Feeds:
Posts
Comments

Archive for the ‘Mitt Romney’ Category

Four Graphs that Will Make You Boiling Mad About the Trans Pacific Partnership–Or Why President Obama, along with executives from Nike, Microsoft, Apple and other US corporations Steadfastly Support China’s Currency Manipulations

income inequality

Originally published May 19, 2015 by John Hively

When China manipulates its currency vis-a-vis the US dollar it increases the profits of US job exporters that produce stuff in China and exports that cheap stuff to the USA.

That’s most likely why President Obama said he will veto any congressional legislation that seeks to stop the Chinese government from manipulating its currency.

Why do President Obama and executives of US based multinational corporations, like Nike, want the Chinese government to manipulate its currency? And what does this have to do with the Trans Pacific Partnership and Fast Track Authority?

The answer to one of these questions is simple: the TPP will force China to manipulate its currency even more than is currently the case.

Take a look at the graph below. On the left side is the Yuan, which is the Chinese currency. On the bottom line is the dollar. Now look at the two intersecting lines, which is the supply and demand for dollars. In this example, 600 yuan can purchase $100 in the currency markets, which is roughly what the two currencies currently exchange for.

So when Nike, Microsoft or Apple Inc. manufacture a product in China that costs the consumers, say, 600 yuan in China, given the exchange rate, the same product will cost $100 in the United States, after, of course, it is exported from China to the USA. Assume these US corporations have a 25% profit margin. That means these companies get 150 Y profits in China per product, and $25 profit when they export their products to the United States.

The same is true for companies that manufacture products in the USA, and then export them to China. American manufacturing companies earn $25 per $100 of product sold in the USA, and 150 Y when their products are exported from the USA to China.

The government of China has been accused of manipulating the value of its currency. So what happens when it does this? It purchases dollars. This shifts the D1 line to the left, because there are less dollars on the market, which is shown in the graph below as line D2. This makes the Yuan less expensive in terms of dollars.

Why would President Obama encourage the Chinese government to manipulate its currency by threatening to veto US legislation aimed at stopping it? Why would Wall Street Senator Ron Wyden only pay lip service to the evil of Chinese currency manipulation, while apparently supporting it? Why are the higher up folks at Nike, Microsoft, Apple and every US corporation that is producing goods in China for export to the United States against any legislation that seeks to address Chinese currency manipulation? There is a very good reason they’re all for this.

Look at the example in the next graph below. When the Chinese government manipulates it’s currency by purchasing dollars, 800 Y will now purchase $75. Do the math; 600 Y will purchase now $56. What does that mean?

It means that when Nike manufactures a pair of shoes in China which costs 600 Y there, in the US it should cost $56 rather than $100, thanks to China’s currency manipulation, but that rarely happens. The US corporate propaganda machine will lie to you and tell you it makes Chinese imports less expensive. However, the truth is that China’s  manipulation increases the profits of Nike.

Nike still gets 25%, or 150 Y, in profits when its shoes are sold in China. When it exports the same shoes to the USA from China, Nike still gets 25% profit on $56, which is $14 dollars. However, Nike still sells it’s shoes for $100 in the United States, which means another $44 in earnings per pair, in addition to the $14.

That means Nike’s profit margin on a $100 pair of shoes goes from 25% at the old exchange rate to 58% at the new exchange rate. This sends its earnings and stock prices higher. The same thing occurs with Microsoft, Dell, Hewlett-Packard, Apple, and every US corporation manufacturing in China, that are exporting their products to the United States.

So who pays the price for this?

You do; if you work for a living in the United States, or if you’re a  small or medium size business owner. Here’s how. Suppose you are a US manufacturer producing shoes in Oregon that sell in the USA for $100. You ship them to China at 600 Y for $100, and earn 150 Y, or $25, in profits. Now suppose the Chinese government, with the encouragement of your corrupt government and many US business leaders, manipulates its currency by purchasing tens of billions upon tens of billions of dollars. The supply of dollars on the international currency markets shrinks, making dollars more expensive, and as noted above, the D1 line shifts to D2, which represents the new supply of money. BTW, the space between D1 and D2 represents the amount of dollars the Chinese purchased.

