Showing posts with label Trade. Show all posts
Showing posts with label Trade. Show all posts

Wednesday, October 26, 2011

America Is On The Mend

The job market is bad. The economic scene is worse. And Federal debt is spiraling out of control. How can America be on the mend? Ambrose Evans-Pritchard tells the story.

He mentions shale gas. We now have at least a 50 year supply and maybe 100.

Then there is shale oil.

Total US shale output is "set to expand dramatically" as fresh sources come on stream, possibly reaching 5.5m b/d by mid-decade. This is a tenfold rise since 2009. The US already meets 72pc of its own oil needs, up from around 50pc a decade ago.
That is a pretty dramatic rise.

Ah. But there is more.
"Made in America, Again" - a report this month by Boston Consulting Group - said Chinese wage inflation running at 16pc a year for a decade has closed much of the cost gap. China is no longer the "default location" for cheap plants supplying the US.

A "tipping point" is near in computers, electrical equipment, machinery, autos and motor parts, plastics and rubber, fabricated metals, and even furniture.

"A surprising amount of work that rushed to China over the past decade could soon start to come back," said BCG's Harold Sirkin.
Feathers in the wind? What about actual companies? What are the people who make corporate decisions doing?
The list of "repatriates" is growing. Farouk Systems is bringing back assembly of hair dryers to Texas after counterfeiting problems; ET Water Systems has switched its irrigation products to California; Master Lock is returning to Milwaukee, and NCR is bringing back its ATM output to Georgia. NatLabs is coming home to Florida.

Boston Consulting expects up to 800,000 manufacturing jobs to return to the US by mid-decade, with a multiplier effect creating 3.2m in total. This would take some sting out of the Long Slump.

As Cleveland Fed chief Sandra Pianalto said last week, US manufacturing is "very competitive" at the current dollar exchange rate. Whether intended or not, the Fed's zero rates and $2.3 trillion printing blitz have brought matters to an abrupt head for China.

Fed actions confronted Beijing with a Morton's Fork of ugly choices: revalue the yuan, or hang onto the mercantilist dollar peg and import a US monetary policy that is far too loose for a red-hot economy at the top of the cycle. Either choice erodes China's wage advantage. The Communist Party chose inflation.
On the inflation front we are working hard but we got beaten by the Chinese. Good for us. Bad for them.

Now for the bad news. Which I alluded to at the start.
The switch in advantage to the US is relative. It does not imply a healthy US recovery. The global depression will grind on as much of the Western world tightens fiscal policy and slowly purges debt, and as China deflates its credit bubble.

Yet America retains a pack of trump cards, and not just in sixteen of the world’s top twenty universities.

It is almost the only economic power with a fertility rate above 2.0 - and therefore the ability to outgrow debt - in sharp contrast to the demographic decay awaiting Japan, China, Korea, Germany, Italy, and Russia.
Our bad policies at the top are temporary. Our natural advantages manifest. And we have something no other country has. The American Spirit.

Cross Posted at Classical Values

Monday, October 19, 2009

Dollar Down Exports Up

Here is a headline I never expected to see in my lifetime. U.S. Steel Exports Surpass Imports. So far it is only for the month of August. Still.

A steel industry trade group said the United States exported more steel than it imported in August for the first time in more than 50 years. But another group said that assessment was based on a selective reading of government data.

The American Institute for International Steel said late Monday that government data indicated U.S. steel exports totaled 800,000 tons while imports amounted to 975,000 tons during the month.

But the group, which advocates for free trade and opposes tariffs, subtracted imports of 156,000 tons of semifinished steel and 30,000 tons of hot-rolled steel because that metal is turned into other steel mill products that are considered domestic, the group's president, David Phelps, said Tuesday.
OK. So it looks like they are cooking the books in search of a headline. They got one from me. So I guess it is working - for them.

Some people think corporate America worries about the shrinkage of the US dollar.
Chief executives from the biggest U.S. corporations worry that the slumping dollar could sap U.S. credibility around the globe, spur inflation and ultimately undermine the economy.

The dollar has fallen to a 14-month low; and while a weaker dollar makes U.S. products cheaper overseas, chief executives gathered for the Business Council meeting in Cary, North Carolina, expressed deep concern that the anemic dollar signals serious jitters.

