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Posts Tagged ‘Harry Reid’

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.

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Let your senators know you stand against giving Wall Street President Obama fast track authority.

Today, according to Politico.com, “Senate leaders have reached a deal to advance President Barack Obama’s trade initiative after a failed vote prompted a furious round of negotiating on Wednesday.

After trading offers throughout the night, party leaders agreed to vote on a fast-track trade bill that was blocked just 24 hours before by Democrats who’d wanted more assurances that their priorities would also be considered.”

Those priorities included provisions against child labor, which McConnell opposed, and currency manipulation.

“The agreement, announced by Senate Majority Leader Mitch McConnell (R-Ky.) on the Senate floor, would give Democrats a chance to vote on two of their trade priorities as standalone bills, in addition to the fast-track measure.”

As your senators know, these measures will stand alone and die right there in the halls of the US senate. These are fake measures to give Democratic senators a plausible reason to give to their grassroots Democrats for supporting giving Obama fast track authority to ram the Trans Pacific Partnership (TPP) through congress. The TPP is an income and political power redistribution scam which will benefit the the 1 percent by robbing from the 99 percent, and every senator knows this, including senator’s Wyden, McConnell and Hatch. That’s precisely why they support fast track authority and the TPP.

Senator Reid supported this procedure, and this shows he is worried about his reelection chances next year, but voters are unlikely to be fooled by the old coot. Reid is likely to be gone next year. The same goes for Wall Street Senator Ron Wyden, who lives in New York City, but, who, in theory, represents the people of Oregon. Wyden is up for reelection next year, but opposition is so fierce in Oregon against his income redistribution scheme, that he most likely will lose his seat because grassroots Democrats are organizing against Wall Street Ronnie at an unprecedented level.

The TPP will create greater income and wealth inequality in the USA, which is already at record levels. Call your senators! Let them know you are against giving President Obama fast track authority.

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Sen. Elizabeth Warren, D-Massachusetts, and Sen. David Vitter, R-Louisiana, filed an amendment that would strip a provision from the $1.1 trillion government spending bill that will allow Wall Street banks to gamble with taxpayer money on derivative investments and receive government bailouts when the gamble fails.

Wall Street’s Senate Majority Leader Harry Reid made a procedural move to kill the Warren/Vitter amendment.

Bipartisan support for the Wall Street giveaway at taxpayer expense, which will redistribute income from the 99 to the 1 percent, passed through the US Senate in the midst of a $1.1 trillion spending bill that will keep the government up and running. Whoever put the provision in the bill refuses to take credit for it.

Now President Obama, a complete Wall Street president, needs to sign the bill, which he will likely on Monday.

The political and economic game is now rigged against the 99 percent more than ever before.

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From Arthur Stamoulis, Executive Director of
CITIZENS TRADE CAMPAIGN

Senator Ron Wyden (D-OR) just took over as Chair of the Senate Finance Committee — one of the most powerful positions in the entire federal government. As such, Senator Wyden will play a deciding role in how trade policy moves forward in this country.

Please sign our “floppy disk” petition urging Senator Wyden to use his power to put an end to Fast Track for the Trans-Pacific Partnership (TPP) and future trade agreements.

Senator Wyden has repeatedly called for transparency in the TPP negotiations. At a constituent event this month, he promised to continue pushing for it, and over two years ago, he wrote our Oregon affiliate saying, “U.S. trade negotiators should be required to — at a minimum — share with the public the proposals they are putting forward, as they put them forward, in negotiations. Obama’s trade negotiators cannot be allowed to shroud their goals in secret because, after all, they are supposed to be negotiating on our behalf — on behalf of workers and everyone who simply seeks to make a decent income for an honest day’s work.”

Now Senator Wyden is in a position to make transparency in U.S. trade negotiations a reality. The first step is abandoning the outdated and inappropriate Fast Track mechanism, which allows trade negotiators to keep their proposals hidden from the public until after pacts are signed, amendments are prohibited and changes become all be impossible.

Fast Track was first cooked up during the Nixon Administration, when trade policy primarily covered tariffs, quotas and customs practices. As questionable as rushing trade agreements through Congress was back in the 1970s, it is clearly ill-suited for modern times when trade deals also cover energy policy, Internet protocols, medicine patents, labor rights, environmental protections, government procurement, financial regulations and more.

A healthy economy, environment and democracy — whether locally, nationally or globally — require transparent and participatory public policy-making, not obsolete Congressional rubber-stamps.

TAKE ACTION: Sign our “floppy disk” petition urging Senator Wyden to say NO to Fast Track for the TPP and other trade pacts. Your electronic petition signature will be printed out, adhered to an old-fashioned 5.25″ floppy disk and hand-delivered to Senator Wyden’s office to drive home the point that Fast Track outdated and needs to come to an end.

Thanks to your efforts, our campaign to end Fast Track has been incredibly successful in recent months. Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi have both spoken out against it — and even Vice President Joe Biden has admitted that Fast Track faces an uphill battle.

As new chair of the committee that decides whether or not Fast Track will move forward, Senator Wyden is in a position to retire this obsolete and undemocratic policy-making procedure once-and-for-all. Please help us defeat Fast Track by signing the petition to Senator Wyden now.

