SteadfastMason

USL, USO and the Contango Collapse

UOY does not seem to have much volume. That translates to me to be possibly tough to sell, if needed.

I hold DXO, a 2X Oil Bull ETF and ERX. it is a 3x Bull, Energy ETF.


SteadfastMason

The Fed Must Be Crazy

The stock market is surging on this news....why and for how long? I would think that, once this latest "sugar high" wears off, the result will be a sell-off that drives financials (and the market) down.

I can't see how fabricating another $1.15T is a net benefit for our economy or for the markets. if anyone out there can explain the case for this latest money crreation being a driver for a sustained (1 to 10 week) boost in bank stocks, please feel free to do so.

Call me crazy, but I just don't see it.


SteadfastMason

Why It's Actually Different This Time

There are many ways to legally make money in this economy, regardless of whether the overall market, a particular sector, or an individual stock goes down or up. These methods are well known and there is plenty of info about them on the Seeking Alpha site.

To respond to your apparent abhorrence with what you interpreted to be that of the author's "Fear Mongering" instead of his providing useful info on how to make money in the market, here is some info you might not be aware of:

FAZ is an ETF that generally increases in price when the financial stock index it tracks declines in price.

FAS is an ETF that generally increases in price when financial stock index it tracks increases in prices.

That is just one example.

Here is another. If you are stuck in an investment that is in a clearly downward trend (and if you believe that overall trend is likely to continue in the same downward direction), you might choose to cut your losses by looking at the short term trading range and choosing a sell price at the high end of that range...maybe even buying back the same stock if it then falls to the low side of that range.

This is a simple dollar cost average down strategy. It is not the right strategy for everyone and in every down-trend circumstance. But it is one of many options each of us can exercise, if we choose to do so.

Above all, do your own research. Decide where YOU believe the market is headed. And choose well what strategy will best serve you.


Many people HAVE profited (legally) during the last year.... Thankfully, I am one of them.

1.) FIRST, by paying attention to REALITY of what is happening in every sector in our economy rather than the Kool-Aid being served by most of the media and the endless stream of talking heads they provide.

2.) by taking the opportunity to observe and try to understand the concept of what happens when fundamental problems surfacing in one key economic sector often times will, and in this case HAVE lead to accelerating problems in multiple other sectors of the US and global economy (an unavoidable ripple effect).

3.) by acknowledging what are the MAJOR and OBVIOUS market ingredients (aka: problems) that were concocted and have been brewing for years if not decades - until finally boiling over into what is an increasingly ugly mess THAT IS THE REASON FOR the larger (downward) BEAR TREND - INCLUDING DEFLATION and DEFICIT SPENDING - we have experienced...and WILL likely have little choice but to continue to try to navigate through until we finally see the real capitulation that will prove to be the real market bottom.

4.) By being willing to look at as well as beyond the day-to-day short-term reality.

5.) To be willing to commit to an investment strategy that responds to your needs and the current/expected market reality but to remain flexible enough to respond to the volatility in some individual investments that we've seen (and will likely continue to see until we hit bottom and start on the road to the REAL Recovery.

FWIW, I believe:

We will need to anticipate and be ready to endure more surprises and non-surprises including unfortunate but equally necessary collapses including another 30% real decline in the still-inflated average US home prices, many more business and home foreclosures, personal bankruptcies, failure of more banks, insurance companies, auto companies, major retailers, to name a few.

I believe we will continue to have an overall Bear Market for the next year or so...before the bear trend starts to bottom. The Elliot Wave Theory can be a useful tool to help map a trend using based on a historical pattern of economic cycles. The trick is to be able to look at the graph and to be able to accurately locate where on it you believe we are, at any given time.)

After we finally hit bottom, I expect our economy to flatten for some period while PRIVATE SECTOR jobs are able to re-emerge and people can again start save and invest for the future. At that point, I think it is likely that we will see a resurgence in commodity inflation.

