June

While President Trump justifiably criticized America’s haphazard trade policies, primarily centered on keeping imports at rock bottom pricing, no matter what the impact on domestic manufacturing might be, an extremist reaction n all future trade negotiations could prove calamitous.

Withdrawing from the Asian Pacific Trade policy, originally approved by President Barack Obama, may have been propitious, but it should not be a forerunner to a comprehensive “protectionist” attitude. This type of action in 1930 led to “Smoot-Hawley” and a near end to world trade. This undoubtedly resulted in America’s worst ever depression. Also, a call for a reassessment of the North American Free Trade Authority (NAFTA) would be foolhardy, since its main objective, in its 1993 three-nation approval, was to upgrade Mexico’s economy; this provided better jobs south of the border, and reduced a continuing surge of border crossings, legal and illegal. The ultimate out-of-control “drug invasion” accelerated the problem to an uncontrollable extent, due to an unfortunate U.S.-based demand.

Canada may have gotten the solution to “porous” borders just right. Even President Trump has commended our northern neighbor, by its imposition of a skills-based immigration system. In 1967, Canada became the first nation ever to use a points system for immigration. It’s called the “federal skilled workers program;” and includes such aspects as work experience, education, language ability, age, and pre-arranged employment to qualify for permanent residency.

U.S. immigration law, on the other hand, values family ties over skills. A Canadian-like American imposition system would be much more orderly and economically benefit overall U.S. efficiency; rather than family-based immigration.

While a more orderly bi-national population balance would result from a work-related benefits point of view, it would not resolve the distortion of families, permanently separated by the current border system. The 1800 mile wall, a major premise of President Trump’s candidacy and election promises, could produce the negativity and sour relationships, that such walls engender. This has been proven historically (i.e. the Berlin Wall.)

The rebuilding of America’s industrial infrastructure, on the other hand, is of utmost urgency, since the conversion of the U.S. into a disproportionate consumer economy (68% of its $18 trillion world-leading gross domestic product, puts America’s future in the hands of future embargos; and at the mercy of confiscatory import prices. The best example of this is the world in general and the U.S., specifically, due to the monopoly that China possesses on “rare earth” minerals. These used to be mined in America domestically, but fell prey to the Environmental Protection Agency. China now is able to set world pricing of such dominance, with more than 90% of the world’s needs.

Whether a better-balanced utilization of America’s rich commodity potential will be tapped should be answered positively by the Trump Administration.

When 32nd President Franklin D. Roosevelt (1933-45) succeeded in four record elections to shape America’s domestic and foreign policies for years to come, it was not based on convincing a mixed Democrat/Republican Congress, but the frequent Fireside Chats, the oratory of which overcame all opposition.

Whatever FDR supported, and verbalized in his most-listened to radio broadcasts to America’s millions, became foreign and domestic policy. This was especially so, since Roosevelt was totally crippled by infantile paralysis, a fact few people knew at the time.

President Trump has borrowed several pages from the Roosevelt book, with the additional advantage of Twitter, televised interviews, and the constant mobility provided by Air Force one, and his own personal luxury plane. Since Trump also generates a Roosevelt-like personal magnetism, he draws huge crowds wherever he chooses to be. Although temporality deflected by not personally putting his stamp on a revised healthcare plan, Trump’s personal magnetism with the average voters will increasingly overcome the digression of “early on” flaws.

Since the oratorical magic of FDR, only Ronald Reagan came close. But even he did not draw the crowds of average Americans that appeared from the earliest days of Trump’s successful GOP nomination appearances.

Like FDR, Trump’s personal charisma will overcome the bureaucratic politicians in his own party, and will likely even convince some among the faltering Democrats. This will become ever more noticeable as the Congressional mid-term election of November 2018 appears just around the corner.

By then, the influential importance of the Trump “magic” will have become so meaningful, as to make his Congressional election backing, and that of his foreign and domestic advocacies, increasingly easier to put across.

With today’s world’s charismatic leaders few and far between, Trump’s similarity to the FDR-like personal approach will become the critical difference between presidential success and becoming bogged down in the political bickering of professional politicians.

Whereas Sears, Roebuck & Company and its prolific catalogue distribution, once dominated a big chunk of U.S. retail commerce, the owners are officially indicating its potential demise in the foreseeable future.

It’s no coincidence that the incredibly fast and comprehensive spread of Amazon”s all-time high merchandising empire is spreading at a never before experienced pace. Although Jeff Bezos’ retail marketing empire is repeatedly setting accelerating records, its monetary success is providing the lubricating capability for a non-ending dominance over the U.S. consumer sector shopping segment.

