| onomic recovery cannot occur without a significant | | | | rise from being a closed, poor third world country to |
| rebound in global trade. Global trade cannot be | | | | becoming a major, and powerful player on a global |
| revived without a recovery. The difficulty in this | | | | scale. It is very well known that the excesses which |
| relationship goes far beyond semantics. Governments | | | | fueled the subprime crisis in the U.S., (which in turn |
| have been pumping gigantic amounts of money to | | | | created today’s global economic slump) were |
| revive global economic activity, and businesses are | | | | financed by Chinese money acquired from export |
| responding as liquidated inventories need to be | | | | activity as part of the global trade boom. At its |
| restocked, and industries must restart producing | | | | worst, there was a vicious circle where the Chinese |
| some goods. But how long can they keep producing | | | | sold to the American consumer to lend back to |
| if trade itself cannot be revived somehow? And can | | | | them, so that they could sell more. That was how |
| government intervention, and similar artificial means | | | | we got oil to $150, the stock market to $15000, |
| substitute for the absence of real private demand in | | | | while waging wars in Iraq and Afghanistan and |
| an economy? These are the questions that the | | | | avoiding inflation at home. Today the Chinese |
| drivers of the supposed bull market, and heralds of | | | | can’t sell to American consumers, who are |
| the new age of economic resurgence must answer. | | | | saving up to 5 percent of their income each year to |
| Last year’s collapse in shipping and trade | | | | ensure against unemployment and economic shocks. |
| volumes was nothing short of catastrophic. Machines | | | | If the Chinese can’t sell to America, who will |
| that were hauling tens of thousands of tones of | | | | purchase their goods? If trade doesn’t grow, |
| cargo were suddenly kept busy with hundreds. | | | | who will finance the new future bubbles that global |
| Shipping rates suffered falls close to an unlikely | | | | governments want to create to save their |
| hundred percent in some cases. This year has seen | | | | hindquarters from angry voters? If bubbles |
| trade volumes hold their ground a lot better, and | | | | can’t be blown, who will sustain |
| overall activity by value has not changed much | | | | today’s bull market? |
| between January and today. Government | | | | Yes, markets are rallying for now, and people are |
| intervention in export credit and insurance business | | | | more optimistic. But let’s not be blinded by |
| ensured that the sudden shock of | | | | our emotions. Six-eight months is not a long time |
| September-December did not translate to a global | | | | period for economic events. Recessions and slumps |
| meltdown of the financial system, and that much is | | | | do not last forever, but they do last until the forces |
| good and desirable. However, while the symptoms of | | | | that created them are eliminated, or new factors |
| the global economic malaise were thus successfully | | | | emerge to revive economic activity. We’re |
| dealt with, the dynamics that created the large shock | | | | afraid that until someone finds a way to address the |
| for trade have not been addressed, and they must | | | | problems created by the evaporation of the illusory |
| remain a major source of concern for bulls and | | | | wealth of the American consumer, a real recovery, |
| politicians alike. | | | | and a real, sustained bull market are but sweet |
| During the past two decades we have seen China | | | | fantasies of emotional people. |