Market crash: are we there yet ?

[TropicCat]

sigh...... Interesting timing as this news waas released today.

".........the world’s 20 major economies have been responsible for as many as 121 “blatantly protectionist” measures, with 134 more in the pipeline, said Global Trade Alert, a monitoring service overseen by the London-based Centre for Economic Policy Research and supported by the World Bank and other international organizations......."

Only 15 of these are American. It would appear that the rest of the world is already erecting trade barriers, once again leaving America as the 'patsy'.

[wind_magic]

Originally Posted by TropicCat

sigh...... Interesting timing as this news waas released today.

".........the world’s 20 major economies have been responsible for as many as 121 “blatantly protectionist” measures, with 134 more in the pipeline, said Global Trade Alert, a monitoring service overseen by the London-based Centre for Economic Policy Research and supported by the World Bank and other international organizations......."

Only 15 of these are American. It would appear that the rest of the world is already erecting trade barriers, once again leaving America as the 'patsy'.

Oh, don't worry Trop, we'll have an all out trade war soon enough. Americans will demand protection, that will prompt other countries to put in place even more protection, we put in place even more protection, and before you know it nobody is trading with anybody and we're living in feudalism again.

See, that's my whole argument - when people put protection in place and try to protect themselves, you don't respond by putting your own measures in place which is what you and CD are arguing, what you do instead is convince the other side to drop theirs so you can all trade freely together.

1930's redux.

[kootenay]

When incomes, investment and jobs are under threat, national governments try to cushion the blow - sometimes by erecting new trade barriers. The current crisis is no exception. According to the latest data from the WTO and ITC, the number of antidumping cases jumped 40% in the first half of 2008, and many nations have already raised tariffs this year. The magnitude of the new protection is modest - so far. As the recession spreads and deepens globally, this could change - especially if world leaders lose control of the situation. Protectionism and competitive devaluations could trigger a vortex of beggar-thy-neighbour policies.

Global Trade Alert | Halting the spread of protectionism

If you are going to quote from a source you may want to post the link so we can read the document in it entirety. This is from the summary I have posted the link.

The document argues against sustaining protectionism. It does no one any good other than give Political leaders the same feeling a grade school kid gets when pissing his pants. Warm satisfied feeling, to be followed by the rest of us experiencing the cold stinging sensation as we find jobs disappearing in even greater numbers. Going to the WTO etc seeking a resolution is really the way to deal with problems. It takes a long time and if the issue is valid eventually you will see the complainant with the real ability to instigate tarriffs that will not be retaliated against. The problem is it does not give the political structure that warm satisfied feeling. But it does avoid the stinging sensation that follows for the rest of us.

The solution?? We need to ensure our reprsentatives have a longer term view. Really that means changing our system of governance to one in which they have longer terms in office with recall provisions. Personally I think Political parties are the worst thing to happen to our system of governance and provide a combative us/them approach rather than seeking the "best" approach to a problem.

[Cruisingdad]

I am NOT for protectionism. I am for Fair Trade, which is different from protectionism in my opinion. We keep saying the same thing, but you throwing up these protectionism arguments which I do not necessarily agree with.

From what I understand, Obama is protecting the Tire industry so that they can catch up with the CHinese, or whatever. I am not sure I understand how three years will help them catch up. I will tell you as someone that just put tires on their car this last week, no one is particularly excited about Chinese tires. They say that they have issues and are not as good as US tires. Maybe that is true, maybe that is not. I do not know. But that is not where I am coming from when I talk about Fair Trade. Let me give some examples.

Let's pretend we are in the Cherry Business.

Let's pertend that you cannot use certain poisions on your cherries and lets pretend that you have ot pay minimum wage and not use children to pick your cherries. Fine. The world is as we know it in a modern, civilizded nation.

Now let's pretend that China gets into the Cherry business. Let's pretend that China uses outlawed poisions and uses prisoners and children to pick their cherries. As such, the only true cost of the cherry business is labor and they are getting it for free or very cheap. In addition, let's pretend that China gives their cherry pickers huge tax breaks and supplements every outgoing crop of cherries with huge government sponsored rebates that go back to the business, which seriously and artificially reduces the cost of their products. These they ship to Canada.

Now Canadians, shopping in the grocery store, do not exactly look at name brands on cherries. They have two options: The Canadian cherries that are $3.99/bushel and the other Cherries conveniently called Tom's Cherries (imported via a Chinese Government owned Canadian company) which only cost .99/bushel. Which ones do you buy? Now wait: due to transport and time, the Chinese cherries are not as good as the Candian... but at 1/3 the price, you can buy a whole lot more and pick off the bad ones.

