Economic Efficiency Cannot Be Calculated

Several of my articles have pointed out negative aspects relating to free trade agreements. Free trade is an important element in the world economy, and a return to isolationism would have a negative impact on the lives of most of the people in the world.

If the world had no trade barriers, in a very short period of time consumers would have access to the lowest cost items. All things being equal, the world would see in theory an economic equilibrium of efficiency and cost. And that is the problem, things are never equal – and theories are never 100% achievable..

• Currencies are manipulated. Watch what the Fed is doing to the US dollar. China does not let its currency float (it undervalues the Yuan) to create an export advantage. Most Asian countries do the same.

• Tax structures are different. Most countries reimburse all taxes collected when products are exported.

• Subsidies provided to industry in each country vary such as very cheap electricity, guaranteed minimum product pricing, export financing, health care, social insurances; and provision of business land, structures, or employee housing.

We need free trade agreements. Our negotiators try for a 100% free trade. This does not make sense as we are allowing unfair competition to wipe out sectors in America which would be competitive – all things being equal. Free trade agreements need to be constantly reviewed and equalized. One of the main benefits of free trade is to improve and equalize the living conditions in the world. There should not be the consequence of lowering the living conditions in any country. When that is happening, the benefits of free trade are overshadowed by creation of social problems.

The economic theories of free trade, money supply, and interest rates use numerical analysis to predict anticipated outcomes. Obviously these tools are not 100% accurate or we would not be entering this recessionary Armageddon. The equations are missing human elements.

In my first management assignment, I created a performance monitoring system for 60 white collar employees. One member of the group, Earl, stood out as he was only carrying out 20% of the work of his colleagues. Obviously, Earl needed to go and I started to process the paper. In the meantime, Earl went on vacation for a month. The work output of the entire unit fell over 10%. The loss of productivity was obvious even without mathematical analysis.

When Earl came back to work the production returned to normal. Earl was not a producer but was a catalyst. This is something that the text books, the theories, and quantitative analysis can not identify or explain.

There are many “Earl” elements of our economy. Mathematical analysis is only the starting point. There is no way to identify all the “Earl’s” when decisions are made. This is why we must carefully monitor the consequences of all of our decisions to correct for unintended consequences.

Unfortunately, politicians do not want a review of their decisions. Their powerful jobs are more important to them than the good of the country, or their desire to do what is right.

In a country well governed, poverty is something to be ashamed of. In a country badly governed, wealth is something to be ashamed of. - Confucius

News of the Week

Credit SuisseGroup AG’s (CS) investment bank has found a new way to reduce the risk of losses from about $5 billion of its most illiquid loans and bonds: using them to pay employees’ year-end bonuses.

Japan has experienced a trade deficit for the second straight month - trade with the United States, the European Union and the rest of Asia suffered a decrease of 49.2 percent, 49.8 percent and 78.2 percent, respectively. I would use this as an indicator of the levels of economic contraction in the various regions which shows the current level of recession being about 50% worse in Asia. However, much of the loss of exports can be attributed to a stronger Yen.

GMAC, the financing arm of General Motors has received approval from the Fed to become a bank holding company. GMAC claimed they are at the door of bankruptcy. As part of the deal to become a bank, GMAC owners Cerberus (owners of Chrysler) and GM will have to give up control over the company. However, all the conditions were not finalized as of December 27, 2008. There is no question that the bankruptcy of GMAC would immediately shutdown GM’s dealer network – and the fate of GM would be sealed.

Investors in Bernard Madoff'salleged Ponzi scheme may get an idea what he has left by New Year’s Eve when he is forced to reveal his assets to regulators. Madoff’s foreign business units were given until January 26 to provide a similar accounting.

Approximately 30 US meat processing plants have lost their export licenses to Mexico due to poor sanitary conditions. The plants according to Mexican authorities have failed three inspections. The USDA has blocked import of Mexican beef this year for the same reasons.

Summary of the Week’s Economic Fundamentals

I still see nothing this week to influence my asset preservation investment strategy. As this was Christmas week, the players left the economy on autopilot and celebrated the season with family and friends. Therefore, I have ignored some of the weekly data (such as Treasury Bills) which have fluctuated. In my opinion, trends cannot be understood until the end of the second week of the new year.

The trailing indicators continue to show a moderate economic contraction. Below is a list of news which happened this week which either reinforces or contradicts any investment strategy.

