Gamesmith94134: America’s threat to Trans-Pacific Trade

There is two principles of free trade, in one circumstance that two merchandized exchange at comparative rate at the expense of its consumers, and of the manufacturer; and the other is the payment exchange in the extend of import and export and balance through the governments, even for lobbyists. Perhaps, Americans lost its trade war to China because the free trade agreement was lobbyist included, and its demand to balance is well beyond the consumer and manufacturers, that surplus must be limited that one’s gain is another’s loss, especially for US. Since America would lump its surpluses and labor to be accountable in the balance of payments that trade is granted under its conditions. No wonder, Brazil, China, or Japan would neglect such Preferential-trade agreement (PTAs), and how American became rogue trader who have no consumers or manufacturers; because trade is all payments and copy right violators that most lobbyists specialized and legalized in complaints.

Far as the Trans-Pacific Partnership, US industrial lobbies, Congress, and presidents may not understand better the term of partnership that may imply equal partnership and reciprocal treatment; and they may continue to affirm themselves in the monopoly power over their partners. They may suggest any neglect the preferential treatment in trading with American; then, their survival may be in jeopardy. Perhaps, if they trade their merchandizes at a comparative rate at the expense of its consumers and of the manufacturers; who is paying the lobbyist, the congress or even the presidents?

Somehow, I am not degrading our products to those we purchased at a 99cents stores, but it is how China connected the under-privileged American consumer with their Chinese cheap manufacturers.  In the change of hearts, the lobbyist, Congress, and presidents should find its strategy for the best match for manufacturer and consumer, instead of, patting on the corrupted politicians’ back and shuffling campaign fund money in their accounts. Definitely, it is not a best way to boast the greatest trade for our priced technologies and the burden of our accumulated debts. It is time to stop complaining ramification and contradicting the trade policy in the matching it supply and demand. After all, it is all consumer and manufacturer, even in the American’s 99 cents stores. What is the better price for frozen meats like chicken and pork if they are three times more expensive than ours, if we cannot have its market? 99cents a pound.

May the Buddha bless you?

The TPP is a  NAFTA-style investor-rights agreements with South Korea, Colombia, and Panama, which was passed in Congress for corporat concerns.  Obama is promoting the loss of more U.S. jobs to low-wage sites overseas, protecting Panama’s status as a tax haven for U.S. corporations and money-laundering center for drug traffickers and supports the needs of the Colombian elite’s massive murders of unionists and also leaving the USA vulnerable to challenges from foreign corporations.

He says he's focused on combating the flow of U.S. jobs to low-wage, high-repression nations, but this TPP idea promotes slave wage labor among other world citizens. This is unacceptable in an age where we are highly aware of the detrimental effects of making decisions while pretending we live in a vacuum. This puts USA in a position of forcing its citizens to tolerate the repression of fellow world citizens so that we can continue to get cheap goods which in turn we will be dependent on , since this kind of action will hurt our businesses who can't possibly compete. It allows open season on us by Korea because they can keep charging the USA the Value Added Taxes on goods while we impose no limitations on them.  The icing on this cake is that, typically, hypocrisy and manipulation of workers and economies is presented as a "Global" solution. This is most definitely not a global solution.  This creates global chaos and is an offense against peoples' very lives. A global solution will be one that promotes everyone's well being and stands firmly against murder , oppression and manipulation of markets for the benefit of elite investors.

The TPP is much more strategic than mere labor practices or even capital controls.

America, with bipartisan support, chose ultra highly leveraged FINANCIAL ENGINEERING as a post-industrial era "industrial policy", and in the last 15 years has staked the policy with the full faith and credit of the nation, and the best minds the country can offer.  Bloomberg reported the size of the derivatives casino reaching US$700 TRILLION (50 times the American GDP) by June 2011. When you consider that the American banking sector has only $16 Trillion in total balance sheet assets, gambling at this level of $700 Trillion (about 44 TIMES assets) is RECKLESS.  And yet Washington acts as if the irresponsibility is a good thing. This festering financial cancer is affecting not only America, but the entire world.

The world's economic malady since 2008 was basically caused by an American decision about 15 years ago, to enable massive OTC derivatives trading, as the nation's industrial policy in a post industrial world.  The policy is imposed on the rest of the world through FREE TRADE, which eventually led to the 2008 debacle.  

