of military power for a state that is not strong in any other manner = end of empire, end of reserve status.

But this crisis might just push this way, way, way faster.

The trends go towards the dollar losing ground against the dollar. things tend to move slowly until enough people get past the ideological insanity that it "it can't happen" and then it happens quickly.

Almost all of the economists that predicted this credit crisis thought it would be moving over 5 to 6 years til it was all over, i think it'll be the same sort of timeframe, but it'll include a change of reserve currency.

The crisis will end the idea that the dollar is invincible, when that goes, it's a short leap to the end of the dollar as reserve currency, no matter what the fundamentals. The debt, public plus private, denominated in dollars, is simply ridiculous - particularly in contrast to the other large currencies.

Maybe, just maybe, it may just switch to the yuan or the yen, but... the euro is the denomination of the world's biggest economy.

It's going to happen. The next few years or up to ten. Nothing more.

The end of the reserve currency status will immediately bankrupt the US govt if it continues on the current path.

Unfortunately, only the wingnut Ron Paul is telling what is _true_ to the country and the world, as a politician, instead of Obama or McCain.

There is no new Roosevelt on offer.
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Old 10-31-2008, 06:23 AM   #4 (permalink)
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Again, it's pretty difficult to predict how things are going to unfold. How things unfold depends on the answers to the very large political questions that the US and the world will soon answer, but at the moment, no one is entirely sure what the political configuration in the US is going to be.

It's a mistake to make the dollar into a fetish as Ron Paul does because the dollar is ultimately a political issue. The dollar could retain it's standing and at the same time, the US could lose autonomy over currency policy through international. Whether you peg the dollar to gold, move to another reference currency, or regulate international flows of capital, the end result is the same: a loss of political autonomy. Ron Paul's idea of pegging it to gold is a particularly clumsy and inflexible, and he knows it. It's part of a shock therapy to get the US economy to look like a neoliberal fantasy land. It's not going to fly, especially not now. If i were to bet on a likely outcome, i'd say it would be a structure of international regulation because that gives all actors a maximum of flexibility and because it would provide some tools for managing capital flows and whatever other problems may arise. Existing institutions may end up with new roles. I'm curious to see what comes out of that WTO meeting in November.

Anyway, i revisited this thread because i wanted to note that Industrial Carriers, a Ukranian shipper went bankrupt a couple weeks ago. Britannia Bulk is said to be in deep trouble now.
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Old 10-31-2008, 06:41 AM   #5 (permalink)
 
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i've been busy with other stuff lately so haven't been able to devote my attention to tracking this fiasco as i previously had...but i'm starting to get back up on the horse. things have undergone an interesting devolution since the vaunted "bailout" was passed and passed over into an incoherent recapitalization non-plan...now there's other new and strange developments..this little piece from naomi klein gives an outline...i post it not only because i think it's kinda interesting (and a way-station in my own process of getting back up on the horse) but also because i quite like the analogy at the center of the argument between what the bush people are doing and the portugese leaving mozambique:

Quote:
The Bailout: Bush's Final Pillage
Lookout
By Naomi Klein

This article appeared in the November 17, 2008 edition of The Nation.

In the final days of the election, many Republicans seem to have given up the fight for power. But that doesn't mean they are relaxing. If you want to see real Republican elbow grease, check out the energy going into chucking great chunks of the $700 billion bailout out the door. At a recent Senate Banking Committee hearing, Republican Senator Bob Corker was fixated on this task, and with a clear deadline in mind: inauguration. "How much of it do you think may be actually spent by January 20 or so?" Corker asked Neel Kashkari, the 35-year-old former banker in charge of the bailout.

When European colonialists realized that they had no choice but to hand over power to the indigenous citizens, they would often turn their attention to stripping the local treasury of its gold and grabbing valuable livestock. If they were really nasty, like the Portuguese in Mozambique in the mid-1970s, they poured concrete down the elevator shafts.

The Bush gang prefers bureaucratic instruments: "distressed asset" auctions and the "equity purchase program." But make no mistake: the goal is the same as it was for the defeated Portuguese--a final frantic looting of the public wealth before they hand over the keys to the safe.

How else to make sense of the bizarre decisions that have governed the allocation of the bailout money? When the Bush administration announced it would be injecting $250 billion into America's banks in exchange for equity, the plan was widely referred to as "partial nationalization"--a radical measure required to get the banks lending again. In fact, there has been no nationalization, partial or otherwise. Taxpayers have gained no meaningful control, which is why the banks can spend their windfall as they wish (on bonuses, mergers, savings...) and the government is reduced to pleading that they use a portion of it for loans.

What, then, is the real purpose of the bailout? I fear it is something much more ambitious than a one-off gift to big business--that this bailout has been designed to keep pillaging the Treasury for years to come. Remember, the main concern among big market players, particularly banks, is not the lack of credit but their battered share prices. Investors have lost confidence in the banks' honesty, and with good reason. This is where Treasury's equity pays off big time.

