I can't think of a situation that involves any foreign nation where we are better off than we were under the previous administration.
Concerning trade and trade deals, we have no new ones, are losing our influence in Asia and are in the midst of a trade war with China. How that might turn out is anyone's guess but the odds aren't looking favorable.
We have allowed the North Koreans to play our egomaniac who was pretty clearly outmaneuvered by theirs. We got nothing, they got some prestige.
Japan and South Korea are having issues which while not directly involving us show how unimportant we have become.
India and Pakistan are generally ignoring us as the dispute over Kashmir continues.
The middle east is perhaps the brightest spot since we did some damage to ISIS but they continue, the Taliban is ready to retake Afghanistan and Iran is preparing to restart nuclear weapon development. We have alienated a lot of middle eastern states by our action related to Jerusalem and the West Bank with no offsetting gain. Our initiative there seems to be an economic one and it isn't being received well.
Russia is doing whatever it wants in the region, in the Ukraine and is likely to attempt to influence our elections. They mainly want to destroy our institutions.
Our European allies, if we can still call them that, refused our invitation to jointly protect oil shipments in the straights of Hormuz. They really don't have much use for us although they do support NATO.
Here in the Americas we have the issues with Central America and Immigration and our biggest failure to date in Venezuela. Maybe this will all fall into place somehow.
We were close to a new NAFTA, not much different than the old NAFTA but it hasn't been ratified yet.
Perhaps everything will be a great success soon. We know someone will claim it is via tweet.
Showing posts with label trade. Show all posts
Showing posts with label trade. Show all posts
Wednesday, August 14, 2019
Thursday, May 9, 2019
Progress?
Deficits up, no negotiated deals, more shooting and hate crimes, wages still stagnant, farmers in trouble, Cabinet members found in contempt of congress, and North Korea and Iran increasing nuclear expansion.
Wealthy people and businesses are making money thanks to the directed tax cuts but that may not last much longer if the situation with China deteriorates.
Our friends don't trust us and our enemies don't take us very seriously.
We are doing very little to prevent a climate disaster and in fact encourage behavior that will speed it along.
We have an administration which only cares about the rich and the easily fooled who listen to the rhetoric and believe the lies, which are easily documented.
Much like his spotted business resume, he is all about the show and has trouble making it go.
If you listen to the people on the animal news, they act like there are great accomplishments.
The great economy is a continuation of the recovery with a boost from tax cuts and increased defense spending. The increased National Debt will come back to haunt us not to mention the climate disaster.
To top it off we have more uninsured Americans this year than last.
Not really any progress at all.
Wealthy people and businesses are making money thanks to the directed tax cuts but that may not last much longer if the situation with China deteriorates.
Our friends don't trust us and our enemies don't take us very seriously.
We are doing very little to prevent a climate disaster and in fact encourage behavior that will speed it along.
We have an administration which only cares about the rich and the easily fooled who listen to the rhetoric and believe the lies, which are easily documented.
Much like his spotted business resume, he is all about the show and has trouble making it go.
If you listen to the people on the animal news, they act like there are great accomplishments.
The great economy is a continuation of the recovery with a boost from tax cuts and increased defense spending. The increased National Debt will come back to haunt us not to mention the climate disaster.
To top it off we have more uninsured Americans this year than last.
Not really any progress at all.
Wednesday, December 19, 2018
Hows the Economy
How strong is the economy?
There are some numbers that look good, such as unemployment but there are also some troubling signs.
It certainly isn't the best economy ever, we don't actually see a major expansion in employment, we see increases at the edges.
If you consider the stock market as a predictor, it is likely that 2019 is going to be a problem year as interest rates, tariffs and political uncertainty cause disruptions.
As always the economy will be better in some places and not so good in others.
Very little improvement has taken place in our hard hit rust belt, as the promises of reviving manufacturing and coal were really empty ones in the first place.
Coal is simply no longer the fuel of choice and manufacturing just needs a lot less workers now, even if you re-open a plant.
Automation and cheap foreign sources haven't gone away.
We are not making enough progress, especially in the heartland to develop new industries like solar and renewable.
Both coasts are doing well because of tech and service industries, but where brawn in the norm, not so much.
Automated brawn is just cheaper.
Economy is still mixed but not terrible. It is likely to get much worse soon.
We need more trade, not less.
There are some numbers that look good, such as unemployment but there are also some troubling signs.
It certainly isn't the best economy ever, we don't actually see a major expansion in employment, we see increases at the edges.
If you consider the stock market as a predictor, it is likely that 2019 is going to be a problem year as interest rates, tariffs and political uncertainty cause disruptions.
As always the economy will be better in some places and not so good in others.
Very little improvement has taken place in our hard hit rust belt, as the promises of reviving manufacturing and coal were really empty ones in the first place.
Coal is simply no longer the fuel of choice and manufacturing just needs a lot less workers now, even if you re-open a plant.
Automation and cheap foreign sources haven't gone away.
We are not making enough progress, especially in the heartland to develop new industries like solar and renewable.
Both coasts are doing well because of tech and service industries, but where brawn in the norm, not so much.
Automated brawn is just cheaper.
Economy is still mixed but not terrible. It is likely to get much worse soon.
We need more trade, not less.
Monday, December 3, 2018
Trade Deals?
So how are the trade negotiations going?
So far not so good but we now have some progress from the G-20. It looks like NAFTA is going to be updated a bit and we have a bit of a truce with China.
Which the dontard has declared as a victory although we're no better off then we were when the whole thing started.
says
Maybe that's about all we can expect from this group. Well at least from their leader.
Even his account of what was agreed to seems questionable as the official account issued by his own administration.
Did they agree to reduce tariffs or just agree not to raise them for a few months?
