Friday, January 21, 2011

Bringing good things to life but not here

President Obama has been on a charm offensive with independent voters by trying to convince them he is pro-business and it’s been working with his approval numbers climbing steadily. Republicans have been losing their talking points with Obama signing the renewal of the Bush tax cuts, appointing a Wall Street banker as WH Chief of Staff and announcing a drive for pro-business reform of all Federal regulations.

The latest thing was to appoint the new head of the President's Council on Jobs and Competitiveness which used to be called the President's Economic Recovery Advisory Board. It’s a great political move but really he’s just given up on that recovery thing and is handing the care of the remaining hens in the chicken house to the foxes.

It might seem appropriate to appoint somebody who has created more jobs than anybody else to head this board but he picked Jeffery Immelt the CEO of GE instead. To be fair he has created a lot of jobs but they were all in China and India. GE does 60% of its business outside the US and this sounds great that a US company is doing so much business, that must mean they bring a lot of money back to the US. You can guess how that really works.

More than half of the imports into the US are purchased by US companies from the overseas division of the same company and laundered through tax haven countries. This allows them to keep all their profits overseas by jacking up the prices they pay themselves. In fact US companies pay much higher taxes in China than they do here. The Chinese aren’t stupid like we are. Two thirds of US corporations pay no taxes in the US, they all pay taxes in China.

Jeffery Immelt got into considerable hot water recently giving a speech to European businessman where was whining about how badly China treats foreign companies. He even suggested they might all leave China. GE disavowed his remarks before he sat down from speaking. Immelt thinks the world is flat and he can go from country to country driving down wages and making the big bucks.

China thinks somewhat differently, Immelt can do as much damage to the US economy as he likes but as China moves aggressively to dominate the world he will bump up against them wherever he goes. The more damage Immelt and his kind do around the world, the more popular China becomes with its trading partners. Immelt can’t push China around and this upsets Mr Immelt but he still has a free hand here, so life isn‘t so bad.

Thursday, January 20, 2011

How many chicken feet for that flat screen?

After meeting with the world’s most powerful man today, that would be Chairman Hu Jintao, President Obama talked up our trade with China saying how the 100 billion in goods we sell China each year creates 500,000 American jobs. He didn’t mention that 4.5 million American jobs have gone to China in just the last ten years. His estimate of the jobs created is doubtless exaggerated since our biggest export is recycled card board and just how many jobs does that create? Fully half of the containers that go back to China with anything in them at all are filled with cardboard or other recycling. (the majority are empty. I wonder if the empty containers are counted as an export, probably)

We also export a lot of old growth forest logs, various ores and fresh water from Lake Superior. None of this creates very many jobs. We export roasted soybean meal and other value added farm products that are counted as manufactured goods. How do you add value to a farm product? Removing the feet from a chicken and throwing them into a barrel counts. We also do that with the leftovers from pork processing, this does create some jobs, mostly for undocumented workers at minimum wage.

We do sell aircraft from Boeing and Lockheed, the deals always include all the technology that goes into building them. Can you say J-20 fifth generation stealth fighter? How about long range hyper-sonic ship killing missiles? Anything to make a buck for US corporations, not that many jobs though. There might be some job opportunities in the military if China decides to flex its muscle, not that we would have an economy to pay for them.

On the bright side, Chairman Hu said today that China will go ahead with a 25 billion dollar order from Boeing. There had been some doubt that would happen with China close to rolling out its own wide body passenger jet. I had a conservative challenge me on this prediction by saying “would you fly on a Chinese jet?”. Guess what genius, that’s where Boeing gets their critical parts, so you are flying on one already. If you use an airline that has outsourced its aircraft overhauls to central America you maybe flying with black market parts that didn’t even pass Chinese inspection.

Initial jobless claims in the US were down sharply last week. Production of chicken feet and pork intestines must be up.

Wednesday, January 19, 2011

It's a translation issue

President Hu Jintao is dropping by the White House for a State dinner tonight. This is getting heavy coverage in the Chinese press, of course they don’t refer to him as President, they call him Chairman Hu Jintao. You know, just like Chairman Mao. When asked about this, the White House said it was a “translation issue”.  Really?

It’s a translation issue that the public face of the last big Communist oligarchy should be referred to as “President” by the US government and the corporate press that is owned by the transnational companies that benefit from sending our jobs over there. Back home in China they make no pretense that he is “President” of anything but simply reflects the will of an eight man committee that in theory holds all power. Mr Hu is set to retire in 2012 and his deputy will assume the job.

There is debate in the West as to whether or not these eight men really run things or if the various bureaucracies like the military, the security state and the banks are out of control or at least compete for their own interests. This is mostly wishful thinking as China’s resounding success indicates that there is little if any real infighting.

Referring to a non democratic leader appointed by a group of eight unelected leaders as “President” is not a stretch for the establishment in this country. They had no problem in the past referring to non democratic leaders appointed by as few as five unelected people as President and Vice President. It’s just a matter of translation.

Monday, January 17, 2011

Hu's on first, many things have double meaning

The most powerful man in the world is back in Washington and Speaker of the House John Boner has insulted him by refusing an invitation to dinner at the White House. The significance of this is deeper than it would seem to be at first glance. The invitation was extended by the second most powerful man in the world, the President of the United States for a State dinner in the honor Hu Jintao the premier of China.

Speaker Boner is seemingly unconcerned with the governance of the country he claims loyalty to and that he is unfortunately only two heart beats away from being in charge of. President Obama is said to be pressing Mr Hu on improving the trade balance. You can snicker at that but Obama has been winning at the WTO on trade cases where Obama has slapped China with 99% tariffs for dumping subsidized goods into the US market.

The most recent win has been over tire imports where US tire companies have been enjoying tariff protection for two years now. They have hired thousands of new workers and invested millions in new production capacity as a result.  Hmmm, maybe we could do that with other things we used to make. Alexander Hamilton thought so and George Washington and the first Federal Congress agreed, creating a system of tariffs, trade and manufacturing policies that stood for nearly 200 years. (until Ronald Reagan, George Bush and Bill Clinton)

Speaker Boner’s memories of Alexander Hamilton have probably faded away as he no longer needs to pay his own bar tab (that’s what lobbyists are for). Obama also invited Boner to fly with him on Air Force One to Tucson as he is the Speaker of the House and a member of Congress has been shot down. Despite Boner weeping about it for the cameras he couldn’t miss a Republican cocktail party to make the flight. Is Air Force One dry? No need to part with any Hamiltons to take the trip so maybe the corporate jets he normally flies on make AF-1 seem beneath his standards of accommodation.  

Of course Boner really just snubbing Obama just for petty political advantage but now he has crossed the line. Snubbing the most powerful man on the planet can have consequences and China keeps track of who shows them respect. This could cost boner some Hamiltons.