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Posts Tagged ‘Dell Computers’

Let’s assume that tariffs are raised in the near future to 35 percent on the goods US corporations export to the United States from their manufacturing facilities abroad. What would happen? Think Nike, Ford, United Technologies, Microsoft, Dell, Campbell’s Soups and thousands of other corporations.

The corporate news media will lie to you and say prices would go up, or the economy would tank. Totally wrong. Lies.

If select tariffs were enacted, the stock market bubble would deflate since corporate profits would decline. On the other hand, the Parasites of Wall Street are now so big that they are sucking the life out of the 99 percent. This means the stock markets are going to tank anyway, and sooner than you might expect. See The New Recession Is Knocking at the Door, and It’s Going to Be Worst Than the Last One–JohnHIvely.Wordpress.com.

The things that make up the wealth of nations are the things that are manufactured. The stock markets are a tool to redistribute income from those who actually produce the wealth of nations to those who produce nothing save for political and financial power. A vast decline in the stock markets would redistribute economic and political power back to those who produce the wealth of the United States.

The bond markets would tank too, if select tariffs were enacted. That means wealth inequality would decline in the USA. Currently, the top 1 percent own more wealth than the bottom 90 percent. Wealth are the things that you own, like houses, stocks, bonds, gold, cars, toys, smart phones, etc…. The video above was made years ago and the statistics the moderator uses are skewed even more to the ultrarich now than when the film was produced.

US manufacturing jobs would come home, probably by the millions. Wages would be forced up with so many jobs coming home. Demand for goods and services would accelerate and power the economy forward. The days of the bubble economies would be over. In other words, it would give life to the host that the Parasites of Wall Street, including all those hedge fund managers, have been sucking dry.

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Income inequality would decrease because more people would have decent paying jobs, while the rich would see their share of income decline. The rich now steal roughly 36 percent of all the income created every year in the United States, up from 8 percent in 1980. That’s precisely why the current economic expansion is the worst in modern US history in terms of job and wage growth, as well as growth in the Gross Domestic Product.

Our social safety nets, such as social security, medicare and medicaid, as well as our roads, schools, and other infrastructure would be financially strengthened.

The rich would have less money to corrupt government and both political parties. Let’s face it. Income and wealth inequality is produced by political inequality.

Foreign governments would not need to retaliate since the products of their nation’s businesses would not be subject to the tariffs.

The time has come for placing tariffs on the goods of US corporations which have exported jobs to China, Mexico and elsewhere, and then exported the goods those jobs produce to the USA.

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Wall Street President Barack Obama has come one step further along with the announcement that the Trans-Pacific Partnership (TPP) has been finalized in the Atlanta sessions that ended last weekend. His Democratic henchman, Wall Street Senator Ron Wyden, must have been smiling with the announcement, since he is the chief Democratic supporter of the TPP in the US senate.

The Democrats are desperate since they have been losing ground in congress and the polls since 2010. Their fundraising falls far short of Republican efforts, and their base is falling by the wayside for reasons described below. President Obama has been intent on securing the Trans-Pacific Partnership (TPP) for his Wall Street benefactors, as well as other sources of big campaign contributions and other sizable perks. If he can’t secure this for Big Donors, what good are the Democrats?

The TPP will show how adept the Democrats are at caving in to Republican Party since the TPP is falsely marketed as a trade agreement when it is designed to redistribute income and political power from the 99 to the 1 percent, just like all previous so-called trade agreements.

In order to get his deal, the president and his negotiators had to engage in serious back door deals with senators, congressional representatives and foreign trade negotiators. For example, in order to get the deal out of the gridlock of negotiations, the president and his team caved in to all of Japan’s demands on agriculture. See why-japan-did-americas-dirty-work-in-the-tpp-ustr-gave-away-the-agricultural-store–nakedcapitalism.com.

The president also made it easier for Japanese automobile parts manufacturers to export their stuff to the US, which will cost the US jobs. The price to get Japan in on the deal was destroy US jobs in auto parts.

