FYI | Sep 22 2011
By Richard (Rick) Mills
As a general rule the most successful man in life is the man who has the best information
Government attempts to inflate the money supply and stimulate growth through quantitative easing have failed, so far, because they gave the stimulus to banks, not directly to their citizens – stimulation will only work if the cash is spent:
- Giving the money to bankers is the equivalent to burying it – banks used the money to shore up their balance sheets and do not loan it out
- Consumers are already buried in debt and facing mass layoffs so taking on yet more debt by borrowing more money from the banks is not an option
There seems to have been a lesson recently learned. Instead of spending every penny they have and borrowing more – gleefully maxing out their credit limits – Americans are turning into savers. The savings rate, a short while ago in negative territory, has turned upwards and today is five percent.
Recent research shows:
“The economic impact of further US consumer deleveraging will depend on income growth – with no income growth, each percentage point increase in the savings rate reduces spending by over $100 billion. US consumers have accounted for more than three-quarters of US GDP growth since 2000 and for more than one-third of global growth in private consumption since An important part of the job fraud is to make the people feel like the loss of jobs is due to the recession, not off-shoring. Long before the recession, South Carolina lost its textile industry; North Carolina lost its furniture industry; Detroit its automobile industry, and California its computer industry, etc. President Obama wants to increase exports, but we have nothing to export. Today, the United States has the export profile of an eighteenth century colony… Last week, the Wall Street Journal announced that the largest chemical producer in the United States was off-shoring. Most of the job loss is from off-shoring, not the recession. But Washington acts as if nothing can be done to limit the off-shoring and protect our economy.
Globalization has developed into a trade war with production looking for the cheapest country to produce, with fierce competition for industry and jobs." Washington's Job Fraud by Sen. Fritz Hollings
Twelve million jobs are needed just to get back to even yet:
- US taxpayers are still funding Federal programs that provide incentives (loans, subsidies, credits, or loan guarantees) for US corporations to relocate their jobs offshore.
- Companies can defer paying taxes on their overseas income indefinitely while deducting many of the expenses caused by moving offshore. Companies that would owe U.S. taxes on overseas profits can avoid payment by reinvesting the proceeds abroad.
- According to recent data from the Commerce Department U.S., multinational firms reduced their workforce in this country by 2.9 million between 1999 and 2009,. Meanwhile, they added 2.4 million workers overseas – many of these multinational firms are represented on Obama’s Jobs Council.
- American guest worker programs such as the H-1B, L-1, and B-1 visas are often used to bring in lower cost foreign workers who substitute for and compete against, American workers
- Almost every company on the Fortune 500 list of companies has increased its presence and overseas investments while at the same time laying off U.S. Workers
Recently President Barack Obama started an Advisory Council for Jobs and Competitiveness. When announcing the Jobs Council Obama said:
“Our job is to do everything we can to ensure that businesses can take root, and folks can find good jobs. We’re going to build stuff, and invent In a regulatory filing just a week before the Japanese disaster put a spotlight on the company's nuclear reactor business, G.E. reported that its tax burden was 7.4 percent of its American profits, about a third of the average reported by other American multinationals. Even those figures are overstated, because they include taxes that will be paid only if the company brings its overseas profits back to the United States. With those profits still offshore, G.E. is effectively getting money back.
Such strategies, as well as changes in tax laws that encouraged some businesses and professionals to file as individuals, have pushed down the corporate share of the nation's tax receipts — from 30 percent of all federal revenue in the mid-1950s to 6.6 percent in 2009."G.E.’s Strategies Let It Avoid Taxes Altogether By David Kocieniewski
Then there’s this by US Congressman Kucinich:
“As 14 million Americans struggle with unemployment, General Electric, under Mr. Immelt’s leadership, is exporting highly-sophisticated technology to the Chinese in order to book short-term profits for GE. GE strives mightily to avoid paying federal income taxes, but goes ‘all in’ on a deal to transfer U.S. government-subsidized technology to the Chinese. Jeffrey Immelt has a conflict of interest. He cannot ethically advise the President on how to create American jobs and promote American competiveness, while at the same time leading a company that is exporting American technology and, along with it, American months.” Diana Farrell, lead author of the McKinsey report
Even in 2003 the US economy wasn’t creating enough jobs for all the US workers displaced by off shoring. Today’s job creation is a different situation than in 2003 – it’s far worse. The American economy is not creating jobs – no jobs were created in August 2011 – let alone 3.5 million a year.
“Jobs off-shoring is nothing more than an activity in pursuit of the lowest cost advantage.”
American jobs sent out of the country aren’t likely to return anytime soon and as long as employers can continue to take advantage of much lower production costs in other countries, and the breaks they receive from America for exporting them there, why would they bring them back?
Conclusion
"NOT MADE IN AMERICA" stickers are now found on nearly every item for sale in America. In 1985, the US imported less than $4 billion worth of goods from China, and the country had just a small trade deficit. Today, the US spends almost $400 billion per year just on Chinese goods and has a massive trade deficit with the world.
Real new wealth, and an economic superpower, are only created when a countries resources are used to manufacture goods to sell at home and abroad, and when a countries natural resources are used to provide solid long term high paying jobs. When people are working, and have discretionary income, economic stimulus results. The United States of America was an economic superpower for these very reasons. The US needs to regenerate and re-grow its economy – restart the process of generating new wealth – this creates jobs and brings national prosperity.
Exploitation of the United States own natural resources, combined with a solid manufacturing sector and the right infrastructure spending stimulus will, in this author’s opinion, be the economic drivers of a resurgent US economy.
Are companies engaged in the search for, development and extraction of natural resources on your radar screen?
If not, maybe they should be.
Richard (Rick) Mills?
rick@aheadoftheherd.com?
www.aheadoftheherd.com
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