[Tyler_JC]

[I split the Inequality and EU vs. USA discussion from the thread because it was becoming decidedly off topic]

[deMolay]

The Great Unravelling has began. With a ferocity never before seen in history. marketwatch

[bencole]

there is a little trouble with the link.

[deMolay]

Global trade collapsing Commentary: U.S. exports falling at 49% pace as customers fade away
By MarketWatch Last update: 12:37 p.m. EDT March 13, 2009:
WASHINGTON (MarketWatch) -- For a while, some analysts held out hope that the rest of the world would be spared the devastation of the collapse of the great American credit bubble. The global economy had de-coupled, they said. America's problems were her own.
No one is saying that any more.
In fact, the latest evidence shows that global trade flows are plunging at an alarming rate.
The Commerce Department reported that the volume of U.S. imports from abroad fell 4.6% in January while exports declined 8.6%, the most since the monthly trade figures were first collected in 1992. See full story.
Over the past five months since the credit crunch intensified, real exports have plunged at a 49% annual rate, while real imports have fallen at a 30% pace.
The pace of the decline is unprecedented in modern times, economists say. "We doubt even during the Great Depression that trade collapsed with such ferocity," said David Greenlaw, an economist for Morgan Stanley.
The Great Recession, as the IMF calls it, has severed a crucial link in the global economy. U.S. consumer spending has been the main engine of growth for the whole world, but that spending was based largely on phantom gains in asset prices that were inflated by that cheap money from abroad that has now been disrupted.
The profits that foreign producers made from selling to America, in turn, created millions of jobs in places such as China, Southeast Asia and the Persian Gulf. That was then: China reported its exports plunged 25% in February compared with a year earlier.
Those jobs are disappearing, sparking a great reverse migration back to rural China, the Philippines and South Asia. In China, an estimated 20 million workers have lost their jobs. It's not just the American economy that needs to adjust to the new reality. The rest of the world will have to re-examine just where growth comes from.
Ultimately, the global economy may find a road to more balanced growth. Economies from Germany to China may need to rely less on U.S. consumers and more on their own.
Wherever the road leads, the process will be wrenching and drawn out.

-- Rex Nutting, Washington bureau chief

[rangerone314]

http://www.marketwatch.com/news/story/g ... aspx?guid={5E877CF4-8D66-46A2-A144-3EE1FF6F6C37}&dist=msr_1

Try that link

[bencole]

I feel that it may be good thing for global trade to be reduced. It seems to be a major waste of energy that benefits mostly wealthy corporations. Loss of trade with China is not so terrible I think, since all that it has created is outsourcing of jobs, intellectual property theft, and a substantial reduction in the quality of manufactured goods. A little protectionism might be good.

[heroineworshipper]

When your exports are only $1, a 50% drop isn't much.

[anarky321]

imports fell 51% annualized....kaboom

[deMolay]

De-Globalization is underway in earnest now. No amount of stimulus will revive the economy. Canadian Exports have fallen 28%, we have our first trade deficit in 33 years. http://www.financialpost.com/news-secto ... id=1385577

[manu]

Good bye globalization. Hello simple living.

[Tanada]

Ahem, DeMolay and Rangerone, and anyone else having troubles with posting links.

When you get the post window there are a series of buttons just below where the thread subject is written. Click on the ones that say URL. Backspace your cursor once. Hit the = key. Paste your link. Hit the right arrow key once. Type the name of your link. Use the right arrow key 6 times or until you are past the last bracket ] symbol.

That's it, you have posted a URL as a link button istead of a mess.

Link 2

Link 1

[Daniel_Plainview]

Ahem, DeMolay and Rangerone, and anyone else having troubles with posting links.

When you get the post window there are a series of buttons just below where the thread subject is written. Click on the ones that say URL. Backspace your cursor once. Hit the = key. Paste your link. Hit the right arrow key once. Type the name of your link. Use the right arrow key 6 times or until you are past the last bracket ] symbol.

That's it, you have posted a URL as a link button istead of a mess.

Link 2

Link 1

Here's a better link

[deMolay]

Thanks Tanada for the advice Tanada. I'll try to improve on that, I thought it was something wrong maybe with the new board.

[deMolay]

This looks really really bad. I think we are going to see more unemployment, more foreclosures and more homelessness.

[Tanada]

This looks really really bad. I think we are going to see more unemployment, more foreclosures and more homelessness.

Agreed, we are still only in the first step of the decline, all these "experts" saying the worst is over are selling wishes and dreams instead of facts and reallities.

[jbrovont]

Goodbye plastic toys with lead paint, hello, local trade and production. Might be a good time to dust off some of those old heirloom tools you got from grandma and grandpa and figure out what they do and how they work.

