I got to wondering, who is getting all the net cash in the world. What countries. Yeah, we all know about China and Saudi Arabia. But is there something showing all the “comes from” and the “goes to”?
In economic terms, this is called the “current account”. ( It leaves out long term money flows like investments in capital stock, so would reflect that we send money to China for plastic crap and leave out the counter flow of that money to buy our farm land. That is, it shows exactly what I want to know.)
http://www.investopedia.com/terms/c/currentaccount.asp
Definition of ‘Current Account’
The difference between a nation’s total exports of goods, services and transfers, and its total imports of them. Current account balance calculations exclude transactions in financial assets and liabilities.
But normally it is just figured for one year. A bit more looking around found a “Cumulative Current Account” map. How is that money stacking up over time?
Turns out that map is very interesting….
Yes, it is an old map. Only up to 2008. So a good 1/2 decade behind where we are now. Probably still about the same pattern, though.
Down in the description it says it is from 1980 to 2008, so a good 28 years of money flow. It also includes the rather interesting table of the values used to make the map reproduced down below.
Now take just a minute to look at that chart. Other than Venezuela exporting tons of oil, and French Guiana that is technically part of France so ought to be counted as Europe numbers, the rest of “The New World” is current account negative. Australia / New Zealand too.
For Europe, Germany is the big engine. France is a little engine (but in the prior posting we saw that it has turned negative now too, so eventually this ‘cumulative’ will turn). The Nordic countries and Netherlands also are net positive; but the Mediterranean arch, Iberia, and Eastern Europe are in trouble on current accounts. There are clearly two Europes. They can not stand under the same currency and survive without massive cultural and economic upheaval.
Much of Africa is not very strongly one way or the other, but the Oil States stand out as net positive. Similarly in the “Middle East” and western Asia the oils states also stand out as green. But other than Saudi Arabia, not all THAT deep a green. Without massive oil money inflows, those countries would be sunk. Russia is a bit of a surprise. They must sell a lot of oil, gas, and minerals / timber to Europe and China to be that green. The Indonesian oil arch also shows up (though they are gaining in manufactures too). Then there are China, Japan, and Korea as net green / gainers. (North Korea shows up as grey / no data).
The oil countries being green is not much of a surprise to me, but the manufacturing centers of China, Japan, Germany, and Korea are surprisingly positive. I always thought of them as more resource dependent. Also the dismal showing of the UK and Australia / New Zealand are a surprise. Canada too. (One presumes their Oil Bonanza is not yet fully reflected in the cumulative numbers).
All in all, a very illuminating image. Why oil so dominates global thinking. Why being a “mercantilist” is so attractive. Why the EU will not hold together under one currency. (And why a North Euro and a South Euro might work). It even shows why bringing Turkey into the EU would be a major financial problem. Like adding another Spain or Italy.
It is also extraordinarily odd to see Russia and China, the two key elements of the old Communist / Cold War era who were essentially not relevant to global production, dominating and winning the current account race of world trade.
Were it not for the Germanic / Scandinavian arc, Europe would be of little importance financially and the “winners” would be oil states, Russians, and Asian manufacturers.
In the end, I’m left wondering if it is stupid, or crafty, that the Anglo countries have managed to trade paper and ‘financial instruments’ for so much oil and goods. Is there some grand strategy to creatively default on all those promises and end up with the goods for nothing? Or are we just selling our capital stock for a bowl of gruel and mug of beer?
The Data
From that same link for the chart, there is this table of the data used. In $Billions of cumulative Current Account Balance.
