LyrArc Article Gist
What is the role of a small wine importer of European wines who supplies local stores in NY city, and other similar business, in a issue of $1 trillion trade imbalances that destroyed American manufacturing and millions of jobs as large US business corporations shipped manufacturing to China? The trade deficit with China has led to loss of 3.8 million jobs, 75% of them or 2.9 million in manufacturing.  Go back to 1990 and Beijing was a city of bicycles not cars. If Beijing shifted to a open economy and simply imported products from the US and Europe as it had done since 1700 it would have remained a backward agricultural economy. It took 20 years of focused effort after 2000 for China with US technological assistance to excel in manufacturing, as the US had done after 1920. Can or cannot the US excel in Manufacturing with its own focused effort and restore jobs and decent wages to the American people, that is the question. That a $1 trillion deficit that has already destroyed the US manufacturing and its capacity to defend itself by rapidly building up the US Navy, is that not an emergency, then what is, is also the question, and the role, the duty, of the president of the US in such a situation. The federal appeals court has allowed the DJT Tariffs to remain in place till it goes to the US Supreme Court. Today May 30 the WSJ in a front page article shown here says the one California shipyard could assemble a supply ship in 5 days in 1942. China's independence in the fight against Imperial Japan and the Kwantung Army's adventures, and the independence of Europe in the 1940's depended on this vital US capacity. Is this forgotten? FDR acted step by step by 1938 to restore the US lost capacity at that time, what is the role of the president today? ...

LyrArc Article Gist
U.S. exports reached $2.34 trillion in 2014, increasing by $760 billion over the figure in 2009, according to the Commerce Department. Exports accounted for one third of the U.S. economic growth since 2009, say Pritzker and McNerney. Goods and services for exports supported 11.7 million U.S. jobs in 2014, and a Commerce Department 2010 paper shows these jobs pay 18% higher than jobs unrelated to exports. Commerce Department Secretary Pritzker, and McNerney, chairman of the President's Export Council, say free trade agreements and investment by private business is critical to supporting export promotion, but make no mention of the effect of the stronger dollar on future exports. In a period of a few months in 2015 the euro is approaching parity with the dollar and the yen is now 120 to the dollar, giving European and Japanese business a significant advantage, and raising questions about the strength of the U.S. recovery going forward.

LyrArc Article Gist
  As policies moderate, and policy action delivers results such as stopping the war on Ukraine, rebuilding the US Navy, and trade that brings back jobs, fentanyl deaths near zero with CMC (Canada, Mexico and China) forced to stop fentanyl flows, the small slippage in DJT support from federal workers in Republican districts and losses to business from wide deportation could reverse. DJT's first 100 days with strong action from the start, given the 2 year window before a possible Democrat takeover of the House and letting out the frustration on border policies of the Biden administration, are taking the Nation by surprise. Immigration policy on illegal migration is supported generally in the US except where it reduces customers to small businesses for fear of deportation such as occupational therapy.  Government employees who voted for DJT are uncertain about their jobs and are a group that is taken aback by the speed and action on cutting the government federal bureaucracy of 2 million workers. Many federal workers are spread out in the 51 states and many are in Republican or Republican leaning districts. With some slippage DJT approval is now at 47%, and slightly higher disapproval at 51%. As a result these two groups are moving away from supporting DJT in the first 100 days. Some who still support him outside these two groups are expressing disapproval of action coming this early and forcefully, yet support the overall policy agenda on immigration and cutting spending. There is also a small yet vocal group that supported RFK Jr. and this group remains energized by his promise to take action on health. Others who wanted strong action on immigration to reverse errors of Biden policies for illegal migrant entry and dispersal across America remain committed to DJT policy.  ...

LyrArc Article Gist
A shakeout for manufacturers in the solar industry is developing in 2011-2012, as prices of solar components drop sharply. There is slowing growth for solar products in 2012. Seven solar power manufacturers have filed for bankruptcy or insolvency in 2011, including two German companies Solar Millenium and Solon SE, and Solyndra LLC of the U.S. Debt exceeds market capitalization for the 10 largest publicly traded solar companies. A major reason is the subsidies offered by governments in Europe, the U.S. and China, which resulted in a glut in manufacturing capacity and falling prices. Chinese banks encouraged by the Chinese government have given $43 billion in credit facilities to Chinese renewable energy companies, according to Bloomberg Energy Finance. Prices of solar panels at $1.60 per megawatt in 2010, dropped to 90 cents per megawatt in 2011. Another problem is slowing demand. In Europe banks are reducing funding. Installations doubled for solar energy in Germany in 2010, and dropped 29% in 2011, according to Jefferies. Germany is the largest market for solar energy in the world....