[Gerben]

I like to share this article from the Netherlands Bureau for Economic Policy Analysis. http://www.cpb.nl/eng/news/2009_12.html

This year the Dutch economy is projected to shrink by 3½%. A contraction is on the horizon for next year as well, albeit only ¼%. The most important reason behind the economic downturn is the slump in relevant world trade. This year this trade is expected to decline by an unprecedented 9¾%. Export, traditionally a driving force for the Dutch economy, is declining sharply ...
In the fourth quarter in particular, economic activity declined drastically. This development will continue to an even stronger degree throughout the first half of 2009. After that the economy will very gradually pick up again, but on balance the Dutch economy will shrink both this year and next. This year the negative growth will reach 3½%, the largest contraction since 1931 (not including the war years). Next year the decline in production volume will be slighter, at ¼%.

It is uncertain whether the low point of the global financial crisis has already passed and whether the most drastic events are behind us. Foreclosures, domino effects, the infection of other parts of the financial sector and new bail-out operations continue to be a real possibility. Moreover the deep recession is now backfiring on the financial sector via greater losses on outstanding loans. The credit crisis and the worldwide recession could persist longer than envisaged in the central projection. An uncertainty scenario shows how economic development could suffer even more if world trade declines even more severely.
...
The credit crisis not only means that the Dutch economy is in a deep recession at the moment - it can also have damaging effects for the medium term. This has happened to other countries that have experienced financial crises as well. It is therefore not unlikely that production in the Netherlands will remain at lower levels for a long time to come.

Note that:
1. Economic activity declined drastically, but they expect a miracle recovery in a few months (I'll try to find out why they believe that).
2. Already they fear this could have a lasting effect.
3. the Netherlands are one of the stronger economies at the moment.

[shady28]

This looks really really bad. I think we are going to see more unemployment, more foreclosures and more homelessness.

Agreed, we are still only in the first step of the decline, all these "experts" saying the worst is over are selling wishes and dreams instead of facts and reallities.

Major declines usually have 3 'legs'. The first is adjustment to proper valuations, essentially a 'blowoff top' of the extreme levels of excess in asset valuations - I think that leg is done.

The second leg is when people believe that things have corrected and it's time to get back on the train. In layman's terms, the second leg is the mother of all bear market rallies as it sucks in all the believers in the old business structure. I am pretty sure this is where we are at now. Witness, all asset classes have started to appreciate in the last 3 weeks. Oil, gold, stocks, commodities of all sorts - all going up. I'd bet we'll see housing stabilize or inch up soon as well.

The third and most powerful leg is distress selling. That is, the market participants realize that things in fact are not fixed and that major structural problems / economic damage still exists. This is the classic rush for the exit doors. In the final phases of this decline those that have been holding on to good assets for a 'rainy day' sell, because in essence it 'rained'. They need to liquidate simply to pay necessary expenses.

The above is what I remember from reading Robert Rhea's 'The Dow Theory'.

[Subjectivist]

This is something I can been thinking a lot about lately. You see I am a member of the United Steel Workers, and last summer my union was pressuring the government to make China stop dumping cheap finished aluminum into the American market.

See back in about 1900 the first bauxite mines on earth opened up, some in Europe and some in America, especially Alabama and Arkansas. Reynold Aluminum and Alcoa both built big plants in Arkansas where about 80 percent of American Bauxite mines were located.

Then when the Great Depression came along it destroyed about half the demand for Aluminum and a bunch of the mines closed. In fall 1939 World War II kicked off in Europe and England suddenly put in purchase orders for hundreds of thousands of tons of aluminum for the british aircraft industry. The American plants started gack up but they needed bauxite faster than the closed mines could reopen so they bought it from mines in South America and had it shipped in on bulk freighters to fill the demand gap. In the process they discovered that the strong dollar nade it cheaper to import bauxite than to reopen the closed mines in the south.

Things might have stayed that way but two thing happened. First during the depression Congress passed a strategic materials law that allows the President to require listed materials be sourced in America. Second when Germany declared war in December 1941 their uboots sank a bunch of ships in the GOM, both oil tankers and bulk carriers hauling Bauxite to Louisna to be shipped up the Mississippi river to Arkansas where the big aluminum pkants were located.

Result, the war material board ordered all the closed bauxite mines reopened early in 1942 and that other minor deposits in Georgia and Virginia be mined ASAP to make up the demand. As a result in 1943 America set our all time record for bauxite mining. From then until about 1956 ten percent of world aluminum production came from Bauxite mined in America, and those tens of thousands of planes we built from 1942-1945 sure used a lot of it.

Then in the mid 1950's the big aluminum companies convinced Jamaica, virtually next door by ship in the western carribean, to lease bauxite mining rights to them. Gradually over the next 25 years more and more Jamaican mines opened and at the same time more and more American mines closed because they couldn't compete with the imported raw material. Finally in 1982 Reynolds Aluminum closed the last Bauxite high volume ore mine for producing Aluminum. A very small quantity of American bauxite is still mined, but what they mine today is used for industrial grinding grit and fracking sand substitue.