Cumulative Current Account Balance Country CCAB, bn Japan 2,747.943 China 1,521.887 Germany 1,047.328 Russia 613.978 Switzerland 596.977 Netherlands 523.055 Saudi Arabia 451.337 Norway 444.011 Taiwan 365.121 Kuwait 346.713 Singapore 309.727 United Arab Emirates 257.365 Sweden 232.236 Venezuela 191.734 Hong Kong SAR 188.310 Belgium 186.513 Algeria 159.451 Libya 156.081 Malaysia 145.888 Qatar 145.276 France 111.443 Korea 111.264 Iran, Islamic Republic of 89.331 Finland 85.127 Brunei Darussalam 69.732 Denmark 44.564 Luxembourg 42.328 Angola 33.466 Iraq 26.315 Trinidad and Tobago 24.640 Nigeria 20.751 Oman 19.866 Azerbaijan 19.229 Austria 14.919 Gabon 14.558 Turkmenistan 11.673 Botswana 11.427 Bahrain 10.510 Uzbekistan 7.358 Indonesia 5.690 Namibia 4.519 Timor-Leste, Dem. Rep. of 3.943 Papua New Guinea 3.829 Yemen, Republic of 1.623 Kiribati 0.074 Vanuatu -0.096 Tonga -0.201 Eritrea -0.320 Solomon Islands -0.384 Samoa -0.430 Mongolia -0.505 Bolivia -0.523 Comoros -0.628 São Tomé and Príncipe -0.645 Gambia, The -0.800 Swaziland -0.921 Suriname -0.951 Djibouti -0.963 Guinea-Bissau -1.059 Dominica -1.098 Bhutan -1.139 Liberia -1.150 Haiti -1.370 Cape Verde -1.383 St. Vincent and the Grenadines -1.462 St. Kitts and Nevis -1.481 Nepal -1.562 Belize -1.571 Afghanistan, Rep. of. -1.768 Central African Republic -1.829 Seychelles -1.836 Grenada -1.852 Tajikistan -1.937 Equatorial Guinea -1.959 Kyrgyz Republic -1.981 Sierra Leone -1.985 Syrian Arab Republic -2.079 Burundi -2.104 Maldives -2.163 Antigua and Barbuda -2.220 Barbados -2.245 St. Lucia -2.414 Mauritius -2.476 Togo -2.980 Cambodia -3.377 Lesotho -3.396 Fiji -3.637 Paraguay -3.678 Congo, Republic -3.729 Montenegro -3.746 Rwanda -3.782 Guyana -3.799 Macedonia, Former Yugoslav Republic of -4.094 Malawi -4.110 Moldova -4.251 Mauritania -4.376 Malta -4.520 Niger -4.580 Mali -4.666 Armenia -4.712 Guinea -4.789 Egypt -4.936 Benin -5.111 Lao People\'s Democratic Republic -5.322 Myanmar -5.981 Albania -6.005 Uganda -6.009 Zimbabwe -6.476 Burkina Faso -6.663 Uruguay -6.933 Cameroon -6.995 Ukraine -7.381 Slovenia -7.412 El Salvador -7.723 Chad -9.263 Ethiopia -9.296 Ecuador -9.435 Bahamas, The -9.610 Georgia -10.373 Honduras -10.519 Madagascar -10.547 Kenya -10.721 Bangladesh -10.805 Zambia -10.846 Côte d\'Ivoire -11.475 Morocco -11.552 Panama -11.614 Kazakhstan -11.712 Jordan -11.714 Congo, Democratic Republic of -11.894 Israel -11.943 Philippines -12.597 Senegal -12.791 Ghana -13.439 Bosnia and Herzegovina -14.037 Jamaica -14.095 Cyprus -15.262 Belarus -15.527 Dominican Repub -15.594 Tanzania -15.639 Estonia -15.963 Mozambique -16.335 Costa Rica -17.266 Nicaragua -19.224 Thailand -19.586 Sri Lanka -20.541 Tunisia -20.623 Guatemala -21.948 Iceland -21.983 Chile -22.794 Latvia -23.392 Lithuania -25.820 Serbia -26.927 Croatia -30.039 Slovak Republic -34.588 Vietnam -34.599 Bulgaria -41.185 Peru -41.389 Ireland -46.067 Czech Republic -47.131 Pakistan -50.424 Lebanon -51.530 Sudan -53.294 Colombia -53.379 Canada -56.757 South Africa -69.912 Argentina -72.486 Romania -89.819 Hungary -91.720 New Zealand -95.316 India -137.796 Poland -182.901 Portugal -187.217 Turkey -192.089 Brazil -220.506 Greece -249.371 Italy -262.901 Mexico -263.667 Australia -529.031 United Kingdom -695.155 Spain -773.443 USA -7,335.869
Now the most startling number, bar none, is that last one. Those numbers are in Billions. The USA has had 7.3 Trillion dollars of cumulative current account outflows. It covers the entire top 6 and most of Saudi Arabia in #7 position, net inflow countries.
