Trump’s trade advisor, Peter Navarro, was on CNBC today asserting that the economy was expanding at an unprecedented rate. Either Navarro is tragically ignorant or an egregious liar. Either way he looks like an idiot to those us who study the real numbers and understand the truth.
The Global Manufacturing PMI (Purchasing Managers
Index) dropped to 50.4 – the lowest since July 2016. It’s been falling
almost nonstop since mid-2017. The current period of decline is the
longest in the 20-year history of the index. The index includes the
purchase of inputs for the manufacturing of consumer goods, investment
goods (capex material) and intermediate goods (semi-finished goods used
as inputs for final goods).
The pace of decline for auto sales in China, Europe
and the U.S. is the fastest in at least three decades excluding the
great financial crisis time period. Visible evidence of the contracting
global/domestic economy is Ford’s announcement that it’s cutting 10% of
salaried (white collar) workforce, about 7,000 jobs, by the end of
August.
The trade war is not the cause of U.S. economic
weakness. If anything, it’s nothing more than an effort by the Trump
Government to manufacture a scapegoat for the inevitably severe economic
recession engulfing the system. China’s exports to the U.S. were 5% of
its GDP in 1995. By 2005 exports to the U.S. had risen to 9% of China’s
GDP. Currently exports to the U.S. represent just 3% of China’s GDP.
These numbers show that the trade war between the U.S. and China is not
the cause of global economic weakness.
Rather, the cause is the massive misapplication of
capital from 10 years of over $21 trillion in money printing and debt
issuance. This artificially over-stimulated economic activity. Now that
the stimulus has worn off, the major economies – especially the U.S. and
China – face the problem of servicing their debt load and the
consequences of a decade of misallocated capital..........http://www.silverbearcafe.com/private/06.19/deteriorate.html
No comments:
Post a Comment