LyrArc Article Gist
U.S. president Trump meets with president Moon of South Korea in June 2017 at the White House. South Korea's new leader president Moon tells congressional leaders that he will not reverse the deployment of the THADD missile defense system aimed at blocking a threat from North Korean missiles. President Trump says the renegotiation of the trade treaty with South Korea is taking place, with discussions on South Korean steel exports "dumped" in the U.S. and barriers in the auto exports from the U.S. The U.S. trade deficit with South Korea jumped from $13 billion in 2011 to $27 billion in 2016, leading to charges of unfair trade. 

LyrArc Article Gist
Alan Mulally talks to Charlie Rose about cost competitiveness, negotiations with the UAW, creating jobs, and the repayment of $20 billion of the $23.5 billion borrowed in 2006. Mullaly points out that 70% of R&D is connected with design and manufacturing- all the technology that goes into designing and building and the associated R&D.

LyrArc Article Gist
Sternberg points out that China's banking system lacks the experience in consumer credit and consumer finance products that would provide the impetus to a surge in consumer spending in China for imported products from the US or Europe. Outstanding consumer credit in China is only 13% of GDP, according to a 2009 study by McKinsey and Company, compared to 48% in Malaysia and 70% in S. Korea. China has lost a decade or more he says in allowing foreign banks to develop a consumer-finance market, and Chinese banks have little compettitive pressure to serve lower income consumer borowers. The Dutch PPF Group was allowed into this field for the first time in November 2010 to introduce in-store financing for durable goods purchases, something available to consumers in Brazil and other developing countries for many years. Large banks have an entrenched mindset to lend to businesses, and especially to state owned enterprises which have the collateral and government guarantees and support to obtain this lending. Risk averse banks in a financial system that lacks the kind of credit ratings system for consumers that the US and Europe have, prefer to lend to make loans to state owned enterprises where the government guarantees the loans. Interest rates on deposits are low and the government deliberately allows a wide spread for the banks so that they can ensure enough earnings to pay for non-performung bad loans, both from the last decade and from the binge in stimulus lending in 2009-2010. This reduces consumption by reducing the earnings on savings for consumers and households. These problems can only be solved gradually if the government and leadership want to change course, but this oddly enough is not happening. Other problems are that China's export factories are part of a global supply chain in which other countries do the product development, logistics, marketing, and retailing. Chinese firms lack the experience in these areas to shift to domestic consumers. As a result, says Sternberg, to lose a foreign customer can mean going out of business. Without government leadership and new direction through large scale re-allocation of capital and labor to the small scale businesses that serve consumers in the domestic market, all the talk of rebalancing will be just that, talk only and no real rebalancing....

LyrArc Article Gist
The U.S. Congress passed free-trade agreements with South Korea, Colombia, and Panama, in October 2011. The deals are expected to increase U.S. exports by $13 billion, including $11 billion to S. Korea.

LyrArc Article Gist
Huawei executive, Meng Wanzhou, is released after agreeing to a deal in a Brooklyn court hearing. Meng Wangzhou, chief financial officer of Huawei Technologies, admitted to wrongdoing in a fraud case. The Biden administration acted to remove a friction point with China, and China released 2 Canadians held by China since 2018, following Meng's release.

Meng is daughter of Huawei founder Ren Zhengfei. She was arrested at Vancouver International Airport in December 2018 at the request of the United States. The US Justice Department during the Trump administration had accused Meng and Huawei of a decade long effort to steal trade secrets, and evade Iran sanctions. In retaliation China arrested 2 Canadians who were released after Meng's release, after a long period in detention.

LyrArc Article Gist
Sharply lower consumer spending is hurting Apple sales in China. Apple cut sales and issued a sales warning in January 2019. This follows Apple's sharp slowdown in India with its uncompetitive pricing.

