April

While the U.S. has “denuded” its manufacturing and infrastructural development during the current century, China, runnerup to the U.S. in global gross domestic product expansion, has surged its internal production capabilities. Simultaneously, Beijing has created a first-class infrastructure of highways, speed trains, modern cities, bridges, dams, etc. Under the most dominant government centralization in forty years, China is well on the way toward regional military superiority, and political dominance in all of Southeast Asia. Its “defense expenditures” rival that of the U.S.

As the Trump-led Administration is shifting its emphasis away from foreign policy involvement, and rebuilding America’s long-neglected internal capabilities, China is speeding up its muscularity to empower its Asiatic globalism. The first move in that direction occurred when the U.S. chose to abandon its dominant involvement in the Trans-Pacific Partnership plan, thereby opening the door for China to fill the vacuum.

At the same time, China is eclipsing the U.S. in military expenditures, even to the point of already laying the groundwork for a “space program” nucleus. Without the U.S.’s active interest in the vast Asiatic econo-political matrix, China’s Xi-Jinping-led future Southeast Asia geopolitical investment will be redoubled, and in a much shorter time period.

As the combination of ambitious leadership, power in both China and the U.S. will now follow separate paths. Beijing faces little, if any, alternatives to its singular goals of Asiatic domination. This already has the approval of Russia’s President Vladimir Putin, whose long-term oil/natural gas contract between Russia and China is forming the groundwork of a heretofore non-existing cooperation between Beijing and Moscow.

It is particularly ironic that Japan, which ruled the Pacific quadrant in the late 1930's and early 1940's has been reduced to a geo-political sideshow in Asiatic power play. Its previous dependence on the U.S. as an associated power broker is now evaporating. Chinese economic and geopolitical involvement of the South Pacific will likely be added to its previous fortification of the disputed coastal islands, which will likely be no longer contested, barring U.S. involvement.

As such major historical power changes have always depended on a dictatorial, undisputed personage, the current projection of Xi-Jinping in this role will practically guarantee China’s global and populous ambitions before mid-21st century appears on the calendar.

Thursday, 27 April 2017 00:39

Will Technology Provide Mideast Breakthrough?

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While the Arab world and the Mideast nations in general, have maintained near unanimous non-recognition positions with Israel since it was declared an independent Jewish State in May 1948, Jerusalem’s fast-growing high technology capacity is starting to fray the tightrope enforcing this diplomatic animosity.

While Egypt, Turkey, and Jordan have maintained a low degree of diplomatic relations with the Jewish State in the last few decades, and with Saudi Arabia, Kuwait, and Qatar keeping an “undercover” approach, Israel’s surprisingly global technological advancement may be the key to warming economic relationships, not even imagined just a few years ago.

According to the OECD, the U.S. organization that tracks technological breakthroughs around the world, has singled out tiny Israel (8 million population), as the world’s leading developer of fast-growth per capita investment business formations, primarily active in the technological arena. Most recently, a potentially successful approach to “desalinization,” has freed Israel from its intermittent droughts, similar to those that have plagued California for many years.

Initial discussions between Israel and California have already begun. This is also true of the world’s two most populous nations, India and China, whose combined 2.5 billion population, comprising one-third of the world’s total, are looking to Israel for technological dialogues.

Coincidentally, with both of these nations projecting global leading GDP growth in excess of 6% this year, a substantial percentage of Israel’s overall export trade depends on these two Southeast Asian growth giants.

Both of these leading viable economies (India and China) will also be becoming more involved in the massive Trans-Pacific Trade Pact, minus the leadership the Trump-led U.S. is vacating. This may even further enhance the development capabilities of Israel’s technological advancement, militated by the number of Israel’s independent businesses in various stages of development of new technologies.

What has proved remarkable in America’s unanticipated technological growth speed has been the incredible personification of “independent business” individuals, such as Bill Gates (Microsoft), Mark Zuckerberg (Facebook), the late Steve Jobs and Tim Cook (Apple), and Jeff Bezos (Amazon), etc,

While Saudi Arabia, more than any other Islamic Middle East super state, is acknowledging its overwhelming dependence on oil, it’s also acknowledging that technology being developed in Israel may be just “what the doctor ordered” for a major leap forward for the Saudis in the years ahead.

As dramatic economic and geopolitical world events have become increasingly plentiful in the past year, the U.S. dollar has exhibited exceptional strength, despite continued record government spending, and a Treasury debt deficit exceeding $20 trillion.