It’s becoming axiomatic in e-commerce that the more shoppers Amazon lures, the more retailers and manufacturers want to sell their goods on that digitally-inspired method of purchasing.

This method gives Amazon more cash for new services, such as two-hour shipping and streaming video and music, which entice more shoppers. This, in turn, allows Amazon to invest in even more services, which brings in another wave of customer additions.

With a constant spread of additional services, such as the firm’s voice-activated assistance support solidifies the consumers’ confidence in any future approaches that Amazon brings to their attention. While this previously unknown commerce blitzkrieg continues full-force, Amazon’s self financing would seem to be unstoppable in the immediate future, as Amazon’s expansion appears endless.

According to Amazon’s spokespersons, this includes logistics firms, search engines, social networks, food manufacturers, and producers of physical, digital, and interactive media of all types. Many of these services support Amazon’s future expansions and that of other companies, which power Amazon’s current operations, as well as those of other firms. Amazon also rents warehouse space to other sellers, such as a $1.5 billion air freight hub in Kentucky. It is also testing technology in stores to let customers skip cash registers altogether; and experimenting with drone deliveries to homes.

This head-spinning variety of innovations, such as those already made functional, have given Amazon a market capitalization of $400 billion, the fifth most valuable firm in the world. Whether such heady growth in the future justifies an eventual doubling of this post year 2000-founded corporate “miracle,” the next decade will tell.

Those that are familiar with the details of the founding of the post World War I “League of Nations,” will tell you that Senator Henry Cabot Lodge, Sr., the grumpy arch-Conservative senator from Massachusetts, and leader of the GOP Senate Majority, was snubbed by U.S. President Woodrow Wilson, the acclaimed architect of the war-ending “Treaty of Versailles.” This punitive dictum, which planted the seeds of World War II, was directed by President Wilson, who was accompanied to Paris only by members of the Democrat Party in his entourage.

The ill-fated League of Nations, derived from this one-sided pact, made Germany a pariah nation, loaded up with post-war debt that led to Berlin’s runaway inflation in the early 1920's. Upon Wilson’s return to the U.S., Lodge was avenged by a Senatorial rejection of the League, mercifully excluding the U.S. from the plight of that United Nations’ forerunner. It also bred American isolationism, which avoided European entanglements, as Hitlerian Germany armed for a revenge war in the late 1930's.

The League’s final chapter was written when it refused to even criticize militant Japan’s invasion of China’s Manchuria Province, and Fascist Italy’s use of poison gas against the hapless Ethiopians, despite their surrender to Mussolini. The “League” faded into anonymity as Hitler began his vengeful European takeover in September, 1939.

The current behavior of the World War II successor, “United Nations” Organization, founded in San Francisco early in 1945, indicates an eventual path to oblivion by the close to 200 nations that comprise its ever-weakening trend and lack of purpose.

While the United States has become the UN’s host location, and main financier, America has committed its respectful reputation to an organization, purposefully opposed to U.S. foreign policy. The Obama Administration furthered this humiliation by siding with the UN’s “Security Council’s” condemnation of Israel for not participating in its own demise.

While this action preceded the inauguration of President Trump, it was President Obama’s final gesture against the Jewish State, which seems to have been saved by a much more sympathetic ally in President Trump.

Be that as it may, the economics of a hostile UN majority, financed by the U.S., will have difficulty continuing actions rejected by the majority of the American people.

As the world’s geopolitically economic mid-century future becomes a projected topic of global dynamics, the dramatic expansion of China and India “unified,” even nominally, could easily become the world’s new focal point. Their percentage of the world’s economic measuring statistics is truly awesome:

1) China (1.45 billion) and India (1.35 billion) together comprise almost 40% of the world population of 7.5 billion.

2) Their combined gross domestic product in dollar terms, China ($13 trillion) and India ($8 trillion) exceed the U.S. current gross domestic product of goods and services ($18 trillion.)

While China’s modern industrialization took off intensively in the 1980's, India is a late comer. With a widely varied, diverse, and religiously antagonistic makeup internally, India is a relative newcomer to modernization, economic updating, and bringing its vast population into a unified modern, economically advanced nation.

