“The cost to buy a sweater in US is almost the same as the cost to buy it in China.”
–Nonsense. The difference is about 10:1

There is no one lobbying to protect low-end electronic assembly in the United States, because there is no low-end electronic assembly in the United States. It’s all moved to China. Once an industry is dead, no one complains. If someone that was once employed in that industry gets another job (say working for Walmart), at that point their political stance will change.

So if Chinese trade destroyed 1 million US jobs in 2001, but created 900,000 in 2003, then what you end up is 900,000 in favor of trade and 100,000 against it. At which people campaigning against trade is political suicide in most areas of the US.

The trouble with statistics is that you can basically massage them to get any number you want, and a lot of times you end up adding apples and oranges.

Also, it really doesn’t matter. People don’t care how many jobs get created or lost by trade as much as they care about whether *their* job gets hit.

I can provide anecdotal evidence for this in that the industries I’ve been involved in (finance and high technology) are very heavily involved in trade, particularly Chinese trade, and we can look at employment numbers for those areas. Also we can look at Congressional voting patterns on trade bills which correlate very strongly with job gains and losses in their district.

I can certainly say that I’m not going to vote for anyone that wants general trade restrictions because it would kill my job. We can then look at statistics and voting patterns to see if I’m unique or not, and I don’t think I am.

I keep hearing this. Can you provide any statistical backup?

Which means absolutely nothing. As part of China’s WTO accession it agreed to allow nations to put under special scrutiny.

There is a specific Congressional act 19 USC 2451 that authorizes USITC to investigate and take countervailing measures against Chinese dumping, and China agreed to this special treatment in Annex 16 of its access protocol see (WT/L/432). This special treatment would likely be totally illegal if China didn’t agree to it.

Now the question is whether or not these sort of investigations every lead to anything, and they don’t. USITC has only approved a very few petition, which goes to the President who promptly tosses the petition and the report in the trash can.

China likely agreed to being a special target precisely because they knew that the investigations would come to nothing.

Glen M: Also, keep in mind, the same realities that subjugate literal enforcement of GATT rules will, eventually, force US politicians to address the resultant job losses.

I doubt it. There have been more job gains from trade than losses, and as long as that is true, you aren’t going to see too many complaints. If nothing has been done over the last decade, I don’t see anything new happening especially since the trade deficit is going down, China is moving away from exports, and China is the source of major markets (it’s practically the only place in the world that GM is making money).

The only industry that has every gotten anywhere with limiting China trade is the textiles industry, and one thing about trade negotiations is that you can use divide and conquer tactics. Once cotton underwear manufacturers get what they want, they don’t care how many steel workers lose their jobs, and vice versa. The WTO negotiation process encourages this sort of industry specific approach to trade.

I am well versed in the realities of legal interpretations. Despite that, the fact remains that China is the target of the vast majority of investigations by the USITC. Also, keep in mind, the same realities that subjugate literal enforcement of GATT rules will, eventually, force US politicians to address the resultant job losses. As such the pendulum will just as easily swing the other way.

You are contradicting yourself. Either Bernanke is using taxes to finance the bailout, in which case you have no inflation or he is printing money. If that causes inflation that defeats the whole purpose of the “evil conspiracy.”

DJC: Now how does the corporate welfare bailout of Goldman Sachs help the American taxpayer straining to feed the family?

First you answer my question, before we go off to another totally unrelated question. You claim that Bernanke is setting up the US for hyperinflation. My question here is how would this benefit Goldman-Sachs and Citigroup who you think run the US Treasury.

If you concede that the ultimate cost is going to be borne by US taxpayers then this presumes no inflation.

In any case, most taxes come from the wealthy so if we have to finance this by increasing taxes on people that make $250,000+, that sounds good to me.

Out of the $180 billion that Bernanke wired to bankrupt AIG, the largest chunk of that pot of money was rewired to Goldman Sachs. The Federal Reserve provides trillion dollar bailouts to the corporate executives that created the fiasco that is derived from Enron-type accounting practices. I am certainly sure that Bernanke knew where the taxpayer money was directly going. Now how does the corporate welfare bailout of Goldman Sachs help the American taxpayer straining to feed the family?

You need to understand how money supply grows. An increase in money supply in not sufficient in of itself to cause inflation.

What the FED does is buy debt. In effect what this does is force the money that was invested in whatever they buy to either be spent or much more likely be invested in something else.

The biggest effect is it drives down interest rates since it decreases the supply of debt which means the sellers of debt can get a better price (Basically the lower the interest rate that has to be paid, the better the price from the borrowers perspective).

What’s happening now is the debt is being bought from banks and the banks are using the money to cover investment losses. They’re using it to increase their loan loss reserves. The money is not going into circulation, so it’s not causing inflation.

The FED isn’t trying to devalue the dollar or cause high inflation. They’re trying to keep financial institutions solvent. Once financial institutions are solvent, they can then borrow the money back from banks and decrease the money supply. In theory, it shouldn’t lead to much inflation. I would think that Chinese officials recognize this aren’t too worried about a collapse in USD.

Basically, the money went into circulation as housing prices went up. The money you see as an increase in money supply effectively went into circulation over the last 10 or so years. It went into the hands of those who sold their houses at inflated prices and didn’t use the proceeds to buy another overpriced home. It didn’t cause much inflation. Probably because globalization was a very strong deflationary counter force.

In order to have a big increase in inflation in the US, you need the employment situation to change. There has to be a shortage of workers and those workers have to command higher wages. This will put money into hands that will spend instead of horde. I don’t see this happening any time soon.

If you want to look at an indicator of inflation, don’t look at money supply. It’s better to look at the velocity of money.

Can you explain to me exactly how wrecking the US economy and hyperinflation will help Goldman-Sachs and Citicorp?

On the one hand they are supposed to be these evil uber-powerful geniuses, but on the other hand they are supposed to be so incompetent that they spend their time destroying themselves.

DJC: Soon the US Dollar will be worth the equilvalent of toilet paper.

No it won’t. One reason it won’t is that it’s interests of Goldman-Sachs or Citigroup or the United States government for the dollar to be worthless.