Rebalancing Underway

And the U.S. government is forcing the rebalancing by debasing the dollar. Debasement is crushing imports and tightening the spending of the U.S. consumer. This could lead to destabilizing devaluation turf battles in East Asia, and a Germany that can't export its way out of recession. Meanwhile, foreign reserve holdings of dollar denominated assets will be worth less.

And good luck going to SDR's when most of the world is fighting tooth and nail for market share.

Export oriented countries will eventually - after depleting their reserves in one fashion or another - reap the whirlwind of any long term trade collapse. And it does look like the collapse is long lasting.

In another sign of how deep the global recession has become, the ports of Los Angeles and Long Beach on Friday reported their worst combined import statistics for September in nine years...

The port of Los Angeles received 309,078 containers packed with imported goods in September, representing a decline of 16% from the same month last year and 27% from September 2006, L.A.'s best month ever for imports. Long Beach received 224,924 import containers in September, a drop of 19% from a year earlier and 32% from September 2007, the port's best September ever.

---
1 "Imports dive at ports of Los Angeles and Long Beach" - LA Times