Japan’s Finance Minister, Hirohisa Fujii, has said that the high value of the Yen is harming the Japanese economy.

He is wrong.

The US economy is unbalanced, because it runs a continual trade deficit. The Japanese economy is unbalanced too, because it relies on exports, and runs a continual trade surplus. Japan, like Germany and China, is addicted to exporting – just as the US (and the UK) are addicted to spending and importing.

These imbalances harm the world economy and lead to pressure for trade barriers, which would harm us all.

While the Japanese Finance Minister was bemoaning the high value of the Yen, the Japanese trade figures for October showed a surplus of 807 billion Yen (£5.6 billion). Exports fell by 23.2% compared with a year earlier, while imports fell by 35.6%. So that trade surplus was in fact even higher than a year ago.

Japan cannot continue expecting others in the world to buy all its production. The Japanese government has run big budget deficits in an attempt to boost domestic demand, with little success. It has also kept interest rates low for many years. But still the Japanese keep saving, and not spending.

A more credible strategy for the Japanese would be to start dismantling their trade barriers that keep out cheaper foreign-made goods.

Japan is a notoriously expensive place to live. Prices are high there because the Yen is undervalued. The Yen needs to rise much further. Japan actually needs a flood of cheap foreign imports to rebalance its economy, to increase the standard of living of its people, and to encourage them to feel good again, so that the recession ends.

Japan has been a seige economy for decades. It is time it was opened up to free trade.

The comments of their Finance Minister are unhelpful and ridiculous. The rebalancing of world trade doesn’t just mean deficit countries like the US and the UK cutting back. It also means the surplus countries need to start being willing to buy things made by foreigners.

Does this mean we should save up to shop in 2010 instead?

++++

Miti to make decision on Malaysia-US FTA talks soon

Business Times, Malaysia
19 November 2009

By Rupa Damodaran

Trade Minister Datuk Mustapa Mohamed hopes to find out in a few weeks if the country should still pursue a free trade area deal with the US, its biggest trading partner, or join a regional pact instead.

The US has indicated its preference to join the Trans-Pacific Partnership (TPP), an existing deal that consists of Singapore, New Zealand, Brunei and Chile.

US chief negotiator Barbara Weisel met Ministry of International Trade and Industry secretary-general Tan Sri Rahman Mamat in Kuala Lumpur yesterday and conveyed the news.

“We need to know if we should embrace the TPP or abandon the bilateral FTA with the US,” Mustapa said at a media briefing in Kuala Lumpur yesterday.

Miti, he added, will conduct its own study on the TPP, which may be joined by Australia, Peru, Vietnam and the US.

Mustapa plans to brief the cabinet in next few weeks and get a mandate on whether Malaysia should continue to pursue the bilateral partnership or the TPP.

The Malaysia-US FTA talks which commenced in 2006, saw eight rounds of discussions but got stuck on issues like government preference for Bumiputera businesses.

Malaysia has signed three bilateral trade agreements so far, namely with Japan, Pakistan and New Zealand. The government is now in talks with India, Chile and Australia.

Earlier, Mustapa said the Asean-6, a group that consists of Malaysia, Singapore, Indonesia, Thailand, Philippines and Brunei, will be a complete free trade area when duties on most products are eliminated.

Come January 1 2010, Malaysia has committed to scrapping import duties on 1,943 products, reduce import duties to 5 per cent for tropical fruits, tobacco and tobacco products, and reduce import duties for rice to 20 per cent.

Under the Common Effective Preferential Tariff (CEPT) Scheme for Afta (Asean Free Trade Area), he said 2,524 companies have applied for 103,745 COOs (Certificates of Origin) in the first nine months of 2009 totalling RM12.53 billion.

Companies with a COO will qualify for the lower or zero duties under Afta.

Also, come January 1 2010, 90 per cent of the products traded under the Asean-China and Asean-Korea FTAs will be duty free, he added.

I recently stumbled upon a great op-ed where the always-interesting Steven Landsburg compares protectionist policies to racism

He begins:

Not long ago in American history accidents of birth were considered legitimate grounds for employment discrimination. Political platforms contained phrases like: “Federal contracts, whenever possible, should be performed by white workers.” Politicians demanded tax incentives to reward firms for hiring whites instead of blacks or showing other kinds of favoritism. Those same politicians endorsed “Right to Know” legislation to alert consumers when products were produced by the “wrong” kind of workers. They embraced slogans like “Buy white!”

When I say this kind of thing was commonplace “not long ago,” I really mean not long ago. Except for one minor and morally insignificant difference, I got all of the above from John Kerry’s Web site. The only change I made is this: Where Kerry said “American,” I substituted “white.”