In looking forward to the wide range of economic innovations contained in President Trump’s aggressive agenda, an even stronger U.S. dollar may become a component of that reckoning.

Currently, the dollar’s international leadership is further increasing by the weakening of its perennial competitors— the euro, the U.K. pound, the Japanese yen, and the Swiss franc. The most unexpected aspect of these currency relationships occurring in the past year, has been “negative” investment interest bonds and Brexit. The latter, U.K. stumbling out of the Eurocom, has clouded the future of that ambitious European economic unification. Ironically, the British had their doubts from the very beginning, never adding their “pound” to the 18-nation European currency block, the Eurozone.

But while President Trump talks about a more world-competitive dollar, the direction of global investments indicate that just the opposite will happen:

1) Currently, much of the world’s investment direction is heading toward the U.S., as Europe’s economy has fallen. This is expected to be joined by much of the world’s financial excess, which
has heard and believes that a re-strengthened domestic American manufacturing sector is on the march. As such events unfold, the demand for the dollar will increase substantially. As expected, future foreign U.S. investments will necessitate conversion into the American currency.

2) The increasingly strengthening dollar will make U.S. bonds and other interest-bearing investments more attractive, in competition with the relatively well-off German, Japanese, and Swiss currency

If Trump’s “re-industrialization” occurs, as promised, a consistently larger amount of U.S. gross domestic product growth (GDP) will be generated internally, as exports sag in light of increasingly higher prices.

As foreign trade pacts, such as the recent Trans-Pacific Trade Partnership, which depended on the U.S. as its anchor, increasingly disappear from America’s growth, due to higher prices and federal government policy, it’s doubtful that the influx of foreign U.S.-bound investments will exceed the lessening of high-priced U.S. exports.

All in all, if future economic events develop as anticipated during President Trump’s reign (whether one-or-two terms), America will benefit by substantially increased employment, higher wages, but a new brand of economic “isolationism.” This will usher in inflationary factors with Americans no longer benefitting from the massive cheap imports of past decades.

Although 2016 recorded one of the worst performances in “independent business” formation in decades, this year is beginning to reverse this trend, as President Trump is starting to make good on his many positive pre-election promises.

As the first business-savvy President in the group of 44 previous national leaders, Trump is well aware of the fact that the bulk of manufacturing and major service jobs had shrunk dramatically since the late 1990's. This negative trend was magnified by the thousands of mechanical and technological crafts personnel, whose previous technical training schools had been largely shuttered in the latter part of the 1900's.

This growing negligence opened the door to a growing segment of America’s manufacturing sector being relocated in both emerging and proven industrial overseas leadership economies. These provided U.S.-based large conglomerates with low-cost capabilities to engender higher profits.

This trend was visibly accelerated during the two terms of the Obama Administration, which prided itself in providing America’s large consumer sector with a wide range of “foreign made” goods, with an American brand name. What had not been generally known, was that the products produced by divisions and/or subsidiaries outside the U.S.A. could be brought “home” with little, if any, tariffs imposed.

While the policies necessary to even out this overseas manufacturing advantage by American companies will be evolving in the months to come, such finality will likely take many months to implement so as not to create havoc in the methods of distribution.

Since independent businesses had been the major “victims” in the surging imports of American branded goods from abroad, the forthcoming Trump policies to expand industrial production and employment will likely make themselves felt affirmatively as this first term of the Trump Administration unfolds— but not before at least two years have passed, prior to mid-term elections.

At that time, a new, more realistic tax system, and a feasible, ongoing return of American offshore monetary liquidity will also have been accomplished.

With “Made in USA” becoming the spearhead of President Trump’s re-ignition of U.S. manufacturing employment and factory production expansion, many American businesses, relying on foreign-made products, components and services must rehabilitate their “modus operandi.”

While the reversal of foreign consumer, industrial, and commercial products has made such a presidential mandate critical, this major return to American-made bases is putting a substantial segment of U.S. manufacturing, distributors, contractors, and end-users in a quandary. The problem is twofold:

1) What constitutes “Made in U.S.A.” products, when a minority, or more of current U.S. products and components are made overseas?

2) Is there an interim timetable during which the conversion can be instituted?

3) What will be the cost impact on the 68% of U.S. gross domestic product of goods and services (GDP) comprised by the ultimate American consumer sector.

Since the purpose of the absolutely necessary and mandatory evolution from abroad to American shores, is strengthening America’s shrinking manufacturing sector, the negatives involved must be considered and given the time for the transition to be implemented effectively.