No doubt everything the dontard says is probably wrong, he doesn't pay attentions and generally doesn't grasp any of the details.
Hopefully some of the people involved actually know how to add and write legal agreements.
It will have to get through congress before anything actually happens.
Even this little bit of progress or no progress is encouraging to the business community who thinks this administration is their friends but head of it is pretty unpredictable, and not in a good way.
Not all the surprises are pleasant ones.
So far not so good but we now have some progress from the G-20. It looks like NAFTA is going to be updated a bit and we have a bit of a truce with China.
Which the dontard has declared as a victory although we're no better off then we were when the whole thing started.
says
Maybe that's about all we can expect from this group. Well at least from their leader.
Even his account of what was agreed to seems questionable as the official account issued by his own administration.
Did they agree to reduce tariffs or just agree not to raise them for a few months?
No doubt everything the dontard says is probably wrong, he doesn't pay attentions and generally doesn't grasp any of the details.
Hopefully some of the people involved actually know how to add and write legal agreements.
It will have to get through congress before anything actually happens.
Even this little bit of progress or no progress is encouraging to the business community who thinks this administration is their friends but head of it is pretty unpredictable, and not in a good way.
Not all the surprises are pleasant ones.
Friday, November 16, 2018
Economic Concerns
There is a rising level of evidence that the short term policies that have been stoking the economy under the current administration are starting to run out of steam.
The tax breaks didn't translate into a lot of high paying jobs and the deficit has grown.
The FED has interpreted the flare up as a potential inflation indicator and has started raising the cost of money.
The elimination of some regulations have enabled some companies to make extra profits but once again this has not led to an explosion of new jobs and taxes so the deficit continues to grow.
Further dampening the economy is the terrible trade policies which will result in higher prices and less exports for the economy.
What is important to note is that the developed countries are, well, developed, meaning that they are nearly at the maximum for consumption. They have had the most money and were clearly the most important markets, and will remain important markets for a long time. However they are not where the dramatic growth is.
The most growth is going to be in the countries that are still developing as they increase their per capita incomes and become greater consumers. American companies need to capture some of those markets to have the sort of growth that ultimately creates jobs.
If the components needed to complete products get more expensive because of tariffs, the end products produced here will be non-competitive. The reason the components are made elsewhere is because the costs are significantly less than here and increasing the cost in this market is not going to change that for the rest of the world.
So America needs a trade policy that allows us unrestricted access to these markets and one that keeps our products competitive.
The spiteful nature of our current policies may hurt others but it is going to be more harmful to us in the long run as we lose market share in developing markets that will be hard to recapture.
This is all pointing to an economic downturn that may have already started. The market seems to think so.
The tax breaks didn't translate into a lot of high paying jobs and the deficit has grown.
The FED has interpreted the flare up as a potential inflation indicator and has started raising the cost of money.
The elimination of some regulations have enabled some companies to make extra profits but once again this has not led to an explosion of new jobs and taxes so the deficit continues to grow.
Further dampening the economy is the terrible trade policies which will result in higher prices and less exports for the economy.
What is important to note is that the developed countries are, well, developed, meaning that they are nearly at the maximum for consumption. They have had the most money and were clearly the most important markets, and will remain important markets for a long time. However they are not where the dramatic growth is.
The most growth is going to be in the countries that are still developing as they increase their per capita incomes and become greater consumers. American companies need to capture some of those markets to have the sort of growth that ultimately creates jobs.
If the components needed to complete products get more expensive because of tariffs, the end products produced here will be non-competitive. The reason the components are made elsewhere is because the costs are significantly less than here and increasing the cost in this market is not going to change that for the rest of the world.
So America needs a trade policy that allows us unrestricted access to these markets and one that keeps our products competitive.
The spiteful nature of our current policies may hurt others but it is going to be more harmful to us in the long run as we lose market share in developing markets that will be hard to recapture.
This is all pointing to an economic downturn that may have already started. The market seems to think so.
Thursday, November 15, 2018
Blndering Policies
There are no magic wands. Some issues are simply complicated and difficult.
For example, if you want to create new jobs going forward, the logical approach would be to identify the industries that will be creating those jobs and supporting them. Of course that requires some idea of what those industries might be.
The long term answer isn't to wistfully look at the past and try to recreate the jobs that used to exist, as we are apparently trying to do.
Coal is old renewable is new.
If someone could actually find a way to economically use coal in a non environmentally damaging way, it would be wonderful since we have so much of it, but the odds of that are slim. It also wouldn't create a lot of new jobs since most coal mining is now much more dependent on machines than people although of course people are still somewhat involved.
Building up renewable energy sources like wind and solar would require significant development and new technology, both of which translate into jobs.
Speaking of development, we need to develop or repair our infrastructure to move forward. This would create a lot of jobs, but after we gave the tax cuts to the industries that would benefit from infrastructure improvements we don't have the money to do it. Using it to build a wall instead of internal infrastructure would be insane. the wall has not long term economic benefit.
Something that does have long term economic benefits is trade. The more trade the better and yes the trade should be conducted on a level playing field. However trade is also a complex issue. Actions taken often have multiple consequences, many of them unintended. Increase the cost of some components used by an industry that exports goods, it may make their cost too high, leading to loss of market share and reduced exports. Retaliatory actions also are problematic.
Trade generally requires less government involvement, and the involvement needs to be surgically precise. Is China stealing trade secrets? Address that issue with specific actions, don't start a trade war that hurts many Americans (and Chinese too).
We seem ill equipped to approach most issues as we conduct policy based on late night thoughts, that are almost always a poor substitute for good analysis. Almost always.
For example, if you want to create new jobs going forward, the logical approach would be to identify the industries that will be creating those jobs and supporting them. Of course that requires some idea of what those industries might be.