Those $100 US made shoes now costs 1000 Y in China. Okay, my graph isn’t too high tech, but the actual figure is 1066 Y, if you do the math, but let’s stick with the 1000 Y, for simplicity sake. There’s still a 25% profit margin per pair of shoes, but at the 1000 Y price, there’s not a whole lot of buyers in China. The US manufacturer could lower the price of the shoes to 750 Y, but he or she isn’t making a penny at that price, and they’re still overpriced for the Chinese market. Say goodbye to the Chinese market for all US products at the new exchange rate.

US exports to China are going to shrink quite rapidly under this scenario. This means fewer American jobs, and less wages for everyone. It means less tax dollars going to schools and other government services, it means no retirement pay for a larger percentage of the 99 percent. Rich folks don’t need the money they’re going to steal from us, except to keep the latest stock market bubble surging, at least until it pops. However, greater profits mean the bubble can keep expanding for a while longer.

So how can US corporate leaders and their corrupt politicians encourage the Chinese government to manipulate its currency even more than it already has?

The scams that have been created to do this are called the Trans Pacific Partnership and Fast Track Authority. So what do these two things have to do with Chinese currency manipulation? More importantly, why would the Chinese

government want to engage in currency manipulation?

The answer in one word; Vietnam.

Vietnam is one of the nation’s involved in negotiating the Trans Pacific Partnership. As you can see from the graph below, China’s annual minimum wage is nearly twice that of Vietnam. The wages in China at those Nike and Microsoft and Apple and Hewlett-Packard factories and their suppliers and contractors and subcontractors have been going up rapidly over the past fifteen years. Those labor costs have been able to go up because the Chinese government has increased the profit margins of its US manufacturers by manipulating its currency. But there’s another reason why China needs to manipulate its currency vis-a-vis the dollar.

As you can see from the map below, there are nearly 313,000 Nike workers toiling in Vietnam, and nearly 250,00 in China. Vietnam clearly has lower labor costs than those in China. The Chinese government, however, can offset its labor cost disadvantage by manipulating its currency. So it can keep those jobs in China, and still allow the wages of Chinese workers to expand. But that might not be the case should the Trans Pacific Partnership (TPP) become a reality.

Tariff is another word for tax. When a US company like Nike manufactures its products in Vietnam, and then exports them to the US, a tariff is charged against the products of between 10 and 15 percent. So another $10 to $15 dollars is added to the cost of a $100 pair of Nike’s Vietnamese made shoes exported to the USA. That means less profits, lower dividends, and lower share prices than would otherwise be the case without tariffs. The US tariffs on US corporate goods manufactured in Vietnamese factories helps to offset some of the Vietnamese labor cost advantages vis-a-vis the cost of Chinese labor.

Under the TPP, should it become law, those tariffs will likely be gone, giving Vietnam a much larger labor cost advantage over Chinese workers.

In which case, the Chinese government will have two options; let millions of Nike and Dell and Apple and Microsoft jobs head south to Vietnam, along with the jobs of contractors and subcontractors, or manipulate its currency even more, which means all of those US corporations manufacturing stuff in China for export to the US will see unprecedented and explosive growth of their profits; and all of this will occur at the expense of small and medium sized US companies that make stuff in the United States and export them to China.

That means several unpleasant things will occur to the US economy: US unemployment will grow with the TPP, as exports to China diminish, inequality in wealth and income will continue to increase during the reign of Obama and Wyden, the stock market bubble will continue to expand, the coming stock market crash will be even worse than imaginable, US businesses will need to export more US jobs to China, and all of these bad things will trickle down to more crowded classrooms, less government services, reduced wages, fewer jobs, more poverty, and much more negative stuff for the 99 percent. However, the super rich will become even more super rich. And Chinese currency manipulation will not be the only thing in the TPP contributing to all of these things. See https://johnhively.wordpress.com/2015/04/21/how-the-trans-pacific-partnership-will-destroy-american-jobs-by-destroying-us-exports/

The political game in the US over the TPP and Fast Track Authority currently being played out is a complete farce.

