South Korea and America, A Match Not Made In Heaven

Over at www.autoblog.com they recently had a story about how a 3rd Korean automaker was trying to enter the market and start exporting cars to the US.  It got me thinking about how bad our foreign policy is these days with countries like South Korea.  First, the US imports about 400,000 cars a year from South Korea while we send them a whopping 15, 000 annually.  Second, the US recently signed a free trade agreement with South Korea and the outcome was predictable.  Our trade deficit with South Korea soared to a record $23 billion dollars.  Third, South Koreans don’t even like Americans.  With the exception of the older generation that can still remember America helping South Korea the rest of South Korea seems to almost hate Americans.

All of this makes me ask why?  Why do we sign free trade deals with a country that costs us billions in lost jobs?  Why do we then station tens of thousands of troops there to defend the same country at great cost ( I was recently told by someone that South Korea has agreed to foot part of the bill for US troops stationed there, how generous of them)?  Finally, why would we do all of this for a country that hates us?  The only country capable of such stupidity is America, thanks Uncle Sam!

http://thehill.com/298279-warren-raises-questions-about-widening-trade-deficit-with-south-korea

http://economyincrisis.org/content/trade-deficit-south-korea-autos-continues-rise

Ssangyong may be 3rd Korean brand to sell cars in US

The Immigration Bill’s biggest Loser, Poor People

The group that stands to lose the most with the disaster that is the senate immigration bill are poor Americans.  This bill declares open season on poor Americans of all colors.  Black, white, brown, yellow it matters not what matters is where you are in terms of your skill sets.  If your less educated and less skilled than this bill is an absolute disaster for your future employment prospects.  The irony in all of this is that it is this same group of Americans that have been hammered hardest by the Great Recession, with many having still not recovered.  This is how your incompetent federal government (both republican and democrat) propose to help those that need help the most.  They want to bring in more low skilled workers that are willing to work for less than Americans are so they will compete for jobs with Americans and also drive down their wages.  All courtesy of our own government.  Meanwhile as that goes on the democrats will then inform the nation that we aren’t spending enough money to help the help the poor in this country that can no longer get a job because a bunch of formerly illegal immigrants took their jobs.

Nothing similar like this has happened since the end of the Roman Empire.  In 376 AD the Eastern Roman Emperor Valens under pressure invited Germanic barbarians to settle within Roman borders.  They revolted, annihilated the Eastern Roman Empire’s field army and set the stage for the ultimate collapse of the Western Roman Empire in about 100 years time from the original invitation.  Our own history shows how this works out as well.  The Mexican government invited American settlers to Texas in the early 19th century.  Not long after these same settlers revolted against the Mexican authorities and eventually won their independence.

I am not saying all of these immigrants will revolt and destroy America.  I am saying that they are going to have a negative impact on our country by taking jobs from poor Americans and by overwhelmingly supporting liberal policies.  Another piece of irony is that black Americans were the reason Obama was voted into office twice and it will be the immigration bill that he signs that will destroy what is left of the black middle class.  But the biggest laugher out of all of this is that the morons in the republican party actually think that they will get some tangible benefit for their party by doing this while in reality all they will accomplish is creating the conditions for a democratic monopoly on federal power.  Hollywood could not write a better script.  I am not naive enough to think we don’t need immigrants to help power this economy forward into the 21st century.  I am confident though that we should not offer up amnesty to 11 million illegals when this bill doesn’t first address border security.  Somebody should also let the incompetents in Washington know that their Free Trade policies destroyed our industrial base and because of that we no longer need millions of unskilled immigrant labor like we did when we had an industrial economy.

 

Big 3 All Gain Market Share For The First Time In Over 20 Yrs.