This would be partially because of supply vs. demand pressures for goods and partially due to the reduced purchasing power of our currency, it having been devalued because all the extra money that has been created by the US treasury to buy up BAD CORP DEBT that the government has ultimately FORCED EACH OF US (and generations of workers/taxpayers to come) TO BUY from the corporate scoundrels via a the growing list of ill-conceived and ill-spent, and ill-enforced bailouts and stimulus plans. And, ultimately it will be paid for either by reducing available investment capital in circulation to help business to grow and employ people generate future GDP, and/or it will be paid for by increasing future taxes. At some point, the debt, if not written off, has to be re-paid, by someone.

Looking beyond this grim perspective, though, one opportunity for fundamental change that I believe will help our country emerge from this swamp of financial debt and ethical/fiduciary/regu... failures is the eventual but critical need for significant reductions in cost/spending/service/... government intervention in the free-market system; This in addition to our adopting seriously improved oversight, accountability, and ethics and professional conduct standards, behaviors and reforms throughout all levels of government and corporate America...and, ultimately, adopted by each of us - as individuals.

With these thought in mind, my hope is that we make a point to help each other live through and learn from whatever hardships remain to be played out in this crisis.

In so doing, I further hope we as individuals and as a society might consider this an opportunity to re-commit to improving ourselves by becoming stronger, more thoughtful (aka: critical thinking), honest, spiritually and morally-grounded, self-reliant, educated, versatile, innovative and industrious, personally vested in the care and welfare of our families, charitable to our neighbors and our communities, involved in protecting and strengthening the core freedoms and justice that comprise our system of government...a systems intended to represent and serve and inspire us.

In my opinion, these are among the most important of the new and/or improved ingredients that will help us, ultimately, to survive and thrive...regardless of what the economy or stock market are doing. For, as such we as a country will again see ourselves as society of individuals, free, focused, yet united as one to rebuild for our benefit as well as for the greater good of our society and those noble principles which have made our country Great.

Without our making serious strides in each of these areas, whatever financial benefits the next "Bull Market" might offer, I wonder if we will have really reached the bottom and are becoming "richer". This crisis does afford us an opportunity to reflect not just on where were and where we are, but also on where we want to end up and how we want to get there.

Ghandi said it best: "Be the change you want to see happen."


Kind Regards,

SteadfastMason


On Mar 12 09:06 AM Oquichtli wrote:

> Pathetic fear mongering. You should be punished to the for spouting
> such fear. I know, fear sells papers and gets fools to read pathetic
> blogs like yours. Why don't you inform the dumb masses how to profit
> in this environment(i.e. highly volatile markets make fortunes for
> options trading) instead of scaring the hell out of their weak minds?
> Oh I know why, you are protecting the business agenda of the masters
> who own you. Just like that fool Ron Paul. Trying to scare the zombie
> sheep. You all should be put to justice.

4 Moves to Make in This Confusing Market

Keith - VERY nice summary, albeit I smelled a bit of bias in the examples you presented in the "Four Reasons the Bull Has Awakened From His Slumber" section. None the less, I do share that bias (for now). I had been trading SKF until FAZ came along. Since then, I've made THREE solid round trips with entry points of between 47 and 52 a share and sell prices at 74, 83, 104, and 111.

Just bought again, yesterday, hoping the CITI/Pandit news would further drive financials us and FAZ down to what I consider buying "sweet spot".

Recession vs. Collapse

The missing step in this case is not the typical "Supply vs Demand" model that applies in a nearly free market. Instead, the model that will rule (aka: lead to hyper-inflation and the "inflationary collapse) is none other than "devaluation" of US dollar...as a result of the explosive expansion in the money supply...particularly to support excessive or nono-existant values attached to current US govt and corporate debt.

As I see it, the next 4 to 5 years will not be pretty for the average American as more of them stand on the sidelines, broke, numb, mute, and otherwise helpless with the economic, socisl, and political paralasis inflicted by our government policy-makers who seem to be completely obliterating what remnants remain of our once great economy.