Interesting but Not Indicating Anything

• The BEA has released the final 3Q 2008 GDP numbers which were revised slightly downward (click to enlarge all images).

• Home loan applications increased significantly last week. This Mortgage Bankers Association index covers 50% of all loan applications. I read elsewhere that there is no system in place to prevent double counting. Over 83% of all loan applications were for refinancing existing loans,

Positive Leading Indicators

• None this week

Negative Leading Indicators

• ECRI’s Weekly Leading Index continues to demonstrate deteriorating market conditions six months from now. As I contribute ECRI’s index result at the same time as this weekly summary, I cannot give you a link – but if you click on “more articles” under my picture above you can find this weeks submission.
• The price per barrel of oil remains hovering around $40 per barrel. In my travels in Asia this week, all shipyards seem to be dealing with cancellations for offshore oil rigs of various kinds. Just 3 months ago, there were five year backlogs in ship building – now you can get competitive prices for quick deliveries. This means oil has passed the lower threshold of fair pricing. Development has halted. Enjoy your cheap gasoline for now – sometime in the future we will all pay dearly for this.

Positive Coincident Indicators

• None

Negative Coincident indicators

• Consumer traffic at American retail stores declined 23.7 percent and sales fell 5.3 percent from last Christmas. On-line sales only declined slightly. I had earlier predicted Christmas sales would be off slightly – so it was even worse than my negative outlook.
• The Department of Labor released their weekly Unemployment Insurance Claims. Note adjustments in prior weeks. Jobless claims are now at the highest level since November 1982,.

Positive Trailing Indicators

• None

Negative Trailing Indicators

• The National Association of Realtors released their November 2008 numbers showing a drop in sales and prices of existing homes. These are the worst housing numbers since 1991 but they were probably due in part to buyer’s delaying purchases due to anticipated lower interest rates. I see no end in sight to a negative downward housing trend next year.

• Corporate profits before tax decreased $56.3 billion in the third quarter, compared with a decrease of $0.9 billion in the second according to BEA. All these profit numbers are skewed based on how you would like to interpret them (before tax, after tax, inventory adjustments, etc). As I has stated earlier, corporate profits (ignoring financials) were not that bad in the third quarter. It will be the fourth quarter’s numbers which will make you cry.
• The BEA released their November Personal Income and Outlays data, This data illustrated slight recessionary values.

• New orders for manufactured durable goods in November decreased $1.8 billion or 1.0 percent to $186.9 billion. This was the fourth consecutive monthly decrease and followed an 8.4 percent October decrease. Excluding transportation, new orders increased 1.2 percent. Excluding defense, new orders decreased 0.9 percent. Again, this data shows a slight recessionary trend.

If you would like a summary of all government financial indicators, click here.

Quotes of the Week

Max Fraad Wolff in "Still Waiting for a Real Bottom":

Obama will buoy spirits. His inauguration will not, in and of itself, change the rules, the losses, the debts or the opportunities we face. We must do that, rebasing our economy and investment guidelines. Spending a trillion dollars on infrastructure, schools, transport, and energy is as good a way as any to limit the depth and breadth of recession pain. It is not a plan to shore up corporate profits, growth rates or stock prices. It is an idea of how to improve lives and prevent political instability and violence. If it works at all it will do very little for the most equity investments.

Disclosures: None

Comments

[patio:]

Steve, was Earl a cocaine dealer? :)

2008 Dec 28 08:18 AM

[Moon Kil Woong:]

As always almost 100% with you on your posts. With all the mass unpredictable Fed and Treasury moves it will be extraordinarily hard to determine the effects of any one or combination of actions taken by them. It's like treating a patient with a fever with flue shots, antibiotics, ritual bleeding, depessants to make them sleep, and and stimulants to wake them up. The cure is more likely to kill them than the disease.

Thanks for the quote Confucius quote. High salaries for bailed out execs do make us all sick. Catapillar is still profitable and their execs took a voluntary pay cut. I'd be happy to bankrupt GM and put it under their management any day. The big question has always been, how do we replace the management without harming the business and industry. So far management's refusal to leave, cut their salary, or do anything else but hold their employees and companies hostage for taxpayers ransom has left no other option but bankruptcy to solve this issue.