With manufacturing personnel cut in half (from 20 million to 10 million) since the turn of the century, a domestically-based reversal can’t come soon enough. But without U.S. Government guidance, such a major transition might become chaotic.

While major U.S. conglomerates benefitted by moving increasing production facilities to such major production bases as China, Mexico, and other worldwide sources, the State Department should become active in advising and negotiating with foreign governments, business, and industrial leaders regarding the permanence of this reversal; and its need in closing the trade deficit gap that now exists with most of America’s business partners.

While the disinflationary and low interest rate factors of the past “great financial recession” years were largely benefitted by these major foreign connections, the American public must be informed, in depth, that higher employment, increased wages, and the cost of everyday purchased goods will come into play later this year, and in the years to come.

To forestall as much as possible, the higher cost “aspect” of the upcoming reversal should be made clear to the public in the most comprehensive terms by the U.S. Government. Once the broad spectrum of the American public understands the positive aspects of the “reversal,” this major change in America’s overall business and industrial climate will not become a “political football,” to be exploited by the critical antagonists of the current Administration.

Unfortunately, the majority of Americans, having relied on the Washington, D.C. and overall media pundits for such interpretation, sinister motives attached to the mandatory aspects of the “reversal” will most likely be distorted by both print, TV, and online media.

If there was ever a historical repeat of the early 1938 British/French Munich sellout that punctuated Hitler’s drive to subsequently overrun Europe in 1939-1942, it was the United Nations-sponsored sanctions-lifting effort to give Iran total freedom to threaten much of the Islamic Middle East, whether dominated by Sunni or Shiite factions.

Iran, designated by the U.S. as the world’s leading orifice of terrorism, is dangerously threatening the sovereignty of Iraq, Saudi Arabia, Yemen, Jordan, and other “member” Arab states in the vast Middle East circumference.

With the U.S. repeating the mistake of Britain and France in “giving away” democratic Czechoslovakia in 1938, the infamous “Iranian treaty,” crafted by U.S. Secretary of State John Kerry, had given the Iranians access to hundreds of billion of dollars to finance their nuclear threat, and deliver dangerous capability at a time of their choosing.

In this, Iran has received the backing of Vladimir Putin’s Russian military power. Iran, in turn, has received two centuries-coveted ports on the Mediterranean Sea, from Syria’s President Assad, totally under Iran’s influence. The latter also controls Hezbollah, the Shiite terror organization that now dominates Lebanon.

With the accession of President Trump to U.S. leadership, the Iran threat is now being recognized by the U.S. as the Hitlerian equivalent of Nazi Germany after their Czech takeover. This action doomed much of the weak, indefensible nations of Eastern Europe, which soon came under Hitler’s thumb.

President Trump has courageously recognized Iran as the main Islamist threat hanging over the Middle East, which is increasingly concerning to the major countries of Turkey and Egypt. It’s no accident that ISIS is providing the most frightening horrors throughout much of Western Europe, and even the U.S., while Iran has not received a single threat from this free-wheeling perpetrator of grisly murder at places of its choosing.

It’s also no accident that Iran recently sent up a “drone” with a message in Hebrew indicating that Israel will be wiped off the map. America’s President has displayed the courage of recognizing Iran’s most terrorist intentions by including Tehran, most among the Mideast nations, of harboring potential terrorist agents. These terrorist groups are ready to repeat in earnest some of the widespread “attacks” on various parts of the U.S. In doing so, Trump realizes that “American sanctuary cities” and the abstaining of America’s Democratic party objecting to the temporary halt of thousands of “refugees,” including those from Iran remain in opposition.

The months ahead will likely determine whether America’s courageous President has the support of the American people against a threat that could equal the menace of German Nazism of the 1940's.

Although President Trump had hoped to include Senate/House term limits as a major item in his FDR-like first 100 days, he might have done well to omit this initiative from his already over-crowded “to-do” list.

The objections to such rational limitations, echoing what America’s “founding fathers’ had intimated in the first place, are so “humongous” that they would never be approved by the Senate/House contemporary occupants. This approval step, requiring a two-thirds majority at the legislative level would not even muster a bare majority. This would make the next step of such a vital amendment moot, with three-quarters of states’ support necessary to await presidential approval, having no chance for passage.

While pointing to the two-term limitation of the U.S. presidency as a basis, President Trump should have remembered that this was engendered by the four successful election campaigns by Franklin D. Roosevelt. In fact, this was an emotional reaction to the dominant statesmanship of FDR, which led the nation through a decade-long recession, ended only by America's massive re-industrialization, brought on by the military buildup necessary to tip the scales for major allies, the U.K., and Russia.

