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Posts Tagged ‘global trade

“Exorbitant privilege”*…

Economic history books will commemorate the era we currently live in as the second wave of financial globalization, following the first wave during the Classical Gold Standard period. Our era is characterized by an unprecedented expansion of global financial flows. Partly, these flows form the counterpart to global value chains and the globalization of trade in goods and services. In the last few decades, however, they have been increasingly decoupled from the real sector. The financial infrastructure that enables this expansion is the international monetary system…

In its current shape, [the international monetary system] has a hierarchical structure with the US-Dollar (USD) at the top and various other monetary areas forming a multilayered periphery to it. A key feature of the system is the creation of USD offshore – a feature that in the 1950s and 60s developed in co-evolution with the Bretton Woods System and in the 1970s replaced it. Since the 2007–9 Financial Crisis, this ‘Offshore US-Dollar System’ has been backstopped by the Federal Reserve’s network of swap lines which are extended to other key central banks. This systemic evolution may continue in the decades to come, but other systemic arrangements are possible as well and have historical precedents. This article discusses four trajectories that would lead to different setups of the international monetary system by 2040, taking into account how its hierarchical structure and the role of offshore credit money creation may evolve. In addition to a continuation of USD hegemony, we present the emergence of competing monetary blocs, the formation of an international monetary federation and the disintegration into an international monetary anarchy…

Americans tend to take the global primacy of the U.S. Dollar for granted (indeed, often complaining about the current account imbalances to which huge quantities of off-shore dollars lead). But there’s no mistaking that this system has been been hugely advantageous to the U.S. Yet, as Steffen Murau (@steffenmurau) explains, it may not last: “The evolution of the Offshore US-Dollar System: past, present and four possible futures.”

See also Mernau’s “International Monetary System” (from whence, the image above), and Ben Bernanke’s “The dollar’s international role: An ‘exorbitant privilege’?

* Valéry Giscard d’Estaing (then the French Minister of Finance; later French President), referring to the benefit that accrues to the U.S. as a result of the U.S. Dollar being the world’s reserve currency

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As we count our blessings, we might recall that it was on this date in 1890 that journalist Nellie Bly completed her 72-day trip around the world.

In 1888, Bly suggested to her editor at the New York World that she take a trip around the world, attempting to turn the fictional Around the World in Eighty Days into fact for the first time.  A year later, at 9:40 a.m. on November 14, 1889, with two days’ notice, she boarded the steamer Augusta Victoria, and began her 24,899-mile journey.

She brought with her the dress she was wearing, a sturdy overcoat, several changes of underwear, and a small travel bag carrying her toiletry essentials. She carried most of her money (£200 in English bank notes and gold in total as well as some American currency) in a bag tied around her neck.

Bly traveled through England, France (where she met Jules Verne in Amiens), Brindisi, the Suez Canal, Colombo (Ceylon), the Straits Settlements of Penang and Singapore, Hong Kong, and Japan.  Just over seventy-two days after her departure from Hoboken, having used steamships and existing railway lines, Bly was back in New York; she beat Phileas Fogg’s time by almost 8 days.

Nellie Bly, in a publicity photo for her around-the-world voyage. Caption on the original photo reads: “Nellie Bly, The New York World‘s correspondent who placed a girdle round the earth in 72 days, 6 hours, and 11 minutes.”

 source

“Bright moons cunningly carved and dyed with spring water”*…

 

Tang Porcelain

 

‘I am not yet so infected with the contagion of China-fancy’, wrote Samuel Johnson in a letter in September 1777, ‘as to like any thing at that rate which can so easily be broken’. At the time, the craze for Chinese export porcelain – ceramics mass-produced in China for foreign markets – had reached epidemic proportions in the Western world: a ‘contagion of China-fancy’. Over 70 million pieces entered Europe in the 17th and 18th centuries and customers from London to Lisbon were desperate for more. The most afflicted were the ‘porcelain sick’ royals and aristocrats, who coated their palace walls, floors and ceilings in ‘white gold’. Patient zero was August the Strong, King of Poland and Elector of Saxony. His Porzellankrankheit was so acute that he amassed a collection of nearly 30,000 pieces and imprisoned the alchemist Johann Friedrich Böttger until he figured out porcelain’s secret recipe, which had been closely guarded by the Chinese for centuries.

