Thursday, March 05, 2009

A Global Retreat As Economies Dry Up

A Global Retreat As Economies Dry Up As World Trade Plummets, Bustling Ports Stand Idle And Foreign Workers Track Back Home

Interesting, I did note this on the caption for the first page:

Facing a repressive government under U.S. sanctions, thousands of Burmese risked their lives in a quest for new factory jobs in Thailand. But when the global economy went code red, Thailand's factories collapsed.

Not sure why it needed to mention about US sanction, why not indicate that the nation propping up that regime is China?

Western governments, through bailouts and nationalizations, are exerting profound new influence over banks and multinationals that helped sow the seeds of globalization throughout the developing world. But the message being sent by the West now is that there's no place like home for job creation and investment. In France, President Nicolas Sarkozy offered a $5 billion lifeline to French automakers, then promptly called on them to use only French-made parts and relocate their factories in Eastern Europe back to France. In the United States, President Obama's 2010 budget would tighten taxation on U.S. companies with operations overseas, limiting incentives to do business abroad. In Britain, bailed out and nationalized banks are being told to offer loans to Britons first.

Now did someone mention somehthing about how bad "Buy American" was? But this clearly looks like an excuse to do what they wanted to do anyway:

A case in point: After "Buy American" provisions won support in the United States as part of the $787 billion stimulus package, Indonesian authorities fired their own salvo. They ordered all civil servants in Southeast Asia's largest economy to consume food, clothing, shoes and other products made only in Indonesia.

"How can you expect countries like Indonesia not to respond when our products are being turned away abroad," Prihortono said. "That's the problem. People think they are only doing what is fair."

There is one bit of possible silver lining in this. No longer does there seem to be a brain drain or human capital drain from LICs to high income countries. Hopefully they will take their skills back home but for countries like Burmese, that is not likely at all...




"This is clearly not going to be a short period of adjustment . . . but globalization is not a bad strategy," he said. "It just takes patience during times like these."
Yes, truly.



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