Are the US auto makers on the come back trail?  It is a question worth asking with today’s announcement that all three have gained market share for the first time in over 20 years.  Even though I supported the bailout I still would not say that this is proof positive that it was worth it but I would say that this is a big step in the right direction.  There is no doubt that the Big 3 automakers are making better product than they have made in a long time.  The real question is can they sustain this new-found momentum and build on it or will this be a small blip in the near continuous 30 year plus fall in market share?  The one thing that does give hope is that these numbers are not skewed by the Japanese Tsunami that put a terrible dent in the Japanese auto manufacturers numbers.  Rather the Japanese manufacturers have already had their expected big recoveries and so we can say that it appears the Detroit 3 actually earned this.  Here is to hoping that this represents a new renaissance in American auto manufacturing.

http://www.autoblog.com/2013/05/01/detroit-automakers-gain-market-share-simultaneously-for-first-ti/#aol-comments

American Trade Policies Are Destroying The Country

 

Why do Americans continuously send politicians to Washington that support free trade when we are one of the few countries that actually truly believe in it.  Everyone else says they do to make us feel better about the fact that we have the world’s dumbest trade policies so they can keep taking advantage of us.  The fact of the matter is that the 2008 economic crisis was because of our moronic trade policies (the Chinese and others invested their obscene profits made from exporting goods to the US in US backed government securities which had the effect of artificially lowering mortgage rates in America thereby creating the housing bubble).

Is it fair to trade with China when we all know they artificially lower their currency to make their goods cheaper here?  Well, one might argue that we get the Chinese to finance our obscene budget deficit that runs over a trillion plus every year.  Fair enough, but does anybody really believe that we are getting good value for that extra trillion we borrow to finance our own governments horribly inefficient operations?  Also if the Chinese pretty much get open access to our market then why don’t we get open access to their market?  If an US auto manufacturer wants to export cars to China they have 3 choices.  First, they can export the cars from the US and pay a steep tariff that will double the price of the vehicle.  Second, they can export the cars in parts that would then be assembled in China ( they call them knock down kits).  Or finally, if they want to build the cars in China they are forced to partner with a Chinese competitor who then has the chance to get a free education on how to build cars to Western standards.  Does any of this sound like it is Free Trade?  Not to me it doesn’t and it begs the question as to why Americans put up with it?  I know this for sure we can’t continue these destructive policies for long because America is on its way to becoming a second world nation because of these policies.

Inspired
by conversation and driven by my personal artistic passion, I

Facebook To Make Over 1 Billion Dollars But Will Not Pay Any Federal Taxes

In what can only be described as an injustice to the American tax payer Facebook has released its financial statement and has admitted that even though the company will make roughly 1.4 billion dollars  in pre tax profit they mysteriously will not owe the federal government anything.  How is this possible is the obvious question and the answer is of course accounting gimmicks.  Facebook appears to accomplish this in two ways.  First, the company is allowed to bank losses from prior years.  In other words, lets say Facebook hypothetically had a loss of 400 million in 2011.  Then the following year they made 1.4 billion.  They would then be able to subtract that loss in 2011 from their pre tax profit in 2012.  The second way is that Facebook does this is explained below.

” Companies like Facebook are allowed to treat the cost of non-cash compensation, such as stock options, as an expense that reduces profits, essentially the way they treat cash compensation such as salaries.

The difference is that Facebook—unlike, say, General Motors (GM)—relies heavily on stock options and restricted stock units as a form of compensation. It paid out a lot during its years as a private company that it must now recognize on its income statement and balance sheet”

The original story goes on to mention that Facebook will not only pay no federal tax on its billion dollar plus profit but will in fact receive over 4oo million dollars in tax refunds.  To say this is absurd is an understatement.  I guess this gives us an idea why our government is broke.  If you think this unfair hit the like button, lol.

http://www.businessweek.com/articles/2013-02-15/facebook-gets-a-multi-billion-dollar-tax-break

BAE, EADS And Britain In The 21st Century

The proposed merger between BAE, the British defense conglomerate, and EADS, the multi-country European aerospace and defense giant is more than a merger of two companies.  It could quite literally help dictate whether Britain remains a proud, independent nation in the world or becomes ever more stuck in the quick sand that Europe and the EU have become.  You might ask yourself how could the merger of two companies could determine the fate of not only nations but perhaps even an entire continent?  The answer is simple, if BAE merges with EADS it will destroy what is left of the British owned industrial base in Britain.  Britain will still have a manufacturing sector within its borders but less and less of it will actually be owned by Britain.  Most of the major car manufacturers are owned by foreign companies, Jaguar by Tata, Mini by BMW, etc.  In fact the defense  industry in Britain led by BAE has been one of the few bright spots for British owned manufacturing in the country and the merger with EADS raises serious questions about whether or not there will be any major British owned industrial companies left if it goes through.  Ceding one of your last strong domestic manufacturing industries to the French is not sound policy.