Start with Fast Track Authority, which President Obama, Nike, Microsoft, Ron Wyden, Orrin Hatch, Mitch McConnell and just about every major US corporate CEO and investor desperately want Obama to have. Fast track will limit congressional debate on trade deals, it will scuttle any possible congressional amendments, and eliminate the use of the filibuster in the senate to stop the TPP. Fast track needs to pass through both houses of congress.

As a condition for bringing Fast Track Authority to a debate on the floor of the US senate, on May 13, a number of Democrats who traditionally vote to redistribute income from the 99 to the 1 percent (Ron Wyden, Harry Reid, Patty Murray, Heidi Heitkamp, Bill Nelson, Tim Kaine, Claire McCaskell, and Ben Cardin) agreed to first bring a vote for a bill by which the US will crackdown somehow on China for manipulating currency.

These folks know such a bill may not pass the senate, much less the house of representatives. If it did pass, then it will sit on Obama’s desk until Fast Track Authority passes both chambers of congress. Then he will veto the currency manipulation bill. There’s a ton of income to be redistributed from the 99 to the 1 percent resting on his shoulders.

Then the above senators will pretend to the folks back home that they did all that they could, when in fact, they did nothing when they could have done something to protect the folks back home from the TPP.

Every US senator and every US house representative knows this is the game, and many are willing to play this deadly game so as to justify their support for giving President Obama Fast Track Authority, even though the TPP will likely rip out the guts of the middle class, as well as the US economy.

If the above named Democrats were at all serious about Chinese currency manipulation, then they would agree to wait until Wall Street President Barack Obama signed the bill into law before opening debate on fast track authority.  That won’t happen.

Fast Track Authority is the only way the president can ram the TPP through congress. It’s an income and political power redistribution agreement falsely marketed as a trade agreement. Most of those in the know say the TPP is dead if the president doesn’t receive fast track authority. So fast track is the key.

Save the United States. Fight against this madness called Fast Track Authority. The TPP will only create greater trade deficits in the future than is currently the case. As US Congressman Alan Grayson famously and recently said, “You will find that the largest fourteen trade deficits in the history of the world have been the US trade deficits in each of the last fourteen years….What sane person can look at these trade deficits and conclude we need more free trade?”

The political fight over the Trans Pacific Partnership, Fast Track Authority, and Chinese currency manipulation isn’t about sanity; it’s about greed and government corruption. It’s about raising the already soaring share prices, dividends and earnings of US corporations that have exported millions of US jobs to China and other third world nations, and doing so at the expense of everybody else. It’s about redistributing your standard of living to a small minority of overly rich people who have corrupted and rigged your government in favor of themselves. It’s about redistributing your income and wealth to the 1 percent so as to keep the current stock market bubble expanding. It’s about redistributing the American dream to the 1 percent. It’s about taking the opportunities that once existed for the majority of American citizens and wiping them out by giving 100 percent of all income growth to the 1 percent, and leaving more and more people in poverty.

Currently, the 1 percent steal 37 percent of all income produced in the United States compared to 8 percent in 1980, back when opportunities for financial advancement existed for most Americans. Now the big boys, and the politicians they’ve bought off in one way or the other, want to eliminate your opportunities, as well as those of your children.

Call your senators. Call your congressmen and congresswomen. Stop Fast Track in the senate. Stop the corruption. Stop the insanity.

Over the past fourteen years, since China was granted most favored nation trade status, Nike’s stock price has risen over a thousand percent, from $10 a share to over a $100. Chinese currency manipulation has helped fuel this bubble. So if you purchased a million shares of Nike in the year 2000, today the value of those shares would be over $10 million. With the TPP and Chinese currency manipulation, the value of Nike’s stock will continue to increase, but only at the expense of everybody else. Much of the US stock market bubble is fueled by the same force, and that goes for the stock prices of Apple, Microsoft, Dell, Adidas, Hewlett-Packard and more. And if the TPP goes through, more US manufacturers will need to shift production to China.