Totalling 7.498 vs -7.335 for the USA.
Also of interest is the country list just above the USA. Spain, UK, Australia and then Mexico, Italy, and Greece. Brazil and Turkey stuck in between them and Portugal.
Kind of makes you go “Hmmmmmm….”
Yes, things need to be adjusted for population size and GDP. But just on the face of it, it’s pretty clear that even with Oil Exports Mexico is spending into the ground. (Though one wonders if drug money inflows are accounted…) The UK has clearly been liquidating for years, and one wonders what Australia has been spending on, what with all those mineral and grain exports. Greece is no surprise, but Brazil? The economic miracle of the ’80s and 90s? Turkey too?
At the top end it is surprising to see that the top three are all manufacturing export countries. Japan leading China (all those cars and TVs/Stereos from the ’80s and 90s?) and then Germany. Even Russia, Switzerland and the Netherlands beat out Saudi Arabia?
I can only presume that a lot of ‘current cash’ flows to Swiss banks. But the Netherlands? What in the world are they selling? I suppose the Dutch are just doing a lot of trading, as they have always done.
At any rate, it’s an interesting picture that explains much in terms of who has the money, who is spending it, and who owns whom.
Looking forward, the implication is that either the heavily negative countries “creatively default” on those long gone purchases via degrading the cumulative counter flow of ‘obligations’, or we simply sell out to those green countries and call it a day… It is also pretty clear that between this long standing “consumption to excess” and our present massive deficit spend at the Federal and other governmental levels; the USA is entirely and completely unsustainable.
Neither at the level of our government, nor at the level of our collective consumption of global goods. We’re all looking to retire (as boomers) and continue consuming at the same unbalanced rate of the prior 28 years; but have nothing much to trade in return for those goods. So far we’ve done it by trading paper ( global reserve currency boat loads of cash, Treasury paper, deeds to stuff) but with the recent collapse of paper assets in real estate, and The Fed making treasuries unattractive, and inflation making the $US less valuable as a reserve currency… Well, I’m just not seeing where the next $7 Trillion of empty promises are going to be floated into the world… And make no mistake about it. Unlike The Fed buying US Treasuries, for current accounts, someone in another country has to accept a promise to pay “someday” or an investment vehicle to fund the ‘buy’.
It looks to me like “Something’s gotta give”, and it won’t be pretty.
No wonder all the politicians in D.C. of all stripes keep doing a frantic kick the can.
“The USA – Ten Spains and deeper in debt”
E.M. May I remind you of the 1993 Heisenberg Certainty Lecture #4 presented (as always) at that years Ig-Nobel Awards Ceremony at MIT, by the esteemed Paul Krugman (cough), which was –
Heisenberg Certainty Lecture #4.
Paul Krugman, Professor of Economics, MIT.
“The MIT Economics Department has now solved the riddle of
world economic crisis. It turns out that if you add up last
year’s reported imports and exports for all of the countries
in the world, world imports exceeded world exports by more
than one hundred billion dollars. You know what that means.
It means that we are running a huge global deficit in our
interplanetary trade. So Ross Perot has it wrong. That great
sucking sound isn’t coming from Mexico — it’s coming from
outer space. Space aliens are stealing American jobs.”
Warren Buffett in Fortune Magazine …
America's Growing Trade Deficit Is Selling the Nation Out From Under Us. Here's a Way to Fix the Problem — And We Need to Do It Now.
Click to access warren_buffett_in_fortune_magazine_oct_03.pdf
I’m not crazy about the solution (Import Certificates) but the illustration (Thriftville vs. Squanderville) is instructive.
Australia has only been negative since the disastrous Rudd and Gillard Labor governments have been elected. 5 short years to turn a positive from the Howard conservative government to a huge socialist labor negative.
@E.M. Peru is in the positive side, though its surplus fell down by 50% in the last year.