The final battle against the middle class will now be waged in the halls of congress. It will be led by Wyden and Obama, along with a bevy of Big Cash politicians from the Republican Party. The news media will remain largely mum on the subject. It’s better to keep the little people illiterate about the issue, than arouse their indignation and protests via honest reporting.

The Democratic base has been falling by the wayside since Obama began his tenure as president. “Hope and change” was a nice slogan as the president gave the rich everything they wanted, including 95 percent of all income growth since Obama took office. The 1 percent steal 37 percent of the nation’s income, up from 8 percent in 1980. That’s what they’re buying with those campaign contributions and other perks.

Little by little the Democratic base has come to realize how indifferent the president is to their concerns, how much he actually favors the rich, what a lie “hope and change” was, since there was no “change,” and this is reflected in recent elections as more and more of the base has increasingly decided to stay home at voting time. That’s precisely why the Republicans have such large margins in both houses of the US congress.

If the TPP passes through congress, within a decade the 1 percent will steal 50 percent of the nation’s income, driving millions of people into poverty in the process.

Take China for example. China is not a part of the TPP, but Vietnam is. Wages in China are about twice is high as in Vietnam. In order to keep jobs in China, the Chinese government will be forced to manipulate its currency vis-a-vis the US dollar. Chinese exports will become cheaper in the US, while US exporters will be encouraged to export US jobs to China. But there is also a devious side to this situation. Prices of Chinese imports won’t decrease in the US. Instead, profit margins will increase.

Any company manufacturing in China will see an increase of its profits, and they won’t need to do a damn thing to make that happen. Corporations like Microsoft, Nike, Dell, and Apple will see massive rises earnings and their stock prices, as income is redistributed from US export workers losing their jobs to US manufacturers producing goods in China. Their rich shareholders will reap a massive bonanza at the expense of people who actually work for a living. See 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–JohnHively.wordpress.com

This isn’t lost on everybody. Some people are already coming out against

AFL-CIO President Richard Trumka:

“We are disappointed that our negotiators rushed to conclude the TPP in Atlanta, given all the concerns that have been raised by American stakeholders and members of Congress. The Administration had a hard time reaching this deal for good reasons: it appears that many problematic concessions were made in order to finalize the deal. We ask the Administration to release the text immediately, and urge legislators to exercise great caution in evaluating the TPP. As we’ve said, rushing through a bad deal will not bring economic stability to working families, nor will it bring confidence that our priorities count as much as those of global corporations. We will evaluate the details carefully and work to defeat this corporate trade deal if it does not measure up.”

Communications Workers of America President Chris Shelton:

“Negotiators from the 12 Trans-Pacific Partnership trade deal countries, meeting in Atlanta, have announced an agreement. Despite all the hype, and given what we’ve learned over the past many months and years of negotiations, it’s clear that this TPP remains a bad deal for working families and communities. The corporate lobbyists who make up the majority of U.S. trade advisers have been pushing hard for an agreement, mainly because they’ve known all along that what’s in the TPP represents a sweet deal for multinational corporations and the 1 percent. For the rest of us—U.S. working families and communities, and workers in the other TPP countries—this agreement is bad news.”

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A new study by the Economic Policy Institute (EPI), called Manufacturing Job Loss: Trade, Not Productivity, Is the Culprit, shows how the corporate propaganda machine has continued to lie to us. The not so free press continues to tell us that automation has cost the US jobs, and that’s the big reason why US job growth is so historically slow nowadays, and wages/benefits have gone down for the last thirty years.

As I’ve pointed out in the past, those claims are out and out lies, and the reporters and editors making these claims are liars. Check out the following links from this blog: Five Graphs that Will Make Your Blood Boiland JOBS: The Largest US Export Product.

According to the EPI study, “The United States lost 5 million manufacturing jobs between January 2000 and December 2014. There is a widespread misperception that rapid productivity growth is the primary cause of continuing manufacturing job losses over the past 15 years. Instead, as this report shows, job losses can be traced to growing trade deficits in manufacturing products prior to the Great Recession and then the massive output collapse during the Great Recession.