Advertisements

Read Full Post »

People below demonstrate against US multinational investment banking firm Goldman Sachs buying into the National Danish electricity supplier DONG in front of the Danish Parliament on January 29, 2014. (AFP Photo / Jeppe Bjoern Vejloe)

“Today, banks like Morgan Stanley, JPMorgan Chase and Goldman Sachs own oil tankers, run airports and control huge quantities of coal, natural gas, heating oil, electric power and precious metals. They likewise can now be found exerting direct control over the supply of a whole galaxy of raw materials crucial to world industry and to society in general, including everything from food products to metals like zinc, copper, tin, nickel and, most infamously thanks to a recent high-profile scandal, aluminum. And they’re doing it not just here but abroad as well: In Denmark, thousands took to the streets in protest in recent weeks, vampire-squid banners in hand, when news came out that Goldman Sachs was about to buy a 19 percent stake in Dong Energy, a national electric provider. The furor inspired mass resignations of ministers from the government’s ruling coalition, as the Danish public wondered how an American investment bank could possibly hold so much influence over the state energy grid.”

Here’s how corrupt the process is; Goldman Sachs may not have been the highest bidder for the electricity company. How can that be?

And here’s something to ponder; then President Bill Clinton signed this legislation to redistribute income from the 99 to the 1 percent. If Hilliary Clinton becomes president, expect her to do more of the same. Of course, President Mitt Romney would be at least as bad.

Click the link below to see how investment banks were enabled to become owners and manipulators of industry.

The Vampire Squid Strikes Again–Rolling Stone Magazine

Danish Prime Minister Helle Thorning-Schmidt addresses the media after the Socialist People’s Party quit the government over the controversial sale of a stake in state-controlled energy group DONG to Goldman Sachs. (AFP Photo / Keld Navntoft)

Read Full Post »

Here’s what the press tells you.

The New York Times
Tuesday, September 10, 2013

“The top 10 percent of earners took more than half of the country’s total income in 2012, the highest level recorded since the government began collecting the relevant data a century ago, according to an updated study by the prominent economists Emmanuel Saez and Thomas Piketty.

The top 1 percent took more than one-fifth of the income earned by Americans, one of the highest levels on record since 1913, when the government instituted an income tax.

The figures underscore that even after the recession the country remains in a new Gilded Age, with income as concentrated as it was in the years that preceded the Depression of the 1930s, if not more so.

High stock prices, rising home values and surging corporate profits have buoyed the recovery-era incomes of the most affluent Americans, with the incomes of the rest still weighed down by high unemployment and stagnant wages for many blue- and white-collar workers.”

Continue reading the rest of the story–the-rich-get-richer-through-the-recovery

Here’s what you should know the press isn’t telling you.

“Surging corporate profits” and “high stock prices” are cited as a reason for the uneven distribution of income during this recovery. However, what isn’t cited is that the surging corporate profits are due in large part to shipping jobs over seas, which redistributes income from the 99 to the 1 percent. Free trade treaties have also paved the way for US corporations to create lesser paying jobs overseas, rather than higher paying jobs here, and this does the exact same income redistribution thing.

The difference between the old, higher US wages and the new, lower wages goes into the pockets of the 1 percent via higher corporate profits, rising dividends and surging share prices. Now you can understand what’s going on.

According to the Federal Reserve Bank, one to three million jobs are shipped overseas every year, thanks to free trade treaties. Millions more per year are created overseas, but these would have been created here in the absence of free trade treaties, which are really income redistribution treaties.

The Obama administration is negotiating to redistribute more income from the 99 to the 1 percent via the largest free income redistribution trade treaty of them all; the Trans Pacific Partnership. Studies are showing this treaty will push middle class income down and redistribute the difference between the old wages and the new lower wages into the pockets of the uber rich. See study-mega-trade-deal-the-trans-pacific-partnership-would-make-most-americans-poorer.

In addition, the study that shows the 1 percent are stealing 95 percent of all income growth doesn’t count all the cash stashed away by the 1 percent in offshore accounts to avoid taxes. The study is counting only cash declared as taxable income. This means the 1 percent have a greater share of the national total income than the study reports. The share of national income the 1 percent have stolen via legislation is much closer to 34  percent than what the study cites.

