What Did You Export Today?

What Did You Export Today?
By David Glenn Cox



What have you exported today? What do you export? I’m so tired of hearing pundits explain that the weak dollar is good for the economy, it helps exports they answer. So what do you export? Me? I don’t export anything but I import quite a bit. Most of the gasoline I buy is imported so if the weak dollar help exports it must conversely hurt imports. The rise in crude oil prices is due just as much to the loss in value of the dollar which has lost half 50% of it’s value against the Euro as it is the demand for oil.

I’m sure a weak dollar helps GM and Ford as they export auto parts to their subsidiaries in Mexico only to import them back as finished automobiles. I sure it was a dandy negotiating tool when GM told the UAW they would shut down all US production and move overseas if they didn’t get a deal. It most certainly helps farmers to export crops abroad but still, those farmers are now being paid with weak dollars that they in turn must spend more of to buy fuel and machinery and petroleum based fertilizers most of which is imported.

But if a weak dollar helps exports and causes the price of imports to rise then how does this help an economy that imports two billion dollars a month more than it exports? The short answer is, it’s a catch phrase like eat your vegetables people are starving in Darfur. One has nothing to do with the other; my eating all my carrots will neither helps or hurt the starving. An emotional argument much like your deposits are insured by the full faith and credit of the US government. What does that mean besides, you can trust us. Ask yourself, which economies in the world today are strong? And which are weak?

Germany, Japan, China and South Korea are all strong and what do they all have in common? They all manufacture products for export and heavily regulate the amount of products they import. Yet this flies in the face of the number one catch phrase of a global economy, like telling the doorman to let him in he’s all right. Germany is currently embroiled in a case in with the European Union over golden shares giving the German government a voice over foreigners purchasing German companies.

Japan is the toughest market of any democratic nation in the world. US popcorn producers were asked to guarantee that 100% of all the kernels would pop. A US producer of salad dressing was stopped at customs and not allowed to bring in samples because Japanese officials had not tested them for safety. The producer offered to dump the contents down the drain just to be allowed to take the bottles in to show potential customers. This request was also denied for the same safety concerns. An Austrian company was denied the right to sell its ski’s in Japan with the explanation that Japanese snow was different.

For many years foreigners wishing to operate in China had to form a partnership with a Chinese company. A virtual trade school to train the Chinese to learn manufacturing techniques. Many of the restrictions have been relaxed in the import of luxury goods but still remain in place for companies wishing to compete in China.

Mazda, Hyundai and Dae Woo sell millions of Korean produced automobiles every year in the American market paying import duties of 2% on each automobile. American cars companies wishing to import American cars into Korea must pay a 25% import duty on each car. What of free trade? Why don’t American car companies protest? Why don’t they demand Congress take action? Well, Ford motor company owns 50% of Mazda and General Motors bought out Dae Woo outright after a financial scandal. Why do they need to import cars into Korea? They get the business either way if Congress were to demand higher import duties the losers would be Ford and GM.

So why then are we in America told that we must bow down to the golden idol of free trade? The same reason Ford and GM don’t want higher import duties on automobiles. American manufactures can produce off shore with $5.00 a day labor slap an American name on the product and make big money. Then with an offshore mail drop avoid paying any taxes at all and pass the savings on in political contributions to keep the free ride going.

But the greatest asset of a weak currency is the ability to pay debts and not have to pay full value. Imagine you owned a bakery in Germany after WW1 you borrowed one million marks to build a new modern bakery with funding provided by American bankers. The profit on a loaf of bread was one mark so it would take a million loaves of bread to repay the loan.

Then after the treaty of Versailles the German government obliterated the value of the mark by excessively printing money. The price of the loaf of bread soared to ten thousand marks of course this reflected your normal profit margin and the cost of doing business. Your profit on a loaf of bread went to one thousand marks so your debt was effectively reduced to 100,000 loaves or a 90% reduction in your debt. You still owned the bakery and paid your bills on time but you paid them with devalued currency.

The German middle class was wiped out; pensioner’s starved and American bankers were able to juggle the situation and cover the actual losses temporarily. On paper they were being paid in full and on time but they were being paid with worthless script. Only by a flood of capital in the 1920’s and an era of rampant speculation where everyone was getting rich in the stock market were the losses covered but we know how that tune is sung and how the last verse ends.