Click here to continue reading.

‘The working class cannot simply lay hold of the ready-made state machinery, and wield it for its own purposes’. The fundamental structure of the state machinery is arranged to perpetuate answering to authority.

Communism’s main argument is the following: that economic production and the structure of society of every historical epoch necessarily arising there from constitute the foundation for the political and intellectual history of that epoch. Since dissolution of communal land ownership, all history is the history of class struggle, between the exploited and the exploiters. Only a total emancipation of the whole of society from exploitation can work. The aim is to ‘proclaim the inevitable impending downfall of present day bourgeois property’. It is not socialism.

Socialism is a maintaining of capitalism with a friendly face by eliminating social abuses. Communism is a total reconstruction of society, not just political revolutions. In 1847, socialism was a middle class movement and communism a working class movement, as such, Marx warns ‘a spectre is haunting Europe – the spectre of communism’. In 1847, Marx’s epoch, he saw the bourgeoisie as having simplified class antagonisms: there is now only the proletariat and the bourgeoisie. The bourgeoisie has a hegemonic hold on values, and as Marx states, ‘the bourgeoisie has resolved personal worth into exchange value’, freedom now is equal to free trade. The bourgeoisie will revolutionize the instruments of production and therefore the relations of production and the whole relations of society. The aim, for the epoch of the bourgeoisie is the constant revolution in production methods, the uninterrupted disturbance of all social conditions, everlasting certainty and agitation. ‘All fixed, frozen relations, with their train of ancient and venerable prejudices and opinions are swept away, all new formed areas become antiquated before they can ossify… all that is solid melts into air… all that is holy is profane’. The market must nestle everywhere, establish connections everywhere’. Where all enter a domain of cosmopolitan consumption, the normalization of the use of capital and its paradigms of desire. The interdependence of nations perpetuates capital and the nation itself, where the ‘cheap prices of commodities are the heavy artillery’ which has now, at the end of history, smashed every last wall of resistance when and where ever it was seen. The bourgeoisie force the world to conform to its model and creates a world after its own image, as the world of the neoliberal springs from the Washington consensus, and engulfs mostly without resistance all that it touches. When there is a crisis of over-production, society falls apart, unless new markets are created and old markets are re-exploited.

The main aim of the bourgeoisie is to commodity the proletariat, to lose their charm and character, which are in tern redefined as expressible as commodities (what does this hat say about me? which colour ipod represents me the best?). The proletariat becomes an ‘appendage of the machine’, where labourers are arranged like soldiers, in rank, authority and worth. Differences in age and sex are neutralized by capitalism, all the instruments of labour of the consumer of commodities, more or less expensive to use according to their age and sex. Although child labour in developed society is behind us, child labour is still exploited by capitalists all over the world. Children in developed countries are accomplices to this as they are born as consumers and trained to consume wit the same hear no evil, speak now evil, see no evil attitude as the bourgeois society around them.

In bourgeois society the past dominates the present, in communist society, the present dominates the past. In bourgeois society, capital has freedom, people don’t. Communism is against freedom as promoted by the bourgeoisie, as individuality and free-trade. ‘Communism deprives no man of the power to appropriate the products of society; all that is done is to deprive him of the power to subjugate the labour of others as a means of such appropriation’, we should enjoy our arts and leisure only when it has been produced in conditions not equatable to exploitation, I,e, outside a system of wage labour and the squeezing of profit from it. The recent phenomenon of ‘fair-trade’ is not enough. Those that work, get as little as possible to perpetuate the necessity of their labour, those who acquire do not work.

Communism aims to abolish the family as we know it. The family of the bourgeoisie, the wife in an instrumental part of production (and adultery is the private prostitution within alienated bourgeois society). Communism aims to abolish all countries and nationalities, as Marx writes ‘working men have no country’. The abolition of property is not a communist aim: it is the abolition of private bourgeois property. ‘Abolition of private property’ is communism. This should happen when the proletariat is raised to the ruling class, to achieve what is known as the ‘dictatorship of the proletariat’, means to abolish private property, a progressive/banded income tax, to abolish inheritance, confiscation of property from rebels and emigrants, centralize credit by setting up a state banking monopoly, to centralize transport, communications and factories, to all have the equal obligation to work, to bring agriculture and manufacturing together by merging town and city via the equal distribution of the population, to have free education, to abolish child labour. In sum, ‘the free development of each is the condition for the free development of all’. It could be said, that people of no class have no reality and exits in the realm of philosophical phantasy. To think one can philosophize, as classless thing, is to flee from the relations of the world you are thrown, by inauthentically ignoring ones historicity: all history is the history of class struggle. ‘All history is nothing but the continuous transformation of human nature: philosophy can be replaced by economic-historical science of society’, and accordingly, Marx questions Hegel, as ‘it is not the consciousness of men that determined their being but on the contrary their social being that determines their consciousness’.

