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Employers add no net jobs in Aug.; rate unchanged

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The loss of comparative advantage is addressed by global labor arbitrage. Cries for a new Bretton Woods are only a cry for solutions to the negatives of cheap labor trade. There has been no economic theory that addresses the negatives of cheap labor globalism. Friedman sold us on the belief that trade deficits would not be detrimental ... thanks Chicago. Well we passed Aug 2nd by taking on more loans ... because we had no choice. The PIIGS in Europe are all in a mess. Germany has had a current account surplus to help them along with a touch of ordoliberalism. Also they had better banking regs and had no run up of hard assets / housing during the housing mess. While not protectionist ... they use protectionist measures and work closely with a highly paid union force. They get it right.

Looking to history and American mercantilism, I can assure you there would be no industries to prop up without the protection of tariffs. Viewing government as a business ... I have to wonder why they prop up the China trade division at a cost of hundreds of billions a year. As if America some how has the economic might, to withstand the years of the drain on the economy while we wait for Chinas cost to rise, that we might benefit from comparative advantage. At some point America has to stop exporting GDP and job growth ... when that will be ... I don't know.

Germany is not a protectionist country. Quite the opposite.
 
The loss of comparative advantage is addressed by global labor arbitrage. Cries for a new Bretton Woods are only a cry for solutions to the negatives of cheap labor trade. There has been no economic theory that addresses the negatives of cheap labor globalism. Friedman sold us on the belief that trade deficits would not be detrimental ... thanks Chicago. Well we passed Aug 2nd by taking on more loans ... because we had no choice. The PIIGS in Europe are all in a mess. Germany has had a current account surplus to help them along with a touch of ordoliberalism. Also they had better banking regs and had no run up of hard assets / housing during the housing mess. While not protectionist ... they use protectionist measures and work closely with a highly paid union force. They get it right.

Several quick thoughts:

1) Although trade deficits might matter less in the short-run, they do matter in the long-run. Chronic sizable imbalances are a problem.

2) As for August 2, the U.S. needed to raise its debt ceiling. To fail to do so would have been reckless as it would have imposed abrupt measures to immediately balance the budget and cover debt payments (interest and, if necessary, a share of principal). The deal attached to the debt ceiling hike was, IMO, suboptimal.

3) Stronger banking regulations, particularly with respect to capital, are not necessarily a bad thing, even if they constrain lending in the short-term. In increasing part, U.S. growth had become tied to larger increases in debt (during the closing years of the housing bubble, domestic nonfinancial debt was rising more than $3 for every $1 increase in GDP. That's not a sustainable model). Canada's banking system, where capital and lending standards are stronger, emerged largely unscathed from the turmoil associated with the recent financial crisis.

4) A lesson--albeit one that was forgotten prior to the recent recession--is that there is no such thing as "good" inflation or "bad" inflation. Whether one is dealing with consumer price inflation or asset price inflation, neither is wholly benign. The housing bubble is a classic illustration of how asset price inflation can be a very bad thing, especially if it is tied to excessive debt. I tend to agree with IMF research that more robust monetary policy approaches should consider asset prices in the overall rubric of inflation.
 
You're still just flinging out baseless innuendo. I wonder why? Could it be that the states with the highest poverty rates are actually southern conservative states? Actually, it could be. http://www.census.gov/compendia/statab/2011/tables/11s0708.pdf

I notice that Texas is right up there with West Virginia. Congratulations, Governor Perry.

You probably ought to take a geography lesson to see where TX is but while you are doing that, suggest you check the Fortune 500 Companies moving to TX and the massive growth in the state. As usual you jump on articles and statistic which you believe support your point of view even though you support a failed ideology much worse than what could ever go on in TX
 
Germany is not a protectionist country. Quite the opposite.

Germany is a sneeky protectionist ... cooperation between unions, government and banks. I'll find more details later ... however I read an article this week and I didn't bookmark it.


Germany's protectionist bombshell – Telegraph Blogs
Germany's protectionist bombshell

By Edmund Conway Economics Last updated: September 28th, 2009

10 Comments Comment on this article

The trouble with protectionism is that both the efforts to prevent it and the disastrous effects it can have have been painted as boring. So often do politicians around the world drone on about confronting the threat that it has become increasingly difficult to convince people of its importance. I can tell you that protectionism is, as I see it, the biggest worry I have about the next couple of years, both economically and diplomatically. I just worry that we’ve become anaesthetised to such comments.