As exporters have changed countries, from the US and Europe to China, India,etc., the real questions would be: Who are those “kids” who have the cash? and what is it buying that cash?, the answer is easy: farm land and precious metals. Then the majority of mankind will end having nothing or, as in many cases, worthless papers….A new kind of medieval feudalism: A “Brave New World”, where “they” will be the “Alphas”, and you and me the “Gammas”.
Aldous Huxley interview-1958:
adolfogiurfa says:
20 February 2013 at 12:53 pm
“A new kind of medieval feudalism: A “Brave New World”, where “they” will be the “Alphas”, and you and me the “Gammas”.
Aldous Huxley interview-1958:”
Aldous Huxley was an avid LSD user. Very interested in chemical mind altering, in other words. His brother was globalist Julian Huxley. Very interested in shaping the new human (UNESCO) and depopulating/ruling the world (WWF).
I can’t decide whether Brave New World was meant as a warning or as a suggestion. THe Gammas in the book are happy. The Huxley clan was a bunch of globalists.
@DirkH: You are right, and he is (in the video above) enough sincere to say that the solution is DES-CENTRALIZATION, not more any centralized power at all, local economy, local governments: A kind of disappearance of all those DINOSAURS, which we all know and we can identify even by their family names, pulling the economic and political strings backstage for their own (and obvious pathological) benefit. Who having a sane mind, would desire such a degree of power?.
I think the distribution of assets in the US allows an easy path to “creative default”. The 1pct transfers into non USD assets, writes policy to inflate 10:1, then transfers back into USD assets. This would require some sort of collusion by the US government and its wealthiest citizens, but I’m sure someone could introduce them to each other.
“I can only presume that a lot of ‘current cash’ flows to Swiss banks. But the Netherlands? What in the world are they selling? I suppose the Dutch are just doing a lot of trading, as they have always done.”
1. Compare the Netherlands with Kuwait in terms of natural gas resources
2. big trader
3. head offices of many multi national corporations due to double tax treaties (now to be destryed by the EU)
4. big exporter of agricultural products and meat
5. big financial sector which is broken down recently
6. big international operating off shore business
7. big logistics and transport operations, shipping, trucking, railways en airtransport/cargo
Unfortunately the country has now entered it’s 4th depression in 3 years and the current government is tearing the country apart with crazy austerity plans and lunatic investments in wind turbines. Without the green investments there wouldn’t be a crises.
I find it amusing, that Canadians believe we will not be effected by the coming turmoil, amusing in the laugh or scream sense.
I suspect the intention is to inflate us out of existence, in which case the land owners will be some of the few to retain something of value.
Its probable we will wake up one morning to find our bank accounts devalued to nought, actually from an RRSP annual report, I notice the cash in my sock drawer is providing a better return over the last 10 years.The cash is only worth a 1/3 its value of 10 years ago, but it did not promise growth.So inflation is already galloping along.
Now I hear Provincial politicians claiming those earning more than $150,000 should pay even more tax. There goes any incentive for contractors.
Any time wealth concentrates in our economy, the government moves in and steals it.
Taxpayers plan their retirements, build wealth there and then govt changes the rules and ensures the investors cannot adjust their accounts to comply without paying gobs of tax.
As the bureaucrats feel contracts are non binding, it seems fair to me that their pensions should evaporate.
Socialism is wonderful, until you run out of other peoples money.
So what does the holder of the net cash have?
Do they hold empty promises or real wealth?
Do they hold wealth or a hot potato? In that, net cash may become a liability rather than just a zero as the holders try to redeem these notes, spending more effort than they are worth.
The money was borrowed on the promise our children will pay the tab, what happens when the kids say, forget it and sell us lazy sods into slavery.
Watch this:
@ E.M. ” Is there some grand strategy to creatively default on all those promises and end up with the goods for nothing? Or are we just selling our capital stock for a bowl of gruel and mug of beer?”