We are in the age of the petite-bourgeoisie, where unions have numbers but have proven time and again to be in the pockets of politicians. The unions are a reaction to the fluctuating wages of the workers. Fluctuating wages causes anxiety: alienation is the existential state of the poor: the proletariat. The proletariat, the dangerous class, the social scum, is waged labour, capital needs labour and the bourgeoisie need capital. Liberal tools such as the minimum wage set the standards for bare existence. To the petite-bourgeoisie, all should become bourgeoisie! To eradicate social inequalities and let everyone enjoy the luxuries and products of their labour. Even those of the minimum wage can get credit cards to buy now pay later for that Playstation 3, car or fashionable haircut. The petite-bourgeoisie acts for the protection of the working class with these tools: the police, prisons and free-trade. The police reinforce, protect and perpetuate the capitalist state machinery, demonize enemies through media discourses and use prisons as the quantitative pecuniary measure of punishment, the ‘horror’ of being forced out of free society. Free society, free trade, free to consume as much as you like, hang the costs, borrow, pay later, you’re free.

From the Telegraph:

1.  Smoot-Hawley

The most famous act of protectionism took place in the 1930s when the US government, facing the early forces of depression, legislated to impose tariffs on over 20,000 imported goods – some significantly. The act triggered a spiral of retaliatory protectionism across the world, and in the view of some economists, fuelled both the Great Depression and the geopolitical tension that led to the Second World War.

2. Common Agricultural Policy

Under the CAP – a European scheme, although similar programmes are in place in the US and throughout the developed world – domestic farmers are given subsidies for producing (or in some cases not producing) food. Without such subsidies many domestic agricultural businesses would collapse, since they cannot compete with the cheap prices charged by overseas exporters for everything from vegetables to livestock to cotton.

3. Shoe wars, bra wars

Recently, in his former role as European Trade Commissioner, Peter Mandelson accused China of illegally dumping vast numbers of shoes – and later bras – on the European markets. “Dumping” is the name given when a country exports a product at a price even lower than that paid in its domestic market. Under the WTO code, it can act against such moves under so-called “anti-dumping” rules.

4. Chinese tyres

China and the US are currently locked in a trade battle over the trade in car tyres. In September, the US Congress accused China of illegally swamping the US market with cheap tyres and imposed tariffs on those imported from the Asian giant. China in turn accused the US of protectionism, arguing that exports to America had actually dropped last year. But with thousands of American jobs on the line, the case is still the focus of heated debate.

5. India vs China

The WTO is not merely a mechanism for the West to fight its own corner against cheaper emerging market exporters. Emerging and developing nations also use it as a forum to tackle their own independent trade battles. Recently, China and India have been locked in debate over trade, with India accusing China of expanding overly aggressively into its silk and satin markets. India argues that Chinese prices are so cheap that its key domestic industry is simply unable to compete.

As I have done before, I receive regular articles from Manufacturing & Technology News and wanted to post the article with my observations. To me, this simply points out that Corporatism rules this country and that those who are in control of corporations don’t give a single rat’s ass about the American workers or their well being (at least from their job perspective).

Corporations are anti-worker. Corporations are entities set up with one goal in mind: making the most profit for their share holders as possible. Period. They do this off of the backs of labor and always have.

So, when I read such stuff as Mr Farr writes (and Richard notes) like blaming government for the current fiasco, I have lived the last 30+ years watching corporations take off towards those “best cost countries” (aka cheapest labor and overhead possible). His blame is hollow when he and his ilk are just as responsible for this mess as any government official ever alive. And both parties are complicit.

I have been calling on Emerson Electric companies for 20+ years. I have actually sold Emerson Electric owned product and know first hand how cheap they are and how they run in to the ground any entity they buy up. So, Mr Farr, excuse me as I call your Bullshit for what it is… Bullshit.

Emerson Electric Votes With Its Feet, Saying The Goverment Is Destoying American Manufacturing

By Richard McCormack
richard@manufacturingnews.com

One of the country’s most important industrial companies says the United States is not a good place to manufacture and it will continue moving its assets offshore.