Poor GM and poor America who has to bail them out. I doubt it will solve anything. I didn't in the 70's. That's why they are still in this predicament 30 years later.

2008 Dec 28 08:38 AM

[Dave Wrixon:]

The US has benefited from distortions in World Trade as much if not more than anyone else. That is the case because they have been effectively running the system for the last 50 years. It is no coincidence that the twin towers were in New York.

America will suffer from the increasing competitiveness of other nations, whether or not they espouse free trade, because they are going to have to increasingly compete for resources. They will suffer because the competitiveness of emerging nations is based on giving more for less. To compete America has to give more for less. Trying to ignore these basic truths will only make matters worse.

Lets face it, American firms cannot generally compete against the transplants that do compete on a level playing field.

2008 Dec 28 08:44 AM

[303820:]

How much of what we buy is made by a Chinese company in china? none!
How much of what we buy is made by a Mexican company in Mexico?none!
Every thing we buy is made by American companies in other countries using their slave labor... all for big profits.
Corporate America has been shipping our jobs over seas and then expecting America to buy their product....whats wrong with this picture?
If free trade was to improve the living standard of other countries..how's come other countries can't afford what they make?
If we're trying to bring the world to our standard of living how's come we're asked to lower our wages to their standard?
protectionism? why do other countries impose 20% import tax on our products while we let theirs in for free? I'll tell you why...BECAUSE WHAT COMES IN FOR FREE IS MADE BY CORPORATE AMERICA USING OTHER COUNTRIES SLAVE LABOR!

2008 Dec 28 09:29 AM

[Paul Killinger:]

No, but you can COUNT domestic auto sales and profits.

2008 Dec 28 09:46 AM

[John D:]

CONSTRUCTE .... No doubt you must be involved in POLITICs you seem to write with the same arrogance as those speak of in congress. You think that the politicians could do a better job of running a corporations - and yet they have a hard time showing the discipline to do what is right for the country without letting their almighty emotions cloud there judgment. The GM, Ford & Chrysler fiasco was nothing more than SMOKE & MIRRORS to divert the attention away from the actual source of the problem ... politicians throw $700 billion at a problem that THEY never should have allowed to happen in the beginning and make the auto industry do a song & dance for a few billion in LOANs so that they can survive the CREDIT CRISIS - and you ask why they were so low on cash ... because the SAME politicians allowed the Asian car companies to dump cars here under FREE TRADE but had they have been doing their jobs properly would have been EQUAL TRADE where they take the same amount of cars to their countries but that didn't happen either. The auto companies no longer provide a set pension for new employees, they get 4% annually and they invest it how they see fit - they no longer provide health care, the union will look after it and when that dries up the government will need to take over (you forget the BILLIONs the tax payers saved when the Big 3 were paying for YOU) - it's nice to see how patriotic you and the other politicians are but I think you all should get out the Webster’s dictionary and look up the term PATROTIC again - I believe it has to do with looking after your OWN country.
If anything the politicians should be in Detroit doing a "Song & Dance" with how they neglected to do their job which lead to financial problems on a GLOBAL scale - that my friend is called ARROGANCE !!


On Dec 28 08:38 AM constructe wrote:

> As always almost 100% with you on your posts. With all the mass unpredictable
> Fed and Treasury moves it will be extraordinarily hard to determine
> the effects of any one or combination of actions taken by them. It's
> like treating a patient with a fever with flue shots, antibiotics,
> ritual bleeding, depessants to make them sleep, and and stimulants
> to wake them up. The cure is more likely to kill them than the disease.
>
>
> Thanks for the quote Confucius quote. High salaries for bailed out
> execs do make us all sick. Catapillar is still profitable and their
> execs took a voluntary pay cut. I'd be happy to bankrupt GM and put
> it under their management any day. The big question has always been,
> how do we replace the management without harming the business and
> industry. So far management's refusal to leave, cut their salary,
> or do anything else but hold their employees and companies hostage
> for taxpayers ransom has left no other option but bankruptcy to solve
> this issue.
>
> Poor GM and poor America who has to bail them out. I doubt it will
> solve anything. I didn't in the 70's. That's why they are still in
> this predicament 30 years later.
>
>
>

2008 Dec 28 09:58 AM

[Paul Killinger:]

You can blame trade, Wall Street or anything else you like for our economic malaise. But the fact is we're becoming more like Europe (and just as globally uncompetitive) every day.