Export porcelain fused two worlds – producer and consumer, East and West – establishing a relationship that continues to shape the way the world works today…

How Chinese porcelain became a worldwide sensation, changing tastes and the global economy: “White Gold.”

See also: “The European Obsession with Porcelain.”

[Image above: source]

* from a Tang Dynasty (618-907) poem describing the Emperor’s porcelain tea cups

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As we handle with care, we might recall that it was on this date in 1972, after President Richard Nixon’s successful visit to China, that Beijing gave the National Zoo a pair of giant pandas, Ling-Ling and Hsing-Hsing.  (The U.S. sent China a pair of musk oxen.)

On that first day, nearly 20,000 people stood in long lines to catch a glimpse of North America’s first pandas; in their initial year at the zoo, the pair attracted more than 1 million visitors.

Ling-Ling_and_Hsing-Hsing_1985 source

 

 

Written by LW

April 16, 2020 at 1:01 am

“The international situation is desperate, as usual”*…

 

world_trade_bonds

 

Two experts agree that the days of increasingly easy and speedy global flows of goods, money, people, and ideas are over; the future that Tom Friedman evoked in The World is Flat is, at best, delayed.  But they have very different ideas of what this may mean…

First, Jean Pisani-Ferry: after a sharp precis of the forces that that have led us to what he calls a “spiky” world, he suggests…

US President Donald Trump’s ruthless use of the centrality of his country’s financial system and the dollar to force economic partners to abide by his unilateral sanctions on Iran has forced the world to recognize the political price of asymmetric economic interdependence. In response, China (and perhaps Europe) will fight to establish their own networks and secure control of their nodes. Again, multilateralism could be the victim of this battle.

A new world is emerging, in which it will be much harder to separate economics from geopolitics. It’s not the world according to Myrdal, Frank, and Perroux, and it’s not Friedman’s flat world, either. It’s the world according to Game of Thrones.

Read his piece in full at “Farewell, Flat World.”

Then consider the argument of Michael O’Sullivan, who agrees with Pisani-Ferry as to the diagnosis, but has a very different prognosis:

Globalization, at least in the form that people have come to enjoy it, is defunct. From here, the passage away from globalization can take two new forms. One dangerous scenario is that we witness the outright end of globalization in much the same manner as the first period of globalization collapsed in 1913. This scenario is a favorite of commentators because it allows them to write about bloody end-of-the-world calamities. This is, thankfully, a low-probability outcome, and with apologies to the many armchair admirals in the commentariat who, for instance, talk willfully of a conflict in the South China Sea, I suggest that a full-scale sea battle between China and the United States is unlikely.

Instead, the evolution of a new world order—a fully multipolar world composed of three (perhaps four, depending on how India develops) large regions that are distinct in the workings of their economies, laws, cultures, and security networks—is manifestly underway. My sense is that until 2018, multipolarity was a more theoretical concept—more something to write about than to witness. This is changing quickly: trade tensions, advances in technologies (such as quantum computing), and the regulation of technology are just some of the fissures around which the world is splitting into distinct regions. Multipolarity is gaining traction and will have two broad axes. First, the poles in the multipolar world have to be large in terms of economic, financial, and geopolitical power. Second, the essence of multipolarity is not simply that the poles are large and powerful but also that they develop distinct, culturally consistent ways of doing things. Multipolarity, where regions do things distinctly and differently, is also very different from multilateralism, where they do them together…

Read an interview with O’Sullivan and more of the excerpt from his new book, The Levelling: What’s Next After Globalization quoted above at “Globalisation is dead and we need to invent a new world order.”

For more on the history of nativism and protectionism, especially in the U.S., concluding, as Pisani-Ferry and O’Sullivan do, that they’re with for awhile, see David Kotok‘s “Borders.”

