Sunday, October 12, 2008
Real economy blowback: The credit crunch is stopping trade
For those of you looking for signs that the global credit crunch is affecting the "real" economy, look no further than this news: Grain is piling up in Canadian ports because foreign customers cannot get the letters of credit to secure their obligation to pay. If that problem spreads it is very bad news for all trade everywhere.
Of course, the blockheads who oppose international trade will get what they have been asking for -- much less of it -- and most of them will not like the consequences one bit. The question is, will people draw the right lesson from this experience, or view it as a new justification for national "independence" from foreign suppliers? I am not optimistic.
3 Comments:
By 
D.E. Cloutier, at
Sun Oct 12, 10:14:00 AM:
One man's calamity is another man's opportunity.
By 
, at
Sun Oct 12, 12:23:00 PM:
I am fearful there will be a tremendous crash in American Agriculture a year from now. I have never see such an opportunity to lose so much money.
By , at
Sun Oct 12, 03:57:00 PM:
I expect trade barriers soon. And currency exchange controls.
It really looks like the 1930s to me. Except the new dictators will not be expansionists. They will concentrate on reshaping their own people.
A crash in US agriculture next year? Under McCain the government would just provide price supports. Under Obama there would be a variety of approaches which ended in production allotments - in effect nationalizing the industry.
Both approaches would be bad. But I don't expect grain prices will collapse soon anyway.
