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John Mauldin's Outside the Box

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  • Geithner, China, and the Specter of Technical Insolvency

    This week I bring you two different articles as an offering for Outside the Box. As a way to introduce the first, let me give you the quote from Merrill Lynch economist David Rosenberg about the rising threat of global trade protectionism: 'The Financial Times weighs in on the rising threat of global trade protectionism in today's Lex Column on page 14 ('Economic Patriotism'). The FT points out that the stimulus packages of many countries include 'buy local' provisions. At home, there is a proposed inclusion of a 'Buy American' provision in the economic recovery package and this could set off trade retaliation from importers of US goods. Here is what the FT had to say, 'It was trade protectionism that made the 1930s Depression 'Great'. Congress would do well to understand that it is in everyone's interest to keep trade open today.' I have long written that the one thing that could derail my Muddle Through (at least eventually) view point is a return to trade protectionism. Nothing could be more devastating to the hopes of a recovery. Nothing could more surely turn a recession into a depression, and a global one at that....