Two things caught my eye this morning. Item #1: If you want to know how the power has shifted in the world of banking, The Financial Times has a fascinating full-page story entitled "The fearsome become the fallen". It compares the rankings of the leading banks in 1999 to the rankings right now, as of March 17th. Here’s the key paragraph:
A decade ago, a list of the world’s largest financial institutions was dominated by banks from the US and UK. Today, just four of the top 20 have their headquarters in the US, still the world’s largest economy. HSBC, at heart an emerging markets bank, is Britain’s sole representative.
All you need to know to understand this is to look at the top three, with their market cap size in billions of dollars, in 1999:
Citigroup ($150.9)
Bank of America ($112.9)
HSBC Holdings ($93.7)
Compared to the top three, with their market cap size in billions of dollars, in 2009:
Industrial & Commercial Bank of China ($175.3)
China Construction Bank ($128.7)
Bank of China ($112.8)
And, now, over to my favorite topic…you can almost set your watch to it because, every so often, The New York Times will run its regular piece warning of the great threat to human kind: the protectionists are about to overrun us. And, sure enough, this morning they were at it again:
After repeated pledges by world leaders to avoid erecting trade barriers, protectionism is on the march, provoking nasty trade disputes and undermining efforts to plot a coordinated response to the deepest global economic downturn since World War II.
From a looming battle with China over tariffs on carbon-intensive goods to a spat over Mexican trucks using American roads, barriers are going up around the world. As the recession’s grip tightens, these pressures are likely to intensify, several experts said.
And…
“The U.S. is in such great danger of backing away from free trade,” said Kenneth S. Rogoff, a professor of economics at Harvard. “The next two years could be a disaster for free trade.”
Oh, sigh: when will they ever get off this tirade? We can only hope that the next two years will be a disaster for "free trade" because maybe, then, we can get back to a real debate about trade, not about marketing phrases that have nothing to do with trade. "Free trade" doesn’t exist. What these elites are upset about is that they can’t jam through the deals they’ve written up that are huge long lists of protections for capital and investment. These deals are the real protectionism: protecting corporate rights. Indeed, the real story here is the info that gets buried at the bottom of the story which should have been the lead part of the story:
Some trade skeptics caution against making too much of the link between the economic crisis and protectionism. Lori Wallach, director of the global trade division at Public Citizen, a consumer advocacy group, noted that many countries had not raised tariffs to the highest levels permissible under trade laws.
Get it. For all this screaming about "protectionism", tariffs levels are still low in many parts of the world.
As I said, prey for the cratering of "free trade", and, then, let’s get to a real debate about trade rules.
