Thursday, November 11, 2010

Hold on to your rubber duckie

It was bad news for President Obama as he emerged from a personal meeting with the President of South Korea without the trade deal he had been touting all summer as a significant step toward economic recovery. The good news for the US is that he failed to get an update to the 2007 Bush agreement that has not been approved by Congress. The deal was supposed to increase exports of US cars and beef but even Ford Motor Company was running full page ads opposing it. The only people in favor of the deal described as the biggest trade deal since NAFTA is the US Chamber of Commerce and they don’t represent US businesses.

The corporate media is playing up Obama’s loss of power to the Republicans as the reason Korea wouldn’t make a deal. The reality is that Obama has little to offer them. The current arrangement allows Korea to sell as many cars in the US as they can make and basically keep US cars out and they can buy all the beef they want. The real problem for the Koreans is the weakening USD and the fact that China continues to tie the renminbi to the US currency. The falling Chinese Yuan is the big problem since they need to compete with them (the US doesn’t export anything)

This problem isn’t confined to Korea of course with countries that are major trading partners with China like Brazil find they are a huge disadvantage. The  renminbi has dropped 60% compared to the Brazilian real and it makes it very difficult for their manufactures to compete with China even in Brazil.

The World Bank is making no secret of their intention to create a new international currency backed by a large gold component. This would mean the end of the USD as the reserve currency of the world and this might be a good thing except that some people are pointing out that this could easily lead to the end of US sovereignty. The reason for this is that we are completely dependent on imports for our very existence and without the ability to create our own money we would become serfs to the people who do control the money. Currently we are at least peasants with some rights, serfs have none and without a sovereign currency we would only sink ever lower.

The folks in control of the Deficit Commission are the very people who have no problem with the loss of US sovereignty since they see themselves as potential feudal barons. It’s time for Obama to show some spine if he want’s to be anything but a novelty footnote in US history. Perhaps it was a deliberate strategy that he didn’t give Korea what they wanted (whatever that was). Obama has hinted ever since he created the Deficit Commission that he was calling the bluff of the so-called deficit hawks by doing so. This could explain loading the commission with all the right wing crazies who really believe in drowning government in the bath tub. The American people maybe forced to face reality before it’s too late to stop the Republicans after all.


Anonymous said...

P2: what, exactly does this mean: "The American people maybe forced to face reality before it’s too late to stop the Republicans after all. "

Isn't stopping the Republicans what we had every reason to expect the 70 million votes for Obama were intended to do?

I note that the commission's (and other's) connecting Social Security (SS) changes with deficit reduction, presuming lawful use of SS trust fund money for non-SS expenditure, only disproves the claims of the would-be baron's that SS is failing. To the contrary, it is actually a cash cow that has been, and presumably will continue to be, used to offset profligacy in many other areas.

This is totally analogous to corporate raiding of private pension funds under their control. I will agree heartily with a P2 comment recently that Wall Street exists not to create wealth but to steal wealth created by others.

The SS tax need to be assessed on ALL earnings, the proceeds made legally off-limits to non-SS spending, and the benefits increased for retirees permitted to draw benefits at an age lower than currently allowed.

John Puma

prairie2 said...

It's the old cliche about the towns people at the castle gates once they realize what is really killing them. Most people still think McDonald's is the happy place.