The result of this inflationary collapse will be to shift (confiscate) ownership and wealth away from individuals and small business...and more to government. Increasing the money supply and devaluing the dollar are both gov't actions that will help transform (financially compel) more of our citizens, the the once-Free, self-reliant, and proud people they were, to become increasingly dependant on, and indentured to serve a government whose existence and ideological mandate is increasingly counter to the ideals of our founding fathers "...a government of the people, by the people, and for the people".

SteadfastMason


On Mar 10 09:41 AM MichaelJ007 wrote:

> I still can't follow the path to inflation. With credit extinct,
> demand defunct and a much smaller market for TSYs how do prices rise
> again??? I mean didn't we already witness the inflation and subsequent
> burst last summer with oil, gold, commodities, housing, credit and
> now finally TSYs falling from their record highs??? Where is the
> missing step that leads us back to inflation? what action/event is
> going to drive all of these prices back up again? An increase in
> money supply that is never spent by the consumer will not lead to
> inflation. Furthermore, if GOVs and currencies start to collapse,
> the Dollar will be the last one standing- no inflation there either.
> Someone please fill in the missing link for me.

China's in a Recession; The IMF Is in a Dreamworld

BTW, my apologies to the readers for my many typos. I'll try to proof my future responses, before posting them.


SteadfastMason

China's in a Recession; The IMF Is in a Dreamworld

I appreciate your response and I would of course expect American policy to honor our many commitments - be it WTO agreements. I would also expect America to make and modify our commitments based on how effectively they reflect America's priorities, interests, and long-term aspirations and societal welfare - as experienced, first hand, by our citizens, businesses, laws, and ideals.

This, expectation of mine, therefore, presumes America's role in and commitments to the WTO agreements are not static. As such, my expectation is that, when one sees a complex pattern of American and non-American trade practices that by design - either intentionally or innocently - have chipped away at America's engines of growth and resulting capacity to financially sustain itself on it's GDP rather than IOU's.

Please understand. I do not fault the WTO or any particular country for the plight America finds itself facing, today. From my vantage point, America, for the last 3 decades, has made some very poor strategic trade policy decisions. IMHO, helping to establish and participate in the WTO was not one of them. Yet, within the noble framework of the WTO and other bodies, we have demonstrated consistent arrogance married with ignorance to their long-term impact on America and Americans. The entire notion that all America's trading partners are interested in promoting the kind of "Free Trade" freedom and "democracy" that Americans understand, to cite just one example, is largely a dangerously over-simplified distortion of the truth, to put it mildly. Yet, our trade agreements have pretty much been crafted to trumpet these principles without enough regard for projecting or measuring what economic impact the particular policies would have on the American worker and family unit.

So, here we are...in a real situation. And we have ourselves (America as a whole) to hold accountable for how we allowed ourselves to get here and how, how we will pay for the mess we created, and how we must change our behavior (aka: what commitments we need to keep and which need to be changed - in order for us to change direction and create our way out of this mess.

In my opinions, the tarriff / tattiff-offset concept I proposed is but one tool we could implement that would have an immediate, and long-term positive impact for America, American citizens, and ultimately for workers in other countries.


SteadfastMason

over a period of several decades served to undermined

China's in a Recession; The IMF Is in a Dreamworld

huangtohmas - Kindly explain how my (tarriff proposal) to another round of massive social experimentation and human suffering. I am not clear as to how you reach that conclusion.

The approach I outlined is intended to:
1.) increase US jobs
2.) reduce (or at least compensate for) the net negative US global trade gap
3.) help restore rather than dismantle US industry
4.) Respond to the ongoing reality that China pegs their currency to ours, keeping it artificially lower than ours...even when our is plunging...solely to ensure their exports are cheaper than our US alternatives.
5.) to offer a disincentive to the US corporate practice of "offshoring" increasing numbers of US jobs.
6.) to offer an incentive (aka: export subsidies) for the US products to be sold more competitively around the world, particularly in countries - like China - who artifically inflate the cost of those US products.
7.) To offer an alternative more favorable for US workers than the single prospect of having to lower our wages to Chinese levels, in order for US workers to be competitive with Chinese.
8.) offer a further incentive for the Chinese to pay their workers wages more closely resembling the US, not the other way around.
9.) Encourage other countries, particularly those with massive trade surpluses with the US - to buy more of our products...not just our manufacturing capacity and intellectual property.