The federal government is “doing everything in [its] manpower [and] capability to destroy U.S. manufacturing,” says David Farr, chairman and CEO of Emerson Electric Co., in a presentation at the Baird 2009 Industrial Conference in Chicago Ill., on Nov. 11. In comments reported by Bloomberg, Farr added that companies will continue adding jobs in China and India because they are “places where people want the products and where the governments welcome you to actually do something. I am not going to hire anybody in the United States. I’m moving. They are doing everything possible to destroy jobs.”

In his Powerpoint presentation available on the Emerson Electric Web site, Farr notes that the federal government is damaging prospects for U.S. economic growth with a $1.41 trillion federal deficit (10 percent of GDP); $12 trillion in government debt that will grow to $20 trillion in 10 years; a policy of printing money; a “non-targeted $800-billion stimulus”; bailouts for Wall Street and the automobile companies; the prospect for cap and trade legislation; a “government takeover” of health care to the tune of more than $1 trillion; increasing taxes and regulations; and a “lack of U.S. $ support” for manufacturing. The global stimulus “soon will fade,” says Farr.

What does it mean for a company like Emerson? “We continue to increase our international and emerging market presence,” says Farr. The company has increased its emerging market sales by 19 percentage points over the past 10 years, from 13 percent of total sales in 1999 to 32 percent in 2009. It is now generating 55 percent of its sales from overseas operations, a figure that will grow to 60 percent by 2014, with 40 percent of total sales coming from emerging markets.

“Emerson’s investment in emerging markets is continuing to pay off with sales growth,” say Farr. In 1999, the company generated $12.4 billion in annual sales from mature markets and $1.9 billion from emerging markets. By 2009, sales from mature markets grew to $14.2 billion, while sales from emerging markets more than tripled to $6.7 billion.

The company projects sales from mature markets in 2014 of between $16 billion and $17 billion, while emerging market sales will reach almost $12 billion.

Between 1999 and 2009 “73 percent of growth is from emerging markets!” Farr exclaims. “More than 60 percent of our growth is expected to come from emerging markets over the next five years so Emerson will continue to invest in these key markets.”

In 2001, the company had 21 percent of its 360 manufacturing facilities located in “best cost countries.” Today, Emerson has 250 manufacturing locations and 36 percent of them are in “best cost countries.” That percentage is going to increase to more than 40 percent.

Emerson is following the money. Infrastructure investment in the United States now accounts for 21 percent of the global total of $12 trillion, down from 27 percent in 2004. Asia Pacific’s share of global infrastructure investment has increased from 18 percent of the global total in 2004 to 27 percent in 2009. That number is expected to continue going up — to 31 percent of global investment in 2014 and 37 percent in 2019.

The current recession has been destructive and the United States will have a hard time recovering, says Farr. U.S. job losses of 7.3 million to date are only slightly less than the total of the last four recessions combined (8 million). The current downturn is having a big impact on Emerson and its employees. The company has reduced its headcount by 15 percent. It has closed 55 facilities and has incurred $540 million in restructure expenses.

The 2001 recession was also tough on the company. It reduced its headcount by 14 percent, closed 75 facilities and incurred $437 million in restructuring expenses. “But the world did not change much,” says the Emerson CEO. With the current recession, “there will be some fundamental changes going forward.”

The company reported sales for its 2009 fiscal year ending in September of $21 billion, down from $25 billion in 2008 and $22 billion in 2007. It had an operating profit of $3.2 billion in 2009 (15 percent of sales).

I will say this. At least now we will see the true spirit of the Corporate Controllers of this country. What you, as a poor redneck just trying to make ends meet needs to know, these jobs will NEVER come back. The vast majority of jobs that have folded up (either for good or to move overseas to those “best cost countries”) are NEVER going to come back to the USA. If you had a decent paying job making parts for an American automotive company… sorry, your job is gone FOREVER. If you were lucky enough to move to an Asian automotive company, get ready to see your wages decrease (or NEVER increase to accommodate inflation). And when it gets bad enough, watch as these jobs disappear, as well.

We used to think that China was the “best cost country”, but I read recently that Mexico is now.

You think that is going to help your chances keeping a good job as these corporations (who ONLY care about the profits) move out even more over the next two years?

It is a snow ball rolling down hill and I see it growing and growing.

BTW: My comment on the article:

Comment: Mr Farr’s comments have a ring of BS to them. I have called on Emerson Plants for almost 20 years and have watched as they took every advantage of “best cost countries”, with NEVER a thought of the American worker in mind. This moving away was happening long ago and the fact is that government and Corporations are BOTH instrumental in this fiasco. Corporations control our government. This is so evident that surely there is no argument. So, Mr Farr, I see this as just another way for you to fulfill your obligations to make as much profit for your shareholders as you can. But do not think for a second that you can start this crap and think that everyone will believe it. Emerson Corp is set to make money… with or without Americans. I say you take your entire shebang elsewhere, then.

