CAFTA

[busterb]

I read in todays paper the cafta is expected to hike U.S. clothing exports by $803M. WTF. Where in hell can you buy anything made in usa? Last overalls I bought "Liberty" brand were made in Russia. So just what are they going to export?

[wolf]

Stuff you already can't afford ...

[elSicomoro]

Well, those Hondurans can make a mean sweater...

Originally Posted by wolf

Stuff you already can't afford ...

Heck even the stuff I can't afford (which is practically everything) is made in the Maldive Islands or something. The US still has a garmet industry? Could have fooled me.

[xoxoxoBruce]

There's a little out there. You won't find it at the Beasts of Bentonville store though.

[tw]

CAFTA and other free trade concepts are not why industries move offshore. You have been warned of repeatedly by Greenspan. Even the George Jr tax cut was destructive. You have not yet seen the resulting damage since money games mask a looming and large inflation. Cited back then was the Kennedy tax cut. What they forgot to mention was the even more severe economic downturn that followed years later when economic forces punish an economy for its free spending binge.

When an economy imports too much and exports too little, then dollar
s pile overseas. For example, Bank of China was said to be 80% in dollars. Normally too many dollars overseas would cause a dollar value drop. It has, but insufficient for what excessive spending demands. Why has the dollar still remained so strong? Why is it therefore so much cheaper to buy overseas clothes? Trade debts would cause the dollar to drop. But another excessive spending is actually keeping the dollar high.

National banks such as China, the EU, etc have been trying to maintain their US trade by buying US dollars. They maintain dollar value to protect their existing US trade, to combat inflation created by too many dollars in their economy, AND by investing in US Treasury bills. The last is most critical. Government debt skyrockets as foreigners again finance the US Government. It makes US long term interest rates even lower.

Greenspan continuously warned that US government debt will have a time bomb effect. For example, as long as China keep spending their US dollars on government debt, then the dollar has little reason to drop. We simply ignore US productivity problems made obvious by trade imbalances. Massive US Government debts only mask a problem. Worse still, this only encourages George Jr to spend even more money we really don't have. George Jr runs up government debts with no reason to stop spending and spending and spending - as long a foreigners keep buying Treasury bills. Meanwhile, all that foreign financing of government debt means interest rates stay low as Americans now buy homes using loans that don't even pay off the principle. So housing prices skyrocket into a bubble.

Eventually, as happened 30 years ago, there are consequences. One was stagflation. If the work we do today is not productive enough to justify our incomes, well, economic forces will take revenge 4 or 10 years later. If the dollar dropped as it should to reflect a loss in US productivity (relative to the world), then the economy would be tighter - and we all would be working harder on things that fix our productivity problems. Instead we continue to spend on things that will only make the impending storm worse - ie SUVs.

A so destructive government debt does not yet affect your life today. Government debt is masking a trade problem by sucking up those excess dollars. Worse still is the future interest payments to China, et al. Under Clinton and George Sr, we finally solved that problem. A double whammy effect you do not yet see is coming. Learn from the economy 30 years ago.

Consequences become more severe and destructive years future when, among other things, foreigners bankrupt healthy domestic industries, a dropping dollar means prices skyrocket (massive inflation), capital investment money becomes scarce as the interest on all those foreign debts eat away at potential capital, etc.

What is even worse, the work we should be doing today to make the products of the future is instead being rechanneled into unproductive activity such as the 'Mission Accomplished' war, massive military spending for current and future planned wars, massive spending on weapons systems (ie war on terror) and other useless endeavors (ie Man to Mars) that will have no useful results, and a most wealthy part of society that is living so very 'high on the hog' while not doing anything productive (ie Enron executives, Rick Wagoner of GM who is only running GM into more debt, and corporate executive whose income rose from 14 times to 300+ times earning of the typical worker). Spending today that makes the economy look healthy today when it is not investing in the future.

Greenspan cites a most destructive force: massive government spending using money not in America. Foreigners are buying up so much American debts that Greenspan's conumdrum is why interest rates do not rise. But economics punishes tomorrow for the sins today. Inflation suddenly undermines even healthy domestic industries when prices suddenly skyrocket back to what they should have cost.

Eliminating massive government spending alone will not solve the problem. The real problem is an economy that is not productive enough to justify its high dollar valuation. That includes twice as much energy consumed per American verses any other people. Now we are so power hungry that the world's second largest producer of natural gas has become an *importer*. . Worse, a dropping dollar might even make energy become more expensive. Just another looming price increase being ignored because our government and others encourage more consumption and rather than innovation; We even spend money borrowed from foreigners to do things WE should be paying for today.

Let's not forget - we did not pay for the liberation of Kuwait. But we are spending massive money to liberate people who did not want to be liberated. Someone must pay for that. We are by selling off America's future.

If the dollar value dropped to truly reflect a) America’s excessive energy consumption, b) its need to put military solutions everywhere - fix the world, c) its less productive industries, and d) its massive government spending that goes unchecked, THEN many domestic industries would appear competitive. What else must be sacrificed to maintain an excessively high dollar? When the dollar finally drops, well, too late for marginal industries. Welcome to problems created (and not yet seen) by many money games including a nonsense tax cut: sold using sound byte logic.