Technically there is no need to import bauxite, we have plenty of supply in Arkansas and Alabama and Georgia. Of course if we did that aluminum cans and bottles would cost a few cents more each.

Now China has invested massively in their aluminum production capacity, so much that they not only mine millions of tons in China, they import millions of more tons from the world market. They then make way more aluminum than they need and dump the extra on the world market at prices that are bankrupting american producers.

USW Files Case on Imports of Primary Unwrought Aluminum to Save the Industry from the Flood of Imports and Resulting Injury
CONTACT: Wayne Ranick, (412) 562-2444, [email protected] OR Roy Houseman, (202) 778-4384, [email protected]

(Pittsburgh) -- The United Steelworkers (USW) today filed a petition under Section 201 of U.S. trade law that seeks to stem a flood of imported primary unwrought aluminum that has seriously injured the American industry and threatens additional job and capacity losses.

A Section 201 petition allows President Obama to provide relief and implement an adjustment plan, if appropriate, once the U.S. International Trade Commission (ITC) finds imports are a substantial cause of the harm.

The USW petition claims that the domestic industry’s circumstances are critical. In such cases, the ITC is required to make a preliminary decision within 60 days. If the decision is affirmative, the president has another 30 days to decide on providing provisional relief. With today’s filing, a preliminary decision by the ITC should occur by June 17. If that is affirmative, the president would have until July 18 to decide on provisional relief.

Primary unwrought aluminum is produced from bauxite-derived alumina and comes in various purity grades with different alloys added for a wide variety of uses. Primary unwrought aluminum typically undergoes further processing by the original producer or other manufacturers.

“A flood of foreign imports and failed trade policies have decimated American manufacturing,” said USW International President Leo W. Gerard. “Aluminum is vital to our national and economic security, and this case will help us retain and begin to rebuild domestic production of primary unwrought aluminum, which has reached critically low levels as a result of flooding imports. By the end of June, the industry will be operating at only 25 percent of 2011 production levels, and the total number of laid off workers will reach 6,500.

“In states all across the country, America’s aluminum producers have closed, idled or are at risk,” said Gerard. “Over just five years, we’ve seen the number of smelters plummet. In 2011 there were 14 smelters in the United States. Today there are only eight, of which only five are currently operating and one is expected to be idled at the end of June. Two of the five now operating are at 50 percent or less of capacity.”

“We refuse to watch another domestic manufacturing sector suffer from failed trade policies,” Gerard added. “This is a vital product for our aircraft and weapon systems. It’s used in construction, manufacturing and in electrical transmission.”

The Section 201 case addresses imports from around the world. The majority of the aluminum currently flooding into the U.S. market comes from Canada, the Middle East, Russia and Venezuela.

Primary unwrought aluminum is a worldwide commodity that is affected by supply-demand imbalances at the global level. When world prices decline, cheap imports force domestic producers to meet them or lose volume.

The world has been going through a period of significant imbalance between supply and demand in primary unwrought aluminum, principally caused by massive capacity additions in China that exceed growth in demand.

It is critical that the supply-demand imbalance be addressed quickly and effectively by the Obama administration. China and the United States have been discussing China’s excess capacity as part of the Joint Commission on Commerce and Trade (JCCT) process, and China has internally recognized it has massive excess capacity in primary unwrought aluminum. What is needed is an actual correction of the imbalance and temporary relief for domestic producers until that is achieved.

The USW’s petition includes recommendations on how the president should respond if the ITC concludes critical circumstances exist and serious injury has occurred.

“The USW’s trade case is intended to provide needed relief,” said Tom Conway, USW International Vice President. “We are requesting four years of increased tariffs, with the tariffs capped at a price allowing domestic producers to effectively operate and, hopefully, restore production.

“The petition also calls for negotiations with our trading partners, principally China, seeking that they dismantle their overproduction and restore balance in global supply and demand.

“Aluminum, steel, paper and many other USW-represented sectors have been the targets of unfair trade. On top of that, world markets are being destroyed by China’s non-market policies and practices. This vital case draws a line in the sand. We will not cede primary unwrought aluminum production.”

In November, the congressionally-created U.S.-China Economic and Security Review Commission released a study that found, “Strong Chinese government support for its domestic aluminum sector has created vast overproduction, lowering global prices and squeezing the profitability of U.S. aluminum firms.

“While the U.S. and other global aluminum firms are restructuring and cutting back production to minimize financial losses, the Chinese government is stepping in to expand capacity and encourage exports, placing the entire U.S. aluminum smelting system at risk.”

According to the consultancy AZ China, 90 percent of China’s aluminum smelters are operating at a loss.

