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| Home Front Economy |
| Forced convergence of China and US |
| 2008-11-12 |
| So how much of the US economy, the home of free enterprise, will end up being nationalised or bailed out by the state during the current economic crisis? So far we've seen banks, mortgage companies, and a mighty insurer all being propped up and bossed around by the federal government. And now it's the real economy, manufacturing, that US taxpayers are set to rescue. Last night, for example, the Democrat Speaker of the House of Representatives, Nancy Pelosi, urged Congress to provide emergency financial help for the crippled US automotive industry. What's being requested by General Motors, Ford and Chrysler is $50bn in loans, on top of the $25bn in low-interest borrowing approved by Congress in September for retooling plants. As cash-strapped US consumers continue to feel this is not the best time to buy a car, and are purchasing fewer vehicles than at any time since the early 1990s, most at risk of collapse is General Motors, the largest US carmaker. Pelosi made clear that she felt the big automakers had to be kept out of bankruptcy at all costs, because of the danger that its failure would lead to massive damage to suppliers and connected businesses, with the possible loss of millions of jobs. A recent study by the Center for Automotive Research concluded that the failure of just one carmaker would lead to 2.5m job losses. The scale of what's at stake was captured chillingly in a quote from a bankruptcy lawyer at White & Case, Alan Gover, who is quoted on Bloomberg: "Trying to reorganise the auto industry in bankruptcy would be as close to reorganising the whole US economy as you could get," he said. "The vast supply chain involves thousands of businesses, millions of existing jobs and just as many retirees, as well as whole communities and states". But here's what some may see as ironic, even - in a dark way - slightly amusing. The fundamental cause of America's woes (and ours too) is that its consumers, businesses and government all borrowed too much in the good years, especially from China. China's semi-nationalised, heavily state-controlled economy generated huge financial surpluses through its massive trade in manufactured goods with America. And those financial surpluses were recycled back to America in the form of loans, so that US consumers and businesses could buy even more from China's factories and workshops. These massive trade and financial imbalances were unsustainable - and are now being brought closer to equilibrium in a painful way. Because US financial institutions both borrowed and lent too much, and because many other mighty companies took on far too much debt, they have been facing collapse. And where they are perceived as too big too fail (where the collateral damage were they to fall over would be devastating), the US government is stepping in with financial succour from taxpayers. For years the great trend in the world was the embracement of free enterprise in China. But now, in America's darkest hour for generations, the US is embracing a form of state-control and intervention that looks remarkably Chinese. |
| Posted by:Besoeker |
| #9 WORLD MIL FORUM [paraph = Google Chinglish translation] > CHINA AND TURKEY HAVE THE LARGEST "BEST" WORLD ECONOMIES, for the USA to heavily interact with in order to resolve its on-going Financial Crisis and related. Also from SAME > PROLONGED US FINANCIAL CRISIS CAN RESHAPE THE MAP OF ISLAM, ASIA AS SUPERPOWER USA DECLINES BUT GROWS MORE ECONOMICALLY DEPENDENT ON FOREIGN STATES. |
| Posted by: JosephMendiola 2008-11-12 23:20 |
| #8 ION FREEREPUBLIC > BARNEY FRANK WANTS TO NATIONALIZE THE US AUTO INDUSTRY. HMMMM, ala the USSR the Bolsheviks + Soviets lasted from 1917 thru 1989 or 1991 > WID US POLITICOS + GLOBALISTS, ETC WAFFLING BWTN THE WORLD-DOMIN/CONQUERING USSA, versus WEAK ANTI-SOVEREIGN OWG USR of Amerika, IT REMAINS TO BE SEEN HOW LONG US-CENTRIC SOCIALIST ORDER WILL LAST. At last check the Islamists are still a'rampagin thru CENTRAL- AND SOUTH/SE ASIA [desired FUTURE NUCLEARIZED ISLAMIST ASIA]. |
| Posted by: JosephMendiola 2008-11-12 18:33 |
| #7 I think you are all right, but do you not see globalist policies as a goodly part of this problem? I wonder how many people do or don't. It has certainly been a godsend for big business, but for the American worker? It seems to have brought few of the promised benefits. |
| Posted by: bigjim-ky 2008-11-12 14:58 |
| #6 EU did you boy Duncan spend his time reading Tom Clancey novels? This mirror idea is a perfect example of the maxim that things should be as simple as possible AND NO SIMPLER. Global trade is way to complex for sound-bite answers from anyone. If you want to know what really caused the depression look into REPUBLICAN idiocy known as Smoot-Hawley. FDR just came along and kept pushing the ball down hill till WWII bailed us all out. |
| Posted by: AlanC 2008-11-12 14:04 |
| #5 You are right too, remoteman. But during the Republican presidential primaries my guy Duncan Hunter said his policy on tariffs would be like a mirror - whatever tariffs they put on our products would be the same tariffs he would put on theirs. That made sense to me but it's not what happens, is it? Not only that but the Chicoms don't protect their workers or their environment like we do. How about a level playing field? |
| Posted by: Ebbang Uluque6305 2008-11-12 13:17 |
| #4 Gloabalism didn't cause people to spend more than they make. Globalism didn't force the UAW to create ridiculous work rules and unsustainable cost demands on its employers. Globalism didn't force our government to create huge entitlement programs (also unsustainable). Globalism is about competition and enabling different countries to specialize. Globalism is about Honda, Toyota, BMW and Mercedes building plants in the US and employing non-union workers at those plants and paying them a very good wage. You want a far worse recession, then erect trade barriers. That sure worked like a dream the last time around. |
| Posted by: remoteman 2008-11-12 12:53 |
| #3 What bigjim said. |
| Posted by: Ebbang Uluque6305 2008-11-12 12:27 |
| #2 Do not discount the strangulation of business by regulation. |
| Posted by: newc 2008-11-12 10:46 |
| #1 If we put the exact same tax on imported goods that their country of origin puts on American goods, I suspect we'd be out of the woods in a very short time. Free trade and globalism advocates have been busting their collective sack explaining the virtues of the global economy for the last 20 years at least, as things steadily went down the toilet. Now we've hit rock bottom, almost, so where's the great benefit in the global economy now? I know, I know, cheap shit at Wal-Mart, yada, yada, yada. But if we've lost millions of jobs, doubled our national debt, became beholden to other countries for our energy, and have to kiss china's ass to keep them from dumping their US bonds and crashing our bond market, what HAVE we gotten out of this deal? I think its a fair question. |
| Posted by: bigjim-ky 2008-11-12 10:04 |