Looking at the four pictures below, it can only be described in four words: exhaustion.
How does this fatigue come about?
People will find out a lot of reasons, such as population, household debt ratio, and so on.
However, the background of the times cannot be ignored, and only the background of the times can determine a trend.
More than half a century in the era of globalization is a period of global capital competing for the Asia-Pacific region, promoting the influx of global capital into the Asia-Pacific region, while promoting the rapid economic development of the region, it has also formed a serious asset bubble, which is the result of the trend of the times.
But with Trump's war in 2018 and the outbreak of the Russia-Ukraine war in 2022, it means that deglobalization has arrived. During the period of globalization, European and American industries continued to move out, which eventually led to the incompleteness of the local industrial chain, and its harm began to appear after the outbreak of the epidemic.
During the epidemic, there was a shortage of masks and essential drugs in Europe and the United States, and the so-called developed countries could not even guarantee the health of their citizens. The intensification of geopolitics is the deep root cause of de-globalization, and the period of de-globalization is destined to be accompanied by war.
After the Russian-Ukrainian war and the Israeli-Kazakhstan war were fought for a relatively long time as a war of attrition, it directly led to the overstretched arms of Europe and the United States, and the restrictive effect of the incomplete industrial chain of Europe and the United States on military production began to appear.
If national security cannot even be guaranteed, the so-called empires or developed countries will only be in vain. This has made Europe and the United States quickly put the reconstruction of industrial chains and the start of re-industrialization in a national security position, or the highest strategic position.
The world is always spiraling, and the re-industrialization of this period is certainly not a simple copy of the industrialization of the past, and must be carried out at a higher level, mainly focusing on medicine, high-tech with AI and semiconductors as the core, aerospace, key basic industries, etc., and the ultimate goal is, of course, to rebuild national security.
Is reindustrialization easy?
Many people may think so.
No! Reindustrialization is a very arduous and complex system engineering
First of all, it means a huge investment of capital, without which it is impossible to succeed;
Secondly, this means a huge investment in human resources, public resources and scientific and technological resources, so we see that Canada, Germany, Japan, etc. are accelerating the absorption of immigrants or overseas workers, and the reason why the United States has allowed the influx of illegal immigrants in the south must also hope to alleviate the labor problem, and everyone's purpose is to solve the problem of human resource shortage.
The influx of immigrants and laborers, the rapid increase of human resources in the country, and of course the run on public facilities such as housing, health care, and education, the housing crisis has already appeared in Germany and Canada, and there is also a serious shortage of places in some urban schools, resulting in children not being able to go to school, and so on.
Reindustrialization is a huge social project, which requires huge input of factors and takes more than ten years or even decades, and it is by no means a simple matter to take for granted.
Whether it will succeed in the end, only history will tell. Since local re-industrialization requires huge factor input, Europe and the United States must be the most important factors of production that have flowed into the world, especially the Asia-Pacific region, over the past half century, so we see that the United States has continuously launched a war against major countries in the Asia-Pacific region to cut off each other's high-tech and key industrial chains, and its purpose is to promote the return of production factors and industries and serve the local re-industrialization.
So there's the diagram below.
The following figure is a senior researcher at the Peterson Institute for International Economics, resident oriental expert Radi drawn a foreign direct investment trend chart, the black line is the data of the State Administration of Foreign Exchange, the blue line is the data of the Ministry of Commerce, the reason why the two data are very different, stems from the difference in statistical caliber, but they are all declining trends, which shows that the inflow of capital into the Asia-Pacific region is declining significantly, which is the core reason for the pressure on assets in the Asia-Pacific region.
Seeing this picture, some friends will definitely flash such a picture in their minds, what actor A did, what actor B did, what China and the United States did, and so on, and then this result was formed.
But I don't see it that way, because the background of deglobalization requires what A must do, what B must do, what the major powers must do, and then this result is formed.
It's like people will wear down jackets when winter comes, it's the background of winter that determines that people will do this, on the contrary, you can't say that someone is wearing a down jacket and say that winter is coming.
The return of capital and industry will lead to the return of employment, and then it will lead to pressure on assets in the Asia-Pacific region.
Then we turn the clock back to 2008. From 2006 to 2007, major countries in the Asia-Pacific region carried out a round of interest rate hikes to curb the overheating of the economy and assets, and the economy and assets began to come under pressure, which was the first foot on the back of assets.