Today, American banking is synonymous with "trading", mostly in unregulated OTC derivatives.  I believe it was reported that B of A made 90% of its profits in 2010 on trading; the number of SBA loans made also dropped by about 90% from previous levels.  American banks don't bank (lend) anymore, they trade.  They are not really banks anymore, but malignant forms of their former selves.

On its face, as a grand national strategy, derivatives look brilliant: not constrained by natural resources, not limited by labor, “new products” galore come forth from the "ingenuity" of the new-fangled breed of financial engineers, and growth looks unlimited, basically constrained only by the salesmen’s ability to sell.

The "minor detail" is that unlike most other business endeavors, derivatives do not produce anything. $700 Trillion in derivatives did not produce a shirt, a tire, or even a single hamburger. It is purely redistributive - one side wins, and the other loses, with the croupier (banker) taking a cut as intermediary. Derivatives, in other words, is PURE GAMBLING.  Or is it rigged gambling?  The "contracts" are typically crafted by the best Wall Street prospectus writers, and not even the salesmen can really explain them. The suspicion is unavoidable that if they are truthfully explained, nobody would buy them.  The products are typiclaly sold on the age old "confidence" basis - "Hey, this is a sophisticated business instrument coming from one of the world's largest financial institutions, what can possibly go wrong?  Just trust me."   It is also a VERY profitable export.  Foreign central bankers and major insurance houses, sick and tired of 2.5% returns on Treasuries, are prime customers (victims).

There is no sign of abatement, even after the 2008 debacle.  With the American mutual funds industry now (year end 2011) pushing for massive adoption of derivatives, and the Commodities Commission promulgating regulations to allow the small guys to join the fun, the derivatives casino is going to be US$1.5 QUADRILLION in no time.  That would be 100 times the size of the American GDP, and more than the entire world's total GDP!!  That is sheer MADNESS.  What is scary is that many in Washington believe that there is method (and good) in that madness.

2008 complicated things a bit. The world witnessed how even 100 year old financial houses can go belly up overnight. Lehman Bros. had $60 Billion of derivatives on its books, lost 3% or $2 Billion, which wiped out its equity. WHAT is the significance of that? 3% of $700 Trillion is $21 Trillion, which is more than the TOTAL equity of ALL American financial companies. AND you would never know when it would hit, or even which bank it might hit.

You think that would stabilize the world economy?

2008 complicated things, as I said. Both Germany and China ordered their banks to stop massive gambling in derivatives. Both of their economies recovered. America bet the farm, and counted on EXPANDING the scope of the casino, betting heavily that (a) in the name of FREE TRADE or other trade arrangements (such as TPP), other countries will be forced to open their markets to this contagion, and (b) the American banks would always win HUGE against foreigners, as they did in the decade before.

The $7.77 TRILLION in subsidies (in the form of no cost or very low cost loans) to the American banking industry also complicated things (Bloomberg reported the practice after 2 years of FOIA requests). Now the foreigners are going to point to that as an violation of WTO rules, and refuse to allow the American banks to come in and maraud.

As an aside, against that backdrop, disputes over merchandise trade (a billion here, a few hundred millions there) are rather irrelevant. The real economic "battleground" in this 21st century is going to be over industrial policies in a post industrial world - mostly over the financial industry.  It is absolutely necessary to discuss and compare risks in various nations' banking and financial systems, to identify systemic risks and frauds that could infect the whole world. 

It is clear that TPP goes way beyond balancing merchandise trade, as it seeks to take away sovereignty as protection for nations' industries, be they financial or manufacturing, and substitute them with rules written to benefit special interests.  It is not in America's national interest to see multiple Asian nations impoverished.  But if the American banksters have their way, and successfully destroy national financial defenses in the name of trade negotiations, Asia and the world would be the poorer.

The US is getting screwed by trade, and doesn't know what to do about it. The trade deficit is damaging industry and aggravating unemployment.   What we see is its government thrashing around.  

I recommend import certificates: http://anamecon.blogspot.com/2011/10/import-trade-certificates-some-problems.html

The US would issue these certificates to the governments of the countries of destination of its exports.  The certificates would allow those countries to then export back to the US.  Eventually, they would be issued such that for each dollar a country imported from the US, it would be allowed to export a dollar's worth of goods to the US.   The certificates would be phased in gradually, until trade was balanced.   Once issued, they could be bought or traded by different governments.  Thus, a nation's trade would be balanced, although it could still run surpluses or deficits with particular countries.

The periphery countries in Europe would also do well to consider issuing import certificates, as trade imbalances lie at the heart of their debt problems, and they now have no other recourse to force the balance of their trade.