My modest proposal attempts to recognize the above issues as real, and as worthy of reversing. I believe one tool to help the US do that, is for us to focus on proposals that maintain and improve US job levels and pay rates.

My proposal tries to takes on that challenge by means of a creative and targeted "tarriff/and tarriff-offest" approach whereby US manufacturing jobs as and US wage rates would be subsidized - or taxed less - if they employ more US and fewer H-1 workers and if they domestically produce more of what Americans buy and what the world will buy.

My main intent is to offer a possible solution that supports American business, and American workers, both with concrete policy and with financial incentives (carrot and stick) those US industries and companies who hire US workers and who export their products. and to pay for those subsidies with monies collected from importers, many of whom are paying prices for goods based on Chinese save labor rates ($1.43/day) and which the US should not attempt to match with equivalent US wage rates.

Please help me to understand the weak points you see in my voucher/tarriff approach.

Kind Regards,

SteadfastMason

How the U.S. Could Balance Trade

NOTE: This is a copy of what i posted to several other SeekinAlpha blogs on the topic of trade.


I believe that, to begin to restore America's economy, one of the first things that we must start to focus on is restoring American Manufacturing. To do that, we must re-invest both in technology R&D and domestic production capacity and strengthen our "domestic treasury of US owned intellectual Property and skilled workforce."

Further, we would be smart to look for opportunities to fund this re-investment in America, as much as we can, from monies extracted from those countries who are currently benefiting most, either by exporting products to us or off-shoring jobs for us. Specifically, I prefer a more jobs-focused version of Warren Buffett's proposed "Import Certificate" money.cnn.com/magazine... ... /index.htm

While I could support the concept of an "Import Certificate", I don't think it goes far enough in terms of actually resulting in Job Creation in the US. Instead, I can see it as just another revenue stream, direct to the US Treasury...

My preference would be to focus on implementing a voucher (aka; tarriff) that essentially does the same thing that Warren's plan does; But instead of focusing on tagging the import certificate to pure import/export dollar parity, I'd recommend it focus on ensuring a proportionate number of US mfg jobs are created that correspond to whatever that country's current import/export dollar parity level is. Otherwise the importer would be assessed a substantial import tarriff to make up the incremental differance (based on some pre-dtermined formula). If a company imports to the US without employing some number of Americans (using a formula that is based on the value of their imports), then they pay the tarriff. The revenue from that tarriff would be used to subsidize US exports.

Further, still, each importer could only offset that tarriff (using a sliding scale) by accumulating "US jobs credits" (vouchers) they either have to earn by creating jobs directly or indirectly...or which they could purchase from another voucher holder. The value of the voucher would further be based on the national average wage rate of the job being created. (Ex: a voucher representing 1 new job at unskilled or minimum wage would not have as much value as a voucher that represents 1 new job at specialized/skilled worker rates). Hence, there is not a bias toward creating only new jobs that pay low-wages.

If the importer chooses to not accumulate vouchers against their imports, then they should be assessed the tarriff - because they are essentially just sucking US dollars out of our economy with each import transaction. Their higher tax burden would help offset their decision to either outsource labor offshore (depriving Americans of jobs) or buying products made outside the US that are then sold in the US, in either case, contributing not just to our trade deficit...but just as important...our loss of skilled high-paying jobs that are so essential to restoring, maintaining, and increasing America's standard of living and economic influence in the world.

This voucher would also be a stronger tool in stemming America's current short-sighted practice of selling or offshoring our most prized intellectual property - where it is ultimately copied, illegally, robbing the US of more money. Perhaps the best aspects to my version of a tarriff is that 1.) it is not influenced one way or another if US currency rates rise or fall. 2.) The current trend toward offshoring labor and/or production would likely be slowed if not reversed, 3.) Further, the cost of the higher taxes would NOT be born by the US consumer. Instead, those taxes would be born by the importer and their oversees source who are already profiting (but not passing on) the savings they currently realize by using Chinese labor at 43 cent a day.

