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Although I wasn’t planning on posting today, some data was released yesterday that underscores two major points about the nature of the world economy and the dangers it still face it that can’t be repeated often enough.is

The data seem pretty arcane – on South Korea’s exports. But that country’s trade patterns exemplify broader flows that have created a dangerously lopsided international economic system, that in fact set the stage for the last financial crisis, and that threaten to create a rerun.

The headline development is that Korea’s exports dropped sharply on a year-on-year basis in December – which in a conventional sense spells bad news for the U.S. and world economies. Korea’s, after all, is an economy heavily dependent on exporting. If its overseas sales are crumbling, that’s a strong indication that the economies of customer countries are too weak to buy much of what the Koreans sell.

But the real import of the new statistics concerns where the fall-offs have been biggest and smallest. Most important of all, virtually none of it took place in shipments to the United States. Specifically, Korea’s overall goods exports (no figures were provided on services exports) plunged by 13.80 percent from December, 2014 to this past December. But they dipped only 0.60 percent to America.

This disparity is the latest evidence that the United States is still playing its traditional contemporary role of global importer of last resort – even though its own growth is lagging. In fact, America’s overall goods imports have been growing much faster than its goods output (let alone its goods exports!) since the current economic recovery technically began back in the summer of 2009. That kind of growth can only be fueled by debt accumulation – which led to such misery in 2007 and 2008.

More broadly, because of the losses in real incomes resulting from years of the offshoring-friendly trade policies they pursued so avidly, U.S. leaders during the previous decade recognized that their ability to stay in power depended on one of two hopes materializing. First, against all odds and evidence, incomes in offshoring destination countries would rise so dramatically that Americans could increase their own earnings by supplying those new markets. Second, Washington could encourage the public to maintain its living standards by substituting borrowing for earnings. Since the first hope was dashed, the second was peddled – and like all houses of cards, ultimately collapsed.

But in addition to showing that the United States and its binge consuming remains the world’s import sponge – and thus growth engine – the Korea trade data make clear that China is not, as widely supposed, performing this function. Here’s why. China’s ostensible growth role stems from its status as the top export market for not only Korea, but most of East Asia. That, however, doesn’t mean that China is where most Korean or other Asian exports are finally consumed – which is what would be needed for China to deserve its growth leader title. After all, China’s economy is export-led itself. So what gives?

As reported in a Bloomberg article on the new trade figures, two-thirds of Korea’s goods exports to China are intermediate goods. They’re the inputs for final products – parts, components, materials, and the like, along with machinery and equipment – that are assembled in the People’s Republic. Many of the final products are sold in China, whose own growth is slowing. But many others need to be exported from China. And a large share goes to the United States.

So U.S. growth is what really pulls along economic activity throughout throughout the string of countries that largely serve as its supply chain – which includes China itself. And lagging American growth is what sends this process into reverse, including in China, even though cheap credit continues enabling U.S. imports to grow much more than they should.

It would be great to report that Washington is on the case and working to diligently to prevent worsening trade imbalances from moving the nation and world closer to another near-financial collapse – and perhaps a bigger one. But in 2012, President Obama and Republican Congressional leaders cooperated to win approval of a U.S.-Korea trade deal practically formulated to supercharge America’s bilateral deficit. And this past year, they secured trade promotion authority for the president that greatly increases the odds of Congressional passage of a Pacific Rim trade deal (the Trans-Pacific Partnership, or TPP) structured in much the same way. Moreover, a less publicized global trade deal covering high tech products, the Information Technology Agreement, is likely to have similar effects. And you thought Charlie Brown letting Lucy hold for his place kicks had a shallow learning curve?

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