After many months, or years, Cherry pickers in Canada have lost so much business that they start going out of business. Competition falls in favor of the Chinese. As such, they can now start slowly ramping up their costs and reducing their government sponsored industry. Before you know it, the Chinese now have the entire market on Cherry's and you are paying as much or more than you did before. Within years, as they well know, they have made up their 'losses' considerably and now control the entire market. In order to collectively keep these markets from then on, they can artificially float their currency to make their goods cheaper than everyone else. No matter what the US DOllar does or the Canadian dollar, they can keep their currency just a bit lower to make their good just a bit cheaper and prevent foreign competition from ever being able to get a foot hold again.

Now, in this scenario Windy will tell you that that is just plain old Free Trade and what happens happens. I tell you that the practice simply is not fair and I tell you that Canada should have stepped up and put a tarrif on the Cherries to keep it from happening. How can we tell our companies that they cannot do 'X' when the rest of the world can... and pretend that our companies are going to be able to be competitive? It is not fair compeition.

Now, some would say that this should be handled in the WTO. I wonder how many Canadian Cherry producers are going to sit back and wait for the worlds most highly political organization (outside the UN) to finally come up with a ruling on Cherries? How long will it sit in the courts of determination? How long can the Canadian Cherry producers go without business? How big is their savings? How long can their families starve?

As I have shown before in this thread, with WTO charts and US Government data, we can trace our trade imbalances TO THE YEAR of the WTO. Perhaps it is just an odd coincidence, but I doubt it. And remember how much it jumped when China came in?

The only saving grace from this is that China cannot remain the cheapest forever. The general feeling was that they too would increase their standard of living and things would balance out between them and the US. Well, they were partially right. Their style of living is increasing and they are losing business. But what these economists did not count on is that instead of it balancing out bewteen them and the US, instead it is going to other countries like India and the Phillipenes - to name a few. The bottom line is that we are raising their manner of living but at whose cost? Ours and our jobs.

These are my opinions and this is why I support Fair Trade, not Free Trade. Nothing in life is free.

- CD

[wind_magic]

CD, great post, you explained your position very well (again!). I'm going to keep my mouth shut for a little while in the hopes that Kootenay will respond to what you said first. Cause you already know what I'm going to say!

[Cruisingdad]

Originally Posted by wind_magic

CD, great post, you explained your position very well (again!). I'm going to keep my mouth shut for a little while in the hopes that Kootenay will respond to what you said first. Cause you already know what I'm going to say!

My point Windy is that you support free trade, but the other side is not living up to their bargain. They are expecting us to live up to ours while they hide behind their walls and systematically undercut us via our own rules and principles. They are using our rules against us. And remember one thing: THe Chinese will never enter into an agreement that is not good for them, directly or indirectly.

By the way, I had so many spelling errors, I cannot believe you could even read it!

- CD

[TropicCat]

Originally Posted by Cruisingdad

Now, in this scenario Windy will tell you that that is just plain old Free Trade and what happens happens.

I don't think Windy would say that. In a free trade scenario, there are no subsidies involved and the company with the lower cherry prices just goes out of business. In other words, the market decides. However, the moment you interject government subsidies the market distorts and you get what you get. China becomes the proud owner of the cherry market.

Then again, this is your point!

[kootenay]

Originally Posted by Cruisingdad

I am NOT for protectionism. I am for Fair Trade, which is different from protectionism in my opinion. We keep saying the same thing, but you throwing up these protectionism arguments which I do not necessarily agree with.

From what I understand, Obama is protecting the Tire industry so that they can catch up with the CHinese, or whatever. I am not sure I understand how three years will help them catch up. I will tell you as someone that just put tires on their car this last week, no one is particularly excited about Chinese tires. They say that they have issues and are not as good as US tires. Maybe that is true, maybe that is not. I do not know. But that is not where I am coming from when I talk about Fair Trade. Let me give some examples.

Let's pretend we are in the Cherry Business.

Let's pertend that you cannot use certain poisions on your cherries and lets pretend that you have ot pay minimum wage and not use children to pick your cherries. Fine. The world is as we know it in a modern, civilizded nation.

Now let's pretend that China gets into the Cherry business. Let's pretend that China uses outlawed poisions and uses prisoners and children to pick their cherries. As such, the only true cost of the cherry business is labor and they are getting it for free or very cheap. In addition, let's pretend that China gives their cherry pickers huge tax breaks and supplements every outgoing crop of cherries with huge government sponsored rebates that go back to the business, which seriously and artificially reduces the cost of their products. These they ship to Canada.

