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Globalists May Soon Become an Extinct Species

Globalists May Soon Become an Extinct Species

The disruptions caused by the spread of the coronavirus mean supply chains will be moved closer to home rather than in foreign lands. 

The coronavirus may force countries to move production closer to home.  
The coronavirus may force countries to move production closer to home.   Photographer: Justin Sullivan/Getty Images

The coronavirus’s depressing effects on the global economy and disruptions of supply chains is no doubt driving the last nail into the coffin of the globalists.

They believe in the theory first articulated by Englishman David Ricardo(1773-1823) that free trade among nations benefits all of them. He argued for the comparative advantage of free trade and industrial specialization. Even if one country is more competitive in every area than its trading partners, that nation should only concentrate on the areas in which it has the greatest competitive advantage. He used the example of English-produced wool being traded for French wine—and not the reverse.

But Ricardo’s simple trade model requires economies in static equilibrium with full employment and neither trade surpluses nor deficits, and similar living standards. These aren’t true in the real world. Also, Ricardo didn’t consider countries at different stages of economic development and different degrees of economic and political freedom, or exchange rate manipulations and competitive devaluations since gold was universal money in his day.

Ricardo also didn’t factor in trading partners with huge wage differences such as the U.S. and China. As a result, China can produce almost any manufactured good cheaper than America. The result has been the huge and chronic U.S. trade deficit with China.

Trade wars are normal as countries with insufficient domestic demand to create full employment strive to unload their problems on trading partners. They promote weak currencies to make imports more expensive for residents in order to encourage local production and to make exports cheaper for foreign buyers. Subsidies for exporting companies, now widespread in China, are another tried and true technique.

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These Four Predicted The Global Financial Crisis; Here’s What They Think Causes The Next One

A different kind of hurricane slammed into the American East coast, the nation and ultimately the world ten years ago today.

Amidst the multiple introspective columns and soul searching that naturally occurred this week, which looked back on the missed warning signs behind the 2008 financial collapse exactly a decade ago this weekend, there is a small group of people whose opinions are actually worth paying attention to.

Though arguably no single individual accurately called all aspects of the crisis in its entirety, precipitated by the implosion of Lehman Brothers, some did very publicly predict key facets with prophetic clarity. As Market Watch’s Howard Gold explains in his profile of four analysts the world should have been listening to: “People warned about subprime mortgage loans, derivatives, and too much leverage, but nobody, to my knowledge, said a bursting housing bubble would cause a global crisis that would lead to the demise of venerable financial firms, require trillion-dollar taxpayer bailouts, and cause a recession that rivaled only the Great Depression in its magnitude.”

Trouble is like many religious prophets of ancient history, they were rejected at the time, cast as dour harbingers of gloom and doom.

Clockwise from upper left: Gary Shilling, Jim Stack, Raghuram Rajan and John Mauldin. Via MarketWatch

Here are four names and their very public warnings that attempted to jolt the financial and banking sectors out of their sleepy stroll toward the abyss before 2008, as well as their predictions for the next big one, and what to look out for.

Howard Gold interviewed each, and laid out the key quotes summarizing then and now…

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Olduvai IV: Courage
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Olduvai II: Exodus
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