How the Global Trade Contraction Begins

Acting-Man

Historical Evidence

The world grows increasingly at odds with itself, with each passing day.  Divided special elections.  Speech censorship by Silicon Valley social media companies.  Increased shrieking from Anderson Cooper.  You name it, a great pileup is upon us.

It was probably Putin’s fault (just a wild guess) [PT]

From our perch overlooking San Pedro Bay, the main port of entry for Chinese made goods into the USA, facets of the mounting economic catastrophe come into focus.  These elements, even for the most untrained of eyes, are impossible to miss.

To meet the relentless expansion of international trade, berths have been widened, and channels have been deepened to accommodate the definitive absurdity of perpetual credit creation:  The CMA CGM Benjamin Franklin. 



The CMA CGM Benjamin Franklin in all its economies-of-scale glory [PT]

This mega container ship, if you’re unfamiliar with it, is over 20 stories tall, the width of a 12 lane freeway, and longer than four football fields.  It has enough cargo space to hold 90 million pairs of ‘Made In China’ shoes.

The secondary distortions of this mammoth – next generation – cargo ship will provide historical evidence to future generations of a political economy that went seriously awry.  For example, at the Port of Long Beach the Gerald Desmond Bridge replacement is currently being constructed at a cost of $1.5 billion. With two towers stretching 515 feet into the sky, this will be the second tallest cable-stayed bridge in the United States.

The purpose of the bridge replacement is to provide greater clearance into the Port’s Inner Harbor for mega container ships.  As the new bridge deck goes up, it  dwarfs the prior edifice like some futuristic motorway traversing up to the heavens.  We’re certainly eager to drive it when it’s complete in late-2019.

Port of Long Beach: Gerald Desmond Bridge replacement construction. Is it to global trade what the “tallest buildings” are to economic booms in general? [PT]

Episodes of Global Trade Contraction

The general philosophy of the bridge’s proponents appears to be that global trade expands in perpetuity.  Hence, more and more space will be needed for more and more next generation container ships.  There’s even 50-years of data to support this belief.  But that doesn’t mean what is will always be.

From a practical standpoint, global trade has expanded without interruption for so long that only senior citizens – if they still have their wits about them – can remember anything different.  Yet, global trade hasn’t always expanded.  In fact, there have been long episodes of contractions in global trade.

Those willing to look back to the first half of the 20th century will discover something that goes counter to their life experience.  Global trade, as a proportion of total economic activity, went down between the onset of World War I and the 1960s.  That’s a near 50 year run of declining global trade.  Could another …read more

Source:: Acting Man