I wrote about protectionism in my column last week, so no need to repeat myself, except to give an update. I mentioned that although there are growing examples of the rise in “traditional” protectionism – stuff like trade barriers, subsidies for domestic companies and so on – the real threat remains the more invisible, insidious element of financial protectionism. This works in two ways: first, that governments around the world, by dint of supporting their banks, are (by helping them survive) giving them anti-competitive support to the detriment of foreign competitors (particularly those with less generous governments ). Second, that governments are invariably ordering their banks to withdraw cash and operations from overseas in order to fund more lending for domestic businesses and consumers.

The first is perhaps unavoidable; the second is inexcusable in a globalised world.

And yet it is happening at alarming pace. There is anecdotal evidence: there were explicit clauses when Royal Bank of Scotland that stipulated that it should ensure more cash was lent to domestic customers. There is statistical evidence. The latest Bank for International Settlements quarterly report showed that the flows of cash around the world have continued to slide.

But I fear that far worse is yet to come. Take Germany as an example. Following the election result, it looks rather likely that the new government will order an overhaul of the way the country’s Landesbank system works. These banks expanded rather too far and too fast into Eastern Europe and Britain (remember West LB and how it became a major player in the world of property finance not so long ago?). According to Hans Redeker of BNP Paribas, one of the likely stipulations the new government will impose is for the banks to withdraw their capital from UK assets and spend the proceeds on financing domestic companies. The amount could be very substantial, if this chart below is anything to go by. It shows that although lending activity throughout the eurozone has dropped like a stone, this hasn’t coincinded (yet) with any cutting of foreign assets.
EMU: Imploding credit growth suggest net external assets to decline

EMU: Imploding credit growth suggest net external assets to decline

Redeker’s insight (as a currency buff) is that this will cause the pound to fall even further against the euro (until, that is, people realise next year how much of a mess the continent’s own economy is in) but my concern is more deep-seated.
If Redeker’s prediction about Germany is the case for other countries around the world, the likelihood is that we are only halfway through this collective purge of overseas assets. And as country after country follows suit, it will result in broader protectionism. As the BIS said in its annual report a few months ago, “after seeing foreign-owned banks pare back activity during the crisis, host country governments may become less sanguine about allowing outsiders to operate on their soil… And, by reducing the ease with which capital moves across borders, financial protectionism would shrink trade in goods and services and thus moderate growth and development.”

What I still find staggering is that governments around the world are being allowed to get away with this kind of protectionism without any apparent resistence from either companies or economic institutions like the IMF or OECD.

As it happens I am off to the IMF’s annual meeting this week so will be sending through plenty of updates around the events this week. It promises to be a very interesting meeting indeed. The US used last week’s G20 to pledge to ensure the international monetary system is no longer allowed to generate the imbalances that caused this crisis. But precisely how do they do this? Hopefully we might get some answers this week.


flandersnews.be: Opel: Is this German protectionism?
General Motors Co. is selling a large stake in the European Unit Opel to Canadian auto parts maker Magna International and Russia's Sberbank. Flemish Prime Minister Kris Peeters is going to take the issue of how the German government handled the sale with European Union authorities. Federal Finance Minister Didier Reynders suspects German protectionism and is asking for an investigation.

Industry lobbies against German protectionism
Industry lobbies against German protectionism

Catherine Craig
26 Jan 2009

Private equity firms are lobbying against proposed changes to German law that could prevent foreigners buying more than a quarter of local companies and stir fears of protectionism as the global economy slows.

The German Private Equity and Venture Capital Association, the BVK, with international buyout firm Permira, will attend a hearing today to defend against proposed German legislation that could discriminate against private equity investors with non-European Union-based funds.

Under the proposals, buying more than 25% of any German company by an investor with funds based outside the EU or the European Free Trade Association could be blocked by the German authorities on national or social security grounds.

Rainer Traugott, a partner at law firm Linklaters in Munich, who is representing the BVK at today’s hearing, said: “Under the proposed legislation, the German Ministry of Economics could investigate any transaction up to three months after it is signed, with a further two months to decide whether or not to prohibit it, placing great uncertainty in the way of deal processes.”

The proposed legislation is particularly worrying for private equity firms with funds based outside the European Union in offshore tax havens.