The outbreak of the subprime mortgage crisis in the United States in 2008, first, the reduction in import demand in the United States led to a decrease in export earnings and an increase in unemployment in Asia-Pacific countries, and a decline in the solvency of laborers. Second, large U.S. banks and other financial institutions are in crisis, and they must sell off their domestic and foreign assets and withdraw funds back home to protect themselves.
The combination of these two factors is to step on the back of the assets of the Asia-Pacific region, and the resonance of the two feet will bring the assets of the Asia-Pacific region into the winter, and I believe that many people can still remember this scene.
At present, anti-globalization has led to the "exhaustion" of assets in the Asia-Pacific region, which is the first "foot". America's foot is sticking out.
The U.S. and Canada are very closely linked economically, and the data of the two countries can often corroborate or guide each other. Generally speaking, Canada's data can play a certain guiding role in the data of the United States, because the Canadian economy is at the forefront of the industrial chain compared with the American economy, so whether it is raising interest rates or cutting interest rates, the Bank of Canada's actions are generally earlier, which can play a certain guiding role in the Fed's interest rate hikes or cuts.
Below is a chart of the unemployment rates in both countries.
The upward trend in the unemployment rate in the United States and Canada in the last six months or so has clearly taken shape, and the unemployment rate is the most realistic description of economic activity, suggesting that a depression is taking shape, and of course it is still early.
On November 16, 2023, Walmart, the largest retailer in the United States, announced its third-quarter earnings report, and its CEO Doug Macmillan said that "in the United States, the pricing level of some food categories remains worrying, which is putting pressure on consumers."
However, he also said that the ** of general goods will decline, and "in the United States, we may experience a period of deflation in the coming months".
The impact of the worst inflation in more than four decades in the past two years will not go away, and will certainly wreak havoc on household balance sheets, and then the household sector's spending power and economic growth potential.
When the depression deepens, regardless of whether it ends in a soft landing or a hard landing, the risk awareness of commercial banks will rise rapidly, the leverage ratio to create liquidity will fall sharply, the liquidity of the market will begin to shrink, financial institutions will need to sell off assets at home and abroad to protect themselves, and the decline in imports from the United States will further damage the balance sheet of the household sector in the Asia-Pacific region, and the United States will have this foot on the ground.
When the two feet resonate again, what will happen to the first four pictures?
So next year we need to beware of the arrival of winter. This round of winter is not only cold, but also may be a long night.
In the aftermath of the subprime mortgage crisis in 2008, the finances of the two major countries were able to roll out bailout measures. The debt ratio of the United States** was less than 70% at that time, and it immediately launched multiple rounds of quantitative easing to save the market; The Eastern Kingdom immediately launched four trillion; Other countries have shown their talents, and the world's money printing press has rumbled to save the collapsed global economy and capital markets.
Today, the debt ratio of the United States** is as high as 130%, and the fiscal and debt crisis is intensifying
First, Fitch downgraded the U.S. sovereign debt credit rating to "AA+" from "AAA" in August, and Moody's downgraded the U.S. sovereign credit rating outlook from "stable" to "negative" in November, which is the most severe warning about the U.S. fiscal and debt problems.
Second, the delay in passing the fiscal year 2024 budget bill and the aid bill for Ukraine and Israel in the U.S. Congress seems to be caused by both parties, and the essence is that the fiscal deficit is on the verge of getting out of control and the debt crisis is intensifying.
According to the latest figures released by the U.S. Treasury Department, the deficit of the United States in fiscal year 2023 is 1$695 trillion, an increase of 23% from last year, it should be noted that 2023 is a very good year for the US economy, with an annualized economic growth rate of up to 5 in the third quarter2%, such a huge deficit was created in such a "good year", which shows that the problem is very serious.
At present, the economic growth of the United States has obviously begun to weaken, once the depression comes, the income will shrink sharply, the deficit will soar rapidly, under such a prospect, the United States budget bill and related aid bill difficult birth, is a very normal thing.
Some countries in the Asia-Pacific region have also suffered sovereign credit downgrades in the wake of the subprime mortgage crisis, and their fiscal and debt problems are equally severe, and it is clear that they are no longer capable of large-scale fiscal bailouts.
In the face of the arrival of winter, the finances of various countries have run out of oil and are unable to bail out, which is likely to make the winter enter a long night. Although the future of the world is uncertain and unpredictable, it is important to be vigilant against the above-mentioned situations today, and cash will become the most important resource for individuals.