If the importer tries to pass on that higher tax to the US consumer by raising the price of their products, at some point those American consumers will simply buy American. So, the incentive will be for them to either pay a tax for the priviledge of using slave labor in another (sarcasm intended) or they can create US jobs, too, thereby offsetting the damage to the US labor market and economy they help cause by importing.


SteadfastMason

China's in a Recession; The IMF Is in a Dreamworld

I believe that, to begin to restore America's economy, one of the first things that we must start to focus on is restoring American Manufacturing. To do that, we must re-invest both in technology R&D and domestic production capacity and strengthen our "domestic treasury of US owned intellectual Property and skilled workforce."

Further, we would be smart to look for opportunities to fund this re-investment in America, as much as we can, from monies extracted from those countries who are currently benefiting most, either by exporting products to us or off-shoring jobs for us. Specifically, I prefer a more jobs-focused version of Warren Buffett's proposed "Import Certificate" money.cnn.com/magazine.../ ... /index.htm

While I could support the concept of an "Import Certificate", I don't think it goes far enough in terms of actually resulting in Job Creation in the US. Instead, I can see it as just another revenue stream, direct to the US Treasury...

My preference would be to focus on implementing a voucher (aka; tarriff) that essentially does the same thing that Warren's plan does; But instead of focusing on tagging the import certificate to pure import/export dollar parity, I'd recommend it focus on ensuring a proportionate number of US mfg jobs are created that correspond to whatever that country's current import/export dollar parity level is. Otherwise the importer would be assessed a substantial import tarriff to make up the incremental differance (based on some pre-dtermined formula). If a company imports to the US without employing some number of Americans (using a formula that is based on the value of their imports), then they pay the tarriff. The revenue from that tarriff would be used to subsidize US exports.


Further, still, each importer could only offset that tarriff (using a sliding scale) by accumulating "US jobs credits" (vouchers) they either have to earn by creating jobs directly or indirectly...or which they could purchase from another voucher holder. The value of the voucher would further be based on the national average wage rate of the job being created. (Ex: a voucher representing 1 new job at unskilled or minimum wage would not have as much value as a voucher that represents 1 new job at specialized/skilled worker rates). Hence, there is not a bias toward creating only new jobs that pay low-wages.

If the importer chooses to not accumulate vouchers against their imports, then they should be assessed the tarriff - because they are essentially just sucking US dollars out of our economy with each import transaction. Their higher tax burden would help offset their decision to either outsource labor offshore (depriving Americans of jobs) or buying products made outside the US that are then sold in the US, in either case, contributing not just to our trade deficit...but just as important...our loss of skilled high-paying jobs that are so essential to restoring, maintaining, and increasing America's standard of living and economic influence in the world.

This voucher would also be a stronger tool in stemming America's current short-sighted practice of selling or offshoring our most prized intellectual property - where it is ultimately copied, illegally, robbing the US of more money. Perhaps the best aspects to my version of a tarriff is that 1.) it is not influenced one way or another if US currency rates rise or fall. 2.) The current trend toward offshoring labor and/or production would likely be slowed if not reversed, 3.) Further, the cost of the higher taxes would NOT be born by the US consumer. Instead, those taxes would be born by the importer and their oversees source who are already profiting (but not passing on) the savings they currently realize by using Chinese labor at 43 cent a day.

If the importer tries to pass on that higher tax to the US consumer by raising the price of their products, at some point those American consumers will simply buy American. So, the incentive will be for them to either pay a tax for the priviledge of using slave labor in another (sarcasm intended) or they can create US jobs, too, thereby offsetting the damage to the US labor market and economy they help cause by importing.


SteadfastMason

Rx for Correcting Global Imbalance

Exactly!

We export the ONLY thing we have that the Chinese want...the info they need to copy us, without any real fear of legal reprisals.