By purchasing stakes in these institutions, Treasury is sending a signal to the market that they are a safe bet. Why safe? Because the government won't be able to afford to let them fail. If these companies get themselves into trouble, investors can assume that the government will keep finding more cash, since allowing them to go down would mean losing its initial equity investments (just look at AIG). That tethering of the public interest to private companies is the real purpose of the bailout plan: Treasury Secretary Henry Paulson is handing all the companies that are admitted to the program--a number potentially in the thousands--an implicit Treasury Department guarantee. To skittish investors looking for safe places to park their money, these equity deals will be even more comforting than a Triple-A rating from Moody's.

Insurance like that is priceless. But for the banks, the best part is that the government is paying them--in some cases billions of dollars--to accept its seal of approval. For taxpayers, on the other hand, this entire plan is extremely risky, and may well cost significantly more than Paulson's original idea of buying up $700 billion in toxic debts. Now taxpayers aren't just on the hook for the debts but, arguably, for the fate of every corporation that sells them equity.

Interestingly, Fannie Mae and Freddie Mac both enjoyed this kind of unspoken guarantee. For decades the market understood that, since these private players were enmeshed with the government, Uncle Sam would always save the day. It was the worst of all worlds. Not only were profits privatized while risks were socialized but the implicit government backing created powerful incentives for reckless investments.

Now, with the new equity purchase program, Paulson has taken the discredited Fannie and Freddie model and applied it to a huge swath of the private banking industry. And once again, there is no reason to shy away from risky bets--especially since Treasury has not required the banks to give up high-risk financial instruments in exchange for taxpayer dollars.

To further boost confidence, the federal government has also unveiled unlimited public guarantees for many bank deposit accounts. Oh, and as if this wasn't enough, Treasury has been encouraging the banks to merge with one another, ensuring that the only institutions left standing will be "too big to fail." In three different ways, the market is being told loud and clear that Washington will not allow the country's financial institutions to bear the consequences of their behavior. This may well be Bush's most creative innovation: no-risk capitalism.

There is a glimmer of hope. In answer to Senator Corker's question, Treasury is indeed having trouble dispersing the bailout funds. It has requested about $350 billion of the $700 billion, but most of this hasn't yet made it out the door. Meanwhile, every day it becomes clearer that the bailout was sold on false pretenses. It was never about getting loans flowing. It was always about turning the state into a giant insurance agency for Wall Street--a safety net for the people who need it least, subsidized by the people who need it most.

This grotesque duplicity is an opportunity. Whoever wins the election on November 4 will have enormous moral authority. It can be used to call for a freeze on the dispersal of bailout funds--not after the inauguration, but right away. All deals should be renegotiated immediately, this time with the public getting the guarantees.

It is risky, of course, to interrupt the bailout. The market won't like it. Nothing could be riskier, however, than allowing the Bush gang their parting gift to big business--the gift that will keep on taking.
Print: The Bailout: Bush's Final Pillage

the new issue of le monde diplo offers a more trenchant critique of the current state of affairs. here's a commercial (they do this...they still want to sell paper copies. can't blame them, really. besides, this is in french):

Le Monde diplomatique - novembre 2008



on the shipping industry, this little apercu is interesting:
Hellenic Shipping News - Worldwide Online Daily Newspaper on Hellenic and International Shipping

more lunatic overbuilding, more neo-liberal inspired "planning" that assumed expansion was a steady state...
in this case, as in alot of others, the underlying dynamic which situates industry problems are of their own making.
it doesn't seem that volume is really decreasing that fast...
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Old 10-31-2008, 09:46 AM   #6 (permalink)
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Quote:
Originally Posted by guyy View Post
Again, it's pretty difficult to predict how things are going to unfold. How things unfold depends on the answers to the very large political questions that the US and the world will soon answer, but at the moment, no one is entirely sure what the political configuration in the US is going to be.

It's a mistake to make the dollar into a fetish as Ron Paul does because the dollar is ultimately a political issue. The dollar could retain it's standing and at the same time, the US could lose autonomy over currency policy through international. Whether you peg the dollar to gold, move to another reference currency, or regulate international flows of capital, the end result is the same: a loss of political autonomy. Ron Paul's idea of pegging it to gold is a particularly clumsy and inflexible, and he knows it. It's part of a shock therapy to get the US economy to look like a neoliberal fantasy land. It's not going to fly, especially not now. If i were to bet on a likely outcome, i'd say it would be a structure of international regulation because that gives all actors a maximum of flexibility and because it would provide some tools for managing capital flows and whatever other problems may arise. Existing institutions may end up with new roles. I'm curious to see what comes out of that WTO meeting in November.