The long term answer isn't to wistfully look at the past and try to recreate the jobs that used to exist, as we are apparently trying to do.
Coal is old renewable is new.
If someone could actually find a way to economically use coal in a non environmentally damaging way, it would be wonderful since we have so much of it, but the odds of that are slim. It also wouldn't create a lot of new jobs since most coal mining is now much more dependent on machines than people although of course people are still somewhat involved.
Building up renewable energy sources like wind and solar would require significant development and new technology, both of which translate into jobs.
Speaking of development, we need to develop or repair our infrastructure to move forward. This would create a lot of jobs, but after we gave the tax cuts to the industries that would benefit from infrastructure improvements we don't have the money to do it. Using it to build a wall instead of internal infrastructure would be insane. the wall has not long term economic benefit.
Something that does have long term economic benefits is trade. The more trade the better and yes the trade should be conducted on a level playing field. However trade is also a complex issue. Actions taken often have multiple consequences, many of them unintended. Increase the cost of some components used by an industry that exports goods, it may make their cost too high, leading to loss of market share and reduced exports. Retaliatory actions also are problematic.
Trade generally requires less government involvement, and the involvement needs to be surgically precise. Is China stealing trade secrets? Address that issue with specific actions, don't start a trade war that hurts many Americans (and Chinese too).
We seem ill equipped to approach most issues as we conduct policy based on late night thoughts, that are almost always a poor substitute for good analysis. Almost always.
Tuesday, November 6, 2018
Get Out and Vote
I guess we will see from the results today whether the last minute campaign push by the dontard helps or hurts republicans overall.
His message is so secular that it is only designed to appeal to the people who are already true believers, and he is trying to get them out to vote.
However, they represent a minority of the voters and his controversial visits might very well incite the opposition to get out and vote.
These rallies are more entertainment events than places to spread a message, since the message is so partisan.
The results will be in by tomorrow and its not clear if they will show if he helped or hindered his party.
His alarmist views seem to have given a few democratic senators a bump in the polls but we know that many of them were in very difficult races in states they normally support republican candidates.
Of course republican candidates used to be more centrist, but in the current situation they have to adopt the radical policies of the administration regarding immigration, abortion, guns, etc.
Some of this plays well, some of it doesn't and when you consider how farmers are being hurt by the trade policies and tariffs, we may see a shift in some of the voting.
The turnout is probably the biggest issue today, lets hope its huge.
His message is so secular that it is only designed to appeal to the people who are already true believers, and he is trying to get them out to vote.
However, they represent a minority of the voters and his controversial visits might very well incite the opposition to get out and vote.
These rallies are more entertainment events than places to spread a message, since the message is so partisan.
The results will be in by tomorrow and its not clear if they will show if he helped or hindered his party.
His alarmist views seem to have given a few democratic senators a bump in the polls but we know that many of them were in very difficult races in states they normally support republican candidates.
Of course republican candidates used to be more centrist, but in the current situation they have to adopt the radical policies of the administration regarding immigration, abortion, guns, etc.
Some of this plays well, some of it doesn't and when you consider how farmers are being hurt by the trade policies and tariffs, we may see a shift in some of the voting.
The turnout is probably the biggest issue today, lets hope its huge.
Monday, October 1, 2018
NAFTA Replaced?
Looks like we are getting ready to sign a replacement trade agreement for NAFTA which despite some criticism was effective at increasing trade among the three countries.
These things should probably be revisited every few years to include things that weren't considered previously, like the tremendous growth in electronic components we have seen since the first NAFTA.
Might be some increased opportunities for our dairy farmers but mostly it seems like it was tweeks with the main provisions still intact.
Trade is an equalizer and that's one of the reasons for the trade deficits we see.
The United States started out quite a bit ahead of Mexico and somewhat ahead of Canada in wealth and spending power.
So we could buy more than they could.
Eventually the money we spent increases their buying power so they can buy more of our exports.
Its not mysterious or nefarious, its simply economics.
This is true of most of our trading partners.
Eventually it evens out but it takes some time for that to happen.
These things should probably be revisited every few years to include things that weren't considered previously, like the tremendous growth in electronic components we have seen since the first NAFTA.
Might be some increased opportunities for our dairy farmers but mostly it seems like it was tweeks with the main provisions still intact.
Trade is an equalizer and that's one of the reasons for the trade deficits we see.
The United States started out quite a bit ahead of Mexico and somewhat ahead of Canada in wealth and spending power.
So we could buy more than they could.
Eventually the money we spent increases their buying power so they can buy more of our exports.
Its not mysterious or nefarious, its simply economics.
This is true of most of our trading partners.
Eventually it evens out but it takes some time for that to happen.
Tuesday, September 18, 2018
A Tariff here, a Tariff there
China has retaliated for the latest round of the dontard's tariffs and the administration position seems to be that, yes prices will go up but no one will notice.
Well those who can't export goods or produce will notice.
The price increases will only be noticed by a small group who rely on certain goods to compete so this cavalier attitude is similar to the let them eat cake position of the Ancien Regime in France before the revolution.
Pay more because we have a president who doesn't understand economics or trade and that efficiency for all is the road forward.
We need to move our resources into the things we do best, not try to create jobs that are lost to technology of cheaper wages.
The fact that China exports much more to us than we send to them is simply a reflection of the differences is cost of production, and remember those imports create lower prices and more demand.
We should be trying to open up export opportunities to China and the rest of the world to improve our economy as standards of living continue to equalize around the globe.
Our current posturing is likely to provide China and Europe as well as others inroads into markets we need to be in.
Producing a product in America is becoming more risky than producing it elsewhere because the dontard is simply risky business.
Well those who can't export goods or produce will notice.