Click here to sign the petition. It should be pointed out that Senator Wyden on all economic issues has sided with Wall Street and the 1 percent against the 99 percent 100 percent of the time. Don’t let this weasal do it again. Sign the petition now

As a final note it should be pointed out that these free trade treaties are primarily designed to push US wages down, ship jobs overseas, and create jobs overseas that would otherwise be created in the USA. The difference between the old higher US wages and the new lower overseas wages is redistributed into the pockets of the 1 percent. Wyden is not the dumb idiot he pretends to be. He knows this.

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The United States’ biggest business group remains optimistic that Congress will pass “trade promotion authority” this year, despite Senate Majority Leader Harry Reid’s unsurprising opposition to the legislation.

“We’re clearly not dead yet. It’s only Feb. 3,” Christopher Wenk, senior director for international policy at the U.S. Chamber of Commerce, said in an interview. “We’ve only just begun in terms of pushing this issue. We’ve made a lot of headway.”

Wenk said he was encouraged by statements U.S. Secretary of State John Kerry, U.S. Defense Secretary Chuck Hagel and White House chief of staff Denis McDonough made over the weekend about President Barack Obama’s intention to push for the bill despite Reid’s widely reported comment that it would be a mistake to pursue it now.

“I’m against fast track,” Reid said. “I think everyone would be well-advised not to push this right now.”
Asked on CBS’s “Face the Nation” if Obama planned to back off legislation, McDonough said, “No. … We think this is really important. Sen. Reid has been a great friend of the president’s. We’ll continue to work on this. His position on trade has been clear from the beginning.”

In other words, Harry Reid is siding with the middle class, unlike Wall Street Senator Ron Wyden, who constantly wages war against the middle class. President Obama, of course, is pushing for the “final solution” to the destruction of the middle class by the Trans Pacific Partnership, by giving himself fast track authority, which would limit debate and result in only an up or down vote, thereby eliminating any congressional amendments.

Reid, a Nevada Democrat, is a longtime opponent of trade agreements, including three recent agreements with Panama, Colombia and South Korea, which he allowed to come to the Senate floor in 2011, even though he voted against all three pacts. Reid also opposed trade promotion authority in 2002, the last time Congress approved the bill.

The White House hopes that Reid won’t let his personal opposition to trade agreements, which dates back at least to his 1993 “no” vote on the North American Free Trade Agreement, stand in the way of Obama completing two big trade pacts with 11 countries in the Asia-Pacific region and the 28 nations of the European Union.

Many Democrats oppose TPA because they believe trade deals make it easier for companies to ship jobs overseas and keep wages low in the United States. But most Republicans and at least some Democrats support the legislation because they believe trade agreements create jobs and boost economic growth. However, there is not one piece of evidence that free trade treaties have created any net new jobs, but plenty of evidence that they’ve killed plenty of jobs and redistributed massive amounts of income from the 99 to the 1 percent. Obama, Kerry, Wyden, Hagel, and the entire Republican Party know this, although they will often be less than truthful about the facts.

Click on the link below for the rest of the story.

Senator Harry Reid Opposes Fast Track Authority–Politico.com

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It’s time to outsource Wall Street Congressman Xavier Becerra for supporting treaties that redistribute income from the 99 to the 1 percent. It’s time to unite and outsource all of Wall Street’s Goons in the senate and the House of Representatives, traitorous dogs like Ron Wyden, John Boehner, Barack Obama, Harry Reid, Mitch McConnell, Orrin Hatch, Earl Blumenaur. Virtually all of these goons have a 100 percent record of pushing legislation that redistributes income from the 99 to the 1 percent. There is one exception; Wall Street Congressman Earl Blumenauer only votes with Wall Street and against the interests of the 99 percent about 92 percent of the time. What a record! Why does the US have record numbers of homeless people roaming our streets? Blame the plutorats listed above.

The result is that 95 percent of all US income growth went to the 1 percent from 2009 to 2012. That trend likely continued last year. Our jobs and tax bases have been redistributed to the 1 percent via free trade treaties. That’s one of the reasons, and perhaps the only reason, why the Dow Jones and other financial markets are at record levels, while our schools, social safety nets, and other government services, are starving for cash. The rich have stolen it all via their plutocrats, or plutorats, in the senate, the house and the white house.

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The student loan bubble was due for a collapse last year as record defaults occurred. Wall Street investment firms found that investors were fleeing the bond market that backs student loans late last year due to fears of an impending collapse.

Investment firms buy loans from Sallie Mae and then issue bonds backed by these government guaranteed loans. It’s a profitable business when investors are buying.

In a remarkable coincidence last year, the government doubled the rate of interest students pay for student loans, from 3.4 to 6.8 percent. This doubled the return on investment for bond buyers, but also redistributed income from working class students to Wall Street bankers and investors. In other words, doubling the interest rate on students made the student loan backed bonds a more attractive investment.

We don’t know how many meetings Wall Street pirates had with President Obama, Senate majority leader Harry Reid, and House Majority Leader John Boehner to discuss raising rates on students, or what they said to get the government to jack up the  interest rates, but we can rightly suspect that meetings did occur, and the middle class was the victim of this income redistribution scam.

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