Their strategy is to pirate the US. And American trade policy has, so far, fed right into their hand, substituting short-sighted and poorly negotiated technology exports without teeth...or appetite... to ensure our intellectual property laws are upheld and honored by the Chinese.

SteadfastMason




On Jan 31 09:07 PM user578974 wrote:

> Why would China want to pay for intellectual property when they can
> steal it?

Rx for Correcting Global Imbalance

The concept of "Fair Trade" with China is a lie. When the Yuan is pegged to the US currence at a discount, it does not matter how low the US dollar goes. The Chinese exchange rate (and therefore their products) will always be more compelling - from a pure price-point. That is not "Free Market competition.

Below, is another example as to why America impoirts from China rather than manufacturing in the US. The following is an excerpt from a case study citing Chinese Factory Wages at Huangwu Toy factory,
www.chinalaborwatch.or...

Huangwu No. 2 Toy Factory (Also called Junda Huangwu Toy factory)
Huangwu Management Zone
Dong Keng Township, Dongguan City
Guangdong Province, China
Ownership: Hong Kong capital (Huangwu No. 2 Toy factory is a subsidiary of Tsun Tat Toy
Company Ltd. / Tsun Tat Company.)
Factory Phone: [phone]
300 workers / half men, half women


Wages:
Paid 43 cents an hour and $3.45 a day;
- In spray paint department, workers paid just $0.000387 cents per piece;
- If workers fail to meet their production quota, their wages fall to 15 to 18 cents an hour,
which is less than half the legal minimum wage;
- Workers are routinely cheated of their legal overtime wage—losing at least $13.33 a
week, or 25 percent of the overtime pay due them;
- One month’s wage is always withheld.

Regular Wages
- 28 yuan per day (if a worker completes the assigned quota)
- 43 cents an hour (.4315659)
- $3.45 a day (8 hours)
- $17.26 a week (40 hours)
- $74.80 a month

Room and Board:
The workers are housed in dorms with nine double-level bunk beds and five to 18 people housed in each crowded room. There are two electric fans, but in the summertime, the rooms remain
unbearably hot and humid. There are no private bathrooms. Each floor has a public bathroom and showers—but only one floor offers hot water. Many workers have to take cold showers at night. Room and board is free, but the workers have to pay 10 yuan a month ($1.23) for water and
electricity, and have to cover the cost of breakfast.

(in the example cited in the case study) "In violation of the law, workers are not provided health insurance or inscribed in a pension program:"

Article 72 of China’s labor law mandates that all companies—including foreign invested enterprises—must inscribe all their workers in social health insurance and pension programs, with both company and workers paying into these programs. Huangwu Toy factory management blatantly ignores this law as well.

According to another study, Does Outsourcing really Benefit Third World Workers like Americans Believe? adm.hfcc.edu/~pkearly/PeerReview ... oussan.htm

"As of 2002, the average income per capita in the United States was $43,760 USD, which was reported by the U.S. Department of Commerce. If the $3.44 per week is totaled for one year, the overseas laborers’ yearly income totals to $178.88 USD, which is about 245 times less than the average American worker.

...When American consumers pay $125 for Nike sneakers made by workers in Indonesia who earn 31 cents an hour… Someone is benefiting, but it isn’t American consumers.”

SteadfastMason

Rx for Correcting Global Imbalance

Why, for example, is it a cheaper proposition for a consumer to walk into their neighborhood discount store and purchase a $.99 plain plastic bowl that was originally punched out of an assembly line in China for under a nickel, packed, shipped half-way around the world, trucked from one of 6 major freight ports to a short list of cheap import distributor warehouses, and then to a retail shelf in any small town in the USA - ...than it is for that same consumer to pay the same $.99 for an identical bowl punched out on a machine at a US factory...perhaps located in their state or region...at a per unit cost of a dime or two....is just plain embarrassing.