"The issue is currency devaluation, and the worry is that it essentially lowers our credibility in the world," said Office Depot Inc (ODP.N) CEO Steve Odland in an interview with Reuters on the sidelines of the conference.

CEOs say that a slew of government spending programs on health care and other priorities could undercut economic recovery.
And all that is true.

But let us take a look at the numbers. US imports have exceeded exports for a very long time. This is balanced by loans and other investments, thus more or less balancing the books. It does argue that at least on a materials basis the dollar is overpriced. But I got to tell you that a 14 month low is not exactly panic city. My worry is not about the amount but the continued direction.

One thing that does happen in a market system when costs are rising is that the people in the markets work very hard to reduce costs. No one wants to be the first to raise prices. It is bad for business. It is the usual: the greed of the honest businessman leads to a better deal for the consumer.

Of course not all businessmen are honest.
Raj Rajaratnam, a portfolio manager for Galleon Group, a hedge fund with up to $7 billion in assets under management, was accused of conspiring with others to use insider information to trade securities in several publicly traded companies, including Google Inc.

U.S. Magistrate Judge Douglas F. Eaton set bail at $100 million to be secured by $20 million in collateral despite a request by prosecutors to deny bail. He also ordered Rajaratnam, who has both U.S. and Sri Lankan citizenship, to stay within 110 miles of New York City.
A guy like that has to know who his friends are.
Rajaratnam, 52, was ranked No. 559 by Forbes magazine this year among the world's wealthiest billionaires, with a $1.3 billion net worth.

According to the Federal Election Commission, he is a generous contributor to Democratic candidates and causes. The FEC said he made over $87,000 in contributions to President Barack Obama's campaign, the Democratic National Committee and various campaigns on behalf of Hillary Rodham Clinton, U.S. Sen. Charles Schumer and New Jersey U.S. Sen. Robert Menendez in the past five years. The Center for Responsive Politics, a watchdog group, said he has given a total of $118,000 since 2004 -- all but one contribution, for $5,000, to Democrats.
And it seems that he was interested in some rather unsavory characters.
...even before his arrest, Rajaratnam was under scrutiny for helping bankroll Sri Lankan militants notorious for suicide bombings.
Now why would a guy friendly to suicide bombers also be friendly to Democrats? Let me think. It will come to me soon I'm sure.

Did some one say economics? All I can say is that the Democrats are moving in the wrong direction. A slide in the dollar may be a good thing for some and a bad thing for others (gasoline prices say - and didn't Sarah Palin have a word or two recently about developing more domestic supplies? Yes she did.) But a cratering of the dollar would be a disaster. Time for a new direction? You betcha!

Cross Posted at Classical Values

Tuesday, July 15, 2008

Sea Trade Cultures

I was discussing an article I posted at Classical Values, The al-Ameriki Tribe (also cross posted here at P&C), with some commenters and made this brilliant (well you know my opinion of myself) comment.

Only a moral people can have successful revolutions. Private property has to be a core value or the result is a degeneration into wholesale thievery. Socialism.

I think being a sea trade culture is critical. It tends to impose honest dealings across cultures and tribes. Tribal or factional cultures tend to degenerate into thievery.
So I thought to myself, that is an interesting line of thought. What is the influence of sea trade cultures on politics? So you know the first thing to do is to see if any one had written anything on "sea trade culture". Nothing. Zero. Bupkiss. Searching - "sea trade" culture - is a little better. About 117,000 items. Anything interesting?

I did find something on littoral culture.
The collapsing of Oceanic culture and politics, the affinities of community and the energies of colonial resistance has me thinking of the deforming imperial visions running through seascapes and littoral cultures. Gifts, affinities, and ships point me to not the land and sea, but to the Àscapes themselves. This, as theorist Kenneth Olwig reminds, is a derivation not unlike that of friendship or citizenship, which is clearly to note that it is a community notion. Thus a seascape is primarily and necessarily founded upon a community of memory, custom, and practice. This is a divided notion—between the place of memory, custom, and community, and that of the imperial power to view, from a dominant vision, "seascapes" themselves; in considering our themes we are radically implicated in these apparent disjunctures between the local and the global or imperial.