And finally, the rich have received massive bailouts to the trillions of dollars while the middle class has struggled under the vicious financial assaults in the political markets of the 1 percent. See breakdown-of-the-26-trillion-the-federal-reserve-handed-out-to-save-rich-incompetent-investors-but-who-purchase-political-power. These bailouts have enabled the rich to continue to purchase legislators and legislation, such as the South Korea free trade treaty of 2012. So we’re really talking about massive government corruption, all the way from the white house through the congress and into the US Supreme Court. It’s one giant rigged game against the  middle class.

These are the reasons the rich are stealing 95 percent of all income growth over the last four years.

Read Full Post »

Back in 2009 and 2010, we were told the yearly US debt was too high, that if the total US debt went over 90 percent of yearly GNP, it would inhibit economic growth, increase interest rates, and lower GNP and job growth by 2 percent. All of these claims were the opposite of what history shows us. These claims ignored decades of Economic 101 teaching and practice. The people mass producing these lies knew this.

A new study by University of Michigan economists Mile Kimball and Yichuan Wang shows that sequestration, (the term used for automatic cuts to the yearly deficit via a deal reached between Republicans and our dumb-dumb president who apparently didn’t realize the Republicans were trying to use deficit cutting as a weapon to reduce job growth and sabotage the economy so that Mitt Romney could win the presidency in 2012), has reduced GNP growth by 2 percent per year.

If the debt had been run up, the economy would be stronger, albeit still historically weak. As far as interest rates, they’re still at or near historic lows. In fact, the US spends about the same amount of its tax dollars on paying the national interest (as a percentage of GNP) as it did under President Ronald Reagan, about 3.25 percent. That’s because interest rates are so low.

Interest rates and not the debt is the real issue, a fact conveniently ignored by the corporate propaganda machines, erroneously called the corporate media. That’s because the US debt is a revolving debt. The US Treasury Department sells bonds to cover the yearly deficit. Whenever the bonds come due, the government sells more bonds to pay up, but it uses tax dollars to pay the interest due on the bonds.

Sequestration has inhibited job growth for the 99 percent, reduced demand, weakened the economy, created mass suffering, and all for political gains on behalf of the 1 percent and Wall Street.

During this Sequestration period, real interest rates have been negative at times. In other words, the governmennt has been paying 1 percent interest or less on its debt, but the inflation rate has been 1 to 3 percent, and the real effect has been negative percent interest. That means heavy deficit spending could have accomplished massive works projects on roads, bridges and rails on the cheap, all to the benefit of the 99 percent. 

So why would President Obama agree to this stupidity?

According to a recent story in Mother Jones, Wall Street and the 1 percent benefit from Sequestration by keeping unemployment high and wages down. Goldman Sachs has been Obama’s biggest campaign contributor over the last two election cycles. The rest of Wall Street and many big corporations whose stocks and bonds trade on various financial markets benefit from this in the same way.

In other words, Sequestion is another way of rigging the game to ensure income and wealth is transferred from the 99 to the 1 percent.

 

 

 

Read Full Post »

The rich hardly pay any taxes. That’s why there’s a federal deficit, at least in part. Let’s get something straight; corporations are rich people, just ask Mitt Romney. Okay Mitt is an idiot. Always has been. We all know corporations are not people. But they are tools of the rich that enable them to redistribute income from the 99 to the 1 percent.

Corporations have bought off tons of politicians of both political parties with their tax breaks, such as Wall Street Fetch Boy Ron Wyden, supposedly a senator from Oregon, but on matters of income redistribution, the senator always sides with the Wall Street one-percenters.

Corporate profits are currently at an all-time high (while worker wages as a percentage of the economy have plummeted to record lows–Thank you Senator Wyden). Guess what? Corporate income tax revenue is going to be about 1.5 percent of GDP this year, below the recent average and far below the amount raised by the tax just a few decades ago. Just look at the chart below, back in the early 1950s, corporate profits were taxed high enough that they were about 35 percent of federal tax revenues.

So Mitt? Why aren’t these people taxed at a higher rate? The answer is simple. Wall Street is a Ponzi scheme. If corporate profits don’t always go up in the long-term, they would either stay stagnate or go down. In which case, Wall Street would go down with corporate share prices. The Ponzi scam would self-destruct.