Fortunately, the majority of the Hindu population has begun to unify behind its most dynamic leader ever, Narendra Modi and his Bharatiya political movement that has surpassed the colonialized Congress Party, which flourished under British rule. It voluntarily withdrew from the Indian subcontinent shortly after the end of World War II. This ended the supremacy of the Maharajah regional rule that had kept India from unifying.

3) While China seems to be flourishing under the rational direction of Xi Jinping, who has succeeded in achieving a balance between government-controlled heavy military and domestic sectors, combined with a large-and-growing free enterprise businesses, China is continuing on a gross domestic product pace of 6.5%.

India’s GDP growth has leapfrogged China in dollar terms, and is on its way to a world-leading 7% plus growth rate this year.

Conclusion: Although there is no indication of even an economic detente between the world’s most populous, fastest growing, and potential richest two nations, their centrality as neighbors, and the potential cooperation of economic compatibility makes this new world center a distinct future reality of global development and leadership direction.

Certainly, leadership at the top, in control in both India and China, make a “modus vivendi” a distinct possibility in that part of the world, which contains all the elements that could make this happen.

There is an old saying that “figures don’t lie, but liars can figure.” While the two most recent Presidents (George W. Bush, Barack Obama) claim to have been business-friendly, a recent intensive study by Forbes Publishing indicates otherwise.

While President Bush, at least, saw America reach the number one spot for business attraction in 2007 (just before the great financial recession) he did not interfere with stifling regulations and unproductive renewables. He also did not discourage conglomerates like GE from going offshore to cover their producer costs.

Bush did support the ever-increasing use of ethanol as a gasoline supplement. This was partially motivated by the farm block, which sold Congress on the idea of reducing oil imports and helping agriculture to maintain itself, especially the corn sector.

But the great tumble in America’s business-friendly standing from No. 1 in 2007 to 23rd in 2016, was caused by a distinct animosity toward business in general, and the independents in particular, by President Barack Obama. Although this all started in the depth of the financial recession (2008-11), America’s global business-friendly standing started on a downhill track from No. 2 in 2009. This downward slope continued in every year of President Obama’s two terms, sending the U.S. to its lowest position (23rd) in America’s modern economic history.

This trend started immediately after President Obama’s inauguration, when a near $1 trillion, voted on as a “grave recession emergency,” destined for infrastructure renewal, was frittered away on solar panel producing plants, many of which eventually went bankrupt. He also gave free reign to the EPA, and the Dodd/Frank regulations, while imposing huge increases in Medicaid. This also increased workforce unemployment, as factories were closing in record numbers.

This moved the labor force participation rate from the high 60's, of those willing and able to work, to record lows as his second term was ending. It’s estimated that over 90 million could have been working full or part-time, without the heavy burden put on America’s business owners and managers through Dodd-Frank and EPA regulatory extremes, as well as unrealistic minimum. This was particularly harmful to the “small businesses,” through strangulating paperwork, requiring additional personnel to do it. This generated the greatest number of “small business” closings, and less openings in 2016, for the first time since 1973.

But added to the reality of stifling U.S. Government interference was the overall incentive by the business community to transfer their production elsewhere. This spurred many of the largest corporations to go to Mexico, Canada, and overseas. These relocations lowered their production costs, as well as engendering lower prices for America’s consumer sector.

It is believed that this caused both workers and unions to cast their votes for President Trump in heavy numbers. It’s hoped that this leadership will energize a revival of America as the home of the world’s leading manufacturers.

When analyzing the relatively depressed U.S. labor force over the last 20 years, this has rarely been broken down by age sector analyses. Although nicknamed the millennials, generation Xers etc., the significance of labor force composition over the past years indicates which groups have been successful in securing jobs during the high unemployment of the past 20 years.

Such a research undertaking was recently summarized by a combination of the Wells Fargo Investment institute, and the Pew Research Center:

  1. These percentages, although only providing a general overview, indicate significant differences between 1995, when the U.S. economy and manufacturing were still relatively strong, with labor force participation rate in the high 60's.

The “boomers” (born 1946-1964) shared the heart of the employment “boom” with the generation Xers (1965-1980) that followed. At that time, each accounted for 34% of the American workforce, which was followed by a slight drop in the so-called “boomer” generation, at the prime of the U.S. post-war economic domination. This included the Marshall Plan, successfully revitalizing the European post World War II mass production re-awakening.

This was followed by the continued joint strength in the 1990's, with generation Xers and boomers sharing the U.S. employment sector with the U.S.’s (born 1900-1924) greatest generation. They came back to work in their hometowns, after the destruction wrought by Nazi Germany’s hold on Europe, and the perpetration of the Holocaust, and its millions of Jewish, as well as other victims.