Permira, whose funds are based in Guernsey but which has stakes in German companies, including media group ProSiebenSat, is understood to be attending the hearing to seek clarification on whether it would be affected by the new rules, as Guernsey is technically excluded from EU law.

Transatlantic Politics » Blog Archive » German protectionism against Nokia
German protectionism at its best: Finish corporation Nokia is a "subsidy locust" and promotes "caravan capitalism" for having decided to move its 2,300 employees-factory from Germany to Romania, where workers cost 10 times less. Such are the claims made by German politicians and trade unions.

Even the European Commission promised some help from "anti-globalization" funds for the angry German workers, who are backed by influential trade unions and populist politicians. The European Parliament got into the act as well by launching an investigation into the alleged abuse of EU funds in relocating to Romania. Everyone seems to forget that Nokia is the LAST mobile phone manufacturer to leave Germany, after Motorola and BenQ Siemens did the same over the past two years. And Nokia is not moving to China, like everyone else, but stays in the EU and gives a fair chance of development to Romania, the poorest member of the club after Bulgaria.

Yet principles such as "freedom of goods, labor and services" within the EU are easily forgotten when it comes to German protectionism.

The cost of German protectionism | Reviewed-Casinos.com
The price of protectionism paid by German online gambling company Jaxx AG, was showcased again this week when the company announced financial results that included a consolidated loss of Euro 16.9 million, largely due to the implementation of the German State Treaty On Gaming.

The Treaty shields the German states which monopolise gambling in the country from fair competition by private companies.

Protectionism rolls through Europe
Germany: quietly waiting

Germany, an actor rather than a victim in the current take-over wave, has remained relatively quiet on protectionism. Foreign investors in general face few hurdles here. Five years ago, British Vodafone took over Mannesmann, the mobile phone company.

There are certain rules: the highly controversial “VW law” makes sure the German state of Niedersachsen can retain its stake in car maker Volkswagen. Other regulations prevent private companies from taking over Germany’s Sparkassen banks, and the military sector is subject to cautious government scrutiny.

Germany tends to take a position somewhere between Great Britain and France.


Opinion: Europe and the Protectionism Trap - SPIEGEL ONLINE - News - International
Protectionism Made in Germany

The German economic stimulus program is designed to primarily benefit the German auto industry. It just happens to be structured somewhat more cleverly than the French plan. If we had sent the €50 billion ($65 billion) to the people in the form of tax rebate checks, French and Italian exporters would have benefited from our program.
 
You probably ought to take a geography lesson to see where TX is but while you are doing that, suggest you check the Fortune 500 Companies moving to TX and the massive growth in the state. As usual you jump on articles and statistic which you believe support your point of view even though you support a failed ideology much worse than what could ever go on in TX
So? Texas still ranks among the highest states when it comes to poverty. And how about addressing Adam's point that most of the worst states are run by Republican governors? Some for decades.

41. Tennessee (Republican)
42. Alabama (Republican)
43. North Carolina (Democrat)
44. Kentucky (Democrat)
45. Texas (Republican)
46. Georgia (Republican)
47. Arkansas (Democrat)
48. New Mexico (Republican)
49. Arizona (Republican)
50. Mississippi (Republican)


Poverty Rate by Household Income - Kaiser State Health Facts
 
Several quick thoughts:

1) Although trade deficits might matter less in the short-run, they do matter in the long-run. Chronic sizable imbalances are a problem.

2) As for August 2, the U.S. needed to raise its debt ceiling. To fail to do so would have been reckless as it would have imposed abrupt measures to immediately balance the budget and cover debt payments (interest and, if necessary, a share of principal). The deal attached to the debt ceiling hike was, IMO, suboptimal.

3) Stronger banking regulations, particularly with respect to capital, are not necessarily a bad thing, even if they constrain lending in the short-term. In increasing part, U.S. growth had become tied to larger increases in debt (during the closing years of the housing bubble, domestic nonfinancial debt was rising more than $3 for every $1 increase in GDP. That's not a sustainable model). Canada's banking system, where capital and lending standards are stronger, emerged largely unscathed from the turmoil associated with the recent financial crisis.

4) A lesson--albeit one that was forgotten prior to the recent recession--is that there is no such thing as "good" inflation or "bad" inflation. Whether one is dealing with consumer price inflation or asset price inflation, neither is wholly benign. The housing bubble is a classic illustration of how asset price inflation can be a very bad thing, especially if it is tied to excessive debt. I tend to agree with IMF research that more robust monetary policy approaches should consider asset prices in the overall rubric of inflation.