Anyway, i revisited this thread because i wanted to note that Industrial Carriers, a Ukranian shipper went bankrupt a couple weeks ago. Britannia Bulk is said to be in deep trouble now.
I don't think any problems can be solved by a next-to-useless pretty-shiny element. Ron Paul is right in saying the dollar is headed for death, soon, and that only some kind of revolution in the direction and politics of the US can save the US from the chaos of its currency being replaced as the reserve.

Many greek shipping companies are expected to go bankrupt also, and soon. Troubling.
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Old 10-31-2008, 10:09 AM   #7 (permalink)
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Quote:
Originally Posted by tisonlyi View Post
I don't think any problems can be solved by a next-to-useless pretty-shiny element. Ron Paul is right in saying the dollar is headed for death, soon, and that only some kind of revolution in the direction and politics of the US can save the US from the chaos of its currency being replaced as the reserve.
I wonder. My international investments are tanking worse than the domestic ones. The dollar may be in trouble but almost everything else besides gold seems to be in worse trouble. The dollar floats against even weaker currencies, maybe they will all go down together.
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Old 10-31-2008, 11:23 AM   #8 (permalink)
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I couldn't even read the article by klein. The title blew it all to hell and i'm tired of reading partisan hack bashing.
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Old 10-31-2008, 04:21 PM   #9 (permalink)
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Originally Posted by dksuddeth View Post
I couldn't even read the article by klein. The title blew it all to hell and i'm tired of reading partisan hack bashing.
Go ahead and read it. It doesn't talk about Bush that much. Klein is more against the system than any of the role-players in it.
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Old 10-31-2008, 06:25 PM   #10 (permalink)
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and unless you follow the system, then you won't understand why there is a temporary surge in the dollar.

also, if you follow history, you should be aware of the phenomenon that is the 'dead cat bounce'.
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Old 02-15-2009, 05:27 PM   #11 (permalink)
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Japan’s 4th-Quarter G.D.P. Falls 3.3%

Quote:
New York Times
February 15, 2009
Japan’s 4th-Quarter G.D.P. Falls 3.3%
By THE ASSOCIATED PRESS

Filed at 7:57 p.m. ET

TOKYO (AP) -- Japan's economy contracted in the fourth quarter at the fastest pace in 35 years as a collapse in global demand battered the world's second-largest economy.

Japan's gross domestic product, or the total value of the nation's goods and services, dropped at an annual pace of 12.7 percent in the October-December period, the government said Monday.

That's the steepest drop for Japan since the oil shock of 1974. It far outpaces declines of 3.8 percent in the U.S. and 1.2 percent in the euro zone.

The contraction underscores the vulnerability of Asia's export-driven economies during global downturns and point toward more cuts in jobs, production and profits in the coming months.

A survey of economists by the Kyodo news agency had projected an 11.6 percent fourth-quarter contraction.

Japan had its third straight quarter of decline. The GDP fell 1.8 percent in the July-September period.

Fourth-quarter GDP fell 3.3 percent from the previous three-month period, and for 2008, it contracted 0.7 percent -- the first decline in nine years, according to the Cabinet Office.

With recovery nowhere in sight, Japan is now in the midst of its worst downturn since World War II, analysts say.

''Since October, economic indicators have deteriorated at a pace that defies any rule of thumb,'' Tetsufumi Yamakawa, chief Japan economist at Goldman Sachs, said in a recent report. ''There has been an unprecedented large decline in exports and production-related indicators in particular, not only in Japan but throughout Asia.''

Japan's real exports plummeted a record 13.9 percent in the fourth quarter, the government said, as the deepening global slowdown choked off demand for the country's cars and gadgets. An appreciating yen also hurt the country's exporters, including Toyota Motor Corp. and Sony Corp.

Japanese electronics company Pioneer Corp. said last week it will cut 10,000 jobs globally, joining a growing list of the country's corporate giants scrambling to slash their payrolls. Sony Corp. is shedding 8,000 workers, while Nissan Motor Co. and NEC Corp. are each cutting 20,000.

Japan slipped into recession in the third quarter after its GDP contracted an annualized 3.7 percent in the April-June period.

A recession is commonly defined as two consecutive quarters of negative growth, though many economists using other parameters say the current downturn actually began in late 2007.

Media reports over the weekend said Japan may be considering additional measures to shore up its economy with fresh spending likely to top 10 trillion yen ($109 billion).

Lawmakers are debating a record 88.5 trillion yen ($963 billion) budget for the fiscal year starting in April. The Yomiuri Shimbun said once parliament passes the budget, Prime Minister Taro Aso -- who faces dismal approval ratings -- will announce the extra economic measures.

Japan's central bank, which lowered its key interest rate to 0.1 percent in December, has introduced various steps to try to thaw a corporate credit crunch. But there is little it can do to address the unprecedented decline in external demand.