The price increases will only be noticed by a small group who rely on certain goods to compete so this cavalier attitude is similar to the let them eat cake position of the Ancien Regime in France before the revolution.
Pay more because we have a president who doesn't understand economics or trade and that efficiency for all is the road forward.
We need to move our resources into the things we do best, not try to create jobs that are lost to technology of cheaper wages.
The fact that China exports much more to us than we send to them is simply a reflection of the differences is cost of production, and remember those imports create lower prices and more demand.
We should be trying to open up export opportunities to China and the rest of the world to improve our economy as standards of living continue to equalize around the globe.
Our current posturing is likely to provide China and Europe as well as others inroads into markets we need to be in.
Producing a product in America is becoming more risky than producing it elsewhere because the dontard is simply risky business.
Saturday, September 1, 2018
September Thoughts
The dontard is going to skip a couple of important Asian summits. The vice president will attend but it is likely to be viewed as a bit of a snub by them and provide China greater inroads and influence.
I believe this is because he isn't really comfortable with these type of summits where he is not the center of attention and also because it would be during a period where his presidency might be on the line.
We as a country have always paid more attention to Europe, it is where our country had most of its roots and where we feel a sort of kinship for those with Western heritage.
Of course Asia is much more populous and still developing so its where most future business opportunities are greatest.
As these countries grow richer, the number of customers who can afford our goods will provide great opportunities.
Of course we know other nations want to exploit that market and certainly our companies are eager to sell their.
We seem however to be making it more and more difficult for them, at least to sell things made here.
We have withdrawn from the Trans Pacific Trade deal and as noted earlier are skipping some important summits.
China and Russia aren't.
As we engage in a trade war with the biggest Asian country and fail to represent our business interests in the area properly we are allowing other countries to expand and fill the gaps.
Not very pro business.
I believe this is because he isn't really comfortable with these type of summits where he is not the center of attention and also because it would be during a period where his presidency might be on the line.
We as a country have always paid more attention to Europe, it is where our country had most of its roots and where we feel a sort of kinship for those with Western heritage.
Of course Asia is much more populous and still developing so its where most future business opportunities are greatest.
As these countries grow richer, the number of customers who can afford our goods will provide great opportunities.
Of course we know other nations want to exploit that market and certainly our companies are eager to sell their.
We seem however to be making it more and more difficult for them, at least to sell things made here.
We have withdrawn from the Trans Pacific Trade deal and as noted earlier are skipping some important summits.
China and Russia aren't.
As we engage in a trade war with the biggest Asian country and fail to represent our business interests in the area properly we are allowing other countries to expand and fill the gaps.
Not very pro business.
Tuesday, August 28, 2018
Trade and Economics
I was reading an article about the changes in NAFTA we have almost agreed to with Mexico and have to say it was pretty unimpressive.
The changes are mostly superficial although I'm sure they will be heralded as a big change.
NAFTA was always more of a Republican initiative than a Democratic one, although it was signed agreed to during the Clinton administration.
It was always clear that it would be good for certain border regions, and it has, while not as good for our manufacturing union people.
It did bring down overall costs and create lower paying jobs, exactly as predicted.
So if it did what it was expected to do, I suppose it was a success of sorts and from an economics point of view we seem to have more benefits than losses.
Trade simply allows more efficient use of resources and an equalization of living standards over time.
After World War 2 the United States had a period when many of its people enjoyed income and living standards that greatly exceeded the rest of the world.
That wasn't something that could last since it made us a high cost producer.
It lasted as long as it did because our industrial rivals were faced with massive rebuilding which finally allowed them to fully compete with us over time.
Of course we also were faced with "third world' countries which were primarily exporters of agricultural goods and buyers of manufactured ones.
As they developed they have grown into competitive rivals such as China and India but there is good in that since they have greatly increased buying power to go with their new jobs
Trade facilitates this growth and equalization but it happens one way or the other since the economics are clear.
The one thing that is certain is that you have to be in the competition to have any chance at success
Tariffs take you right out of it.
The changes are mostly superficial although I'm sure they will be heralded as a big change.
NAFTA was always more of a Republican initiative than a Democratic one, although it was signed agreed to during the Clinton administration.
It was always clear that it would be good for certain border regions, and it has, while not as good for our manufacturing union people.
It did bring down overall costs and create lower paying jobs, exactly as predicted.
So if it did what it was expected to do, I suppose it was a success of sorts and from an economics point of view we seem to have more benefits than losses.
Trade simply allows more efficient use of resources and an equalization of living standards over time.
After World War 2 the United States had a period when many of its people enjoyed income and living standards that greatly exceeded the rest of the world.
That wasn't something that could last since it made us a high cost producer.
It lasted as long as it did because our industrial rivals were faced with massive rebuilding which finally allowed them to fully compete with us over time.
Of course we also were faced with "third world' countries which were primarily exporters of agricultural goods and buyers of manufactured ones.
As they developed they have grown into competitive rivals such as China and India but there is good in that since they have greatly increased buying power to go with their new jobs
Trade facilitates this growth and equalization but it happens one way or the other since the economics are clear.
The one thing that is certain is that you have to be in the competition to have any chance at success
Tariffs take you right out of it.
Saturday, August 25, 2018
Saturday Musings
All the ridiculous and never ending investigations and allegations against Hillary Clinton never came up with a single charge. Interesting.
Once a house of cards starts to crumble it crumbles pretty fast. Got the National Enquirer and the Doorman involved already.
If you see a lot of rats leaving the ship, it means their feet are getting wet.
The North Korea actions have led to a postponement of talks, sounds a lot like that Nobel Peace Prize is slipping away.
So foreign relations, the climate and trade are all quickly deteriorating. Need new players.
The Dontard in Ohio continues to blame the minority Democratic party for not supporting him? Guess he isn't up on the two party system we have.
