From Steve Roach's column today:

The Europeans and Japanese believe they have suffered enough and are pointing the finger at others — mainly China — to pick up the slack. US politicians are also sympathetic to this line of reasoning. Consequently, the role that China plays in venting global imbalances is also likely to be a key issue in the year ahead. For what it’s worth, I think this debate overlooks a critical consideration: Europe and Japan are wealthy countries that have dragged their feet endlessly on reforms, whereas China is still a very poor country that has been aggressive in embracing reforms. Why should China be called on to compensate for adjustments that Europe and Japan are unwilling to undertake?

Indeed, why should they? I can only hope that the forces of the market will help all of us trade freely without fighting, but I fear the U.S. is picking a trade fight with China. Neither China nor Europe nor Japan are to blame for the ongoing and upcoming price to be paid by the U.S. economy. We've done that to ourselves, but someone must be blamed, and it will be China.

I can't really figure out how the .3% lost from the Producer Price Index in November is supposed to be a good thing[1]. This number came out before the negative Consumer Confidence data which was credited with taking the market lower. In any case, they still don't say much about what falling producer prices mean in an era of cheaper dollars and more expensive raw materials.

A broad index of commodities, the CRB, has risen 7% in November (and has been on the rise for months), so their drop in prices can only be the result of a lack of pricing power. A lack of pricing power is, of course, an indication of deflation not inflation, and thus really stirs the pot. The Fed says there's no longer any real risk of deflation, but they still didn't raise rates. The economy is expanding but isn't producing any jobs. Everywhere one looks, the data is conflicting. What's an amatuer economist to do?

[1]By the time I captured the Wall Street Journal article for my archive, they had started spinning it neutral. They had been blowing positive when the market seemed to like it. Eventally, they decided it must not be positive since the market thought it wasn't.