Is America Picking Up A Bad Chinese Habit?
[By Drew Lawler]
Lucky for the members of Congress that Article 3 of the Constitution allows for Congress itself to define acts of treason, otherwise they collectively may be guilty of “that which undermines the government or our national security.” I am talking about our national debt. Think about it. The objective of terrorists is to create such a massive panic as to strangle our nation’s economy. If terrorists can kill innocent Americans, that’s fine with them, but what they really hate is our economy and so they try to use acts of terrorism as a means to destroy it. But with the executive and legislative branches spending a trillion dollars more than we take in each year, aren’t we doing the terrorist’s job for them? And if so, why isn’t that treasonous?
Can you name the U.S. Trade Representative? I didn’t think so. The problem with all of our Trade Reps hasn’t been the reps themselves but rather that they are temporary political appointees. The Trade Rep is our nation’s chief trade negotiator, but compared to the “lifers” they are up against in China or Japan, the moment they’re appointed by the current president it’s as if they are already a lame duck. But it’s an easy fix. Just make the Trade Rep a long term appointment like the Fed Chairman position, someone whose years of service transcends presidential terms of office. Trade negotiations are complex, difficult and slow to enact, sometimes taking a decade or more. Having continuity in this important position would strengthen our hand.
It used to be when E.F. Hutton spoke, people listened, or so went the ad slogan. But these days, when HSBC speaks, they have my attention. The global banking giant recently released its trade forecast. Among the highlights are the following, with my comments in italics:
• Global trade and U.S. trade to grow by 98 percent and 95 percent respectively over the next 15 years….We would all prefer to see it double in 10 years, but a double in 15 years is better than a poke in the eye.…we’ll take it!
• Emerging market trade to outpace developed world, leading to a rebalancing of trade flows…. The whole world loves an underdog.
• Reflecting the current uncertainty, the near term forecast is the weakest with growth of 3.7 percent to 2016, before accelerating to 5.9 percent to 2021. What the forecast does show is that the underlying forces driving global trade remain very much intact, led by emerging market countries….Three cheers for the BRICS!
• Those countries continue to outpace the developed world in terms of trade growth with Poland, India and the Czech Republic expected to lead export growth at around 5.5 percent while Brazil and India lead import growth at over 7 percent. The emerging markets countries are forecast to see the biggest gains in trade, with Latin America up by 6 percent and Asia by 5.4 percent to 2016. China, despite its increasing size, is still forecast to see strong growth in both imports and exports of 5.1 percent and 4.7 percent to 2016….To paraphrase Lee Corso, “not so fast my friend”.…it would not surprise me to see China’s blended growth more like 7 percent to 2016. I’m keeping my China Growth Fund.
• Annual growth rate of U.S. exports to China are forecasted to outpace U.S. imports from China during next five years.…You gotta love it.
• China and Germany are set to leapfrog the United States to become the world’s largest importers by 2026.…More power to them.
What is it with the media’s continued pronouncement that the American economy is in the doldrums? Really? Compared to what? Is the negative news a ploy to sell more subscriptions? I don’t get it. Sure, unemployment remains too high, but the reality is that corporate America is flush with cash and U.S. exports are on the move. Agreed, things are not as robust as they were in ’05, ’06 and ’07, nor should they be. Those were peak bubble years and not the norm. The norm is more like when you and I were kids back in the 1960s and the family would maybe go out for a meal once a week and a vacation meant a camping trip, not a trip to Hawaii or the Bahamas. It may not be good news for The Royal Hawaiian but it’s great news if you’re Coleman.
One of the ironies in the whole Greek drama is that at just under 11 million, its population is less than that of Ohio. Not to diminish Ohio, but could Ohio’s economy create a worldwide confidence crises? Of course not. And Greece’s GDP is only a shade over $300 billion vs. $484 billion for Ohio. All this crisis really underscores is the need for the EC to remain a free trade bloc but ditch the euro. You can be sure that Odysseus is not coming and Angela Merkel is no Penelope.
France is easily swept away by romantic notions. Ever since they let Joan of Arc—at the tender age of just 17—lead them into two historic battles against England, the country has operated at times as if in a fairy tale. Now zz has proposed a 75 percent personal tax on income over $1 million euros. Mr. Hollande wants to see more growth, businesses prosper and lower unemployment. So how will levying a 75 percent tax rate accomplish that? Even more disturbing is how the majority of the French voters would buy into such a crazy notion. Let’s hope Mr. Hollande’s opus falls flat.
Relax. China Isn’t Taking Over!