I would have to sadly opine that if there s a grand strategy, it is not a strategy that benefits the masses of the USA. Most of the goods we have bought from overseas are consumer goods that currently have been used up, chewed up and metaphorically spat into the land fills. We may have gotten some short term gain, but not a long term gain. The long term effect of all those cheap goods is that we no longer have the factories, the infrastructure, or even the trained workers, to create all those products. Imagine a crack junky who has learned how to cheat his dealer for years on end. As he approaches the final end of his long and successful “scam for drugs” he looks in the mirror and sees his decaying and weakened body, his toothless grin and shouts “YAHOO! I got all that crack for NOTHING!” Yeah… that’s us!
My unproved suspicion is that the economic damage to the US has been done on purpose, that is has enriched a small class while impoverishing the majority into serfdom. My suspicion is that it was decided sometime around 1970 or a bit earlier. The US was in the process of going to the moon — an unbelievable technical achievement! — and had a generation growing up with the idea that maybe peace was a good idea. What a dangerous combination! Something had to be done…A century and a half earlier, China had been destroyed by forcing it to accept the opium trade. The US would be hooked on a different drug, cheap VCRs, low priced clothes, goods produced by near-slave labor. Concurrently, US manufacturing was hit with OSHA, with EPA, with IRS, with every type of regulation and restriction which a bureaucrat could devise. So companies, one after another stopped making things and moved out of the country. And consumers did not complain because even though the companies were gone from the US, the goods still magically appeared on the shelves, and in fact the goods were cheaper than ever! In one generation we went from being the richest nation of (mostly free) people which ever existed, to the most debt ridden nation (of mostly controlled people) that has ever existed. I just cannot see how a switch of that magnitude can happen by accident. I cannot understand how a system that worked so successfully for almost two centuries can suddenly no longer work and completely reverse in only a few decades. I think Humpty Dumpty was pushed.
@ KevinM “This would require some sort of collusion by the US government and its wealthiest citizens, but I’m sure someone could introduce them to each other.”
LOL! Yeah… I am sure someone can get them together! :)
Must read: Ketchup, not blood on the trading floor by Spengler: http://www.atimes.com/atimes/Global_Economy/GECON-05-190213.html
Jason Calley says:
21 February 2013 at 12:56 pm
@ E.M. ” Is there some grand strategy to creatively default on all those promises and end up with the goods for nothing? Or are we just selling our capital stock for a bowl of gruel and mug of beer?”
I would have to sadly opine that if there s a grand strategy, it is not a strategy that benefits the masses of the USA….
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
There is a ‘ grand strategy’ and Pascal Lamy, Director General of the World Trade Organization let the cat out of the bag.
Remember H. L. Mencken’s observation ~
“The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary. “
Aside for the fact this quote shows that the sovereignty of nations has been a target for years, another key concept is Interdependence. Several years ago Al Gore let the cat out of the bag while presenting a national award to a Colorado FFA member. Gore asked the student what his/her life plans were. Upon hearing that the FFA member wanted to continue on in production agriculture, Gore reportedly replied that the young person should develop other plans because our production agriculture is being shifted out of the U.S. to the Third World.” The plan is to have different areas responsible for different things. Africa and South America for example would be responsible for food production, China and India for manufacturing, the US for technical inovation…. In trying to find an additional old link to that I ran across this.
This can all be traced back to the Club of Rome.
These quotes are lifted from The Green Agenda and Mankind at the Turning Point: Interdependence is Totalitarian Unfortunately the links within those articles to the original documents are now dead.
Just in case you think the hamstringing of the US economy is a fluke, read this from Al Gore’s book.
His buddy Bill Clinton is of course responsible for the rise of China.
None of the economic disasters in the EU and USA are a fluke. They were planned and executed with malice aforethought and the planners have profited handsomely.
Don’t forget Eugenics and the Fabians with their plans to smash the world and “REMOULD IT NEARER TO THE HEART’S DESIRE” as depicted in their stain glass window now proudly hanging in the London School of Economics. The same LSE where Pascal Lamy, Bill Clinton, Tony Blair and the Federal Reserve Chairman Ben S. Bernanke all lecture.
Eugenics was the brainchild of Charles Darwin’s cousin Francis Galton.
Julian Huxley, [another Fabian] the first Director-General of the United Nations Educational, Scientific, and Cultural Organization (UNESCO) and a member of the Eugenics Society SEE: Introduction to Eugenics