I took an interest in the subject of cheap labor ... after the bubble. I actually voted for Reagan and Clinton ... both whose initiatives exist today ... low tax and free trade. I had already determined in my mind that free trade (cheap labor) that I previously supported, destroyed the economy ... before I ever read one economic link. It seemed obvious that exporting jobs and GDP would have negative consequences without the promised job creation.

Eventually I ran into all the economic schools and theory. I also found economic studies ... the best being the Harvard study which made the current account deficit with Asia a codeterminant. Not that the solution to prevent bubbles was a codeterminent ... it was all about the capital from current accounts. Also the benefits espoused by Friedman were shunned ... how do we control, reduce, and regulate the capital.

I'm not dismissive of risk "There is little doubt that increased financial sector leverage –from 20x capital to 30x capital from 2000 – 2007 (even 35x)" , I merely accept the fact that glut and valuation increases were inevitable. A taste of old Nam inflation might have been better then the runup on commodities / housing valuations. Many factors like Asia crisis, monetary manipulation in China, and dollar devaluation contributed.

GDP exports and the following consumption issues that drive 70% of the economy sparked my interest after the inability to stimulate the economy. Underconsumption/Says debate. In the end I look at the bottom line ... as a country ... not just corporation. To old and military service ... the nationalism is ingrained.
www.economics.harvard.edu/faculty/rogoff/files/Global_Imbalances_and_Financial_Crisis.pdf
 
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So? Texas still ranks among the highest states when it comes to poverty. And how about addressing Adam's point that most of the worst states are run by Republican governors? Some for decades.

41. Tennessee (Republican)
42. Alabama (Republican)
43. North Carolina (Democrat)
44. Kentucky (Democrat)
45. Texas (Republican)
46. Georgia (Republican)
47. Arkansas (Democrat)
48. New Mexico (Republican)
49. Arizona (Republican)
50. Mississippi (Republican)


Poverty Rate by Household Income - Kaiser State Health Facts

Never been to TX, I see. Tell that to the people of Houston, Austin, Dallas/Ft.Worth, Midland/Odessa, Lubbock. Guess you ought to stay out of TX. We really are going to miss you.
 
So? Texas still ranks among the highest states when it comes to poverty. And how about addressing Adam's point that most of the worst states are run by Republican governors? Some for decades.

41. Tennessee (Republican)
42. Alabama (Republican)
43. North Carolina (Democrat)
44. Kentucky (Democrat)
45. Texas (Republican)
46. Georgia (Republican)
47. Arkansas (Democrat)
48. New Mexico (Republican)
49. Arizona (Republican)
50. Mississippi (Republican)


Poverty Rate by Household Income - Kaiser State Health Facts
What are you guys arguing about, where the government is making people rich or what? Whether republican or democrat, where is it written that poverty can't exist?
 
What are you guys arguing about, where the government is making people rich or what? Whether republican or democrat, where is it written that poverty can't exist?

Shiek is doing his anti Republican rants again as usual believing that it is the government's role to provide a certain level of income to individuals instead of the freedoms to give them the opportunity to succeed. Liberals love to micromanage everyone else's life but not intrude on theirs. Notice it is always about entitlements funded by others and never personal responsibility.
 
Never been to TX, I see. Tell that to the people of Houston, Austin, Dallas/Ft.Worth, Midland/Odessa, Lubbock. Guess you ought to stay out of TX. We really are going to miss you.
I always thought Texas was a much bigger state than those cities.:roll:
 
What are you guys arguing about, where the government is making people rich or what? Whether republican or democrat, where is it written that poverty can't exist?
Conservative claims Democrat/Liberal policies leads to poverty. Some here are pointing out cases where the highest poverty levels are in states run by Republicans/Conservatives.
 
I always thought Texas was a much bigger state than those cities.:roll:

I gave cross sections of TX, East West, South, and North, all major metropolitan areas that pain a picture of the economy of TX contrary to your point of view and negative articles posted.
 
Never been to TX, I see. Tell that to the people of Houston, Austin, Dallas/Ft.Worth, Midland/Odessa, Lubbock. Guess you ought to stay out of TX. We really are going to miss you.
Texas has the 6th highest poverty rate in the nation. Deal with it. And if the poverty rate in the few cities you mentioned is below the national average, that makes the poverty rate in the rest of Texas that much higher.
 