So if the weak dollar is so good for us who is benefiting from it? My guess would be those with huge debts especially those with huge bad debts. Those who have the availability to buy and sell in foreign markets and then convert their profits to weak dollars to pay their debts. But who owes more money than anyone else? Who is the biggest debtor in the whole world? Where do they get their money? That’s right they print it themselves.

If you were fortunate enough to have a million dollars in the bank chances are it’s not in the bank. It’s at work in the stock market benefiting from the outsourcing of jobs and American industry. You don’t own the bakery but your resources are hedged against the falling dollars but only to a point. Because sooner or later you’ll have to try and get them out and judgment days a commin.

Over 8 Trillion dollars of financial assets are controlled by foreign interests 3 trillion more than Americans hold in foreign markets and want to make a wild guess which ways that’s balance is going and who’ll get out first? Wonder why the market gyrates wildly for apparently little or no reason? The wise are no longer so wise and the seer’s no longer see and those that do in the street vernacular are scared shitless.

They prayed like penitents during the plaque for the holy God the Federal Reserve to save them with a rate cut. It managed only to rescue the stock market for 45 days but then the plaque returned. But God spoke to Moses Bernacke and said don’t ask again build an ark and remember the weak dollar is good for the economy. (hint hint)

So what did you export today? Did you hire a third a world worker to do your job and then pay him $5.00 bucks and pocket the difference? Do you export more than you import? The answer to the question of who will bail out the banks in the mortgage loan crises has been decided, you will. Can you swim? Or can you build an ark to protect yourself from the rising sea of worthless dollars? Cause it looks like rain from here.

k&r

But if a weak dollar helps exports and causes the price of imports to rise then how does this help an economy that imports two billion dollars a month more than it exports?

That should have been two billion per day not per month

Manufacturing is the source of all real wealth. A country that cannot maintain an even trade balance is eventually going to collapse. The one-way trade flow hurts only the American people, the corporations still make their profit.

The corporations will tell you that everyone benefits from "free" trade. That is a bald-faced lie. The only way to save the United States from economic collapse is to rebuild our manufacturing infrastructure and create jobs here in America. The only way to bring jobs here is to change the import laws and tariffs, as well as the Federal tax code, so as to make it unprofitable to import goods that can be made here in America.

As the OP pointed out, our trading "partners" all have import restrictions and their economies are booming. When we are told by the government that they are trying to open up trade with Japan and China, that is a lie also because the corporations make plenty of profit with the status quo. Only the American people suffer for it and obviously we don't count.

The fact that many Japanese branded cars are manufactured here in the U.S. and are affordable and higher quality than many G.M., Ford, and Chrysler products, which are made wholly or in part overseas, puts the lie to the multinational corporations claims that they can't make a profit unless they make their products overseas.

The economy consists basically of the "circulation" of goods and money. Currently, our "economy" is purchasing goods basically on credit, since we have no comparable value of goods to sell to other countries. The capitalists have essentially been selling America's assets to foreigners to subsidize this spending spree.

As the value of the dollar declines, our creditors can expect that what they are repaid with will be worth a lot less than what they loaned us. The foreigners have already bought into so many American companies, that what is left to sell off is coming to be worth less and less. Moreover, since we have so little manufactured goods to sell, at some point our economy is going to collapse. That is why many countries are beginning to demand payment in Euros, or Yen, or Yuan (sp?).

One other lie to expose. The free traders will tell you that goods made in America cost more. We are saving you money by buying cheaper made foreign goods. Not So. Imported goods would be a lot cheaper than they are if the corporations passed along cheaper labor costs to the consumer. They do not. The companies merely pocket the savings from cheaper labor costs as profit.

This hurts America in two ways. First, it creates a class of unemployed or under employed people who have little money to spend within the U.S., spending which would support other American jobs. Second, people who don't work don't pay income taxes or Social Security taxes. This increases the Federal deficit and means higher taxes or degraded infrastructure in the future...or economic collapse.

Conservative economist Kevin Phillips wrote a book titled "Wealth and Democracy" in which he describes the collapse of many empires of the past, including the Roman, Spanish, Portuguese, Dutch, and British. They all failed for similar reasons: Outsourcing jobs to colonies for cheap resources and labor, destroying their own middle class in the process, and using up their country's wealth in supporting a bloated military that was involved in endless warfare to hold on to these colonies from native uprisings or foreign competition. Does any of this sound familiar?