Now Canadians, shopping in the grocery store, do not exactly look at name brands on cherries. They have two options: The Canadian cherries that are $3.99/bushel and the other Cherries conveniently called Tom's Cherries (imported via a Chinese Government owned Canadian company) which only cost .99/bushel. Which ones do you buy? Now wait: due to transport and time, the Chinese cherries are not as good as the Candian... but at 1/3 the price, you can buy a whole lot more and pick off the bad ones.

After many months, or years, Cherry pickers in Canada have lost so much business that they start going out of business. Competition falls in favor of the Chinese. As such, they can now start slowly ramping up their costs and reducing their government sponsored industry. Before you know it, the Chinese now have the entire market on Cherry's and you are paying as much or more than you did before. Within years, as they well know, they have made up their 'losses' considerably and now control the entire market. In order to collectively keep these markets from then on, they can artificially float their currency to make their goods cheaper than everyone else. No matter what the US DOllar does or the Canadian dollar, they can keep their currency just a bit lower to make their good just a bit cheaper and prevent foreign competition from ever being able to get a foot hold again.

Now, in this scenario Windy will tell you that that is just plain old Free Trade and what happens happens. I tell you that the practice simply is not fair and I tell you that Canada should have stepped up and put a tarrif on the Cherries to keep it from happening. How can we tell our companies that they cannot do 'X' when the rest of the world can... and pretend that our companies are going to be able to be competitive? It is not fair compeition.

Now, some would say that this should be handled in the WTO. I wonder how many Canadian Cherry producers are going to sit back and wait for the worlds most highly political organization (outside the UN) to finally come up with a ruling on Cherries? How long will it sit in the courts of determination? How long can the Canadian Cherry producers go without business? How big is their savings? How long can their families starve?

As I have shown before in this thread, with WTO charts and US Government data, we can trace our trade imbalances TO THE YEAR of the WTO. Perhaps it is just an odd coincidence, but I doubt it. And remember how much it jumped when China came in?

The only saving grace from this is that China cannot remain the cheapest forever. The general feeling was that they too would increase their standard of living and things would balance out between them and the US. Well, they were partially right. Their style of living is increasing and they are losing business. But what these economists did not count on is that instead of it balancing out bewteen them and the US, instead it is going to other countries like India and the Phillipenes - to name a few. The bottom line is that we are raising their manner of living but at whose cost? Ours and our jobs.

These are my opinions and this is why I support Fair Trade, not Free Trade. Nothing in life is free.

- CD

Sure lets pretend we are in the cherry business. You have a competitor that uses chemicals you cant because of enviromental restrictions. It subsidises its producers and its hourly rates are lower than yours. It doesnt have the same level of regulatory control on workers rights. It uses illegal workers. It dumps its product on your market regularly. It makes it difficult for you to oimport your product through non tarriff trade barriers. You may think I am describing China but I am not I am describing US Agriculture today as it exists now. Should Europe and Canada put tarriffs on US Ag products, should we put tarriffs on US tires or what. Or should we negotiate through endless rounds of trade negotiations trying to deal with problems rather than the symptoms. I would vote for the later. Sure its messy and takes forever and is politically charged but it has the least negative impact on the system of trade.

Now I am not saying that there are points in trade negotiations where you have to place punative tarriffs to get a result in negotiations and that may well be the case with tires. But as a rule tarriffs like war are generally the last action you want to use when diplomacy fails. As a rule both war and tarriffs lead you to pain and suffering on all sides. No one really wins.

[kootenay]

FYI

The following are the subsidies by crop in 2004 in the United States.
Commodity US Dollars (in Millions) Percentage of Total
Feed Grains 2,841 35.4
Upland and ElS Cotton 1,420 17.7
Wheat 1,173 14.6
Rice 1,130 14.1
Soybeans and products 610 7.6
Dairy 295 3.7
Peanuts 259 3.2
Sugar 61 0.8
Minor Oilseeds 29 0.4
Tobacco 18 0.2
Wool and Mohair 12 0.1
Vegetable Oil products 11 0.1
Honey 3 0.0
Other Crops 160 2.0
Total 8,022 100
Source USDA 2006 Fiscal Year Budget[5]

Oh and you can increase that amount by the BS subsidies they have added for Ethanol production. About 3 billion more

[Cruisingdad]

You don't understand... I don't think it is right on EITHER side. You have the farmers down here that get upset about it as much as you guys do. It is basically the government telling them what they are going to grow and how.

But my point is that that is not free trade... no matter which side does it. That is why I believe in FAIR trade, for both sides. And that includes patent infringement, child labor, floating currencies, stolen technology, etc. Free Trade sounds great in a text book, but in reality cannot work.

- CD

PS THey do INS raids down here. THe stories I could tell...