G-20 Status: Pittsburgh, Pa.
Today in Pittsburgh, Pennsylvania the city is bracing for the arrival of delegations from the countries being represented at tomorrow’s G-20 meeting. Although the police, the Secret Service and the Coast Guard can be seen practically everywhere, there is very little sign of any major demonstrations yet. There have been, however, a few incidents involving a hand full of protesters. A hundred or so AIDS activists held a rally calling for universal access to anti-retroviral medicine, a few dozen protesters complained about police harassment, a small group of demonstrators sang chants about the evils of coal usage, and one or two people chained themselves to a major bridge crossing the Ohio River. Security personnel expect that tomorrow and Friday will bring a significant increase in the number and intensity of demonstrations; however, protesters will be kept well away from the David Lawrence Convention Center, where the meetings will be held. So far, the expected “massive” demonstrations are a little like “Y2K”; all talk but no action.
G-20 Issues:
One of the key issues, if not the central issue, that will be discussed at the G-20 meeting is trade restrictions that member countries have imposed on each other in recent years. Ironically, while every country wants to protect its own domestic economy from the effect of imports, no-one wants to see another country impose trade barriers against their exports. All of the nations being represented know full well that imposing import restrictions can result in harmful trade wars that ultimately impede their own growth. Unfortunately, what makes sense from an economic viewpoint does not always make sense politically. The United States is a good example of this conundrum.
For decades the U.S. economy has imported billions of dollars more in goods and services from foreign countries than it has exported. Much of the trade imbalance has been related to America’s consumption of foreign oil; however, a substancial percentage has resulted from the importation of manufactured goods, such as Japanese cars, or Chinese textiles. Ultimately, the dollars paid for these imports are invested back in the United States in the form of Government Securities, or other things such as real estate, or even the purchase of American companies. The bottom line is that the American trade imbalance with the rest of the world has resulted in the selling off of America, bit by bit.
It is time for the Obama Administration to take a tougher stand against other nations (especially the Chinese) who have been given unfettered access to American markets. The most effective way to protect American industries is to impose tariffs against imported goods that are being dumped on American markets at artificially low prices. Although tariffs are not the ideal solution, the alternative is to sit back idly as American industries and American jobs are shipped overseas.
—Rich
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=dc319a06-b848-4fbf-a6e1-505a4944255b)
Hear, hear! Consumers also need to take responsibility for how they vote with their dollar, and put a little more thought into their purchases of things like clothing, shoes, and other items. For example, does anyone really need another $8 novelty t-shirt from Wal-mart (or similar)? We need to take stock of what we own, buy quality not quantity, care for our things, and take a little time to scout out items made in the U.S.A.
Probably no-one will want to hear messages like this right now, but I’m hoping that this recession, apart from the inevitable anxiety it produces, will inspire people to take control of their spending habits and be more thoughtful. Not only for economic reasons like the ones you wrote about in this post, but because often the reason foreign goods are so cheap is because they were manufactured by, essentially, slave labor and with no regard for the environmental consequences of the manufacturing process (textiles, especially synthetics, with all the dyes and chemicals are big-time offenders).
I have a feeling that I’m preaching to the choir here, but thanks for letting me throw my two cents down anyway!
[Translate]
China owns too many US dollars and one word from their central bank would drop the dollar faster than a lead brick. Don’t expect much.
And you forget foreign investments in the US such as Honda, Toyota, Volkswagen, BMW, and Mercedes-Benz just to name a few.
Not being able to buy foreign goods also means not being able to sell American goods.
You also need to consider that many companies “ship” jobs overseas because of the government red tape we have in the US. You also fail to see that simple goods that require little quality control or skill, such as shoes, are not cost effective if made in the US but if you look at companies such as Caterpillar Construction you will see that a majority of their sales happen overseas… mainly in China. If you raise tariffs on Chinese goods Caterpillar, and other companies like it, will get killed. In fact, the CEO of Caterpillar was on 60 Minutes slamming the Obama administration for its trade policies.
[Translate]
Tamara,
You are right in saying that people need to take control of their spending habits. I think that the recession has been an eye-opener for many Americans, who are now concentrating more on paying off debt and less on purchasing consumer goods. When the recession is over, this country needs to strike a healthier balance between saving and spending.
The problem with completely free trade (i.e. no tariffs) is that countries such as China, or Mexico, or Indonesia can produce and export goods cheaply by exploiting their own labor markets. Yes, we in America benefit from lower prices, but in the long run it can destroy our domestic industries who are unable to compete.
[Translate]
Harrison,
As you correctly stated, the Chinese now hold billions of dollars (if not trillions) of U.S. Government bonds that were printed by the Treasury Department to pay for America’s decades-long spending binge. As the U.S. dollar continues to get further diluted by deficit spending, its value will erode and interest rates will skyrocket. We simply cannot afford to spend our way out of economic problems without creating hyper-inflation. I suppose that when there are no more U.S. manufacturing jobs left in America due to unrestricted foreign imports the spending binge will have to end because the country will have nothing left to sell, and U.S. government debt will be worthless.
[Translate]
There will be plenty of manufacturing left, don’t worry.
[Translate]