Faith-based free trade follies
Many bloggers think of Lou Dobbs as a wanker. I have always thought of him as a markets journalist with more than a few interesting things to say.
Can I hear a witness for "faith-based free trade"? Oh yeah, baby, preach it! :
Eye-glazing stuff, international trade. But the consequences of faith-based free-trade will be eye-popping in the disaster it wreaks on our economy and working Americans. The facts are anything but dull: For 30 consecutive years the United States has run a trade deficit, and our trade deficit has surged to record highs in each of the past four years. Our monthly deficits have reached record levels in two of the past three months.
Our current account deficit -- the broadest measure of international trade -- is on track to approach $1 trillion this year. And our current account deficit is almost 7 percent of our nation's gross domestic product, considerably above the threshold at which Federal Reserve studies have acknowledged our economy must make policy adjustments or face major financial crisis. We're borrowing about $3 billion a day just to pay for our imports, and our trade debt now stands at $5 trillion.
We will no longer have to be patient to see the impact of these faith-based policies in free trade. Signs are already beginning to mount that a reckoning is nearing. Our trading partners in Europe are counseling "vigilance" in the currency markets, as their anxiety rises with the value of the Euro against the dollar. For the first time, the Chinese government is publicly expressing its concern about the more than $1 trillion it holds in reserves.
But most disturbing of all are the comments of new Treasury Secretary Henry Paulson, who said in London Tuesday, "A strong dollar is clearly in our nation's interest and I feel very good today about the strength of the U.S. economy," as the U.S. dollar hit a 20-month low against the Euro. Treasury secretaries are not paid for their candor, but Paulson's rejection of our current reality won't bolster his credibility with either our trading partners or the new Democratic-led Congress.
When I travelled earlier this year to Amsterdam and walked into an H&M store, I was hit by the painful realization that having dollars in my pocket didn't and couldn't get me far in the European city. A sweater that costs me 39 dollars in the US costs me 39 euros in Holland. Fair trade for a bargain seeker? Of course not.
Take into consideration that I live in New York City, one of the most expensive cities in the world. I am used to sticker shock and, as a New Yorker, have developed the shopping and barganing skills necessary for living in a big city. Yet, when your dollar is only worth about 75 cents, shopping for even a cup of coffee becomes an Olympics in mental arithmetics.
The problem is not just multinational chain stores like H&M. If you consider that all brands are global now --that there are no local "Amsterdam" or "New York" mass markets of shoes, clothes, hand bags-- then shopping is more about deciding whom to surrender to with your worthless sheckles as opposed to enjoying the art of haggling.
And we only have the neo-capitalists' fixation with China and India to blame. Dobbs' article really hits it over the head when he says,
Instead of opening new markets to U.S. products and services, the U.S. government over the past 10 years has negotiated nothing more than a series of outsourcing agreements.
Outsourcing.
Dobbs is absolutely right about this one. Our economy has become so dependent on outsourcing and offshoring that my ability to be able to indulge in some tourism is tied to how many products and services are being manufactured or managed worldwide by China and India.
Many of these so-called global brands used to be from the US. But the politico-industrial complex rationalized outsourcing and offshoring as the price to pay for global domination. Imperialism in a blue suit under the auspices of so-called democracies; leaving a new kind of serfdom called "the middle class".
Oh save me the "THERE GOES THE MARXIST CRAP". If anything, Marx understood the political implications of a still emerging at his time, global market of networked economies. This was more than 100 years ago. What he did not forsee was for the global market to become ONE --the variety brought by the network is gone.
If we are dealing with global economies in which I, as a middle class-college educated-PRuppie and Buppie wannabe am only considered as a resource subject to adjustments and efficiencies and not as a player, then when I speak of "being middle class" I need to think of it from a global perspective, right?
The question is, how to articulate that into something easy to do and understand. How do you give up the American dream for a New Global middle class dream?
Or should we give up completely on the idea of "middle class" once and for all?
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Economics | Free Trade | World Economy | china | Dollar | European Union | Henry Paulson | Lou Dobbs | Treasury Deparment
It's All Terribly Confusing
Since 1981 the US has used some manner monetary policy to govern the economy. So what confuses me is if you're going to constantly putz around with the money don't you want it to have some value in the first place?
We haven't had a strong dollar since Bill Clinton left office. The current bunch went in with a weak dollar agenda and never bothered to tell anyone. Not that letting us in on their plans is exactly their strong suit.
But here's the strangest thing - the amount of money running around the US economy used to be posted every Friday by the Treasury. This was the measure of everything from the loose pennies you find in the bottom of the washer right up to the money the Pentagon plays with. From Nixon through Clinton that was public information, but now?
As the standup comics say, "What's the deal with that?"
Anyway - no you shouldn't give up on the middle class or as the ancient Greeks called it, the polis. They saw it as the great buffer between the rich and the poor. They felt that when you only had one or the other you were headed for disaster.
But it should be noted that it wasn't monetary but fiscal (AKA Keynesian) policy that created the large post-WWII middle class. There was an interesting article in The Atlantic a month or so ago talking about how you pretty much have to move to the Blue States to get work if you're the least bit educated. It all works along these lines.
And as we say at our hosue - all hail glorious people commentator Tovarish Dobbs and his struggle to raise class consciousness!