Force them to open their markets or else face the consequences.
What consequences??
Pray tell what is made here that anyone wants?
Guns and butter.
That is about it.
That steel tarrif was nuts.
It hurt GM and F and did not help anyone but a few steel workers. Not a good tradeoff.
You want tarrifs to cause inflation?
Do you?
If auto prices even attempt to go up, what will happen?
Hell they have to give the things away now. Yeah right, put a tarrif on Toyotas. What will every other country do to GMs and Ford. Will anyone buy US cars if the price goes up? No. Not here, not there.
The plain fact of the matter is, because of labor cost differences, we are going to continue to lose jobs to China and India. Loss of jobs is extremely deflationary. Raise prices while jobs are being lost. Not possible.
Tarrifs are not the answer.
Hell, there is no answer except that it is time to bite the bullet and pay down some debt. Our economy is on the verge of a meltdown because of insane policies of Greenspan and other who created 3 or 4 bubbles where there was once only one.
I believe we are likley beyond the point of no return, where nothing anyone does will work. Unfortunately, most of what they try, makes the problem worse.
Consider this
cioinsight.com
Tech is not the way out.
Nor is pushing on a string.
Nor is letting failed companies like WCOM KM etc stay in business. How can Q and VZ compete against WCOM when only WCOM is debt free now. One by one they are all likely to go under.
Look at this post of mine that explains the big problem right now.
This post was in response to something Lizzie said on Jorj Mckie's board. I replied to her directly but also put it on my soapbox commentary on the FOOL.
============================================================
Soapbox
It all about jobs.
To "Muddle Thru" we need jobs.
Are they there?
Where?
This Soapbox is in response to the following post in italics, from Lizzie Tudor on Silicon Investor.
misheldo, it is my business to outsource and cut people out of their jobs so this process in no way concerns me. .... Now there are all these laborers out of work, same old same old it's been going on for at least 10 years that I know of.
The beauty of the situation now, vs. in the past is that the countries that have the cheap manufacturing sectors also are more open mkts than we had before. I think we are going to sell more to china than we will ever lose in production capacity to them, same with India. That was not true with Japan, although Japan is a great market for tech equipment especially software.
Reply from Mish:
And what beauty is that?
You have a job so who cares about everyone else?
Just kidding.
OK let's assume the end result is we sell more goods to China than we buy from them. I do not believe this (at least in any kind of reasonable timeframe) but I will accept it for the sake of argument. The question remains where will those good be produced? If you think in the US then I politely suggest that you are mistaken, since we are never going to be able to compete with labor costs in China. So perhaps you can make a case for companies benefiting from lower production costs, but at what cost? The cost is easy to state: Loss of US jobs.
Where are the jobs to support our economy?
Tell me where?
What happens to our economy when high paying jobs across the board are headed to India and China. Programmers and call centers are being outsourced in mass to India as you know, since you are part of the process. Microsoft moved a development division to India recently. Even Mexico is losing jobs to China now! Honest to god. Stuff that was "made in Mexico" is now stamped "made in China".
Is housing and consumer spending on its last legs or not? Consumer spending is 2/3 of the economy. How much of that is at risk, with outsourcers like yourself trying to eliminate as many jobs as possible?
What are we going to do about state budget deficits?
Personal debt?
Corporate debt?
I have harped about this before, but it bears repeating.
GM is $200B in debt and losing heavily on every car they sell. How long can this continue? GM and F are going under IMO. Bankrupt, just like UAL. Note I said BK, as opposed to out of business. This could take years to happen but I believe it is inevitable. After bankruptcy, will salary concessions have to be made just like the pilots on UAL? How much will that hurt? Jobs are being lost everywhere, reduced salaries and benefits (especially medical) for the jobs that remain. What will that do to state and federal coffers?
Before all is said and done, how much debt is going to have to be written off? Who is going to take the hit on that? GM F S UAL WCOM ENE KM the list will keep getting bigger and bigger. LU and NT are possibilities as well. Of course that will eventually cascade to companies like MBI that insure this debt. Hmmm. Houston do we have a problem here or not?
Rest assured the FED is fighting like mad to reflate the bubble. Will they be successful? I see stagflation as the very best that can be achieved right now. The best. When stagflation is the best you can hope for, the outlook is not pretty. Hyperinflation and Deflation are other possibilities. An economic depression with 15-20% unemployment, and/or underemployment is a very very real possibility.
Mauldin thinks we muddle thru.
2000wave.com
I am not so sure. With jobs being lost left and right, benefits being cut left and right, and with corporate debt, consumer debt, state debt, and federal debt rising every day, I personally think it will take a near miracle to muddle thru (at least in terms the average person will agree with). Yes, it is possible that with salary cuts, layoffs, outsourcing, etc., that corporate profits begin to stabilize at low levels, but to me the crux of the matter is jobs, debt, and balance of trade.
Trade deficits and the strong US$ have helped finance the consumer spending mess we are in. There are no guarantees that the US$ bubble and trade deficit can be "gracefully popped". We did not successfully pop the stock market bubble, yet we created new ones in debt, balance of trade, housing, and credit risks. There are new bubbles all over the place.
In order to muddle thru, these bubbles must be deflated gracefully over time, or at least popped one by one with a series of small jolts rather than several huge ones.
Given the continued loss of jobs, the loss in benefits, the bear market losses that are likely to continue for years, the rise in insurance, the rise in medical costs, and the rise in property taxes, there is no way the consumer can possibly hold up. If the consumer can not hold up, the economy can not hold up.
Look at the action in the stock markets lately. Stocks and bonds down and gold up. Are foreign $ exiting both US stocks and bonds? Perhaps foreign bonds are far more attractive than US bonds now. Hmmm. What happens if there is a mass exodus in US bonds?
At any rate, show me the jobs and I will show you an economy that might muddle thru. If we keep losing jobs, and with the boom underway in outsourcing as well as pure cutbacks and layoffs, I do not see how we can not keep losing jobs, muddle-thru looks iffier by the day.
You seem to see beauty in the current situation. If job prospects do not pick up, I see one humongous disaster.
M |
