“The gap in our economy is between what we have and what we think we ought to have.” - Paul Heyne, US economist-educator“Globalization is a fact of life. But I believe we have underestimated its fragility.” - Kofi Annan, in 2001. Annan a Ghanaian, was the 7th Secretary-General of the UN.“It’s a recession when your neighbor loses his job; it’s a depression when you lose yours.” - US President Harry Truman By George Lauriat, AJOTMIND THE GAP For those who use the London underground, there is a familiar refrain heard when leaving or entering the train. The “mind the gap” announcement alerts passengers to the separation between the platform and the cars. In the US “mind the gap” could easily refer to the trade gap between the imports and exports of goods (exclusive of oil and services). The trade gap is nothing new. The United States has been running trade deficits for three decades plus. However, the trade deficits began to expand at an unprecedented rate in the late 1980s and continued to rise at a rapid clip until slamming into the barrier of economic recession in the fourth quarter of last year. For example, back in 1987 the goods deficit was just over $152 billion, significant but with a booming economy, not a major concern. But by the 2001, economists were getting nervous about the rising trade deficit, coupled with strong dollar…and a suspiciously weak Chinese Yuan. In November of 2004, Federal Reserve Chairman, Alan Greenspan jolted Wall Street when he commented that the US trade deficit “cannot continue to increase forever.” This was economic vagrancy, an economy blissfully rolling along with no visible means of support. Still the trade deficits continued to increase and according to the recently released data from the US Census Bureau, the goods deficit in 2008 was $821.2 billion, up over the $819.4 billion in 2007. Globalization: sourcing and outsourcing Back in 2001, the Greenspan had already believed that the US economy was already in recession. Greenspan was probably right but the impact at “Mall” level was minimal. High value consumer imports destined for US retailers like Wal-Mart, Target, Costco, Sears, and Kohls continued to pour in from China. More importantly, the goods sold as fast as the shelves were stocked. The result was that the retailers posted record sales while China tallied record trade surpluses. In 2008, the US trade deficit with China hit a record $266.3 billion as imports from that country rose to a record $337.8 billion. Money is one thing but the physical impact is almost impossible to imagine. In 1997, China exported 1.48 million TEUS worth of goods to the US. By a decade later the total had risen to 8.8 million TEUS, which in terms of length would extend around the world one-and-third times. During the same span, US imports from Japan went from 721,000 TEUS to 783,000 import TEUS. Amazingly, China’s numbers do not include Hong Kong, the United State’s number three importer in terms of TEUS. Hong Kong sent 631,000 boxes to the US in 1997 and ten years later the number was 644,000 – albeit almost half of Hong Kong’s exports to the US shifted to mainland ports over the period. The reasons that the retail boom in the US continued were varied. Real estate and the housing market were white hot, with easy mortgages and low interest rates. Americans began using their ever increasingly higher valued homes like ATM machines, employing refinancing to generate disposable income. Although certain sectors would time to time be hit, the globalization of share markets seemed to act like a child’s seesaw, when one segment was down another rose. Another aspect to the period leading up to last year’s crash was the invasive nature of globalization. The Internet was more than a worldwide people’s movement it connected businesses in ways that had never been imagined. An ATM card in Boston, Massachusetts, dispenses cash just as well in Boston, United Kingdom. Equally, any IT service could be provided from any spot i