I believe your article fails to account the pragmatic side of the global alliance. You make it sound like the world is full of ethical and selless folks whereas the reality is to the contrary . We are, and continue to make alliances based on mutual benefits and at best their longevity is momentary. Why just blame the US alone. China is no saint and is more aggressively continuuing to expand both economically and geographically. At least US is not pretending to be a savior but just helping out (with self interest in mind) to those in ASIA asking for intervention into the expantory desire of the Chinese.

@Charlesst:

I think the Chicom's expression is "lift the rock to wack your own foot."  Protectionism will do exactly that.

At the end of the day, fair trade has to mean equal profits. In that respect the trade is ABSOLUTELY AND GROSSLY UNFAIR. American companies were basically given free rein to expand into China. American auto companies sell more cars in China than anywhere else. Walmart has 350 stores. Yum Brands has the largest restaurant chains in China. Hospital diagnostic equipment is dominated by GE. The list just goes on and on. Aircrafts are dominated by the likes of Boeing. The Gap is now talking about shuttering 22% of its American stores, and tripling its number of stores in China in the next few years.

In 2010, American companies made more than $100 Billion in profits in and from China.

Yet with extreme asymmetric treatment, America basically blocked most Chinese investments into America. WHAT Chinese companies are allowed to have hundreds of outlets in America? Deal after deal was blocked by the xenophobes in Washington.

As a direct result of the above, the current profit imbalance is at least 5 or 6 to 1 IN FAVOR OF AMERICA (exports to America typically gives the Chinese exporters no more than 3-5% margins).

How long do you figure that sort of unfairness will be allowed to continue? Some Chinese bloggers have long lamented that, of the 33 key industrial sectors, 20 of them are dominated by foreign companies, and that Beijing should do something to take back the lead. So if Washington is going to disengage, it would be a perfect storm.

If protectionism has its say, America can kiss the $100 Billion a year in profits from China goodbye.  Actually other bloggers have estimated the sum to be almost $300 Billion a year. Just applying a 20 P/E would mean a sum of wealth ($5 or $6 TRILLION) far exceeding the total amount of foreign currency reserves of China.

Americans are the shrewdest businessmen on earth. They are in China because it is profitable. There are no favors done, and none asked for by the Chinese.  The tit for tat is just a call for help from the Chinese.  Open the American markets for Chinese investments.  Let the playing field be even.

I would like more details, please.

Gamesmith94134: The economics of strategic containment

When I read of the APAC, Hawaii meeting, I was amazed that the result was good as the G20 in solving the European Crisis----let China pays. Now, I am listening to the containment plan in single out China in America’s new “Pacific offensive,” aimed at offering nations in the region an alternative to excessive and rapidly growing dependence on a rising China; and balckmailing Japan to join the offensive to shut out China; if China would not allow reminbi to rise by 25%, or catch copy right offenders. 

“In short, the TPP’s core agenda will offer the region a “Doha Round-type” agreement that includes the social and environmental agenda that developing economies have been resisting within the WTO.” Is it the coming future of the Obama-Clinton agreement on their CIA, as “commerce in awe”? Currently, China is in denial of the South Sea dispute, and the EU crisis; it worked, so America can donimate Doha Round-type agreement and everyone follows into the cold war with China and Japan.

However, as American Chinese, I fear of the ‘containment’; it sounds like a beast entrapped; and I must not criticize how the CIA, as ‘Commerce In Awe’, can influence more on the recovery of the global economy. However, I do agree with Zolt’s saying that we are all part of the system we must work together to have a mutual understanding of our survival. It is for us switching our inherent nature and attitude from self calculation to calculation for the whole in order to make this mutual system work.

Perhaps, Mr. Obama and Ms. Clinton must learn to walk a mile with Mr. Hu’s shoe, in raising reminbi by 25% promptly; then, American can ease the price of its real estate by 25% and let the richer Chinese buy them. Perhaps, they can repay Chinese for the loss in MF global financial just like the Lehman Brothers promptly too; since we do not accept counterfeiters or scammer in our “Commerce In Awe”. In the end, everybody is going back to Doha Round and everyone is smiling.

May the Buddha bless you?

I agree with the bloger.one circumstance that two merchandized exchange at comparative rate at the expense of its consumers, and of the manufacturer; and the other is the payment exchange in the extend of import and export and balance through the governments, even for lobbyists.seo services uk