Retail sales growth in China- which bounced back in previous downturns- dropped to the lowest level in 15 years in November 2018. Auto sales are down with the sharpest drop in 7 years- the first annual drop in sales since 1990. Fears of a housing bubble have led to restrictions on home purchases for speculation which have not been lifted. Income tax reduction has not increased spending. GDP growth for the fourth quarter dropped to 6.4%.

Further signs of a sharp pullback are seen in the drop in consumption tax revenue falling by 61% in October and 71% in November 2018. The consumption tax is placed on cars, gasoline and luxury goods, and is paid by the companies making the products.

LyrArc Article Gist
Wessel describes the changes in American manufacturing as it goes through some of the same changes that happened in Germany in the years after reunification. With high unemployment German manufacturing companies worked with unions and the government for wage restraint over the last decade, resulting in wages barely keeping up with inflation. The increase in productivity and wage restraint helped Germany become more competitive with factories in Asia and Eastern Europe. Wages are now increasing with larger wage increase negotiated by the unions in Germany, as skilled labor is becoming scarce. In the U.S. Labor Department figures show an increase in output per hour in American manufacturing of 13% in the last 5 years and 21% in the five years before that. Typical of the wage changes in manufacturing- American Axle & Manufacturing plant in Three Rivers, Michigan hires assembly workers at $10 per hour, with older "legacy workers" making $18 per hour. General Electric brought back manufacturing work from Mexico paying workers $13 per hour for new hires, compared to to $21- $23 in prior years. At GM, Ford and Chrysler workers make $16-$19 per hour in base pay compared to older workers with legacy rates of $29-$33. The Bureau of Labor Statistics shows earnings for production workers in manufacturing averaging $19.15 per hour in April, which is where they were in 2000 adjusted for inflation. The impact of this large increase in productivity with new machinery and production methods, and the wage reductions in manufacturing, is a return of offshored jobs. Wages increased in China and Mexico in the last decade. After a 35% decrease in the number of manufacturing jobs in the U.S. from 1998-2010, the number of jobs has increased by 4.3% to 11.9 million in April 2012, according to the Labor Department....

LyrArc Article Gist
Why Paulson's efforts at economic dialogue with China are not convincing Congress and not much is coming out of the talks in the way of tangible progress. See separate articles on the stock bubble developing in China and how it is aggravated by the rising trade surplus, on rising inequality in China.

LyrArc Article Gist
Comment by a former Tory leader, Sir Ian Duncan Smith, on negotiations with the European Union's Ursula Leyen, show how much the term sovereignty has become the word on which everything depends. Smith said on December 10 about the EU demands that Britain adhere to EU environmental and other rules after leaving the EU, "either Britain is sovereign, or it is not."  The word sovereign is discussed in this context in this Times analysis. The word comes from the old French word "sovereinete" during the period when the King's authority was being contested by feudal lords in 16th century France. The Oxford dictionary defines it as the authority of a state to govern itself, and to do this without outside interference. Tory leaders such as David Davis and others including Smith see this as meaning making your own laws. For the European Union to insist on its laws being primary and British law asked to conform with EU law making it secondary, would not only be outside interference, but also divided authority. Older French and British political philosophers Hobbes and Rousseau see this as divided authority. Even though the meaning has changed in modern times, the essential definition in the Oxford Dictionary remains undivided authority. Which is why these Tory leaders insist on the original definition as the right one. Behind the wrangling there is the sense among Leavers that Britain could do better in economic terms by setting its own direction, and doing business its way. How would a new economic power in India by 2030 affect Britain, would it create many more opportunities for Britain to grow because of its history and cultural ties. Could the relationship with the U.S. provide more opportunities for growth? What about French indifference and even disdain of Britain, does Britain have other options? Isn't the European Union merely a Franco-German alliance led politically by France and economically by Germany, and propelled by their three wars since 1871, with a bunch of European countries added in, and what has Britain got to do with it? Closer to the negotiations with Leyen there is also the question - isn't France trying to make certain with its demand that Britain not violate EU law, that Britain's ingenuity and free wheeling spirit outside the European Union does not let it grow faster than France? Where one gets Boris Johnson's immediate reply that Britain is better off not being stuck inside "EU's regulatory orbit."   At the other end of the world you have India with "Atman Nirbhar Bharat" calling for a self-reliant economy and taking the time for transitioning out of the trade relationship with China, at short term cost and long term advantage. Britain is closely watching India as it makes big strides in developing infrastructure, in renewable energy, and setting a bold vision for the future. Even France is mapping out a pathway to self-reliant economy as it looks at ways to bring production home after the pandemic. The pandemic has only reinforced the drive to be self-reliant. ...