Our ONLY chance for a serious economic resurgence at this late date is a return to our roots, to what made our country economically great. And the answer to that, my friend, is CHEAP ENERGY.

The truth is we have MORE domestic energy resources than any other nation in the world. But so long as our government gets to artificially decide the energy winners and losers, we're destined to join the many other formerly great nations of the world on the economic ash heap.

It was a nice ride while it lasted.

2008 Dec 28 10:00 AM

[NobodyinPar...:]

For once I'd like an ecomomist to apply two of their most cherished theories in a way that actually makes them THINK! That is: apply the Law of Diminishing Returns to holyholy Free Trade and you'll conclude that the efficency gains decline with volume. And what gets worse: Balance of Payment deficits that can't be sustained in the long run & result in devestating economic crashes.

2008 Dec 28 10:33 AM

[303820:]

We don't need another 200 billion loan from china for a stimulus check to purchase a Chinese TV ...We need jobs to pay our mortgages... bring our jobs back!

2008 Dec 28 11:03 AM

[PeteK:]

During the past 15 years, most strikes called by the unions were mostly concerning medical & health care cost. Most people don't understand why health care cost gone up so much. Just look at the law-suits brought by millions of greedy individuals and lawyers each and everyday suing doctors and hospitals and anything on sight. To make it worse, insurance for doctors and health facilities gone up like crazy. To make it even worse, the jury gone more crazy, rewarding billions to these law-suits. These law-suits affects almost every business in this country. Automakers were sued countless times. Now some people know why some big business are leaving this country. Too many junk law-suits and labor problems. Many samll coofee shops have to buy
insurance coverage. MaCdonald got sued for hot coffee. All these just get out of control. Congress must do something to reform this. Otherwise, business will find it harder and harder to survive.

2008 Dec 28 11:18 AM

[Rob Viglione:]

Paul's onto something with the notion that America has consistently adopted policies rendering us less competitive over the last 50+ years. We have lost our way as a bastion of free trade, and free enterprise.

Still, we cannot escape the trade distorting protectionism found in nearly every country with which we interact. This certainly benefits American consumers, as they buy cheaper goods, but it can be devastating to our industry. This is one, BUT NOT THE ONLY, reason our industrial base has contracted over the last several decades.

I can see the need for collective security in negotiation of truly fair trade agreements, in which the distortions of foreign protectionism are diminished. Yet to engage on this level we need to equalize our own trade distortions.

In the end we all benefit from a free America and should look to ways in which we can reinvigorate our competitiveness by removing regulatory, trade, and tax barriers to prosperity. Only when America is free and interacting with the world on a system of free enterprise can we demand our trading partners do the same.


On Dec 28 10:00 AM Paul Killinger wrote:

> You can blame trade, Wall Street or anything else you like for our
> economic malaise. But the fact is we're becoming more like Europe
> (and just as globally uncompetitive) every day.
>
> Our ONLY chance for a serious economic resurgence at this late date
> is a return to our roots, to what made our country economically great.
> And the answer to that, my friend, is CHEAP ENERGY.
>
> The truth is we have MORE domestic energy resources than any other
> nation in the world. But so long as our government gets to artificially
> decide the energy winners and losers, we're destined to join the
> many other formerly great nations of the world on the economic ash
> heap.
>
> It was a nice ride while it lasted.

2008 Dec 28 11:18 AM

[John Lounsbury:]

Steven - - -

As always, a useful, thoughtful and well written article. Some of the comment stream is quite angry, though.

Onr thought on free trade: How does it affect the velocity of money? It seems to me that there should be a significant increase in velocity. Has anyone done a study?

Another thought on free trade: I have read many complaints about other countries having restrictions against American made cars being imported. I can see how this could be a valid concern with Japan (they have a high cost of labor), but I don't think the concern would apply to other countries like China (low cost of labor). See the comment by 303820. Our companies would never export to low labor cost countries; they would just go there and mnaufacture there.

2008 Dec 28 11:28 AM

[303820:]

KIA,AND HYUNDAI exported 600,000 cars to USA last year, while Detroit sold 5000 cars in Korea.
we’re the only country in the world with out health care for its people…the cost of it (health care) is left to the companies. This makes our product more expensive over seas…
If our government would take care of its workers we wouldn’t be in this mess…the only thing Washington cares about is the shipping of our jobs to slave labor countries and the lowering of our wages..