Equally to note is the critical observation that these "ships" are indeed literally "ships." That is, they are continuously mobile and negotiated constructions, bearing meaning yet dependent upon the familiars who create them—if we strongly consider such terms as "citizenship," with all of its evocations of the ship of state, we see uniquely how it is very much a question of "representation." In the image then, to represent the seascape, is also to struggle with the notion of representation—the politics of community, accountability, and voice, and the struggle over those seascapes which are unrepresented, which have no "ships," whether communities evoked, rights to be enjoyed or demanded, or mobile cultures in which to participate.
Typical academic speak. I think what he means to say is that seafaring has a rather definite culture attached to it. In other words he has restated the premise without adding any information.

I have done some more searching and haven't found anything like Mahan's "The Influence of Sea Power On History" with respect to the influence of seafaring on politics and actual culture (as opposed to giving it a name - littoral culture - and letting it go at that). As far as I can tell what the scholars mean by "littoral culture" is that people have boats. There is no attempt to unify cultural/political constructions that are a result of such a culture. How does it influence law? Levels of trust? Clan behavior? Identity? It looks like a wide open field of study.

I have taken a look in some past articles on the advantages of safe trade routes to the general welfare in Decline and Fall and Desolation Row and
Makers vs Takers. But none of those touches on the effect of seafaring on politics and culture. I'm going to have to give this some more thought and research and see if I can add to the body of general knowledge.

Sunday, April 06, 2008

Trade Is A Two Way Street

Mark Penn is a public relations guy working in the Clinton Campaign. He also does PR work for Colombia. And guess what? The Colombians are not happy.

WASHINGTON (AP) -- The Colombian government said Saturday it has fired Mark Penn's public relations firm after the chief campaign strategist for Democrat Hillary Rodham Clinton apologized for meeting with Colombian officials pushing a trade deal with the U.S.

Colombian officials said they terminated their contract with lobbying and public relations giant Burson-Marsteller in response to a statement released Friday by Penn, the firm's chief executive, calling the meeting an "error in judgment." Clinton opposes the trade deal.

"The Colombian government considers this a lack of respect to Colombians, and finds this response unacceptable," government officials said in a news release. The government will continue its push for a free trade agreement with the United States, they added.

The Wall Street Journal reported Friday that Penn had met with the Colombian ambassador March 31.

Clinton advisers said the meeting was not connected to the campaign, but made clear the candidate was not happy to learn it. Penn later issued a statement expressing regrets.

"The meeting was an error in judgment that will not be repeated and I am sorry for it," he said. "The senator's well-known opposition to this trade deal is clear and was not discussed."

The Colombian government is trying to secure congressional passage of the agreement signed in 2006 by Colombian President Alvaro Uribe and the Bush administration.
Heh.

I just did a bit on what America has to do to improve its competitive position in the world. The direction the Democrats want to take us in is not the way to go. If we are going to sell we have to be willing to buy.

Trade is a two way street.

The essence of business is buy low and sell high. How can we buy low if we can't buy from the lowest cost producers? Protectionism slowly strangles economies. Why would we want to do that to ourselves just to support some politically connected businesses?

We are Americans. We can compete.

Cross Posted at Classical Values

Monday, January 29, 2007

War Is A Racket

Major-General Smedley D. Butler: Common Sense (November 1935)
I spent thirty-three years and four months in active service as a member of our country's most agile military force---the Marine Corps. I have served in all commissioned ranks from a second lieutenant to major-general. And during that period I spent most of my time being a high-class muscle man for Big Business, for Wall Street, and for the bankers, In short I was a racketeer for capitalism
Thus, I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place to live for the National City Bank boys to collect revenues in…. I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-1912. I brought light to the Dominican Republic for American Sugar interests in 1916. I helped make Honduras "right" for American fruit companies in 1903. In China in1927 I helped see to it that Standard Oil went its way unmolested. During those years I had, as the boys in the back room would say, a swell racket. I was rewarded honors, medals, promotion. Looking back on it, I feel I might have given Al Capone a few hints. The best he could do was operate his racket in three city districts. We Marines operated on three continents."
So what is a quote like that doing on an avowedly neo-con blog? Sit down swollow your drink. Get your hands off the computer.

I agree with the General.