But by the first quarter 2015, the manufacturing workforce participation of the “greatest generation” was only 2%, while the post millennials, born after 1998, found few new openings after high school, contributing only one percent to America’s 150 million plus workforce.

The millennials (1981-97) did a little better at 2%. With foreign production increasingly cutting into the U.S. top heavy consumer sector, found that factory jobs were still concentrated in the boomers and generation Xers. These were held mostly by those having birth dates between 1946-64, and general Xers (1965-1980). Those born between 1925 and 1945, were aptly called the “silents,’ since they came into the workforce after the “greatest generation” and the boomers, due to the economic air pocket in between.

What impact the Trump Administration will have on rebirth of factories and employment will decide the success or failure of the promises that elected him on November 8, 2016.

While constitutional bedrock has historically been the legal base of our constitution, the flaunting of such legality has been flaunted by the mayors of America’s three major cities (Los Angeles’ Garcetti, New York’s de Blasio, and Chicago’s Emanuel).

In the early months of President Trump’s attempt to instigate his overloaded economic and foreign policy initiatives, “POTUS” ran into fierce resistance to the expansive wall with the Mexican border, as well as an ill-timed attempt to rush through the elimination of “ObamaCare,” and the “rounding up” of illegal aliens with criminal records.

With the Congressional legislators and their states’ majority backing, feverishly combining to stop all Trump initiatives before the House and Senate, which has a slim majority of three GOP Senators, even the equity markets, which jumped to new highs after President Trump’s election, retracted as doubts set in regarding the President’s ability to implement all positive new legislation.

But most concerning is the antipathy of the three major states (California, New York, Illinois) ignoring the Presidential mandates’ attempt to round up thousands of illegal felons, and offering them the benefits of sanctuary cities, also unconstitutional.

This, unfortunately, has reached levels of antagonism, bordering on rebellion against the nation’s executive administration.

With all the major ups and downs that the American nation has faced in its near 240 years of existence, the blatant ignoring of the federal government’s policy has never before been experienced to this degree.

Although the anti-constitutional “rebellion” has previously been unheard of, no crackdown is contemplated by the only free world nation that has not experienced civil war since the fratricidal 1860-1865 war between the states, that led to an awesome number of wartime deaths, almost five percent of America’s 30-million population at that time.

Much of the current expressions of rebellion against the duly-elected federal government reflects the anger of the Democrat party, now in the hands of its extremists. That major political party, which proudly remembers the unique leadership qualities of Franklin D. Roosevelt and John F. Kennedy seems to be manifesting its rage against an eagerly expected 2016 presidential victory.

It’s shameless support of the extreme-leftist doctrines of the likes of Senator “Bernie” Sanders (I-Vermont), a patron of its doctrinal forefathers, Saul Alinsky, is today aggressively supported by new spokespersons, frustrated by their inability to maintain the national redirection impact.

One of the main premises of President Trump’s upset victory last November was a solid promise of reversal of America’s manufacturing losses. Statistics have revealed that the 20 million manufacturing jobs, existent on Jan. 1, 2000, had been cut in half as 2017 dawned a few months ago.

Although an appreciable segment of those losses can be attributed to rapidly evolving technology, the bulk of America’s manufacturing sector melt down is due to an overseas shift by the nation’s major conglomerates and multi-billion dollar corporations.

Since the reality of free enterprise competition is based on the lowest cost of manufactured finished goods, or components, and acceptable quality-use by the buyer, the ability of neighboring Mexico and growing overseas manufacturing capability have won out over much of “made in the U.S.A.”

An additional factor, in the case of huge corporations, dependent on their quarterly profits, announced to investors, is the cost/price relationship. As embryonic overseas manufacturing ability has became more sophisticated, many of the largest corporations have not only purchased needed requirements overseas, but have either acquired or built their facilities in foreign countries, as the cost-price gap exceeded equivalent production in the U.S.

President Trump has made this “return” to America a major commitment of his Administration. This may be the most difficult promise for him to fulfill since “dictating” the source of manufacturing can only work through much stiffer tariffs than exist today. But such “protectionism” will likely be met with counteraction, as happened in the early 1930's when the U.S. Congressional Smoot-Hawley legislation instigated a trade war. Historians attribute this legislative disaster as a main factor in the devastating depression that followed.