2008 Dec 28 11:54 AM

[303820:]

We keep on lowering our wages in the name of competition…and replacing our paycheck with easy credit.

I have a question for all anti union... After we lower our wages who’s going to buy the products we make? Mexico? china? or India?…and if the union is bad for Detroit big three…why are Toyota and Honda loosing money!

2008 Dec 28 12:01 PM

[carey_jim:]

Economic theories and ideologies are, in part, advertisements, propaganda and cheer leading for the powerful. Whatever you say about them, they are only models for the very complicated place we call the world.

I find it bracing to recall that George Washington, Thomas Jefferson, Benjamin Franklin, and other prominent Founding Fathers, all had prices on their heads and were condemned by the British Crown to death by hanging for the high crime of treason.

If Britain had won the first American Civil War (which the American Revolution is often still called in Britain) our illustrious Founding Fathers certainly would have been hanged (along with their theories of government.)

2008 Dec 28 01:44 PM

[Dave Wrixon:]

Much of the comment on here about protecting jobs is very reminiscent of views expressed in the UK in the 1970s. It did do us any good then, and it won't do the US any good now.

This crisis is one hell of reality check. Unfortunately, that is exactly what has been called for a good while.

2008 Dec 28 04:30 PM

[scotty1560:]

Great article as always and great responses, most make a lot of sense.

Our society has many problems with corruption increasing by the decade
from legal channels, military, legislation, lobbyists, tax codes, enforcement
of laws, de-regulation, currency manipulation, judges, zoning changes,manipulation of other countries, and so on. Nothing more than scams to alter a level playing field-ask Thomas Jefferson. "Eventually" complex
arrogant societies outsmart themselves- ask the Romans or Germans, it's
all in the history books with a new chapter waiting to written.

The big winner's see huge gains. Tied into the system via corporate, political,
or military, enforcement- the winners do well in a good economy or a bad economy. During down turns they go and raid countries or consolidate
business with the full backing of the government and supreme military.

The point about raiding poor countries is so true. Bully country (US) goes
in and sets up an industry using the poorest people for labor. We take
their resources and assets to make a profit for the top corporate and government leaders of both countries involved. The poor laborers are basically slave labor while the jobs are moved out of our country, therefore hurting our labor. So yes I can buy my khaki pants for a few bucks less, but in the much bigger picture I am diminishing my stable multi-tiered "ecosystem" of my area from blue collar labor to mom and pop operators. Again, only the top of the food chain gets the real benefits from both countries- so both loose.

The cycle will continue until society "gets it". We have a major imbalance lacking a stable healthy middle class system here. Manufacturing is only the most obvious step- health care, technology, finance, etc can all be sent abroad at lower costs to benefit a few CEO's- the "masses" in our country will need to abapt to a much lower standard of living if we are to subsidize the elitists at the cost of the rest of the working force. The upper "white collar" guy is now in the
"sights" of the elitists, he will be the next meal ticket-nice deep pockets.

Time to elect a third party candidate and shake up the establishment- it won't be easy, they have all the tools and all the resources- expect the slow decline to continue during our lifetime. The "sheople" are blind in their fish bowls.
The two parties are nothing more than corporate reps. Leaders like Henry Ford
or Andrew Mellon are long dead, and with them goes a little more of the
"true" leadership that made this country the superpower it is.

2008 Dec 28 08:05 PM

[PainfullyAware:]

Hey John D,

I find it interesting that you accuse of arrogance and yet you associate Constructe with the Reprehensible.

Opinion is just that - Opinion. Should you be attacked for you narrow view?

I agree with your tenant for anger; I disagree with where you are placing it.

The comment Constructe left was a lament for what those same politicians, that you rail and place in juxtaposition with Him, have wrought. You are worried about the symptoms and he is worried about the disease. You both are angry at the same source.

I would reckon that you believe that the Democratic Party and The Republican Party are different. I would agree if you were talking about the spelling; However in action they appear remarkably similar.

The complexity of corruption is vast. To assume benevolence is foolish.

Your anger is valid - There is greater scope to the madness.

One's Opinion is the sum total of the data they have purveyed, seasoned with emotion.

Every Great Story Begins With A Grain Of Truth. What You Choose To Feed Your Mind Will Determine How Far It Will Take You. Everything you read is filtered through others.