He wants to stop prosecutors from flipping suspects to get to bigger fish. Guess he doesn't understand how our criminal justice system works. He should watch episodes of Law and Order.
I'm sorry to disappoint those who think he has some sort of master plan to accomplish whatever it is he is trying to accomplish. He doesn't and he just tries to take care of number one.
If you think he had a brilliant strategy to win the election remember he lost the popular vote and was helped by both the FBI and the Russians to win a few key states by the skin of his teeth. Hillary isn't the best campaigner when you look at it.
The damage he is causing to the environment is actually the worst thing about this period. The Supreme Court might be almost as bad.
The rest can be fixed pretty easily.
Once a house of cards starts to crumble it crumbles pretty fast. Got the National Enquirer and the Doorman involved already.
If you see a lot of rats leaving the ship, it means their feet are getting wet.
The North Korea actions have led to a postponement of talks, sounds a lot like that Nobel Peace Prize is slipping away.
So foreign relations, the climate and trade are all quickly deteriorating. Need new players.
The Dontard in Ohio continues to blame the minority Democratic party for not supporting him? Guess he isn't up on the two party system we have.
He wants to stop prosecutors from flipping suspects to get to bigger fish. Guess he doesn't understand how our criminal justice system works. He should watch episodes of Law and Order.
I'm sorry to disappoint those who think he has some sort of master plan to accomplish whatever it is he is trying to accomplish. He doesn't and he just tries to take care of number one.
If you think he had a brilliant strategy to win the election remember he lost the popular vote and was helped by both the FBI and the Russians to win a few key states by the skin of his teeth. Hillary isn't the best campaigner when you look at it.
The damage he is causing to the environment is actually the worst thing about this period. The Supreme Court might be almost as bad.
The rest can be fixed pretty easily.
Thursday, August 16, 2018
Just a Trickle So Far
Economics is generally a fairly slow process but if you are a small business it speeds up a lot.
Much like how some households live paycheck to paycheck many small businesses live on a similar shoestring, with the significant deadlines being when invoices and payrolls become due.
They count on a certain number of sales and certainly if they can secure longer term contracts they have a bit more comfort.
This of course often mean they have promised to deliver product at a set cost for an extended period, counting on stable pricing and other factors.
As the cost of their raw materials increase due to the tariffs, what was once a profitable arrangement can easily turn into an unprofitable one.
So we see reports of businesses closing plants, laying off employees or deciding to move production offshore to reduce costs.
These reports concern the most vulnerable concerns and as they stumble slightly bigger firms soldier on.
The impact of the trade war is insidious since it both makes your cost higher, it makes your ability to sell to certain countries very difficult.
We are in a global economy and there is a lot of competition.
The tariffs are a disadvantage to our domestic producers even for product they sell domestically, since the prices will go up and demand will go down accordingly.
It isn't very much so far and the dontard lives in a fantasy where steel factories have sprung up in every corner of the country employing millions.
That's not true and any jobs created are once again, just a trickle.
Much like how some households live paycheck to paycheck many small businesses live on a similar shoestring, with the significant deadlines being when invoices and payrolls become due.
They count on a certain number of sales and certainly if they can secure longer term contracts they have a bit more comfort.
This of course often mean they have promised to deliver product at a set cost for an extended period, counting on stable pricing and other factors.
As the cost of their raw materials increase due to the tariffs, what was once a profitable arrangement can easily turn into an unprofitable one.
So we see reports of businesses closing plants, laying off employees or deciding to move production offshore to reduce costs.
These reports concern the most vulnerable concerns and as they stumble slightly bigger firms soldier on.
The impact of the trade war is insidious since it both makes your cost higher, it makes your ability to sell to certain countries very difficult.
We are in a global economy and there is a lot of competition.
The tariffs are a disadvantage to our domestic producers even for product they sell domestically, since the prices will go up and demand will go down accordingly.
It isn't very much so far and the dontard lives in a fantasy where steel factories have sprung up in every corner of the country employing millions.
That's not true and any jobs created are once again, just a trickle.
Wednesday, August 15, 2018
Not Thanksgiving
When you hear Turkey and China you may think about Thanksgiving but in this case its just the increasing trade wars.
Turkey has been added primarily it seems because they failed to comply with a request from the dontard about an arrested minister.
The minister may not be guilty but I have no real way of knowing and generally we allow countries to administer their own laws within their own countries.
Turkey is, as far as trade goes, pretty insignificant but of course these sort of things tend to take on more significance because of the politics involved.
There is a long list of countries, a growing list, where we are engaged in sanctions or tariffs to enforce a principle or policy.
This list includes our oldest and strongest allies as well as of course some countries we have had ongoing issue with.
Of course the issues with China may have the most significance but its the accumulation that may end up being the Trojan horse.
As more and more countries decide our policies are irrational and arbitrary, compliance to things like sanctions will decrease.
It should also be noted that to the extent that restrictions are put on using American dollars in transaction in sanctioned countries we may be signaling a move to a different currency.
America has been viewed generally as a stable harbor in a sea of financial turbulence, but that perception is likely to change based on some of these unpredictable and erratic policies.
Time will tell.
Turkey has been added primarily it seems because they failed to comply with a request from the dontard about an arrested minister.
The minister may not be guilty but I have no real way of knowing and generally we allow countries to administer their own laws within their own countries.
Turkey is, as far as trade goes, pretty insignificant but of course these sort of things tend to take on more significance because of the politics involved.
There is a long list of countries, a growing list, where we are engaged in sanctions or tariffs to enforce a principle or policy.
This list includes our oldest and strongest allies as well as of course some countries we have had ongoing issue with.
Of course the issues with China may have the most significance but its the accumulation that may end up being the Trojan horse.