Hopefully, achieving competitive superiority in the plastic bowl manufacturing industry will not become the pinnacle of America's realistic aspirations for restoring a vibrant manufacturing / employment base. But, if we can't even compete with a factory on the other side of the world at making a plain plastic bowl that sells for under a buck that was nearly 100% made by a machine (aka: no issue with labor differentials between China and USA), then how can we begin to secure financing necessary to make larger capital expenditures to build more complex and comparable quality products and that the consumer will want to buy...that are made with more efficient machines, in more efficient factories, and with more effective techniques...to keep more of America's dollars circulating within the our economy...contributing to our country's tax revenue, cash in circulation, and trickle-down employment growth?

After all, what are the ingredients needed to make virtually anything in the US? Long-term Funding (at favorable terms) for plant and equipment, R&D, production and supply chain and distribution network, raw materials, skilled/specialized labor, energy, legal/Copyright/licens... tax and other regulations, and a solid marketing growth plan...long-term committment to growing the business, and plenty of elbow grease.


SteadfastMason

Rx for Correcting Global Imbalance

I recently came across a related article on Seeking Alpha, titled: "Misunderstanding the Great Recession", written by Steven Hansen and published on WWW.Seekingalphs.com, on Jan 26, 2009. (I've added the link to his article, toward the end of this post.)

In his article, Mr. Hansen argues the exact same points I believe are - both, at the root of America's economic decline, and pointing to the solution that will restore American economic prosperity. It is not the collapse of the housing market, as Mr. Bernake has stated; It is not the current "Credit crunch" as a range of "experts" argue; It is not purely the drop in US employment,

Mr. Hansen argues that:
"There is another proximate cause (at the root of America's economic crisis) which explains the employment drop – failure to expand technologically. At some point we took our eyes off of the ball. We stopped investing in ourselves. Without this investment, new jobs were not created. Companies became obsessed with short term over long term profits. Bonuses based on current stock value caused executives to keep focused on one year horizons. We exported R & D overseas to save costs. Small businesses stopped being created at past rates.".

This is exactly my position/.

In short, I believe:
...to restore America's economy, we must restore American Manufacturing. To do that, we must re-invest both in technology R&D and domestic production capacity and strengthen our "domestic treasury of US owned intellectual Property and skilled workforce."

Further, we would be smart to fund this re-investment in America, as much as we can, from monies extracted from those countries who are currently benefiting most, either by exporting products to us or off-shoring jobs for us. (This refers to my recommendation that the US impose a tariff on importers that they could offset by earning US jobs creation credits.

Otherwise, the remaining tariff proceeds would be directed to fund US R&D and export credits for manufacturers. And, best of all, the foreign countries, not the American taxpayers, would be the ones funding the restoration of our industries, jobs, and global trade balance.

This would create jobs in the USA...good jobs for Americans...which, in turn would point us in the direction to improve our current import/export gap and thereby start to regain the vital corporate and personal tax base that is needed to combat our spending deficits and which we've been "exporting" to those countries we import from or outsource to. (Not forgetting to take advantage of cutting Gov't spending wherever we can.)

I've attached the link to Mr. Hanson's article. I hope you will read it.
seekingalpha.com/artic...- ... -recession

On a side note:
Another critical thing to restore in America, is "Honest American Business Ethics." That is a topic for another thread, though.


SteadfastMason

Misunderstanding the Great Recession

I agree 100% with Steve Hansen's arguement that:
"There is another proximate cause (at the root of America's economic cricis) which explains the employment drop – failure to expand technologically. At some point we took our eyes off of the ball. We stopped investing in ourselves. Without this investment, new jobs were not created. Companies became obsessed with short term over long term profits. Bonuses based on current stock value caused executives to keep focused on one year horizons. We exported R & D overseas to save costs. Small businesses stopped being created at past rates.".

One response I've seen mentioned in the US to this disparity in wages and "worker conditions" between America and developing world (mostly China)...calls for the US government to adopt what is called a "Fair Trade Wage-Leveling Tariff". Personally, I don't think this approach focuses on the core problem and I question whether it would be effective.

Another interesting plan proposed by Warren E. Buffett and Carol J. Loomis in 2003 is titled:

America's Growing Trade Deficit Is Selling The Nation Out From Under Us. Here's A Way To Fix The Problem--And We Need To Do It Now.