Be American Foremost. Realize Your Neighbors Are Too. Their Fear Is Like Mind. The Things Happening Now Have No Parallel. Similarities, Yes; Scale And Scope - NO.

There will be a great amount more spent in 2009 to make the populous content. Why Not; It is the magic of electronics that calls it into being. If the Populous becomes Uncomfortable they will become much more acute to what is going on in places of governance. There are many shenanigans taking place and the rule of law has taken a back seat to Disaster Management. Much has been changed and the system hardly resembles its former self. One must look at many different levels of scale to understand more fully the transformation.

This is an Economic blog of what I believe to be some very sharp people that have for the most part an ability to be objective. It takes many flavors to make the soup; The different viewpoints allow for a test of conclusion. Faith Untested Is Worthless.

I agree that Arrogance has no place in the halls of intelligence. Things are not always as they appear at first. The more aspects of investigation the greater the resolution of reality.

Humanity has an amazing challenge before them. We will see how it turns out. Please do your part to be kind; Personal attacks and provocation do nothing to help wade through the possibilities.


On Dec 28 09:58 AM John D wrote:

> CONSTRUCTE .... No doubt you must be involved in POLITICs you seem
> to write with the same arrogance as those speak of in congress. You
> think that the politicians could do a better job of running a corporations
> - and yet they have a hard time showing the discipline to do what
> is right for the country without letting their almighty emotions
> cloud there judgment. The GM, Ford & Chrysler fiasco was nothing
> more than SMOKE & MIRRORS to divert the attention away from the
> actual source of the problem ... politicians throw $700 billion at
> a problem that THEY never should have allowed to happen in the beginning
> and make the auto industry do a song & dance for a few billion
> in LOANs so that they can survive the CREDIT CRISIS - and you ask
> why they were so low on cash ... because the SAME politicians allowed
> the Asian car companies to dump cars here under FREE TRADE but had
> they have been doing their jobs properly would have been EQUAL TRADE
> where they take the same amount of cars to their countries but that
> didn't happen either. The auto companies no longer provide a set
> pension for new employees, they get 4% annually and they invest it
> how they see fit - they no longer provide health care, the union
> will look after it and when that dries up the government will need
> to take over (you forget the BILLIONs the tax payers saved when the
> Big 3 were paying for YOU) - it's nice to see how patriotic you and
> the other politicians are but I think you all should get out the
> Webster’s dictionary and look up the term PATROTIC again - I believe
> it has to do with looking after your OWN country.
> If anything the politicians should be in Detroit doing a "Song &
> Dance" with how they neglected to do their job which lead to financial
> problems on a GLOBAL scale - that my friend is called ARROGANCE !!

>
>
>
> On Dec 28 08:38 AM constructe wrote:

2008 Dec 28 10:29 PM

[nmelendez:]

Sorry i do not agree. I follow the logic of swimming in the pack. Let's me pick up plenty of what's left back. You fight the pack, you lose. That's the problem, the pack herds the masses ("save") and everyone goes into CD's. Meanwhile what do they do? They use YOUR money to leverage themselves. Me, i'll put my faith in treasuries rather than banks. Even if it deflates i still get a return, not busted like maddoff's big winners.


On Dec 28 08:05 PM scotty1560 wrote:

