Monday, February 11, 2013

Green backs and can openers

The good news is that unemployment claims continue trending down indicating a slow but continuous recovery. The bad news is that it's being to look like the Republicans might allow the sequester to happen, and follow that up with refusing to raise the debt ceiling. Or perhaps they're simply going to milk it for propaganda in order to rile up their own base right up until the last minute, and then cave in. They're pushing hard to attach Obama's name to it, literally calling it the Obama-sequester at every opportunity. No matter that Speaker Boner bragged about getting everything he wanted when the Republicans created the sequester. Of course they expected to have control of the government by now so it wouldn't have been a problem.

Further evidence of the decline of the United States is that China has now passed the US to become the world's largest trader, with a combined total of exports and imports of nearly $4 trillion and $230 billion in trade surplus. The US isn't that far behind, except for the small problem of a $750 billion annual trade deficit.

In reality the US is even worse off than these numbers might suggest. China imports raw materials and exports manufactured goods, the US does just the opposite just like any third world country. Our biggest manufactured export is refined gasoline and other fuels with a full third of the product leaving the country while we pay prices based on the notion that there is a shortage, and we get to keep the pollution.

Another big chunk of US trade is from importing goods and then exporting them to the EU to get around the lack of trade agreements between South America and the EU. This of course contributes nothing to the US economy. 

The right-wing crazies are pushing hard on the notion that Obama is simply printing money to the point that China doesn't even want USDs anymore. The 'proof' they point to is that China won't sell us rare earth metals like lithium for batteries. Of course China won't sell to Japan, the EU or India either. So I guess the Yen, euro, and the rupee are also in trouble.

The fact is that Obama has no say in how much money is printed, only the privately owned Federal Reserve System has any say on the size of the money supply. The fact is that the Treasury could if authorized by Congress begin printing money again. The last Treasury notes were printed 50 years ago, with LBJ ending the practice in late November 1963, his first official act as President.

We would in theory be better off with a weaker dollar as it would cut down that 3/4 of a trillion dollar trade deficit, but with the USD being the favored reserve currency around the world that's a hard thing to do. We don't even have any idea how many dollars are in circulation outside the country, since the Federal Reserve stopped publishing the number back in 2006 when things started to go bad. So China has no problem with the USD as long as its trading partners with sell them a copper mine or an oil field in exchange for green backs. If the world ever decided to stop taking dollars then China could trade manufactured goods for what it needs, we can't.

We're in middle of taking a direct hit from a coronal mass ejection, that's billion of tons of ionized particles hitting the upper atmosphere. And while the Solar flare that produced it was impressive, this isn't the big one. If we're ever hit by a really big mass it will push the earth's magnetic field down to ground level, and that will be the end of the power grid, possibly for a generation. The good news is that NASA has a pair of satellites monitoring the sun and can give us some warning. The question is, can they isolate the power grid completely? It doesn't really sound like it, so you need to have a manual can opener just in case.


Anonymous said...

Leave it up to the Republicans to kill any kind of recovery. I read earlier today that the signs were there indications that by the end of the year the economy would be clearly recovering. I'm sure that didn't take into account any Republican efforts to continue to sink the country.

Ronmac said...

Bad new on that NASA satelitte. It's just been privatized which means that all that scientific info it's been collecting has been "packaged" into a form of derivative along with Irish real estate and euro bonds.

Even if the sun were to run into a few "problems" it would take months for them to find it, and when they do, expect to pay thru the nose for it.