Specifically, between 2000 and 2007, growing trade deficits in manufactured goods led to the loss of 3.6 million manufacturing jobs in that period. Between 2007 and 2009, the massive collapse in overall U.S. output hit manufacturing particularly hard (real manufacturing output fell 10.3 percent between 2007 and 2009). This collapse was followed by the slowest recovery in domestic manufacturing output in more than 60 years. Reasonably strong GDP growth over the past five years has not been sufficient to counter these trends; only about 900,000 of the 2.3 million manufacturing jobs lost during the Great Recession have been recovered. In addition, resurgence of the U.S. trade deficit in manufactured goods since 2009 has hurt the recovery of manufacturing output and employment.

In short, the collapse in demand during the Great Recession and ensuing glacial recovery was responsible for most or all of the 1.4 million net manufacturing jobs lost between 2007 and 2014. Between 2007 and 2014, productivity growth slowed noticeably, and manufacturing output experienced no net, real growth.”

There are a few things the EPI study doesn’t mention.

  1. The report didn’t mention that US corporations are the biggest, and perhaps only, cause of the US trade deficit. When a US company ships jobs overseas, to say China, and then exports the products created overseas to the US, that adds to the trade deficit. Think of Apple Inc., Microsoft, Dell Computers, Nike, and thousands of other US corporations that produce their products in China, Pakistan, India, Indonesia, Mexico, etc…, and then export them into the US. When was the last time you purchased a Chinese smart phone. Along with US businesses, their chinese contractors and subcontractors manufacture them for US corporations.
  2. The EPI report also didn’t mention that international income redistribution scams, politely called international trade agreements, are also the primary, though not the only, conduit through which income is redistributed from the 99 to the 1 percent in the USA. When a job is created by a US company abroad, or exported from the US, the difference between the old wages and the new lower wages goes straight into the pockets of the super wealthy via higher corporate profits, roaring dividends and surging share prices.
  3. Largely because of trade agreements, the 1 percent steal 37 percent of all income created in the USA, compared to 8 percent in 1980.
  4. Notice in the graph above that this redistribution of income since 1980 has coincided with the loss of US manufacturing jobs. Duh!
  5. Those jobs supported millions of other jobs as well, such as local restaurant workers, accountants, auto salesmen, not to mention they provided the tax dollars for schools, infrastructure, police, fire, and social security nets. Those jobs don’t pay the taxes they used to because they’re not in the US anymore.
  6. The demand for goods and services by the 99 percent has been curtailed due to the exportation of jobs, so manufacturing employment, as well as employment throughout the US, is the worst since the Great Depression.
  7. The trade deficit hurts social security because when the rich are literally the only beneficiaries of trade scams and they don’t pay into the social security trust fund after the first $118,000 of yearly income. Meanwhile, the people who lost their jobs and whose incomes have been redistributed to the 1 percent are no longer paying into the system.
  8. Wages have dropped, in large part, because so many jobs have been exported overseas. According to the Federal Reserve, nearly 28 million jobs were exported from the US from 1990 to 2010.
  9. International income redistribution scams pave the legal way for jobs to be exported from the US to lesser paying nations, but they also pave the legal route for US corporations to create jobs overseas that they would otherwise have been created in the USA, meaning the job losses created by trade are understated by a hefty margin. When a job is exported to China by a US business, and the product of that job is sold in China, or exported to nations other than the USA, then it’s not statistically visible that this exported job has added to the trade deficit, even though US exports are lower than if the job still remained in the US. Under such circumstances, US exports are lower, which raises the trade deficit, increases income and wealth inequality, decimates our tax bases, and weakens social security, but it pushes the stock markets higher.
  10. The Chinese government requires US companies to partner with Chinese companies, and share technology to boot, in order to sell products in China. Boeing has exported thousands of jobs to China because of this partnership clause that otherwise would have been in the USA.

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Four Graphs that Will Make You Boiling Mad About the Trans Pacific Partnership–Or Why President Trump, former 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 former 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.

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