New Downturn In The Global Economy: Global Trade Volume Growth Is Deep In The Danger Zone, Moody’s Possibly Downgrading 5 Big Canadian Banks, The Eurozone Money Supply Is Contracting Again, And China Firms Leave Bills Unpaid As Economy Slows
October 28th, 2012
Global Trade Volume Growth Is About To Turn Negative
For two decades the rate of growth of world trade volumes considerably outstripped that of industrial production as credit-fueled globalization created huge imbalances in the world. As Diapason Commodities’ Sean Corrigan indicates in these three simple charts, all that vendor-financed circular exuberance has come to an end. The bottom-line is that forced deleveraging (not least of which in Europe) is crushing the credit-fueled (and unsustainable) dream of endless growth as debt saturation has been reached (on private and now public balance sheets). To wit: Global Trade Volume growth is deep in the danger zone and about to turn negative; as the hopes of so manySinomaniacs and Pollyannas is slowly peeled back to a righteous recognition of reality.
The ratio of Global Trade Volumes to Industrial Production remained in a relatively stable uptrend as imbalances fueled by credit averaged 3.4% annually more trade than production. All that ended when whatever Keynesian Endpoint or Debt Saturation barrier we hit in 2008 and the impossible was proclaimed entirely possible.