As income has been redistributed for the last 30 years, the demand for goods and services has shrunk. That means corporations have to boost income in other ways than selling more of their stuff. So they ship jobs overseas and pay legislators big bucks to pass legislation allowing them to reduce their tax burden. That’s what has occurred over the last thirty years. That means more money flows to the 1 percent via higher profits, dividends and share prices. The rest of us pay the price, such as reduced government services, lower paychecks, rotting schools and more lumpy streets. That you Senator Wyden.

We’ve got idiots like Wyden talking about cutting Medicare, Medicaid and Social Security benefits for the aged and the infirmed. That’s crazy. Especially since the Social Security Trust Fund has a $2.5 trillion surplus that earns about $118 billion a year in interest.

Let’s solve the problem easily. Tax corporations more, like in the good old days, and watch the Wall Street Ponzi Scam collapse. We’d be saving our livelihoods, our economy and a lot more.

As the Century Foundation noted in the chart below, the corporate income tax, as a share of total government revenue, used to track reasonably well with corporate profits. But in the last decade, the two have become decoupled:

CEO's are getting record salaries and bonuess, the 1 percent are using their corporate machines to jack up share prices and dividends

Corporate profits are up, dividends are up, share prices are up, and corporate tax payments are down, down, down. Anybody see a relationship here?

By the way, the video below is when Mitt the Twit said corporations are people. But Dumb Dumb never figured out in what hospital any of them were given birth.

Read Full Post »

We’ve been told a ton of bull shit about the deficit and the looming fiscal cliff, which is a combination of tax increases and spending cuts that will kick in shortly after the end of 2012. We’re told by our corporate leaders, like Barack Obama, Joe Biden, Ron Wyden, Mitt Romney, John Boehner and others that the deficit is too great! They tell us there must be spending cuts and tax increases to solve the problem. This is a total load of bull shit in a grand farce being played out in the halls of congress and the white house to fool the American people. There is no great problem too big to solve. The short term answer to the so-called deficit problems can be found in the words and actions of Federal Reserve Chairman Ben Bernanke.

Back in 2008 or so, the Federal Reserve (the Fed) printed up $26 trillion and loaned it to several banks. According to Bernanke, the banks paid most of the money back by 2011. That means the Federal Reserve has somewhat short of $26 trillion it can simply give the US government. It’s money that’s just sitting there, hopefully collecting interest.

Think about it. The Fed was willing to bail out rich investors, but Obama, the Democrats and the Republicans are unwilling to ask the Fed to do the same thing for the rest of the American people, even though the Fed is sitting on stacks and stacks of cash. Their attitude is simple; what’s good for the 1 percent is way too good for the lower class 99 percent.

Political grand theater is occurring right before our eyes. It’s a great way to get us emotionally involved in an argument with an easy solution other than tax increases and spending cuts.

Yes I know. There are people who will say that it is not possible to use the $26 trillion to save the American people, although it was okay use it to save rich investors from their own stupidity. And these people would be right, but for all the wrong reasons.

Here’s the real reason why it can’t happen. Bernanke lied. The recipients of the $26 trillion never paid it back (Check out the story below). The Fed cooked it’s books, the recipients cooked theirs, to make it appear they paid it back, which was mathematically impossible.

But that doesn’t mean the Fed couldn’t simply print up a trillion or so dollars and help out the other 99 percent of the American people. It should because it can, but it can’t because to do so would change the hidden rules of the grand charade being played out by the 1 percent and their representatives in government, in order to mislead the 99 percent again.

Related stories

Breakdown-of-the-26-trillion-the-federal-reserve-handed-out-to-save-rich-incompetent-investors-but-who-purchase-political-power–JohnHively.wordpress.com

Obama Willing to Compromise on the Fiscal Cliff–Guardian.UK

Read Full Post »

We’ve had sociopathic liars in high office before. Ronald Reagan comes readily to mind, so does George W. Bush and Dick Cheney come to mind. Yes, I know. President Obama has lied plenty of times, like when he told a crowd in Ohio in 2008 that he would renegotiate NAFTA if elected president, but Obama is not sociopathic! He’s just a liar. Wall Street Mitt the Twit Romney is an habitual liar and a sociopath.

Read Full Post »

Older Posts »