Susana Iranzo (Universitat Rovira Virgili) and Giovanni Peri (University of California Davis, CESifo and NBER) have a new paper that looks into the relationship between migration and trade:

The remarkable increase in trade flows and in migratory flows of highly educated people are two important features of globalization of the last decades. This paper extends a two-country model of inter- and intra-industry trade to a rich environment featuring technological differences, skill differences and the possibility of international labor mobility. The model is used to explain the patterns of trade and migration as countries remove barriers to trade and to labor mobility. We calibrate the model to match the features of the Western and Eastern European members of the EU and analyze first the effects of the trade liberalization which occurred between 1989 and 2004, and then the gains and losses from migration which would occur if barriers to labor mobility are reduced. The lower barriers to migration result in significant migration of skilled workers from Eastern European countries. Interestingly, this would not only benefit the migrants and most Western European workers but, via trade, it would also benefit the workers remaining in Eastern Europe.

An interesting interview with Jagdish Bhagwati where he talks about protectionism and free trade. He mentions global warming too-

I think it depends on the way you do it. First, you’ve got to decide whether there is a problem of an externality. I have doubts about these scientists who claim to have a consensus on global warming because, you know, Freeman Dyson, a great scientific figure, says these guys are really low-level scientists and I’m told by many that they, in fact, are. And if they reach a consensus, I don’t care. I mean, that’s the consensus of incompetents.

But so long as only the scientists were talking about global warming, nobody paid the slightest attention. Remember, not a single senator voted for the Kyoto resolution back in the ’90s. Even Al Gore and Clinton had to walk away from Kyoto. But then the polar bears were threatened, the glaciers began to melt, and then that great French film about the penguins which touched all our hearts came out. So these were three whammies. Even if you live in Peoria you will understand, wrongly maybe, that global warming is a problem. I tell all my students: If they think of something like that for free trade, please let me know.

APEC stated very clearly – reject all form of protectionism and embrace a very open liberal economy. Yes, back to basics, free trade and more free trade. It looks more like going back to square one instead; we are embarking our first step again to bring about another financial crisis (in the future). Have we not learn from our history lesson? Again, I believe everybody will be horrified if a government decided to wipe out the Jews race again, which I believe everybody should be just as horrified that our governments have decided to promote Adam Smith’s free market theory again. The great depression in 1929 is the failure of Adam Smith’s theory;  maybe Asians didn’t feel the impact as much back then, but now that we are striving forward in economic terms, we are in greater risk of experiencing what US and Europe had experienced in 1929. Finally, the 1970s recession brought upon by world-wide opening up their economies is another exmaple of free market weakness as well. Even the 1997 Asian financial crisis and the last global financial crisis has its roots to our free market, free trade policies.

I couldn’t emphsize more on the downsides of free trade. The governments are again going back to adopt it which is the exact root cause of poverty! Mexico President Felipe Calderon even used NAFTA (North America Free Trade Agreement) as an example to encourage Asia Pacific to enter free trade! However, according to some actual facts, Mexico farmers are worse off since NAFTA and terrorist group is formed on day 1 of NAFTA formation.Why would any ordinary farmer with a family to take care of resort to join a terrorist group? It is definitely because NAFTA would make him incapable to take care his family anymore. My dear Asians mates, can you see what we are getting ourselves into?

Finally, free market has this ability to increase the volumn of economy in short period of time. It means we will receive news that our GDP is rising, goodnews? NO! It would only make the income inequality gap greater. Furthermore, with globalization in place, the production rates will be increasing tremendously, pollution and more pollution. Finally, China the biggest polluters in the world has not made any committment to ease their irresponsible action. However, it is solely China’s fault? I doubt so, the international brands are setting their production there, polluting China even more! It’s a cycle, why are we gearing ourselves to another loop of it?

Saw this cartoon on the newspaper few days back:

I’m neither the one who drew that nor I’m the only one who realize the consequences of the APEC summit this year. If you have read this entry till this far, I hope you will make an effort to share the content to the next person you see today.

Catholic Bishops Put Sex Obsession Ahead of Mission to the Sick and the Poor By Adele M. Stan, AlterNet.

First they threatened to take down health-care reform over abortion coverage. Now they’re threatening services to the sick and poor of Washington, D.C., over same-sex marriage.

