Global Economic Meltdown !

Today, clearly the most important news around the world is the serious financial crisis and its consequences as growing unemployment numbers hit family and friends near and far. The glorious bubble we have been living under is bursting before our very eyes and news articles around the globe are focusing on another dangerous financial situation about to hit us. Where could and will these new and latest woes lead us?

In 2007, we had the housing bubble burst with the collapse of the real estate market and all of the foreclosures because of the ARM mortgages. In 2008, we had the collapse of the financial market, with the roller coaster ride of the stock market and millions of people loosing much of their retirement savings. Now in 2009, we are facing the worst of all, the busting of the world trade bubble.

The figures came in for the first quarter of 2009 and Japan's exports were down 47%; Germany's exports fell 20%; China's exports are down 17.5% and the U.S. had their exports decrease by 16.4%.

The WTO (World Trade Organization) states that it expects global trade volumes to fall by an average of 9% in 2009, that is the sharpest fall since World War II, which was 70 years ago.

Other economic news around the globe states the Russia and some Eastern European nations are in very dire straits financially. Countries such as Austria, Germany and Italy are now also deeply in trouble because of lending to these countries who now appear to be unable to pay them back.

You should take note of what this could mean for the rest of the year if world economic production and trade continue a downward slide.

In February of this year, the U.S. stimulus program contained several "buy American" provisions. While this makes sense nationally, if all nations begin to turn inward, it would derail international commerce and will produce a larger downward spiral effect.

The international trade war! Protectionist in the House Democratic Party want to require that all iron and steel used in stimulus funded infrastructure projects be made in America only. But American exporters fear retaliation against their products, especially in China, where the steel provisions are aimed at.

Other countries will begin to think about starting their own stimulus package programs ~ with in-country purchasing requirements also. Creating high tariffs on imports making it impossible for other countries to compete in their market place.

Disruption of the world economic system will bring unemployment to unacceptable levels causing nations to turn inward for solutions, hoarding the money for themselves and causing further economic decline. People will then demand a different economic system emerge that placed jobs, security and order over freedom and a free market system.

This is exactly what happened in Germany in the 1930's, as a trade war and economic decline helped bring Adolf Hitler to power and brought about World War II.

For many decades now, we have not had the experience of the devastating effects of a trade war. As long as international trade thrives, each country contributes to the welfare of others and each can help prop another up. But as a trade war turns an economic friend into your economic adversary this generates ill will against each other. In short time, trade war could eventually lead to an outright military conflict.

Turning inward and only buying products made by your country, although sounds like good financial sense, in the long run could hurt us globally.

Something to think about.

Just one man's opinion. As always, put the wind in your hair and keep the sun to your back. Be good and stay safe. Peace, Love and prosperity to all.

Good Journeys !!!

Frank WOLF TM © 2005

Watchdog taking a BITE out of corruption!

Copyright© Frank J. Ball Sr.

May 5^th, 2009