As more and more countries decide our policies are irrational and arbitrary, compliance to things like sanctions will decrease.
It should also be noted that to the extent that restrictions are put on using American dollars in transaction in sanctioned countries we may be signaling a move to a different currency.
America has been viewed generally as a stable harbor in a sea of financial turbulence, but that perception is likely to change based on some of these unpredictable and erratic policies.
Time will tell.
Monday, August 13, 2018
More Economics
There are a lot of people in the world and to a company everyone represents some sort of customer, either a current one, or a potential one.
Customers come in many different categories and some have money to spend and others do not.
Customers in the United States generally have had more money to spend than customers in most other countries, although not as much more as they once did.
Businesses ultimately make money by selling their product and if you make it hard to reach the people who live outside this country they will be at a disadvantage.
If you consider our relationship with China you will note that they sell much more here than we sell there despite the fact that they have a population that exceeds ours by a factor of three.
Its not that hard to explain since despite their population advantage we have a much higher per capita income level, so we can buy imported items and to a large extent they can buy less.
At least at this time.
China has a growing economy as do we, but they clearly have more growth potential than we do as they create more higher paying jobs (higher paying for them), This means that the potential customers in China are turning into real customers at a faster and faster pace.
The United States is a much more mature economy so any increase in consumption has to be tied to increases in income.
To engage in a trade war with China at this time provides other countries, say European ones a great opportunity to exploit that growing market and disadvantages us.
Will a certain percentage of goods we import from China start being produced here? Well unless we can find a different lower cost producer some will, but they will cost more, reducing our buying power.
Will the huge potential Chinese consumer market be filled with American goods? Well it not as likely as it was before we started this trade war.
We all will get to pay more and will help our competitors exploit the Chinese market.
Of course we already conceded much of Asia by withdrawing from the Trans Pacific Trade Pact.
Good economics? Not really.
Customers come in many different categories and some have money to spend and others do not.
Customers in the United States generally have had more money to spend than customers in most other countries, although not as much more as they once did.
Businesses ultimately make money by selling their product and if you make it hard to reach the people who live outside this country they will be at a disadvantage.
If you consider our relationship with China you will note that they sell much more here than we sell there despite the fact that they have a population that exceeds ours by a factor of three.
Its not that hard to explain since despite their population advantage we have a much higher per capita income level, so we can buy imported items and to a large extent they can buy less.
At least at this time.
China has a growing economy as do we, but they clearly have more growth potential than we do as they create more higher paying jobs (higher paying for them), This means that the potential customers in China are turning into real customers at a faster and faster pace.
The United States is a much more mature economy so any increase in consumption has to be tied to increases in income.
To engage in a trade war with China at this time provides other countries, say European ones a great opportunity to exploit that growing market and disadvantages us.
Will a certain percentage of goods we import from China start being produced here? Well unless we can find a different lower cost producer some will, but they will cost more, reducing our buying power.
Will the huge potential Chinese consumer market be filled with American goods? Well it not as likely as it was before we started this trade war.
We all will get to pay more and will help our competitors exploit the Chinese market.
Of course we already conceded much of Asia by withdrawing from the Trans Pacific Trade Pact.
Good economics? Not really.
Thursday, August 9, 2018
Economics will win
The trade war is progressing and one thing is clear, no one will win.
In fact the public is pretty much guaranteed to lose with higher prices on more and more things.
The idea that some increase in jobs will make that worthwhile is problematic considering that we have very little surplus labor to fill those jobs.
Reversing the economic forces that takes production to the most efficient supplier is a major component of capitalism and competition and the attempt to interfere in economic forces is unlikely to succeed.
Still we see action and retaliations escalating and we are also seeing some of the fallout as companies lose profits and sales and costs rise.
The one industry which was most in favor of this was the steel industry and the price of steel has risen dramatically.
American producers freed from competitive forces have raised prices on items already in production.
This is just additional profits and higher prices will by the laws of economics reduce demand, reducing jobs in general.
In fact as prices go up for other items the reduced demand will have exactly the opposite impact that the dontard expected.
No surprise there.
In fact the public is pretty much guaranteed to lose with higher prices on more and more things.
The idea that some increase in jobs will make that worthwhile is problematic considering that we have very little surplus labor to fill those jobs.
Reversing the economic forces that takes production to the most efficient supplier is a major component of capitalism and competition and the attempt to interfere in economic forces is unlikely to succeed.
Still we see action and retaliations escalating and we are also seeing some of the fallout as companies lose profits and sales and costs rise.
The one industry which was most in favor of this was the steel industry and the price of steel has risen dramatically.
American producers freed from competitive forces have raised prices on items already in production.
This is just additional profits and higher prices will by the laws of economics reduce demand, reducing jobs in general.
In fact as prices go up for other items the reduced demand will have exactly the opposite impact that the dontard expected.
No surprise there.
Friday, June 15, 2018
Trade Wars
The impact of the tariffs that the dontard is announcing are clearly going to result in retaliations.
What does this mean?
Well it will mean that certain items get more expensive either because of the tariffs themselves are because item get produced domestically at higher cost.
More significantly, it is likely to result in less exports as commodities are targeted by China.
Since a tariff will artificially increase the cost of American commodities it will have no impact on our competitors, so sales will go elsewhere.
Commodities in general are pretty much the same no matter where you get them and are therefore extremely sensitive to market forces.
Manufactured products are a bit different, and while certain production can be ramped up, it not as easy to build factories or find skilled labor as it is to expand or decrease a crop like soybeans.
If you lose a significant market for your commodity you either lower price and absorb the tariff yourself or you reduce production since you can't sell your product.
None of this is good for the economy and certainly not for the reliably red states in the middle of the country.