The venerable U.S. presidential great, overcoming paralysis and heart problems, lived to see the near end of the two-front war before his sudden, untimely death on April 12, 1945.

It was Roosevelt's foreign policy genius that was capable of uniting bitter antagonist, Britain's Prime Minister Winston Churchill, and the Soviet Union's Joseph Stalin. Nevertheless, the fear of such White House dominance being re-elected indefinitely, thereby maximizing the Executive, and minimizing the Legislative and Judicial branches, made the passage of the Presidential two-term limitation an inevitable reality by an American public and legislators fearful of such executive dominance undermining the basis of American democracy.

Unfortunately, the voluntary lack of ending their "Washington terms" has become a weak reed on which to lean. It has seen an inordinate number of politicians extending their Washington stay, by joining the many lobbying groups, representing foreign and domestic interest organizations, financed by both foreign governments and U.S. plutocrats.

It's incredibly remarkable that, despite the huge amounts spent by innumerable special interests groups, the American voter still has the last word, protected by the Electoral College.

However, involuntary term limitations for both House and Senate, have little, if any, chance of passage in the foreseeable future.

Sunday, 23 April 2017 00:43

Is Europe Headed on Downward Slope?

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While the European Union, as represented by 28 Eurocom nations, was once the hotbed of economic recovery in both imports and export activity, in the late 1990's and early 21st century, its immediate economic future looks bleak.

With the United Kingdom completing its Eurocom secession (retaining the pound kept it from the Eurozone), other major Western nations are wavering in their Eurocom commitment. Even economically powerful Germany is weakening, as Europe’s leading gross domestic product generator is chugging along at less than two percent per annum growth.

Both Germany’s once legendary European imports and exports are weakening, while unemployment of its 81 million residents are reaching a relatively high 5% unemployment level. Even so, German Chancellor Angela Merkel astounded its neighbors, as well as the German population in general, by absorbing 1.1 million Syrian refugees, recently making Germany second only to France in housing a multi-million Moslem population.

Other European nations, especially the more productive half, including Italy, France, Scandinavia, the lowlands (Holland and Belgium), plus the Iberian Peninsula (Spain and Portugal) will do well to maintain a scant 1.5% growth level, as a group.

Greece, which has been dodging bankruptcy for years, keeps hanging on through long-term bond issues and Eurocom loans.

The political future of this once globally dominant power center looks even more concerning. Germany, France, and Holland are facing serious opposition from Alt-Right Conservative power brokers. Although these arch-conservatives are not expected to dominate upcoming elections, later this year, this swing to the right indicates a popular shift from the overall socialism that seemed to pervade Europe during the last 50 years.

Even the United Kingdom, which is expected to break off the last vestige of economic contact with Eurocom this year, is in the process of replacing this connection with a major bi-national economic conduit with the U.S. A budding friendship between the U.K.’s Prime Minister Theresa May and U.S. President Donald J. Trump could lead to a doubling of the current $50 billion import/export relationship between the two Atlantic nations. If this upcoming trade pact becomes viable, it will further weaken the European continental economic leadership, as London and its Mideast connections turn West.

If such developments occur, as expected, it’s very likely that the euro, once the world’s strongest currency, will further falter in relation to the dollar, and even the Japanese yen; while the Chinese yuan is coming up fast on the outside, despite Beijing’s attempt to keep it down, for reasons of export competitiveness.

While President Trump is correct in seeking a balanced U.S. manufacturing position to meet the production needs of America’s world-record consumer sector demand, he is verging on forcing this process too fast, and potentially overbearing in the long run.

Trump’s export priority and domestic production growth action has been made necessary by the past two Administrations (2001-2017), who turned a blind eye toward the withering of U.S.-based production. In the case of the George W. Bush era, this happened due to administrative indifference, while the Obama period undercut “small business,” the main hirer of U.S. employees. This was done by favoring America’s multi-national conglomerates, while issuing increasingly stifling domestic regulations and entering unbalanced trade pacts, which ultimately resulted in the outflow of over a trillion dollars or more by the “export” of U.S. factories and jobs.

Although not yet in play, President Trump has indicated the forceful return of American production and currency generated through stiff tariff walls, and a literal elimination of most regulations impeding domestic production. It does not seem to matter what objectives prompted these regulations.

