Wednesday's Top 10: Flipping trends; Why all the world can't export its way to growth; Are larger cities really more productive?; Secular stagnation; Dilbert

I'm back with my weekly Top 10 on a Wednesday. Here's my Top 10 links from around the Internet at 1 pm today. As always, we welcome your additions in the comments below or via email to bernard.hickey@interest.co.nz. 

See all previous Top 10s here.

My must read today is #3 from Gavyn Davies on a disturbing slowdown in global trade growth and what that means for global GDP growth.

1. Old trends and new trends - The Atlantic has come up with a nice piece looking at how some 'trends' have flipped and are now 'non-trends'.

The include how solar power has flipped from being expensive to being cheap, and how China's population bomb looks like busting.

Surprisingly, others include falling US carbon emissions and a real slowdown in medical cost inflation.

It's these reversals that can change your view of the global economy and the trickle-down to us.

The fall in the number of kilometres traveled in cars is the most interesting.

It's happening here and in the US.

Here's The Atlantic:

With gasoline more-or-less permanently at $4, Americans are finally adjusting their lifestyles, driving less and less even as unemployment falls. Meanwhile, rail traffic is up, with Amtrak logging a 55% gain since 1997.

2. US Productivity growth - It turns out that productivity growth is not necessarily connected to population growth in certain parts of the country.

There's a long held view that when cities grow they generate productivity growth by their workers.

This piece from Richard Florida in Atlantic Cities suggests otherwise. It has some cracking maps and charts.

Only one of the top 10 leading population growth metros broke into the top 100 in terms of productivity growth, Austin in 64th place. Six of out of the top 10 metros with the highest rates of population growth saw real declines in productivity over the course of the decade. And the average rate of economic growth across these top 10 metros was also negative, (-0.53 percent per year) and beneath the U.S. metro average (of 0.48 percent annually).

When it comes to fast growing large metros, Houston and Atlanta both experienced considerable population growth rates over the past decade, while seeing real declines in productivity over the period.

3. Why world trade growth has lost its mojo - Gavyn Davies writes in his (not paywalled) FT blog about an apparently surprising slow-down in global trade growth.

When everyone is trying to export their way to prosperity without buying much then the world has a problem.

In part, the weakness in world trade has clearly been due to the cyclical slowdowns in the eurozone in 2012, and in the BRICs in 2013. Because trade between the member states inside the eurozone is counted as part of world trade, the euro crisis has had a particularly large effect. But this effect should have been reversing by the middle of 2013, so it is disturbing to see that the decelerating trend in trade flows has continued (though there have been tentative signs of revival in the last couple of months).

The WTO’s latest projections show that the normal 2:1 relationship between trade and GDP growth will be restored gradually over the next few years, but there are many reasons for doubting this. One intractable problem is that the export-led growth model followed by many emerging economies in the last few decades seems to have run into the sands. The sluggish recovery in import demand in the developed economies looks set to continue, implying that the emerging world will need to find ways of boosting their domestic demand so that trade flows within the emerging bloc can expand more rapidly.

4. Secular stagnation - Paul Krugman writes here at the NY Times about the risk of a long period of weak demand in the global economy holding everyone back. He seems to have a point. 

This chart Krugman uses showing US debt to GDP (ie leverage) explains part of the story.

Krugman has a few ideas for solutions.

One answer could be a higher inflation target, so that the real interest rate can go more negative. I’m for it! But you do have to wonder how effective that low real interest rate can be if we’re simultaneously limiting leverage.

Another answer could be sustained, deficit-financed fiscal stimulus. But, you say, this would lead to exploding public debt! Actually, no – not if the real interest rate is persistently below the economy’s growth rate, which it will certainly be if it’s persistently negative. In that case the government can run a primary deficit even while keeping the debt-GDP ratio constant – and the higher the level of debt, the higher the allowable deficit.

OK, I’m shooting from the hip here. The main point is simply that the weirdness of our current situation may well go on much longer than anyone currently imagines.

5. Pandacam - The star of the US Government shutdown is a Panda. 

As of this morning, the camera that streams the antics of Tian Tian, Mei Xiang, and Mei Xiang's as-yet-unnamed cub has been turned off. Which is, obviously, an enormous loss to bored office workers the nation over ... but which is also, in the scheme of things, not a great sacrifice. (It's the camera, to be clear, that has been turned off; the pandas themselves will be free to frolic unfettered by the shutdown.)

7. Life on Treasury Island - This (unpaywalled) piece in AFR from Australian financial bureaucrat Jason Murphy paints an interesting picture of life on Nauru.

8. An excellent blog - This Guardian series quoting what London investment bankers really think has been cracking. It's now coming to an end. Here's the 10 best quotes from the series. 

This is my favourite.

"It's strange. Bankers are so smart, yet they get this thing wrong. They spend their lives in an office when the only truly valuable thing in life is time. It is the only thing that is not replenishable. You can always make more money, but you can never get more time. Maybe it's because death is such a taboo in our society; that people live in this illusion that their life will go on forever."

9. Totally a video about the evolution of the guitar solo. It's time for some mid-week fun. 

10. Totally Jon Stewart explaining what's really happening in Washington.