The overall ripple effect of the trade wars is hard to forecast exactly, some say it is minor, some argue it will be significant, which all depends on reactions and escalations.
WE know our guy is a loose cannon, so I anticipate it getting worse.
He says we will win a trade war, but trade wars have no winners, just losers as everyone gets to pay more.
The real victims will be business owners, whether farmers or small manufacturers who become uncompetitive as prices here increase or overseas markets dry up.
Yes people in other countries will also suffer, not sure that will make our casualties feel better.
We'll see.
What does this mean?
Well it will mean that certain items get more expensive either because of the tariffs themselves are because item get produced domestically at higher cost.
More significantly, it is likely to result in less exports as commodities are targeted by China.
Since a tariff will artificially increase the cost of American commodities it will have no impact on our competitors, so sales will go elsewhere.
Commodities in general are pretty much the same no matter where you get them and are therefore extremely sensitive to market forces.
Manufactured products are a bit different, and while certain production can be ramped up, it not as easy to build factories or find skilled labor as it is to expand or decrease a crop like soybeans.
If you lose a significant market for your commodity you either lower price and absorb the tariff yourself or you reduce production since you can't sell your product.
None of this is good for the economy and certainly not for the reliably red states in the middle of the country.
The overall ripple effect of the trade wars is hard to forecast exactly, some say it is minor, some argue it will be significant, which all depends on reactions and escalations.
WE know our guy is a loose cannon, so I anticipate it getting worse.
He says we will win a trade war, but trade wars have no winners, just losers as everyone gets to pay more.
The real victims will be business owners, whether farmers or small manufacturers who become uncompetitive as prices here increase or overseas markets dry up.
Yes people in other countries will also suffer, not sure that will make our casualties feel better.
We'll see.
Monday, June 11, 2018
Economic Isolation
There are some in this country who think the country is better off in isolation.
This was sometimes our official policy prior to World War 2 where we became aware of the global implications of such a policy.
To try to prevent another war of that magnitude we adopted a policy of alliances around the world to contain our perceived enemies, primarily the communist states.
While we did have some bloody regional conflicts, which didn't resolve anything but also didn't escalate into a world wide conflict.
The alliances slowly became as much economic as military, and as the countries ravaged by WW2 and undeveloped countries built up, our hegemony over trade began to slip.
As the most prosperous nation in the world, with the largest markets it was much easier for other countries to sell products to us then us to them. We had more money and more consumers.
Over the years we forged strong economic alliances in which world trade was expanded and while we saw some trade imbalances, the outcome was greater prosperity for all.
Not necessarily every person, economics doesn't work like that.
Its ultimately a great leveler, moving work to those who have the lowest cost and making the markets very competitive.
In a truly free trade system, the adjustments could be very painful as industries were overcome by international competition, so countries did adopt certain protective tariffs.
Still, we had a general system where trade among us and our allies moved relatively freely.
In any such system, all sides have to comply with the rules and we have set up systems which are supposed to determine that the rules are followed.
In all of this, we served as the example of a free people espousing principles and following them.
No more.
We are now the nation that wants to manipulate the rules so that the economic forces at work are changed in our favor.
Its the end of an era as we once again start to espouse isolationism.
It has never ended well in the past.
This was sometimes our official policy prior to World War 2 where we became aware of the global implications of such a policy.
To try to prevent another war of that magnitude we adopted a policy of alliances around the world to contain our perceived enemies, primarily the communist states.
While we did have some bloody regional conflicts, which didn't resolve anything but also didn't escalate into a world wide conflict.
The alliances slowly became as much economic as military, and as the countries ravaged by WW2 and undeveloped countries built up, our hegemony over trade began to slip.
As the most prosperous nation in the world, with the largest markets it was much easier for other countries to sell products to us then us to them. We had more money and more consumers.
Over the years we forged strong economic alliances in which world trade was expanded and while we saw some trade imbalances, the outcome was greater prosperity for all.
Not necessarily every person, economics doesn't work like that.
Its ultimately a great leveler, moving work to those who have the lowest cost and making the markets very competitive.
In a truly free trade system, the adjustments could be very painful as industries were overcome by international competition, so countries did adopt certain protective tariffs.
Still, we had a general system where trade among us and our allies moved relatively freely.
In any such system, all sides have to comply with the rules and we have set up systems which are supposed to determine that the rules are followed.
In all of this, we served as the example of a free people espousing principles and following them.
No more.
We are now the nation that wants to manipulate the rules so that the economic forces at work are changed in our favor.
Its the end of an era as we once again start to espouse isolationism.
It has never ended well in the past.
Tuesday, June 5, 2018
Policies?
One way to look at some of the actions of the dontard is to say he is standing up to his enemies and holding to certain principles.
I suppose that is the way his supporters look at it as he fights with more and more people, both domestically and internationally over his stands on things like trade, pardons, collusion, lying, immigration, gun control and abortion.
Of course that is the most favorable light you can put on it.
The one that seems to ring truer is that he is acting like a toddler who throws tantrums when he doesn't get his way.
His decision to disinvite the Super Bowl Champion Eagles because some of the team wouldn't attend is just like the kid who wants to take his ball and go home if he isn't picked first.
Now his apparent belief that owners or anyone else can force citizens to do things they don't agree with is typical of his disregard for the rights we have in this country.
Of course a few people missing from the group would be no big deal except it would have been played up in the press, probably more than it should be. Still the big toddler can't accept any criticism and rather than recognize the team's achievements he made it about himself and his odd beliefs.
He is also finding national leaders from other countries starting to disagree with him. His "friend" Macron apparently told him how he disliked his decision on tariffs. What did he expect?
Many of the allies are working with Iran to salvage the nuclear deal and circumvent American sanctions, imposed despite Iran's compliance with the agreement.