China has no natural advantage in producing aluminum, an energy intensive product. Yet, China added 79.5 percent of the global increase in capacity between 2001 and 2014.

China’s production of aluminum grew by 650.8 percent from 3.25 million metric tons in 2001 to 24.40 million tons in 2014, while its capacity increased 723.5 percent from 4.25 million metric tons in 2001 to 35.0 million metric tons in 2014. As production increased, China’s capacity utilization fell from 76.5 percent in 2001 to 69.7 percent in 2014.

http://www.usw.org/news/media-center/re ... ing-injury

[Subjectivist]

This is the latest union update,

USW Supports Announcement of USTR Action to Address Chinese Aluminum Overcapacity: China’s Free Ride Needs to End
CONTACT: Holly Hart (202) 778-4384, [email protected]

The United Steelworkers (USW) released the following statement today in support of the United States Trade Representative’s (USTR) announcement that it was requesting consultations with China regarding its continuing expansion of production in the aluminum sector. This ongoing expansion and overcapacity has resulted in injury to U.S. production and employment. The filing is the result of a cooperative effort initiated more than one year ago by the USW and Century Aluminum with the USTR to address global overcapacity in the aluminum sector.

“USTR’s request for consultations is intended to eliminate the devastating effects China’s actions to dominate world aluminum production have created for its competitors,” said USW International President Leo W. Gerard. “This is called ‘serious prejudice’ in trade law terminology.

“Fueled by supporting policies, China’s massive expansion of industrial capacity in aluminum has increased its capacity by 22 million tons (or 130 percent) in the last eight years, helping to depress world prices of aluminum by more than 35 percent.

“As a result, U.S. producers cannot get fair market prices for their products. This has led to significant injury with numerous facilities closing and more than 6,600 highly skilled USW members laid off.

“Success in this case would give hope to the thousands of aluminum sector workers across the country that have either lost their jobs or are in fear of losing them in this distorted market. We worked with allies in Congress and partners in the American aluminum industry to bring the severity of the problem to USTR’s attention and especially want to thank Senators Wyden, Schumer, Brown and Portman for their leadership. The staff of the USTR has put considerable time and effort into this case, as they have with many other important enforcement actions.

“As a result, USTR has studied the causes of China’s massive, ongoing capacity expansion that has decimated production and our members’ jobs. In 2008, there were 14 smelters operating in America. Today there are five. The loss of this production and the thousands of jobs it took with it can be directly tied to the predatory practices of Chinese state-directed entities.

“When China and other countries ignore rules in other sectors, the USW works hard to get relief through trade cases, and these have momentarily helped to stem the flood of steel imports and to slow imports of aluminum extrusion products.

“If the USW had been able to bring a traditional trade case against China, we would have done so years ago but unfortunately traditional trade cases are not effective for basic aluminum. China’s massive, illegal subsidies have depressed world prices and made American domestic operations unprofitable, regardless of export levels. Only global action will be effective.”

USW International Vice President Tom Conway said: “Some 60 percent of primary U.S. aluminum capacity has gone offline in the last nine months. U.S. domestic aluminum producers, workers and communities suffer as China continues to break its promises and undermine American jobs. This case deserves the attention and support of our trading partners and those who argue for further trade liberalization. China is not a market economy, and its actions in this sector and others are constant testimony to that fact.

“Every job counts. We have the most productive, efficient workers in the world. We can compete against anyone that plays by the rules, but we can’t compete against governments. Chinese companies act primarily on behalf of and with the support of the state. That’s not market economics.”

President Gerard said, “China’s free ride needs to end. Fifteen years ago, China became a member of the WTO and since then, it has enjoyed virtually unfettered access to the U.S. market. In return they limit our exports and undermine our economic interests. This case is part of a broader enforcement effort which we hope will increase with the next administration.

“We call on other aluminum-producing nations -- and, in fact, all nations concerned about China’s overcapacity in this and many other sectors -- to join the U.S. government in this case. The WTO needs to act expeditiously and recognize that success in this case, as in other contexts that deal with China’s failure to become a market economy, is vital to continuing support for itself as an institution. China’s failure to become a market economy even after being a WTO member for more than 15 years is creating serious stresses in the international trading system, not to mention severe dislocations in many economies, developed and developing alike, for workers and businesses that operate based on the harsh discipline of the free market. If the WTO fails to sanction China’s harmful economic approach, it will signal a need for America to reclaim control of its trade agenda. Too often, the WTO has acted against the interest of those seeking to enforce the rules of fair trade. This case provides an opportunity for the WTO to restore some of its legitimacy.”

The USW represents 850,000 workers in North America employed in many industries, including metals, rubber, chemicals, paper, oil refining, mining and the service and public sectors. For more information: http://www.usw.org/.

http://www.usw.org/news/media-center/re ... eds-to-end