* Tom Robbins , Even Cowgirls Get the Blues

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As we renew our passports, we might recall that it was on this date in 1405 that Ming Dynasty admiral Zheng He set sail on the first of his seven exploratory “treasure voyages” to Southeast Asia, South Asia, Western Asia, and East Africa, exacting tribute and encouraging trade.

After his death, at the end of his seventh expedition, Ming naval efforts declined dramatically (the government’s attention having been diverted by a threat from the Mongols in their northwest).  1950s historians like Joseph Needham popularized the idea that after Zheng He’s voyages, China turned away from the seas (as reflected in to the Haijin edict) and was isolated from European technological advancements.  But modern historians point out that Chinese maritime commerce didn’t totally stop after Zheng He, that Chinese ships continued to participate in Southeast Asian commerce until the 19th century, and that active Chinese trading with India and East Africa continued long after the time of Zheng.

In any case, it’s clear that Zheng He belongs atop any list of maritime adventurers– the vanguard of globalization.

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Statue from a modern monument to Zheng He

source

 

“The map? I will first make it.”*…

 

Portuguese-Planosphere__1553012500415

Nautical map of the world by Nicolo di Caverio, 1506

 

From the fifteenth to the eighteenth century, European powers sent voyagers to lands farther and farther away from the continent in an expansionist period we now call the Age of Exploration. These journeys were propelled by religious fervor and fierce colonial sentiment—and an overall desire for new trade routes. They would not have been possible without the rise of modern cartography. While geographically accurate maps had existed before, the Age of Exploration saw the emergence of a sustained tradition of topographic surveying. Maps were being made specifically to guide travelers. Technology progressed quickly through the centuries, helping explorers and traders find their way to new imperial outposts—at least sometimes. On other occasions, hiccups in cartographic reasoning led their users even farther astray…

How cartography made early modern global trade possible: “First you make the maps.”

* Patrick White, Voss

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As we find our way, we might recall that it was on this date in 1578– the same day that King Henry III laid the first stone of the Pont Neuf (“New Bridge”), the oldest remaining bridge in Paris– that the Catacombs of Rome were (re-)discovered.  Underground burial sites in use mostly in the 2nd and 3rd centuries AD, they were decorated with both iconographic and stylistic paintings and mosaics.  After their rediscovery, it took several decades to explore and map them; indeed, new discoveries have been made as recently as the 1950s.

220px-Eucharistic_bread

Eucharistic fresco in the Catacombs [source]

 

 

Written by LW

May 31, 2019 at 1:01 am

“How does it happen that trade, which after all is nothing more than the exchange of products of various individuals and countries, rules the whole world”*…

 

Expandable version here

The map above is probably the most detailed map of Medieval Trade Routes in Europe, Asia and Africa in the 11th and 12th centuries you can find online. It includes major and minor locations, major and minor routes, sea routes, canals and roads.

martinjanmansson [see here] explains that:

Even before modern times the Afro-Eurasian world was already well connected. This map depicts the main trading arteries of the high middle ages, just after the decline of the Vikings and before the rise of the Mongols, the Hansa and well before the Portuguese rounded the Cape of Good Hope…

Explore the global markets of the Middle Ages at: “An Incredibly Detailed Map Of Medieval Trade Routes.”

See also Michael Frachetti’s fascinating Long Now Seminar talk, “Open Source Civilization and the Unexpected Origins of the Silk Road.”

* Karl Marx, The German Ideology

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As we contemplate commerce, we might spare a thought for Francois-Marie Arouet, better known as Voltaire; he died on this date in 1778.  The Father of the Age of Reason, he produced works in almost every literary form: plays, poems, novels, essays, and historical and scientific works– more than 2,000 books and pamphlets (and more than 20,000 letters).  A social reformer, Voltaire used satire to criticize the intolerance, religious dogma, and oligopolistic privilege of his day, perhaps nowhere more sardonically than in Candide.

 source

 

Written by LW

May 30, 2018 at 1:01 am

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