Sunday, September 13, 2009

Obama mans up on trade

The Obama Adm. stood up to China on Friday and raised the tariff on tires to 39%. This follows a large tariff imposed on steel pipe. It is not likely however that he did this without at least the grudging agreement of Beijing. China could put the US economy in a tailspin anytime they want to and it would not be wise to provoke them. Face is more important than anything else for China’s leaders and Obama will have to show them proper respect when they come to the G20 meeting in Philadelphia and later when he travels to China in November. Before you right-wingers get your pink panties in a wad; Bush never stood up to them on anything and was happy to do a Monica for them anytime.

Two thirds of our trade deficit is with China and it took the biggest jump in ten years last month. Bringing back normal trade (pre-Clinton/Bush) is the only way to have a middle class again. Republicans will fight this tooth and nail because the would prefer a mixed economy of feudalism and plantation slavery. There are more than a few Democrats who say that we live in a Global Economy and that’s just the way it is. You’ve got to be pretty stupid to sincerely believe this. Most are just willfully ignorant as their jobs depend on keeping up the fiction.

China has been plowing ahead full speed with fixed asset investment continuing to grow 30% year on year. They have been reducing the percentage of their economy that depends on trade at a rapid pace. They have been prudently disposing of their USD to buy anything and everything from copper mines to oil fields to zinc deposits anywhere somebody is stupid enough to take Dollars. China has banned the export of its strategic metals all the while the US continues to be strip mined. Last year Beijing handed out several hundred billion to their trading partners to cushion the impact from the collapse of the US economy.

Even if the trade and tariff problem is resolved there still is the matter of the trillions of funny money the Republicans have hung all over the world as well as even more trillions of debt obligations they created to balance the government books and securitized consumer debt that they created to avoid paying a living wage to US workers and prop up the banks. There should be some public hangings but that is too much to hope for.