Whoa. Say it isn't so. Nope. It is true. The purpose of the American military in 2007 and well beyond is to open trade possiblities and keep the trade routes open. If we don't do that job as I explained in Decline and Fall, the world and all its people will be worse off. In fact the outcome would lead to Desolation Row.

What people do not understand is that if war is done as a way to increase trade flows (Gen. S. Butler was right about that part - his Marines were sent to make opportunities for American companies or to protect assets the companies had already invested in) every one involved gets richer.

If it is purely a blood sucking operation (as the Soviets did to their "clients") every one gets poorer.

Now in general (and yes from time to time we have screwed the pooch badly) where do you think America stands?

What about people who think that if we stopped spending on the military the money could go to better uses.

Probably.

However, those people needn't wait to get the Feds to move on it. They could start in their own communities by demanding the police force be disbanded. Think of all the money that could go to better uses.

Some one is going to be the world's policeman. Given the options I'd rather it was us. We are not so good. But there is lots worse out there.

Suggested by the discussion at Rose Colored Glasses

Cross Posted at Classical Values

Wednesday, January 03, 2007

Desolation Row

American Thinker has an interesting piece up about American Imperialism. In it J.R. Dunn looks at the difference between American Imperialsm and the Roman version.

Much in the way of criticism of the United States comes in the form of accusations of imperialism. According to this view, echoed by everyone from Harold Pinter to Noam Chomsky to the Arab press, the U.S. has for decades run roughshod over the globe, in defiance of agreements and civilized norms. Enforcing its policies unilaterally and always for its own benefit, the U.S. has effectively colonized huge swathes of the planet, if not through direct military action, then by economic exploitation or diplomatic chicanery. No one dares raise a hand against this; any show of independence is met by cruise missiles at the very least, if not armored divisions or carrier battle groups. Today it's Iraq, tomorrow... who knows? America is the third-millennial Rome, brutal, implacable, infinitely corrupt.

Domestically, this takes the form of hegemonism, with the U.S. viewed as the primal source of global iniquity. Internationally, it's a major component of anti-Americanism, in which the U.S. is taken as the embodiment of an overpowering modernity, in whatever form - economic, political, cultural -- the onlooker finds most threatening. In such a context, anything and everything can be labeled "imperialist", from military bases to McDonald's fast-food joints to tourism. Intent and results are meaningless; all U.S. actions are evil, since all are viewed through the lens of imperialist activity.

It's difficult to match any of this with the actual record. The America that takes on the dirty jobs, the jobs no one else will touch - Serbia, Kuwait, Somalia - the country that comes to the rescue when disaster strikes, as with the Indian Ocean tsunami or the Pakistan earthquake, either goes unmentioned or has its actions attributed to somebody else (as in Kofi Annan's taking credit for tsunami relief operations in his farewell speech).
It is a strange kind of imperialism that neither rules nor directly taxes the imperium for the maintenance of the imperial garrisons and the American rulers of the conquered states. In fact Americans pay the price to keep the "imperial" system running. Strange indeed.

Mr. Dunn looks at Rome to see what might be in our future.
But the world's anti-Americans should take care that their fantasies don't catch up with them. Myths have a way of coming true. If believed in long enough, and hard enough, and by enough people, they can come to pass, if only by limiting the possible responses of the subject in question. Tell someone they're an oppressor often enough, and they may become an oppressor, out of spite, or anger, or simple weariness. Useful the Roman stereotype may be, but it can prove very dangerous.

How did Rome get that way in the first place? The Rome we know is seen through the lens of the later, corrupt empire -- brutal, heartless, and tyrannical. We see the Romans as dour, arrogant, living off the intellectual capital of older civilizations, slowly falling victim to their own worst impulses. But was Rome always like that? Did Rome start out that way? Was Rome ever young?

It must have been at one time. Rome was once a republic, and must have possessed a republic's virtues. How could it ever have accomplished so much otherwise?