By Warren E. Buffett Carol J. Loomis
money.cnn.com/magazine.../ ... /index.htm

This plan comes closer to the one I would envision. But it differs in one key area....Warren's tarriff proposal seems to focus on achieving trade balance (import / export) parity as measured in US dollars only.

My preference is to focus on creating a similar tarriff; But, instead of focusing on pure dollar parity, as Mr. Buffett's plan seems to do, my approach would focus on ensuring a proportionate number of U.S. manufacturing jobs are created that correspond to whatever that dollar parity level is, or those importers would have to pay the special tarriff that would be used to fund US technology R&D, US manufacturing capacity, targeted job training, and export credits for US-based manufacturers. If the company imports to the US without employing some number of Americans (using a formula that is based on the value of their imports and the trade disparity between the country of origin and the US), then they pay a higher tax (aka: the tarriff).

Companies could only offset that higher tax (with a sliding scale) by accumulating US jobs credits (vouchers) they either have to earn by creating jobs directly or indirectly...or which they could purchase from another voucher holder. The value of the voucher would further be based on the national average wage rate of the job being created. (Ex: a voucher representing 1 new job at unskilled or minimum wage would not have as much value as a voucher that represents 1 new job at specialized/skilled worker rates). Hence, there is not a bias toward creating only new jobs that pay low-wages.

If the importer chooses to not accumulate vouchers againes their imports, then they should be taxed at a higher rate - because they are essentially just sucking US dollarsout of our economy with each transaction. Their higher tax burden would help offset their decision to either outsource labor offshore (depriving Americans of jobs) or buying products made outside the US that are then sold in the US, in either case, contributing not just to our trade deficit...but just as important...our loss of skilled high-paying jobs that are so essential to restoring, maintaining, and increasing America's standard of living and economic influence in the world.

This voucher would also be a stronger tool in stemming America's current short-sighted practice of selling or offshoring our most prized intellectual property - where it is ultimately copied, illegally, robbing the US of more money. Perhaps the best aspects to my version of a tarriff is that
1.) it is not influenced one way or another if US currency rates rise or fall.
2.) The current trend toward offshoring labor and/or production would likely be slowed if not reversed.
3.) Further, the cost of the higher taxes would NOT be born by the US consumer. Instead, those taxes would be born by the importer and their oversees source who are already profiting (but not passing on) the savings they currently realize by using Chinese labor at 43 cent a day.

If the importer tries to pass on that higher tax to the US consumer by raising the price of their products, at some point those American consumers will simply buy American. So, the incentive will be for them to either pay a tax for the priviledge of using slave labor in another (sarcasm intended) or they can create US jobs, too, thereby offsetting the damage to the US labor market and economy they help cause by importing.

In short, I believe:
...to restore America's economy, we must restore American Manufacturing. To do that, we must re-invest both in technology R&D and domestic production capacity and strengthen our "domestic treasury of US owned intellectual Property and skilled workforce."

Further, we would be smart to fund this re-investment in America, as much as we can, from monies extracted from those countries who are currently benefiting most, either by exporting products to us or offshoring jobs for us. (This refers to my recomendation that the US impose a tarriff on importers that they could offset by earning US jobs creation credits.

Otherwise, the remaining tarriff proceeds would be directed to fund US R&D and export credits for manufacturers. And, best of all, the foreign countries, not the American taxpayers, would be the ones funding the restoration of our industries, jobs, and global trade balance.

This would create jobs in the USA...good jobs for Americans...which, in turn would point us in the direction to improve our current import/export gap and thereby start to regain the vital corporate and personal tax base that is needed to combat our spending deficits and which we've been "exporting" to those countries we import from or outsource to. (Not forgetting to take advantage of cutting Gov't spending wherever we can.)

On a side note:
Two other critical factors that would seal the long-term restoration of the American economy, is "Honest Ameircan Business Ethics" and developing true leaders. That is a topic for another thread, though.

Kind Regards,

Steadfastmason
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