The End of Globalization????

Ed Marsh | May 3, 2011
From Barron's - here Saturday March 26th 

Seems like a bit of a reach.

WE HUMBLY ACKNOWLEDGE THAT WE'VE been among those aforementioned cranky pessimists, and so is one of our favorite market pundits recently interviewed inBarron's, MacroMavens' Stephanie Pomboy. In her latest dispatch, Stephanie has come up with an epiphany, or it may be the product of too little sleep and too much coffee. We can't make up our mind which, but like everything Stephanie writes, it's provocative, feisty and smart.

The long and short of her discovery is that the Sendai quake in Japan will prove to be "the book-end on the Era of Globalization begun with Reagan's speech at the Brandenburg Gate. Already contending with the outbreak of riots and civil unrest in developing nations, Japan's quake conspires to solidify burgeoning doubts about the blessings of offshoring."
As companies from Boeing to GM cope with a shortage of Japanese parts, she goes on, "the realization that even developed economies with stable political and social backdrops are not without risks surely has U.S. executives considering the benefits of sourcing supplies at or close to home."
So what she envisions is that the tragedy in Japan over the long pull "will prove a blessing for the U.S., resuscitating our moribund manufacturing sector and returning jobs from overseas."

The process and its benefits, she admits, isn't going to happen overnight, but rather will unfold over years, if not decades. In the interim, while they work to centralize their supply chains and ultimately bring production back home, companies, Stephanie predicts, will hold more inventory as a matter of course. And the impulse to stockpile, she reasons, "diminished by the opening of borders and the disinflation it ushered in," will get a new lease on life.

"Mother Nature," she speculates, "may have accomplished what Bernanke could not. By shifting the tectonic plates in a way that finds marginal hiring and production taking place at home, she may have sown the seeds for a durable recovery."