This is because the merger will accomplish two things, first the company will no longer be British, second the new company will stand to lose access to the all important US defense market.  The fact that the company will no longer be headquartered in Britain might not sound like a big deal at first but then you play out a few scenarios in your head like how do companies achieve synergies when they merge.  Well first off they would eliminate redundancies within the new company.  So that means since BAE is the junior partner in this deal then you could expect much of the white-collar jobs in Britain will quickly be eliminated in order to achieve maximum cost savings.  Hundreds, probably thousands of top paying jobs all eliminated.  Second, the current British government has already done its best to destroy its own armed forces by enacting drastic cuts that happen to be one of the reasons BAE is even contemplating this.  Since they are already dismantling their defense industrial base right now does anybody in Britain really think they will have any incentive to carry out big defense projects like the proposed new British nuclear submarines.  One of the few current incentives about doing this is that it will help maintain the defense industry jobs but if the merger goes through will that still be the case since at least some if not a large amount of the work will be done outside Britain.  I think not.

Secondly, roughly 40% of BAE’s profits come from doing work in the gigantic US defense industry.  They are one of the few foreign companies allowed to do this.  Other companies like EADS do business with the pentagon but are not allowed access to advanced technologies to safe guard intellectual property.  This is not the case with BAE because they have special agreements with the US government allowing them to share in this defense work.  The reason for this is simple, they are British.  Because the obvious special relationship they get access that others like the French and Germans don’t and never will.  This alone should give both BAE and EADS pause about the merger.

Finally, if the deal goes through Britain will be drawn closer to Europe at a time when the Continent is in steep decline.  Losing access to the US market will force the new company to look even more to Europe for work.  This in turn will force the UK to get deeper involved with the EU at a time when many in the country want less to do with it.  And if your forced to look more towards Europe they will no longer be able to be that close to the US.  If I were British I would advocate less severe defense cuts both to maintain capabilities but also to maintain an important part of their economy.  I would also focus even more on joint work in the US defense industry because one, it is bigger and two, you don’t have to surrender more of your sovereignty to the failing EU.

Minefields await for EADS-BAE deal

http://www.rusi.org/analysis/commentary/ref:C50534A0EA81CF/

http://www.thisismoney.co.uk/money/markets/article-2202939/BAE-Systems-merger-EADS-faces-flak-sides.html

Obama’s Economic Report Card

The Economist, a British magazine dealing with economics, has put out a report card for President Obama’s first term.  I would like to give my thoughts on each grade and would hope if anybody actually reads this that they could offer up their own report card for all the categories.

The Economist/Me

Crisis response          A-/C          I lowered the grade to a C because although the auto bailout was necessary in my opinion they should have done more to reign in the UAW because much of the reason the companies were no longer competitive was due to labor costs.

Stimulus                     B+/C-         I gave him a C-  here because it did not deliver anything near what the president had said it would.  Also so much of it was wasted on green energy pipe dreams that will never work without government funding.

Housing                      C+/C          An enormous problem that will take years more to work through to see the housing market fully recover.

Labour                        C+/F           I’m not sure what the guy writing this article was thinking but boosting college funding is not near a good enough reason to merit a passing grade when the nation is still at record high unemployment levels 4 years removed from the crisis.

Trade                           B-/B-         I left the grade unchanged because I do feel the Obama administration has tried to help American companies export more goods.  However, since the Obama administration has not fundamentally addressed the nation’s most critical economic failure, our trade policy, I could not give him an even higher grade as I originally wanted.

Industrial Policy        F/F            The Economist laid out the obvious reasons for the grade already.

Regulation                  D/F            To me there is no question this has been of the administration’s most glaring failures.  The fear that companies have of what Obamacare might mean in terms of new costly regulations is enough for most to give him an F here.