This provides some wonderful opportunities for China and Russia to increase influence and ties with the rest of the world. Where it ends is anyone's guess.
The historic summit with North Korea has done more to legitimize that regime already than any action by any administration since the Korean War. It is already a major success for them, not matter what the outcome is.
Lets be clear, North Korea was never a real threat to this country even if somehow they could deliver a warhead that we didn't intercept. We would have annihilated them in an instant. The program did accomplish world recognition and their elevation to a player on the world stage.
Was probably worth every penny to them.
I suppose that is the way his supporters look at it as he fights with more and more people, both domestically and internationally over his stands on things like trade, pardons, collusion, lying, immigration, gun control and abortion.
Of course that is the most favorable light you can put on it.
The one that seems to ring truer is that he is acting like a toddler who throws tantrums when he doesn't get his way.
His decision to disinvite the Super Bowl Champion Eagles because some of the team wouldn't attend is just like the kid who wants to take his ball and go home if he isn't picked first.
Now his apparent belief that owners or anyone else can force citizens to do things they don't agree with is typical of his disregard for the rights we have in this country.
Of course a few people missing from the group would be no big deal except it would have been played up in the press, probably more than it should be. Still the big toddler can't accept any criticism and rather than recognize the team's achievements he made it about himself and his odd beliefs.
He is also finding national leaders from other countries starting to disagree with him. His "friend" Macron apparently told him how he disliked his decision on tariffs. What did he expect?
Many of the allies are working with Iran to salvage the nuclear deal and circumvent American sanctions, imposed despite Iran's compliance with the agreement.
This provides some wonderful opportunities for China and Russia to increase influence and ties with the rest of the world. Where it ends is anyone's guess.
The historic summit with North Korea has done more to legitimize that regime already than any action by any administration since the Korean War. It is already a major success for them, not matter what the outcome is.
Lets be clear, North Korea was never a real threat to this country even if somehow they could deliver a warhead that we didn't intercept. We would have annihilated them in an instant. The program did accomplish world recognition and their elevation to a player on the world stage.
Was probably worth every penny to them.
Thursday, May 31, 2018
Trade
Economics is one of the most boring things in the world.
Unfortunately it is also one of the most important.
There is of course big economics and little economics.
Big economics are things like GDP, trade balances, fed interest rates, inflation, unemployment, etc.
Little economics are things we all deal with, effectively how much we have to pay out versus how much we take in.
We are all aware of the second, but many of us ignore the first.
Ignore isn't probably the right word, when we hear or read how unemployment is going up or down it tends to impact our optimism.
One of our most significant indicators is just that, consumer optimism.
Our economy is largely a consumer economy and the more consumers spend the better it is.
Which brings us to trade and trade balances.
Our economy is extremely large and trade is a relatively small part of it, about 10%.
Not insignificant and it isn't an isolated thing, it influences other area of the economy.
In can greatly influence little economics for certain people.
In most economic theories trade is a good thing since it allows for greater efficiency, by increasing competition which drives down prices.
Driving down prices is good for consumers (we live in a consumer society) but not so good for producers who are forced to compete.
The theory is that cheaper prices benefit everyone and competition eventually levels the playing field for all as everyone is forced to compete.
When you start ahead though, it creates a certain drag on your economy via trade deficits.
A trade deficit, effectively is a transfer of jobs and money to other countries.
The best way to address a trade deficit is to export more, which requires everyone to be more competitive.
The worst way is to adopt protectionist policies that drive up the cost of goods and services.
Lower prices allow spending on other items. If the cost of an imported car is significantly lower, the money saved could allows for more spending on say household appliances.
Whether the imported car resulted in lost jobs is a matter of debate, but even if it did, the lower prices impact many more people and the money they spend creates more jobs than were lost.
As I said at the beginning, economics is boring and can become extremely complex, but trade creates more jobs than it costs.
Of course it depends on whose job we are talking about when you come right down to it.
If its yours, it is a horrible thing.
Unfortunately it is also one of the most important.
There is of course big economics and little economics.
Big economics are things like GDP, trade balances, fed interest rates, inflation, unemployment, etc.
Little economics are things we all deal with, effectively how much we have to pay out versus how much we take in.
We are all aware of the second, but many of us ignore the first.
Ignore isn't probably the right word, when we hear or read how unemployment is going up or down it tends to impact our optimism.
One of our most significant indicators is just that, consumer optimism.
Our economy is largely a consumer economy and the more consumers spend the better it is.
Which brings us to trade and trade balances.
Our economy is extremely large and trade is a relatively small part of it, about 10%.
Not insignificant and it isn't an isolated thing, it influences other area of the economy.
In can greatly influence little economics for certain people.
In most economic theories trade is a good thing since it allows for greater efficiency, by increasing competition which drives down prices.
Driving down prices is good for consumers (we live in a consumer society) but not so good for producers who are forced to compete.
The theory is that cheaper prices benefit everyone and competition eventually levels the playing field for all as everyone is forced to compete.
When you start ahead though, it creates a certain drag on your economy via trade deficits.
A trade deficit, effectively is a transfer of jobs and money to other countries.
The best way to address a trade deficit is to export more, which requires everyone to be more competitive.
The worst way is to adopt protectionist policies that drive up the cost of goods and services.
Lower prices allow spending on other items. If the cost of an imported car is significantly lower, the money saved could allows for more spending on say household appliances.
Whether the imported car resulted in lost jobs is a matter of debate, but even if it did, the lower prices impact many more people and the money they spend creates more jobs than were lost.
As I said at the beginning, economics is boring and can become extremely complex, but trade creates more jobs than it costs.
Of course it depends on whose job we are talking about when you come right down to it.
If its yours, it is a horrible thing.
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