LyrArc Article Gist
Jenkins sees risks to Apple's closed ecosystem and decline in margins of $300 on devices priced at $600.

LyrArc Article Gist
Berlin based China studies center MERICS experts say China's weak spot is domestic consumption, as it is too reliant on export demand. These experts say overseas demand from Europe and US has held up in recent months, but where would China pick up manufacturing production when this demand slows down? Stimulus is seen as risky by experts and contradictory to efforts by the Chinese government to reduce debt based financial risks, with the debt built up in hypergrowth of two decades since 2000. Much of this hypergrowth itself has resulted in trade tensions with US and today puts China in what MERICS calls this "tricky situation." This situation resulted from growth since 2000 that was was unleashed from local governments in China with failure to control it from the central government in Beijing to reduce its impact on deindustrialization of towns and communities in the US and Europe. A lesson that China's planners may be looking at as they look to the future for more balance and quality of life,  and dignity of life for rural, town and city communities across China. Politburo CCP's standing committee has put forward the idea of a "dual circulation economy" to reduce dependence on foreign demand, and balance it with growing domestic demand, yet experts at Berlin base MERICS say this has not happened. A report from the Atlantic Council says without domestic demand picking up the pace of China's growth, China would have difficulty growing beyond 3% annually by 2025.  ...

LyrArc Article Gist
Chinese leaders at annual policy meeting turn to issues facing nation's 730 millon farmers, as urban outcomes year after year far outpace growth of rural incomes. See graph. Urban incomes have shot up just as rural incomes remain sluggish as the country has focused on rapid industrialization, rapid urbanization and an export driven manufacturing economy for two decades with some success because of the focused effort. But this focused effort is dependent on the ability of Western Europe and the USA as well as other countries sucking in cheaper Chinese manufactured goods. This ability of the western countries to absorb Chinese manufactured goods at an astonishing rate is now called into question, and maybe permanently impaired after years of out of control consumption and spending and easy credit with the impact of the credit and housing crisis. As one of the aspects of this focused effort was to make enough rapid progress in industry and urbanization that it could stay ahead of the problems facing the rural areas and farmers, the new situation in western countries and China's lowered growth rate with lower exports, calls for new thinking on how to address the problems facing the rural areas and farmers. Part of the problem is that farmers do not own land in China. The government owns all the land and China's farmers only have 30 year leases on the land and technically that land cannot be sold though it can be transferred. A related aspect to this is that farms though having 50% more productivity than in 1980 are still small by western standards and it takes a lot of land to feed the growing needs of a more affluent urban population. The typical Chinese farm is 1.5 acres compared to 15 acres in Hungary and Poland and 432 acres in the USA. Obviously the US farms are huge and China does not have the vast acreages of land compared to the people, but larger farms would enable the kind of improvements posible on larger farms to raise productivity. Ways have to be found to increase farmers incomes and to enable farmers to move to urban areas which means creating more jobs. This will have to be done in the context of a domestic led growth and trade with other Asian countries as the export drive and export industries shipping products to western countries see their growth fall. ...

LyrArc Article Gist
China and Japan have reached an agreement at meetings between the Japanese prime minister, Mr. Noda, and China's president Hu Jintao, to start direct trading of their currencies. This agreement will give a greater international role for the Chinese currency, the yuan.

LyrArc Article Gist
Krugman cites Apple as the largest company in the U.S. in terms of its valuation but having only 43,000 employees in the U.S. He asks the question- why does Apple get most of its manufacturing done in China? Apple indirectly employs about 700,000 people at its suppliers, with most of them in China. Companies contribute to a country's economy by creating successful clusters of research, innovation and manufacturing. In Apple's case, to the great detriment of the U.S. economy, the manufacturing part is being done entirely overseas. If cost is the only factor for this, then the question remains how German manufacturing has managed to surivive and grow with wages that are higher than in the U.S.