They lead a church that claims to stand on the side of the sick and the poor, the meek who shall inherit the earth. But in the course of a single week, the bishops of the Roman Catholic Church proclaimed themselves willing to see health-care denied to millions of uninsured Americans, and to yank the social-service rug out from under the feet of tens of thousands of urban poor in the nation’s capital — all to serve the bishops’ obsession with the sex lives and reproductive organs of others.

The church’s week of shame began with the bishops’ role in creating the monster that is the Stupak amendment to the health-care reform bill passed last weekend by the House of Representatives, when the bishops refused to bless a compromise made between pro-choice and anti-abortion Democrats in the language of the bill. (Without the bishops’ blessing, anti-choice Democrats vowed to vote against the bill, so Speaker Nancy Pelosi was strong-armed into allowing Rep. Bart Stupak, D-Mich., to bring an anti-choice amendment to the floor.) Finishing off the week with a brutal bang, the church threatened to sever its social service contracts with the District of Columbia if the city council of Washington, D.C., passes a measure legalizing same-sex marriage — a move that would throw services to 68,000 of the poorest and most vulnerable citizens of the nation’s capital into chaos.  READ MORE:

http://www.alternet.org/sex/143945/catholic_bishops_put_sex_obsession_ahead_of_mission_to_the_sick_and_the_poor

Christian Bootcamp Seeks to Arm Home-Schooled Youths for “Spiritual Warfare” Posted by Eleanor Bader, RH Reality Check

“Life is not a playground,” says Rev. Rusty Lee Thomas in The Kingdom Leadership Institute Manual. “It is a war zone.”

Rev. Rusty Lee Thomas, Assistant Director of Operation Save America, is worried. According to studies by the Barna Research Group, California pollsters specializing in tracking religious and spiritual attitudes, only nine percent of teenaged Christians believe in moral absolutes. What’s more, Barna reports that the vast majority of kids raised Christian will abandon all or part of their faith by the time they finish high school. “Assembly of God leaders estimate between 65 and 70 percent will depart, while the Southern Baptist Council on Family Life estimates roughly 88 percent will leave,” Thomas writes.

To remedy this, Thomas’ Elijah Ministries has started the Kingdom Leadership Institute, a weeklong ideological boot camp for home-schooled Christians between the ages of 14 and 21. His recently released book, The Kingdom Leadership Institute Manual, is a roadmap for their training and a fascinating — if twisted — look at the concerns of far right evangelicals, complete with a game plan for action.

There’s no pussy-footing in Thomas’ screed. For him the battle between God and Satan is at hand, pitting True Believers against Sinners. Common ground? Impossible since there are only two sides, one resulting in heavenly salvation and the other ending with the earth’s destruction.

“Life is not a playground,” he rails. “It is a war zone — a clash of ideas, philosophies, values, and worldviews. It demands leaders who do not shrink back in [sic] the day of battle.” He calls it “spiritual warfare” and repeatedly summons images straight out of the Middle Ages, with gallant Knights protecting grateful maidens, and courtliness trumping gender equity.  READ MORE:

http://www.alternet.org/blogs/rights/143975/christian_bootcamp_seeks_to_arm_home-schooled_youths_for_%22spiritual_warfare%22

Geithner Singled Out in TARP Watchdog Neil Barofsky’s Scathing Report on AIG Bailout by Shahien Nasiripour, The Huffington Post

A brutal report issued Monday by a government watchdog holds Timothy Geithner — then the head of the Federal Reserve Bank of New York and now the nation’s Treasury Secretary — responsible for overpayments that put billions of extra tax dollars in the coffers of major Wall Street firms, most notably Goldman Sachs.

The authoritative new narrative describes how, while bailing out insurance giant AIG last fall, a team led by Geithner failed nearly every step of the way.

Instead of bargaining with AIG’s numerous counterparties to resolve its billions of dollars in souring derivatives contracts, Geithner’s team ended up paying top dollar for toxic assets — “an amount far above their market value at the time,” the report notes.

“There is no question that the effect of FRBNY’s decisions — indeed, the very design of the federal assistance to AIG — was that tens of billions of dollars of Government money was funneled inexorably and directly to AIG’s counterparties,” the Office of the Special Inspector General for the Troubled Asset Relief Program said.

Wall Street firms like Goldman Sachs, Merrill Lynch and Wachovia got full value for their derivatives contracts with AIG, and taxpayers got the bill. In total, $27.1 billion of public money was transferred to companies that did business with AIG.

Throughout the bailout of AIG, the report says, the New York Fed failed to develop appropriate contingency plans; failed to properly assess the impact of its decisions; and generally engaged in negotiation strategies that were doomed to fail.