Debt            Incomplete/F            I thought hard here about giving the president a D because republicans have not been realistic about accepting at least some meagre tax hikes in exchange for entitlement reform, which will have to happen to solve the deficit problem.  Unfortunately I couldn’t do that because of the president’s record-breaking trillion-dollar plus deficits for each year he has been in office.  The bottom line is that the size of these yearly deficits and the accumulated debt overall has done more to endanger our country than anything in the history of this nation since World War II.

In the final analysis the Obama administration faced problems not seen since the Great Depression and should be graded with that in mind.  Some of the things that many conservatives blast him for the most were needed like the auto bailouts and the stimulus, even though they were poorly executed, because the country was ready to plunge into the abyss.  Unfortunately record high unemployment, out of control deficits, and the burden of Obamacare mean that this president does not deserve a passing grade in my opinion.

Barack Obama’s economic record: End-of-term report

Consequences Of Globalization

It is interesting to see the consequences of globalization taking place all around the world today.  People so often in the 90’s talked about how globalization would improve people’s lives across the globe.  To be fair to some degree that has happened in places like China where several hundred million people have been lifted out of poverty by moving from the countryside to the urban manufacturing centers of China.  Other nations like Germany have also benefited greatly from globalization in the form of the EU.  With the barriers to trade removed from the internal European market German companies have proceeded to destroy their fellow European competition and reap the rewards.  Unfortunately these two examples of countries benefiting from globalization have also cast a dark shadow across many other countries who have suffered while China and Germany have benefited.  In China’s case many of the jobs in manufacturing that now power the Chinese economy were once based in America.  The fallout from this in America has been significant because many of the jobs lost to China were some of the best paying jobs a non skilled worker could find in America.  Recently in the last several years there has been a small glimmer of hope in the American manufacturing sector where instead of losing jobs they have actually begun adding some.  It remains to be seen if this is just part of the economy coming back from the lows of the economic meltdown in 2008 or if this is part of a new trend of increased American industrial production over the long term.

The situation in Europe seems more straight forward where there is little doubt that the Euro has made life much more difficult for countries like Greece, Italy, and Spain to compete with Germany since they can no longer devalue their own currency to become more competitive.  The result has been that much of southern Europe chose to use debt to fuel economic growth (much like America has done) instead of trying to make their economies more competitive.  The consequences of this have been tragic for those countries with some like Greece in what can only be described as a economci depression.  One thing is for certain, you don’t seem to hear nearly as many world leaders talking up the benefits of globalization because the real long term consequences have now manifested themselves and it is not a very pretty picture.

Presidential Campaign Update, Should Obama Be Worried?

With several polls now showing Romney taking the lead is it time for Obama to start worrying.  After all the president relentlessly attacked Romney during the past month with negative ads out in overwhelming force.  Make no mistake Obama is certainly not running on hope and change this time out, his campaign is all about going negative against Romney.  Unfortunately for the president after going so hard after Romney, his campaign even ran a deficit last month, he has nothing to show for it.  On top of this you have his regrettable statement about business owners not being responsible for their own success which has boomeranged on the president putting his campaign on the defensive.  A few weeks ago I wrote how Romney appeared to be the one in trouble.  My feelings right now are that if the GOP had a top-tier candidate running against Obama he/she would clean the president’s clock because people seem to be so down on his administration.  Fortunately for the president Mitt Romney is his opponent.  As we have seen with his latest gaffe about the London Olympics not being ready (which is probably true) right before he visits London shows  sometimes he can leave much to be desired.  Obama still has some things going for him in several key battleground states so that coupled with Romney’s inability to effectively campaign against the president will combine to make this race a lot closer than it should be.

CAMPAIGN
RATTLPOLL:
ROMNEY PULLS TO 5 POINT LEAD...
ED…

 

 

 

Oh Canada!

 

Word out of the great white north is that Canadians are now more wealthy than Americans for the first time ever.  Several factors have contributed to this new development but the biggest without question would be the collapse in the US housing market, which in turn torpedoed Americans wealth since a house is most people’s biggest asset.  Besides the housing market the economy in Canada is stronger with unemployment at around 7.2% in Canada vs. 8.2% in America.  The real question is whether or not a long-term trend will develop where Canada is consistently more wealthy as America continues to struggle with extricating itself from the meltdown in 2008?  Only time will tell.

CANADIANS NOW RICHER THAN AMERICANS