The Bank of Japan policy board is scheduled to start a two-day meeting Wednesday.

In stock markets, the benchmark Nikkei 225 index was down 0.99 percent at 7,702.24.
http://www.nytimes.com/aponline/2009...l?ref=business

This is a major indicator suggesting that global trade is in dire straits. Japan--the world's second largest economy--has taken its single biggest hit in 35 years. To note about the Asian economy in general is its export reliance. It's easy focus on the U.S. economy considering its prominence and sensationalism, but we should also be looking elsewhere. Thanks in part to globalization, and also in part to an awkward synchronization, this crisis is very much global.

We shouldn't be expecting too much of the Obama administration's stimulus package. One nation can only do so much with conditions like these. The economic solution will be an international one.
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Old 02-15-2009, 05:45 PM   #12 (permalink)
 
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i think the dithering about how to proceed and the problems of co-ordination are all examples of the cognitive problems this crisis is generating. under neo-liberalism in the states, the reality of erasure of the nation-state as a meaningful center of controls over capital flows were minimized by fairy tales of self-regulating markets on the one hand and neo-con style nationalism at the level of military action on the other. in other parts of the metropole, neoliberalism advanced a bit further in rendering problematic the nation-state, but there remain significant limits on how far thinking has been able to go. there's no doubt a circular relation between these limits and the post world-war-2 international structure, which is now obviously problematic and which now obviously has to be altered--the only question really is how much further things have to devolve for the political classes which are beholden to nation-state level social hierarchies for their own positions realize that the jig is basically up and that advantages can be accrued to those who are more rather than less proactive in shaping the new institutional infrastructure--assuming they don't dither so long that the entire capitalist house of cards falls in on itself.

if that happens, there are interesting essays to be written on clay tablets about the implications of cognitive crisis atop economic crisis.
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Old 02-16-2009, 09:48 AM   #13 (permalink)
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There's very little reporting on Japan. One thing that gets lost hear is that it is a pretty large market itself. Now maybe it has "only" 1/10th the population of China or India, but being a rich country, people generally have more money. You would think that there would be a certain room to maneuver. However,
one of the problems here is that Japan has been following a de facto policy of de-industrialisation, much like the US did in the years after the oil shock of '73. More and more production is off shore, especially in China. Agriculture was wiped out by free trade agreements, and a lot of foodstuff comes from Asian neighbours and even further afield.

We have a fairly good idea about effective responses to unemployment and depression in functioning industrial economies. I'm not sure we have a clear idea of what to do about a depression in a largely de-industrialised economies.
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Old 02-16-2009, 10:21 AM   #14 (permalink)
 
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Government Beyond Obama? - The New York Review of Books

this is from the ny review of books and is an outline of a new thing by jeff madrick called "the case for big government"
even in this cliff-notes forms, the information and argument amounts to a demolition of neoliberal pieties concerning the evils of the state in relation to markets and all that.

there are a host of matters that could benefit from a basic rethinking of the existing order even within the sorry state of affairs that is post-neoliberal capitalism. i think you can find a little list of them in the review, and i won't spare you the trouble of reading it by repeating the list here.

there are two basic problems that run beyond this, though---one guyy raises just above about the types and directions state action can and should take in a deindustrialized context. to even begin to address that, the entertainment complex that is the major media would probably have to begin repeating to people that deindustrialization has happened so that they come to discover for themselves in that way that free americans seem to freely discover that they want to want what they are told they want in the way they are told to want it that perhaps it's a good idea to begin actually looking at reality as it is, and not as they want it to be. from there, the obvious questions are--what directions should be gone in and to what end?

the second question is the amount of time available before the existing house of cards lurches into another phase of implosion, and from that follows another, which is whether the obama administration has the stomach to undertake a fundamental change of organization and direction and whether they are going to get ahead of the question by driving the debate or remain as they currently are, which is in a largely reactive mode, attempting to appease the paleolithic right and retaining elements of their outmoded worldview as a price for playing in the same sandbox as they are.

personally, i think that the administration has to be much more radical than it has been and fast or it will find itself sucked into the giant vacuum that neoliberalism has spent 40 odd years putting into place.
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Old 02-17-2009, 08:05 PM   #15 (permalink)
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After watching IOUSA and Frontline tonight on how the stock market killed the banks (because of what the banks did), and now seeing the ripple effects through out the world economy, this isn't looking good. I mean, it looks good in my little world (within 5 miles of me), but the overall fiscal picture is pretty shocking. And while I still have time to work and save for retirement, I'm not sure what will happen to the millions of people 50-70 that are still working and planning on retiring in the next year or two, if they lost a large amount of money in the stock market.

I'm not sure what they will have to do in order to fix this. But if the whole economy dries up, this might not be very good. If the US government runs out of money in 5-10 years, there will be some major problems. Has anyone heard how things are going in Iceland?
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