Then, after Geithner’s team paid off AIG’s counterparties on Wall Street, it imposed “onerous” terms on the troubled insurer, the report says.  READ MORE:

http://www.commondreams.org/headline/2009/11/17-8

Hightower: Obscenely Rich Bankers Claim to Do God’s Work — They Can Go to Hell By Jim Hightower, AlterNet.

Top executives were initially hurt by the public’s moral outrage. But their sense of entitlement quickly kicked in, and now they claim they’re the good guys.

“Repent,” the preacher cried out, startling those who heard him.

This was no street evangelist ranting at the passing crowd, but the archbishop of Canterbury, head of the Church of England. His sharp admonition was pointed directly at a particular set of sinners, who undoubtedly had never given any thought to the morality of their actions: the barons of global banking.

As in our country, people in Europe are enraged at those hustlers of high finance who wrecked the world’s economies, then flexed their political muscle to get governments to replenish their bankrupt vaults. Infuriatingly, these bailed-out bankers have now returned to business as usual, including grabbing monstrous bonus payments for themselves.

In Europe, such greed is not only being assailed politically, but it is also being cast as a matter of fundamental moral failure. As another of Britain’s leading clergymen put it, “There is a general feeling that the level of bonuses we’ve seen have been obscene.”  READ MORE:

http://www.alternet.org/story/144026/hightower%3A_obscenely_rich_bankers_claim_to_do_god%27s_work_–_they_can_go_to_hell

http://www.reuters.com/article/domesticNews/idUSTRE5AG30Y20091117

Just at the very time when it is finally dawning on American leadership that our enormous trade deficit lies at the heart of our economic problems, American labor, numbed by decades of brow-beating about the supposed benefits of free trade and globalization, seems to have given up the fight.  Just when President Obama most needs for American workers to rally behind his efforts to restore a balance of trade – while meeting with the Chinese premier in an effort to stop Chinese manipulation of the currency exchange rate – the labor movement has fallen silent.  America’s most powerful labor union prepares for a summit on job creation without one mention of correcting our trade imbalances. 

As reported in the above-linked Reuters article, AFL-CIO President Richard Trumka is preparing for a December 3rd White House Summit on job creation, focusing on such things as steering government stimulus spending toward small businesses.  His plan doesn’t include a single mention of trade. 

In a preview of labor’s contribution to Obama’s December jobs summit, AFL-CIO President Richard Trumka said money from the Troubled Asset Relief Program could be lent directly to small- and medium-sized businesses at commercial rates.

He said TARP money could also help small community banks that were ignored during the financial rescue effort by having them manage the loans.

… The AFL-CIO jobs plan also calls for extended unemployment benefits, food assistance and healthcare for the unemployed, more money for infrastructure projects and state and local governments, and job creation aimed at distressed communities.

Never mind the fact that the President’s emphasis on currency exchange rates will have little effect on the trade deficit with China, or that his whole approach to trade has been far too timid.  Without the support of American labor on this issue, he has virtually no chance of softening foreign opposition to trade policy inititatives. 

I suppose that labor leaders like Trumka can hardly be blamed for giving up the fight after decades of being ignored on the trade issue by their own party and mocked by business leaders and economists as being unwilling to “compete” in the global economy.  For decades, labor complained bitterly about the effects of trade policy while administrations and both political parties remained enamored with the false promises of a doomed model of free trade and globalization.  But the climate on trade policy is changing rapidly in the wake of the global economic collapse and this is exactly the wrong time to give up the fight and become dependent on government largesse.  The very moment in history when you were proven to be right all along is not the time to admit defeat.

Menurut David Ricardo, pada dasarnya perdagangan internasional didorong oleh adanya comparative advantange dimana produk di suatu negara tidak dapat diproduksi negara lain dan competitive advantange dimana negara dapat mengambil keuntungan dari spesialisasi produk yang memiliki opportunity cost lebih kecil dari negara mitra dagangnya. Perdagangan internasional juga menguntungkan baik bagi produsen maupun konsumen, dimana adanya keuntungan dari economic of scale yaitu penurunan average fixed cost dari produksi dalam jumlah yang besar serta spesialisasi produk yang membuat pilihan produk menjadi beragam.

