Friday, February 6, 2009

Nations Rush to Establish New Barriers to Trade

This goes along with my growing concerns about deflation.

When you look around the globe you can see that the entire world economy is in trouble and world leaders really don't know what to do about it.

After 50 years of inflation everyone has a mindset about inflation. But, who really has an understanding of deflation and what to do about it?

If you are old enough you might remember WHIP--whip inflation now. That brainy, government, idea didn't work as intended. Instead price controls gave us one percent inflation a month.

It took almost a decade and Paul Volker to figure it out.

Well now we are heading for a global trade war. Meaning barriers and trade tariffs that could very well choke off global trading.

Just the mention of "Buy America" has the world in a tizzy.

I have no doubt that many American consumers are thinking "buy America" right now. And, I have no doubt that companies will be getting behind this theme in their advertising soon.

Given the dire straights in the auto industry, I have to admit. If I bought a new car it would have to be an American made car. I would just hold my nose and do it. The idea of millions of unemployed in Michigan does not sit well with me.

Seems like the American thing to do. Doesn't it?
clipped from
Countries grappling with global recession have enacted a wave of barriers to world commerce since early last month, scrambling to safeguard their key industries -- often by damaging those of their neighbors.
The European Union has warned the U.S. that proposed "Buy American" provisions in planned stimulus spending could break trade rules. Meanwhile, EU nations have reversed direction and tightened their own trade rules, for instance by resuming subsidies to dairy farmers' exports and effectively barring Chinese screws and bolts from their market, while accusing China of dumping them below cost.
[Global Retreat]
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