Conservative claims Democrat/Liberal policies leads to poverty. Some here are pointing out cases where the highest poverty levels are in states run by Republicans/Conservatives.

Proven over and over again but ignored. Some of those Repubican Governors are in border states and some took over recently from Democrat Governors so not sure what your point is. To believe that it is the Government's role to create wealth for individuals is a fallacy but it is true that liberalism has created dependence promoting that falacy
 
Texas has the 6th highest poverty rate in the nation. Deal with it. And if the poverty rate in the few cities you mentioned is below the national average, that makes the poverty rate in the rest of Texas that much higher.

Don't move to TX. People in TX have a better chance of getting out of poverty due to lower taxes and greater freedoms. Guess that fact escaped you
 
Don't move to TX. People in TX have a better chance of getting out of poverty due to lower taxes and greater freedoms. Guess that fact escaped you
How on Earth do people in Texas have a better chance of getting out of poverty when Texas has one of highest poverty rates in the nation?
 
Texas has the 6th highest poverty rate in the nation. Deal with it. And if the poverty rate in the few cities you mentioned is below the national average, that makes the poverty rate in the rest of Texas that much higher.

Unlike you, Sheik, I want a govt. that gives me equal opportunity not one that guarantees equal outcome because that equal outcome is at a cost, higher taxes, more regulations, and less personal freedoms. Govt.spending always comes with strings attached as is all dollars controlled by politicians. Suits you quite well doesn't it?
 
Germany is a sneeky protectionist ... cooperation between unions, government and banks.

Interesting, but most of that appears to be dated or speculative, as in "some elements in Germany want to...." Since the first article was written in 2009 have we seen German banks pulling capital back in country? I'd say it's just the opposite. Germany has been the main (albeit reluctant) party keeping the troubled EU economies afloat. There are some interesting points in there, though. Particularly that protectionism these days is tending to take a less direct form, such as government support for industry (like our own subsidies for green energy, or cash for clunkers). South Korea has been a master of that, helping its industrial conglomerates outperform foreign competitors.

But I guess that begs the question: is it really protectionism for a government to lends its resources to domestic private industry? I think there has to be a distinction between government helping industry become more competitive, and government directly intervening to benefit industry because it can't compete internationally. In for the former case government is helping to improve efficiency and competitiveness while in the latter government is in effect fostering inefficiency and uncompetitiveness by shielding companies from stronger competition.
 
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How on Earth do people in Texas have a better chance of getting out of poverty when Texas has one of highest poverty rates in the nation?

TX has among the higest growth in the nation many legals and illegals that are counted in studies. Low taxes, lower reguations, greater growth opportunities abound in TX. Best move I ever made 19 years ago. Keep reading your reports and I will keep living reality.
 
Conservative claims Democrat/Liberal policies leads to poverty. Some here are pointing out cases where the highest poverty levels are in states run by Republicans/Conservatives.

That's because you premise success on how many people govt gets out of poverty, and we don't. So what are you looking for? And do you think your comparison regarding states is fair? What factors are you looking at, besides the number of poor people? All these years of entitlement programs (on a national level) and the percentage of poor is basically unchanged.
 
That's because you premise success on how many people govt gets out of poverty, and we don't.

I think we premise success on how many people AREN'T living in poverty, period.
 
Shiek is doing his anti Republican rants again as usual believing that it is the government's role to provide a certain level of income to individuals instead of the freedoms to give them the opportunity to succeed. Liberals love to micromanage everyone else's life but not intrude on theirs. Notice it is always about entitlements funded by others and never personal responsibility.
Mind telling the forum what entitlements come from the mayoral level?
 
Unlike you, Sheik, I want a govt. that gives me equal opportunity not one that guarantees equal outcome because that equal outcome is at a cost, higher taxes, more regulations, and less personal freedoms. Govt.spending always comes with strings attached as is all dollars controlled by politicians. Suits you quite well doesn't it?
And that has led Texas to rank 6th highest in poverty.
 
Mind telling the forum what entitlements come from the mayoral level?

Do mayors govern states? You raised the issue of state poverty. As for mayors do they control a budget? Do they assure the safety of their citizens? Do they manage infrastructure? Mayors are closer to the problem than the governors and thus have more of a role in their cities than the Governors do in their city.
 
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