If worried about jobs being lost, attack the reason why - massive government spending on boondoggles such as Iraq, lying about government spending by not leaving treasury bills for money taken from Social Security, Highway Trust Fund, etc, a useless anti-ballistic missile system, massive spending increase to put a human on Mars (for not one good scientific reason), massive new star wars weapons for an enemy that does not even exist, the stifling of research in innovative and promising science from quantum physics and stem cells to better machines that use less energy, building more military bases for future wars in Iran, N Korea, and (maybe) Central Asia, a military budget that implies the Cold War never ended, corporate welfare to energy producing companies (yes even George Jr complained about that wasteful government spending in the current energy bill), massive tax cuts that enrich only the wealthy (so they can spend more on foreign vacations & foreign products rather than invest in American productivity, etc), protection of excessive drug industry prices, and massive government subsidies to agricultural industries (ie sugar) that means more illegal aliens must be imported and that creates more poverty in other third world nations. The last one is a problem that even George Jr has properly and accurately criticized.

You need not believe these are all bad spending. Still, the point remains. George Jr's tax cut AND George Jr's massive spend and spend policies are only maintaining a high dollar that means some domestic industries cannot compete today followed by inflation (and stagflation) that takes revenge on everyone's income and equity tomorrow. Such policies (and not CAFTA) economic money games. Games that even cause industry loses.

We could all pay to have someone dig up our lawns and replant grass. Then economic data would show prosperous times. The economy would boom. What happens years later when debts come due? The resulting recession is what happens when you play money games as the administration is doing. 30+ years ago, they insisted we could have both guns and butter. Years later, we paid big time. Massive debts, too many dollars overseas, an outflow of domestic industries not replace by new and innovative industries, and a dollar whose strength is not justified by current economic conditions were all leading indicators of economic hard times - back then.

Greenspan kept sounding warnings. Did you even hear him? Or would you just foolishly blame CAFTA? The danger of excessive government borrowing and spending will become apparent later when the dollar finally does drop. Its just so much easier to blame free trade. Reality is just too complex. If we were not playing money games to mask massive government (and corporate) debts, then the dollar would reflect the real value of American goods. Currently, too many dollars are sloshing overseas. Everyone is masking a problem directly traceable to an American government that is spending money we don't have. Both government spending and on other things such as more energy consumption rather than energy innovation.

Job loses to CAFTA would only be a symptom of economic problems currently ongoing. CAFTA would only get blamed because currency problems created by massive debts is too often not understood. Too many people never understood Greenspan's warnings. So they blame CAFTA?

[busterb]

tw. I just pointed CAFTA out as one of the many fuckups in the game. Not as the main cause.

[Bullitt]

Originally Posted by tw

CAFTA and other free trade concepts...

I need a nap after reading that novel.. good Lord

[tw]

Originally Posted by busterb

tw. I just pointed CAFTA out as one of the many fuckups in the game. Not as the main cause.

"Fuckups" occur when government assumes it can fix trade. Fuckups - a US tire industry that was so anti-American as to run to the government to keep the 1948 radial tire out of America until Michelin finally shattered those government restrictions in 1975. That's right. Anti-American trade restrictions kept the radial tire out of America for 28 years. So tarrifs and trade restrictions must be good? If you oppose CAFTA, then you also endorse what kept the radial tire out of America.

Meanwhile, numerous paraplegics and quadriplegics exist in America because those same anti-American tire companies were so technically ignorant as to make radial tires that failed prematurely - often with human injury. Patriots remember WHY the Firestone 500 was killing Americans - including a run to the Supreme Court to have the facts quashed.

Did elimination of government tariffs cause all those deaths? Only the naive would say so - just like anyone would blame CAFTA for the resulting problems. Those deaths occurred because anti-American tire companies ran to government for trade restrictions rather than fix their management.

BTW, name major American tire companies? Most got sold to foreigners because government protected of those companies. Names like Uniroyal, Firestone, Goodrich, etc all had to be sold because of government protection. Only Goodyear remained American.

Same applies to CAFTA. If CAFTA causes American job losses, then reread the previously long post to appreciate free market economics. CAFTA and other tariffs eliminations are long overdue. Elimination of US government subsidizes - such as 50% subsidy of US Sugar - is also long overdue. If US Sugar enters bankruptcy, then good. Bankruptcy eliminates the only reason why US jobs are lost - defective top management.

Those who 'Buy American' are classic anti-Americans. Patriots believe in the free market - buy the best. Patriots saved both Ford and Chrysler by buying superior foreign products. Therefore Chrysler replaced the reasons for their problem - replaced Townsend and Richardo with Lee Iacocca. Ford replaces the anti-American Henry Ford with Don Petersen. These lessons of history contradict much of what is taught in the business schools - where there is plenty of mythical blame to go around.

Innovations in T-shirt technology - where was it applied? In the US where management was brainwashed by MBA school concepts of cost controls? Then no wonder the industry had to move overseas. I should not have to mention a major innovation in T shirts. If you have knowledge of economics, you can cite a major innovation in T shirts. I leave it to you to cite a major T shirt innovation.

'Buy American' or 'Buy the best'? Which one are you. The patriot? Or one who concepts found in communism?

Meanwhile CAFTA is a problem to American industries whose bosses were anti-American; anti-innovation; typically graduates and disciples of business schools. Either we force those pathetic industries to near bankruptcy so as to fix their only problem - top management. Or we protect those anti-American companies with more tariffs.

[richlevy]

Originally Posted by tw

I should not have to mention a major innovation in T shirts. If you have knowledge of economics, you can cite a major innovation in T shirts. I leave it to you to cite a major T shirt innovation.

TW, this paragraph comes off as a little strange. I'm sure there have been many T-shirt innovations.

[xoxoxoBruce]

I was driving on Michelin Radials in 1964.