> Great article as always and great responses, most make a lot of sense.
>
>
> Our society has many problems with corruption increasing by the decade
>
> from legal channels, military, legislation, lobbyists, tax codes,
> enforcement
> of laws, de-regulation, currency manipulation, judges, zoning changes,manipulation
> of other countries, and so on. Nothing more than scams to alter a
> level playing field-ask Thomas Jefferson. "Eventually" complex<br/>arro...
> societies outsmart themselves- ask the Romans or Germans, it's<br/>all
> in the history books with a new chapter waiting to written.
>
> The big winner's see huge gains. Tied into the system via corporate,
> political,
> or military, enforcement- the winners do well in a good economy or
> a bad economy. During down turns they go and raid countries or consolidate
>
> business with the full backing of the government and supreme military.
>
>
> The point about raiding poor countries is so true. Bully country
> (US) goes
> in and sets up an industry using the poorest people for labor. We
> take
> their resources and assets to make a profit for the top corporate
> and government leaders of both countries involved. The poor laborers
> are basically slave labor while the jobs are moved out of our country,
> therefore hurting our labor. So yes I can buy my khaki pants for
> a few bucks less, but in the much bigger picture I am diminishing
> my stable multi-tiered "ecosystem" of my area from blue collar labor
> to mom and pop operators. Again, only the top of the food chain gets
> the real benefits from both countries- so both loose.
>
> The cycle will continue until society "gets it". We have a major
> imbalance lacking a stable healthy middle class system here. Manufacturing
> is only the most obvious step- health care, technology, finance,
> etc can all be sent abroad at lower costs to benefit a few CEO's-
> the "masses" in our country will need to abapt to a much lower standard
> of living if we are to subsidize the elitists at the cost of the
> rest of the working force. The upper "white collar" guy is now in
> the
> "sights" of the elitists, he will be the next meal ticket-nice deep
> pockets.
>
> Time to elect a third party candidate and shake up the establishment-
> it won't be easy, they have all the tools and all the resources-
> expect the slow decline to continue during our lifetime. The "sheople"
> are blind in their fish bowls.
> The two parties are nothing more than corporate reps. Leaders like
> Henry Ford
> or Andrew Mellon are long dead, and with them goes a little more
> of the
> "true" leadership that made this country the superpower it is.<br/>
>
>
>

2008 Dec 28 10:35 PM

[The Proclaimer:]

Paul, Great comment. Please take a moment to check out this new Patent Pending (Worldwide)discovery. It promisses many great things. Among them is "that it will make the cost of generating electricy LESS THAN ZERO" Cheap energy and CLEAN COAL / HYDROCARBON Technology. This is the "WILDCARD" that I have been proclaiming.

www.faqs.org/patents/a...

Happy Near Year to ALL!

2008 Dec 29 10:28 AM

[tolo:]

Actually GM sells a lot of cars in China especially the Buick brand.


On Dec 28 11:28 AM John Lounsbury wrote:

> Steven - - -
>
> As always, a useful, thoughtful and well written article. Some of
> the comment stream is quite angry, though.
>
> Onr thought on free trade: How does it affect the velocity of money?
> It seems to me that there should be a significant increase in velocity.
> Has anyone done a study?
>
> Another thought on free trade: I have read many complaints about
> other countries having restrictions against American made cars being
> imported. I can see how this could be a valid concern with Japan
> (they have a high cost of labor), but I don't think the concern would
> apply to other countries like China (low cost of labor). See the
> comment by 303820. Our companies would never export to low labor
> cost countries; they would just go there and mnaufacture there.

2008 Dec 29 11:22 AM

[bobbobwhite:]

You are so right, and have you ever tried any tools made by our or Japanese companies in China. Pure crap, and not worthy of anyone other than someone to use once or twice a year. And, an HP printer I mistakenly bought made in China lasted 3 months and never worked right within those 3 months. All of the items made for America's "cute shops", you know, those little flowery, puffy, smelly potpurri gift shops that so many women own everywhere in the USA, are ALL made in China. Pure junk all.

Woman I know got her CA resale license and within 3 months had over 900 catalogs for pure crap, that junky gifty-stuff all made in China and sold by importers here. That's how these cute-shop owners get the idea to open the damn places initially, by getting all those catalogs with cheap crap stuff they think they can sell high to dumb people. All states sell lists of names of all recent resale licensees to these crap companies. Free trade! Ain't it grand? Not to me.

"Let's open a gift shop!"......... Ugh.


On Dec 28 09:29 AM 303820 wrote:

> How much of what we buy is made by a Chinese company in china? none!
>
> How much of what we buy is made by a Mexican company in Mexico?none!
>
> Every thing we buy is made by American companies in other countries
> using their slave labor... all for big profits.
> Corporate America has been shipping our jobs over seas and then expecting
> America to buy their product....whats wrong with this picture? <br/>If
> free trade was to improve the living standard of other countries..how's
> come other countries can't afford what they make?
> If we're trying to bring the world to our standard of living how's
> come we're asked to lower our wages to their standard?
> protectionism? why do other countries impose 20% import tax on our
> products while we let theirs in for free? I'll tell you why...BECAUSE
> WHAT COMES IN FOR FREE IS MADE BY CORPORATE AMERICA USING OTHER COUNTRIES
> SLAVE LABOR!

2008 Dec 29 02:00 PM