This folks is the money shot. Globalization defenders wrapped in the flag of “free” trade are being slowly disrobed.

Now this tributary is interesting courtesy of the Fed. Kohn in a speech today talks about how he believes inflation will moderate over the next year as economic weakness takes hold. By this argument we get a moderating headline reading (ok), but still higher prices. What Mr. Kohn and his cult need to be asked (and every pundit who subscribes to this absurdity) is how that helps Jane Doe who has declining credit capabilities, stagnant wages, no job security and no social safety net (GAO head retires on back of warnings about US solvency). In South America they call this stealth devaluation.

Larry Summers was on television this am discussing NAFTA. He SAID that many of the assumptions that went into NAFTA were simply exaggerations and or things that just haven’t come true. Globalization is full of over the horizon promises (the stock and trade of the financial markets), but in the end it is a shear arbitrage which seems to be running its course. It is an arbitrage that has made an end run on labor – the home team clearly made itself a target but the punishment was disproportionate – and effected a historic shift of power from workers to capital. It is an arbitrage that has resulted in all time high profit margins. It is an arbitrage that has fueled itself off the rotting carcass of US industrializing and 0% financing (vendor and private). Theses are all indisputable facts, not over the stock obfuscations of the Davos set.

A much ignored story this week was a blurb about the first 7 figure financial bonuses paid in China. Why is this important? Because this is after all what we do, not them. Import price inflation is one thing, but Chinese investment bankers were conveniently left out of China’s WTO sales pitch to Congress. The raid on the industrial base was foreordained, but beating the house in the home team’s casino wasn’t part of the master plan. The Chinese must have been as insulted by the NYT magazine factory floor bit – as Russell Crowe’s “Gladiator” said, “I will have my revenge.”

The cold war/multinational logic that governed the globalization snowball has enabled unsound policy mistakes over and over again. Stiglitz is out with a comment this am that the past two Fed Chairman are guilty of being asleep at the wheel, one knowingly and the other not. No doubt people, strike that, companies and the financial complex have benefited, a large number of which have substantially no tangible claim. More kindling to the growing discontent

It was Eisenhower who warned of the creeping power of the military industrial complex. Surely the purveyors of the durable goods numbers worship at their alter, but that is another story. The military complex is nothing compared to the insidious disease they call globalization (in its current form) and its patrons in the financial complex.