At this point in time, President Trump’s aggressive “reversal program” is called for due to the pendulum having swung far against America’s independent business production capability. The enforcement of extreme measures to force production back to American soil, especially in light of employment losses due to technological evolution, is within the realm of the Trump Administration’s power to do so.

But such extreme reaction to U.S.-based production, of all types, could usher in a reawakening of “Smoot/Hawley.” This is the Congressional dictum of the early 1930's that crushed the export/import balance, thereby eventually shutting down both critical economic sub-sectors. This brought on the “Great Depression” of the 1930's. Such a dismal outcome is unlikely in the short term, due to the fact that independent American businesses have been grossly violated by unneeded restraints and subsidies of foreign governments. This resulted in the lowest American productivity in years, during the fourth quarter of 2016.

But in going too far in inciting foreign hostility, U.S. exports and domestic prices could easily become the victims of one-sided actions becoming extremist. While perfect balance may be impossible to achieve, presidential moderation on the part of an intelligent, business-minded Administration could generate a substantially expanded gross domestic product in the years ahead. It would overcome the dismal “less than 2%” annual growth of the last eight years.

Much to the surprise of expert forecasters, the demand for housing, including apartments and co-ops in the big cities, as well as additional rentals and ownership in the suburbs and rural areas, is continuing.

With the housing demand starting its surge shortly after the end of the “great financial recession” in 2011, available supply was caught short, with the great variety of craftsmen necessary to perform the basic building functions unavailable.

Much of this was due to the fact that the “financial recession” further complicated available work shortages. Such work crafts as electricians, constructors, plasterers and latherers, previously graduated from now non-existent technical high schools, which were no longer available. This dereliction was magnified by the lack of “unemployed” reserves available.

With housing prices especially stratospheric in America’s major cities, as well as almost everywhere else in the U.S., it was anticipated that the demand/supply balance of available employees would be reached late in 2015. This not only hasn’t happened, but has resulted in increasingly higher rentals, and made capital costs of new and already standing homes more expensive.

What the pundits had underestimated was that an unexpected surge of immigrants, legal and illegal, was boosting America’s population past the 330 million mark. This number, not expected to be reached until 2020 at the earliest, will actually be surpassed this year; despite the static low reproduction rates of multi-generational American families.

Also impinging on available housing and higher prices, are the re-entry into the marketplace by thousands of high school and college graduates that had previously been living with their parents during and shortly after the “great financial recession.” With both wages, job opportunities, and despite higher rentals and mortgage interest rate recoveries, this “shortage” trend actually picked up speed in the last quarter of 2016.

And with the central point of President Trump’s manifesto calling for expansion of domestic factories, and vastly improved job opportunities within the borders of the U.S., the demand/supply balance will strongly continue to favor increases in demand and even more continued housing shortages. Even steadily higher interest rates will not be a problem, as wage increases will overcome any interest margin cutbacks.

The most inexcusable shortcoming of both the two-terms of Presidents Barack Obama and George W. Bush was the total neglect of a national infrastructure development, increasingly neglected since the mid-1950's Eisenhower years.

Since that time, the disintegration of roads, bridges, highways, dams, rail lines, and the desperate need for a modern pipeline matrix have been shoved off from one presidential administration to the next.

But the most egregious neglect came in 2008-2011, when a unified House and Senate voted a near trillion dollar debt addition to encourage the incoming President with the wherewithal to “fix up” desperately needed 50 state and territorial infrastructure, as well as giving the tens of thousands of jobless employees the opportunity to be gainfully employed.

Instead, that Treasury debt addition was spent on Obamacare, solar panel plants, and stifling regulations cost increases by the Environmental Protection Agency, which designated “climatological purity” as most critical, while the last eight presidential years show the Treasury debt doubling from $10 trillion to near $20 trillion, as President Obama left office in early 2017.

Much of the U.S., especially the U.S. Government majority-controlled geography West of the Mississippi has been totally neglected. It now falls on current President Donald J. Trump to add this overdue super-expenditure of environmental restructuring to a list that includes new tax codes, enticing conglomerates to “bring home” nearly two trillion dollars into the U.S. Treasury, while expanding industrial factories and employment. These are among the urgencies occupying his “full-time” record to-do list.

Also desperately needed is re-strengthening of America’s once mighty military machine, which protected the “free world” by acting as its primary protector since the end of World War II.

At the same time, President Trump’s early White House tenure is beset by a broken Democrat political organization that has taken to the streets, as well as fighting each legislative step to slow down, if not totally prevent, the “revolutionary” economic and geopolitical changes that President Trump is putting on the table with desperate urgency.

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