So what happened to change things? Wars, in a word - Rome's early history is that of a state with its back to the wall, sacked by the Goths, at constant sword's point from neighboring states. Livy's histories are a chronicle of endless strife -- wars with the Etruscans, the Social Wars, at last the Punic Wars. And with each conflict, another layer of republican virtue was scraped off. At some point, perhaps during the Second Punic War, with Italy all but under occupation by Hannibal's forces for a decade, it effectively vanished, destroyed not only by the fear and strain of constant struggle, but what the Romans felt compelled to do in response. Consider that terrible image of Scipio gazing on the blazing ruins of Carthage and seeing Rome itself in the flames.
In Decline and Fall I take a look at what the end of American "imperialism" might mean for America and the world. Again, not surpisingly, through a look at what happened to the Roman Empire. It was not pretty. Long distance trade became impossible. With the lack of long distance trade the gains from what economist David Riccardo called comparative advantage are reduced to a local scale. The gains are limited indeed. This leads to a much lower carrying capacity for the regions formerly under protection of the empire. Populations disappear through, war, disease, and starvation. Everything comes back in balance at a much lower level. For the world it would mean a massive die off. For the USA a drastic cut back in our standard of living.
There's a sense of weariness at international ingratitude, irresponsibility, and hostility. It has not gone unnoticed that sympathy for the U.S. effectively evaporated within days of 9/11, that support for necessary responses has been grudging and hedged with conditions, that, time and again, Western states have been caught under the table with corrupt UN officials and even the terrorists themselves, that, with a few notable exceptions such as India and Japan, our sole dependable allies against a universal threat have been our cousins, Great Britain and Australia.

The classic U.S. response to such provocations has been isolationism. When betrayed in the international sphere, we go home and mind our own business. But that's no longer a viable option. In this millennium, we can't isolate our troubles overseas. If we turn our back, they'll come right after us.

There have been rumblings, comments on the Net, voices on talk radio, arguing another alternative. That we owe the rest of the world nothing. That an effective response to terror is simply to start vaporizing cities, beginning with Tehran and working our way down until attacks cease. That, quite simply, the United States should transform itself into Rome.
I have given some thought to this myself. I have wistfully rejected it. The Sampson option. If we are going down we will take the rest of the bastards with us. Let the world become like the Iranians, nostalgic for the "oppression" of the Shah.
But we had better know this: if the U.S. ever does take on the trappings of imperium, if we, out of despair or terror, turn to Roman methods, then, like Scipio, we will be witnessing our own fate in the cities we set ablaze.

Fate is by definition unavoidable. Nations are often forced into roles they might not have chosen, the way Britain found itself an empire "in a fit of absentmindedness". For now, we - the Americans, despised and envied across the world -- still stumble along, doing the best we can, taking our licks and looking for solutions while living up to our image of ourselves. But the criticsshould be wary of screaming too loud, of conspiring too well, of undermining us too thoroughly. Because if they succeed, if they do get what they insist they want, then the result may well be something they never conceived, and it will be their desolation, and our peace.
I think he has that right. Except with our peace will come our impoverishment.

We do have a trick or two up our sleves. One I found at Classical Values. One I invented myself. One is defensive, one is offensive (yeah, that's me).

The defensive measure is Easy Low Cost No Radiation Fusion. With greatly increased energy supplies we will not be dependent on the oil tankers plying the high seas. We will greatly reduce the funding by the Arab states of terrorism. Enegry independence would become our defensive shield since energy (specifically liquid energy) is our greatest vulnerability.

The offensive measure is the Neighborhood Development Package. A package designed to give a neighborhood access to the internet, cell phones, and electrical power. By distributing these packages we educate and emanicipate women. Educated and emancipated women are the best tool we have to destroy tribal culture.

We can get our wish (a measure of peace) by destroying the world. We can also get it another way. Let us hope our better angels predominate, but we will have to get cracking.

Cross Posted at Classical Values

Thursday, December 21, 2006

Decline and Fall

Commenter Karridine alerted me to this interesting piece by Orson Scott Card on the decline and fall of the Roman Empire.

Card's central thesis is that trade made the empire and its people richer and that the empire fell because trade was no longer safe.

Trade breaks down as merchants lose confidence and markets are disrupted by barbarian invaders. When this happens, specialization becomes impossible, local areas must become agriculturally and militarily self-sufficient again, and between disease, famine, war, and emigration, populations crash.
Then he asks the most important question of the day. Can it happen to us?
For a century, America has been the great cushion to absorb the shocks that might have brought down western civilization. In the Great War (WWI), Europe crashed its own population through war and then crashed further through the influenza epidemic. But the American economy provided the means for France and Britain -- but not Germany -- to recover. Arguably, it was the failure to include Germany in the recovery that led to repeated economic crises, and when America finally joined Europe with its own Depression in the 1930s, the stage was set for the next barbarian invasion.
He discusses the German and Japanese barbarians of WW2 and why it was good that America defeated them.