Adanya hambatan atas impor untuk memproteksi industri dalam negeri baik tarif ataupun kuota, telah membuat distorsi terhadap harga pasar internasional baik produk lokal maupun impor. Terdapat penurunan consumer surplus dimana untuk kuantitas yang sama, konsumen harus membayar lebih mahal. Berdasarkan analisa makroekonomi, walaupun terdapat producer surplus dari kenaikan harga pasar global dan tax revenue buat pemerintah, namun jumlahnya lebih kecil daripada penurunan consumer surplus. Hal inilah yang menjadi net loss bagi seluruh masyarakat. Atas dasar itulah, terdapat gagasan untuk melakukan liberalisasi perdagangan (free trade) dimana tarif diminimalkan bahkan dihapuskan untuk meningkatkan consumer surplus. Peningkatan consumer surplus ini dapat meningkatkan investasi maupun pajak penghasilan serta memperbesar volume perdagangan.

Penghapusan tarif yang berlaku selama ini didasari atas free trade agreement antar negara maupun antar beberapa negara. Namun karena hanya beberapa negara saja yang menyepakati penghapusan tarif maka pasar masih belum seefisien dan senetral mungkin membentuk harga. Kemungkinan negara dengan biaya produksi tinggi bebas tarif namun adanya negara dengan biaya produksi rendah namun terkena tarif karena tidak terlibat dalam free trade agreement dapat menyebabkan trade diversion (pengalihan perhatian konsumen). Hal ini dapat menyebabkan potential loss bagi consumer surplus karena seharusnya konsumen dapat membayar dengan harga yang lebih murah. Karena itu perlu adanya penetapan tarif bersama yang lebih global agar tercipta pasar yang lebih efisien.

Atas dasar itulah dibentuk organisasi internasional yang bertujuan mensupervisi dan meliberalisasi perdagangan internasional secara global yaitu General Agreement on Tariffs and Trade (GATT) yang dibentuk 1947 yang dilanjutkan oleh World Trade Organization (WTO) yang dibentuk tahun 1994. WTO mempunyai 153 anggota dan merepresentasikan 93% dari perdagangan internasional sehinnga kebijakannya memungkinkan terciptanya pasar dunia yang efisien.

Setelah berjalan, WTO mendapat banyak kritik dari para ekonom terutama adanya indikasi keberpihakannya terhadap negara-negara maju yang menekan negara-negara berkembang dengan negotiation power yang kurang. Martin Khor dari The Third World Network (2007) menyatakan indikasi tersebut sebagai berikut:

* Beberapa negara maju masih dapat mengenakan bea masuk yang tinggi pada produk tertentu, contoh: bea masuk pada tekstil di AS.
* Banyaknya hambatan non tarif baru seperti Anti-Dumping (bila harga produk yang diekspor dan dijual di pasar domestik berbeda), Safeguard (lonjakan barang kompetitor impor yang mengancam industri dalam negeri), dan Counterveilling (adanya subsidi yang dasarnya tidak jelas terhadap barang ekspor) dimana negara berkembang banyak dituntut oleh negara maju.
* Proteksi terhadap produk agrikultur dari negara berkembang di negara maju dengan persyaratan kualitas barang.
* Banyaknya negara berkembang yang kurang mempunyai kapasitas bernegosiasi dan berpartisipasi aktif di Uruguay Round.
* TRIP Agreement (Trade-Related Aspects of Intellectual Property Rights) yang membatasi negara berkembang untuk mengembangkan teknologi yang berasal dari luar negeri pada sistem lokal.

Hal inilah yang membuat banyak negara mempertanyakan transparasi dari WTO dalam pengambilan keputusan. Kecenderungan WTO terhadap negara maju memungkinkan adanya trade diversion baru yang membuat inefisiensi pasar.

Berdasarkan fakta tersebut, sebaiknya dilakukan hal sebagai berikut:

1. Pemerintah negara berkembang harus lebih aktif dalam melakukan negoisasi dalam WTO terutama masalah proteksi negara maju terhadap impor agrikultur dan bea masuk yang masih tinggi.
2. Kebijakan WTO atas anti-dumping, counterveiling, safeguard, dsb harus direvisi kembali terutama bila pembuktiannya sulit dilakukan terutama untuk counterveilling karena industri negara berkembang masih sangat memerlukan subsidi pemerintah untuk berkembang.
3. Kebijakan WTO mengenai TRIP Agreement sebaiknya dihapuskan saja karena bukan merupakan kewenangan WTO dalam mengurusi Intellectual Property Rights

Daftar Pustaka

1. Khor, Martin (2000-01-28). “Rethinking Liberalization And Reforming The WTO”. Third World Network. http://www.twnside.org.sg/title/davos2-cn.htm. Retrieved on 2007-03-22.
2. Steven E. Landsburg “Price Theory and Applications” Sixth Edition Chapter 8. http://en.wikipidea.org/free_trade
3. http://www.wto.org