Additionally, the U.S. consumer sector, which comprises 68 percent of the U.S. world-leading gross domestic product will react negatively, if the forced result of bringing manufacturing back to America faces the 330 million Americans with substantially higher purchasing costs.

Whether poor trade negotiations allowed by previous Administrations on import/export agreements were responsible for the U.S. manufacturing meltdown, or not, this will be determined, and implemented, enforced, and accepted by the overwhelming majority of Americans.

It is remarkable to witness the overriding influence that anticipated action by the Federal Reserve Board has achieved. Although this was not the result of that independent national financial institution’s intent, the “Fed” has become the major focus, watched by all financial markets, and the economy in general.

While the organization of the Fed includes a dozen regional board of directors, it is primarily the “Chair,” whose personal statements on all things economic are carefully observed; and frequently acted upon by the financial markets, currencies, and practically all aspects of the U.S. economy.

In fact, the semi-annual Humphrey/Hawkins “Fed” presentations before both Houses of Congress are carefully parsed by all communications media, and often lead to major re-direction of the U.S. and the world economy.

This “Fed’s” expanded influence has become particularly powerful, due to the exceptional brilliance of the most recent Federal Reserve chairmen, Alan Greenspan and Ben Bernanke. They were spanning a turbulent period in the history of the United States, (1986-2016). In both cases, their involvement was critical in guiding the nation’s economic direction during troublesome times.

Greenspan came on board during the height of the inflation that seemed uncontrollable, replacing Paul Volcker, who was raising “fed funds” rates as the only way to stem the runaway prices threatening an economic calamity. This Greenspan-led turnaround became the keystone of President Reagan’s success.

A similar experience befell Ben Bernanke, who followed the record lengthy career of retiring Alan Greenspan, at the time of the “great financial crisis.” It was Fed Chair Bernanke, who bought up much of the worthless “mortgage-backed securities/derivatives” that were clogging the loan arteries of the nation’s largest banks. While a few of these banks were acquired by competition, and some ceased operating, it was the Federal Reserve Board, led by Bernanke. that bought up three trillion dollars worth of this “junk” paper, thereby giving value to the residue.

This gigantic purchase also bloated the Federal Reserve Board’s balance sheet to four trillion dollars worth of “paper,” from an original one trillion dollars. This will eventually have to be reduced. But since the Federal Reserve Board is an independent entity, it will be able to do so at a time and pace of its choosing.

When taking dramatic events such as these into account, it should not be a surprise that the independent Federal Reserve Board, whose chairman is proposed by the U.S. President and ratified by the Senate, has become a major influence in America’s, and the world’s economic direction.

Monday, 19 June 2017 11:28

Is World Trade Endangered by Populism?

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In a recent meeting of world finance chiefs, held in Baden-Baden, Germany, it became readily apparent that trade increase in a slowly-recovering world economy, is increasingly endangered by “protectionism.”

Although this is largely blamed on President Trump’s emphasis on reversing the outflow of American factories and their products, most attendees at this conference objected to this “populist” spreading. This disparity between the U.S. and most other major nations is based on the fact that America’s 330 million strong population, and its world-leading consumer sector, comprising 68% of its gross domestic product, has begun to reverse its top-heavy imports versus exports, under the direction of the Trump Administration.

With America considered the world’s ultimate focus of much of its competitors’ production, it quickly became apparent at this meeting that the group of 20 nations represented at this conference, took exception to America’s commitment to balancing its import/export disparity in the future.

While previous American Administrations, especially during the past 16 years, considered low-cost goods from abroad as a “plus,” the Trump Administration has viewed the negative impact of imports from foreign or displaced American factories and job opportunities as unacceptable. This has resulted in a decidedly negative reaction, especially from Europe and China, who have mightily benefitted by America’s downgraded production facilities, as well as the attending nations’ exports, creating substantial GDP additions to their bottom lines. Whereas exports are an important additional factor to the U.S. annual budget, it’s absolutely critical to the major European and Asiatic gross domestic product leaders.

Although official comments from the four-day meeting tended to be conciliatory for future discussions in reaching a global balanced export/import position, private expressions voiced grave concern with President Trump’s dramatic American economic policy revisions.

With the European Community already reeling from the “Brexit” move by the United Kingdom, and the growing fear of further wide-open Mideast immigration surges in the offing, the general attitude among the world’s leading financial participants at the G20 was that “protectionism” is a factor that these nations will have to reckon with in the foreseeable future, as America puts its version of “protectionism” into high gear.

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