He then goes on to discuss the American "imperial" system.
In the aftermath of WWII, once again America was the economic cushion -- only this time the portion of Germany under western occupation was included in the economic recovery, as was Japan.

The result, over the past sixty years, has been a pax Americana covering much of the world. And the world has prospered fantastically wherever the American military sustained it.

Let me say that again: As with Rome, the American military has been the wall behind which a system of safe trade has allowed an extraordinary degree of specialization and therefore mutually sustained prosperity.

America has not been imperial -- we have not been stripping other countries. On the contrary, those nations that were able to sustain the internal peace necessary for production, and that have joined the economy presided over by America, have all been able to join in the prosperity as equals.

We don't tax them -- quite the opposite. We have taxed ourselves to pay for the military protection that maintained the safety and perception of safety that allowed the European community and Japan to flourish. Their welfare economies are only possible because they did not have to pay for their own defense at anything like the levels we have paid.

People talk about America's enormous defense budget as if it were a menace to the world. But our enormous defense budget has allowed Japan and Europe -- and Taiwan and South Korea -- to thrive without having to invest much of their gross domestic product in defense.
He then goes on to discuss China and Russia and the different path's they have taken. He is not optimistic about either country.

Then he discusses how the American system could fall to the barbarians.
Here's how it happens: America stupidly and immorally withdraws from the War on Terror, withdrawing prematurely from Iraq and leaving it in chaos. Emboldened, either Muslims unite against the West (unlikely) or collapse in a huge war between Shiites and Sunnis (already beginning). It almost doesn't matter, because in the process the oil will stop flowing.

And when the oil stops flowing, Europe and Japan and Taiwan and Singapore and South Korea all crash economically; Europe then has to face the demands of its West-hating Muslim "minority" without money and without the ruthlessness or will to survive that would allow them to counter the threat. The result is accommodation or surrender to Islam. The numbers don't lie -- it is not just possible, it is likely.

America doesn't crash right away, mind you. But we still have a major depression, because we have nowhere to sell our goods. And depending on what our desperate enemies do, it's a matter of time before we crash as well.
He points out what I have and so many others have said over and over. At this time oil is the life blood of civilization. Without it there will be a huge die off.

Card looks at what America might become without world trade and imported oil.
...our own oil production cannot meet the demands of transportation and production at current levels. Rationing will cripple us. We will not be able to maintain our huge fleet of trucks. Air travel will becoming shockingly expensive and airlines will fail or consolidate. We won't even be allowed to drive our cars on long trips because gasoline will be rationed.

We will go back to the rails. Only we won't have the money to rebuild and refurbish the railroad system -- it will only be able to limp along.

It will look, even inside the United States, amazingly like the shrinkage that happened at the time of the fall of Rome.

Then, and only then, will America look -- and be -- vulnerable to any kind of intervention from the south. Economies that are still somewhat primitive will recover faster than economies that are absolutely dependent on specialization.

It takes two generations for the dark ages to reach America. But they will come, if we allow this nightmare to begin. Because once you reach the tipping point, there's no turning back, as the Emperor Justinian discovered.

Our global economic system is a brilliant creation, imperfect of course, but powerful and effective in creating more prosperity for more people than ever in the history of the world. It is a creation of America's military and America's benign government of the world -- so benign they pretend we don't govern it.

Our enemies and most of our "allies" and many of our own citizens are working as hard as possible to bring the whole thing crashing down, though that is not at all what they intend.

They just haven't learned the lessons -- the principles -- of how great economic empires are maintained. They only look at the political dogmas du jour and spout their platitudes. People like me are ridiculed for seeing the big picture and learning the lessons of history.
A similar crash of global trade happened in the aftermath of the European wars of the 20th century. Starting in 1914 it did not fully recovered until 50 years from the end of the last of the European shooting wars.

We many not be so lucky this time.

Fortunately we have an ace in the hole. However, we had better get cracking. This new source of energy will take 5 years to prototype and probably 10 years to roll out. There is no time to waste.

Cross Posted at Classical Values