Today’s Must-Read

Prosecuting Financial Crimes: Will Anyone Bunk with Bernie?

Apparently no one at the Department of Justice (DOJ) or the FBI really cares about the greatest white-collar crime wave in the history of the world — even if it did rob average American of some $14 trillion dollars in lost wages, savings, and housing wealth. After eighteen months, it is difficult to point to one CEO from a major Wall Street bank, hedge fund, or fraudulent mortgage company who is behind bars.

How does this compare to the S&L Crisis?

. . . According to government statistics, no less than 1,852 S&L officials were prosecuted and 1,072 were jailed. Over 500 of these were top officers

Go read..

G-20 Standing Up To China, Now It’s Your Turn

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
As the manufacturing infrastructure of suppliers, technology knowledge, etc., moves to China, dependence follows. China appears to be ready to answer, “So what are you going to do about it?”
The world is starting to realize this. Financial Times, yesterday, China reprimanded by G20 leaders

Five prominent members of the Group of 20 leading economies, including the US and UK, sent a coded rebuke to China on Tuesday against backsliding on economic agreements.
In a letter to the rest of the G20 that shows frustration at slow progress this year, the leaders warned: “Without co-operative action to make the necessary adjustments to achieve [strong and sustainable growth], the risk of future crises and low growth remain.”

Reuters says,

The letter was signed by U.S. President Barack Obama, Canadian Prime Minister Stephen Harper, French President Nicolas Sarkozy, South Korean President Lee Myung-bak and UK Prime Minister Gordon Brown.

Meanwhile Business Week looks at China, in China: Closing for Business? (turn your sound off before clicking)

Nearly a decade after China’s entry into the World Trade Organization, many foreign companies say the warm reception they once received has turned frosty. … A new government procurement program known as “indigenous innovation” features rules favoring local firms: It could block sales worth billions of dollars a year. … Beijing has written strict standards for everything from cell phones to cars, often couching them in a way that gives an advantage to domestic producers.

Summary, China used the promise of access to its huge market to grab control of much of the world’s manufacturing. “You want to sell to us, you have to build your factories here.” Now that they have it they are no longer as interested in sharing. And while they subsidize manufacturing in various ways – including currency manipulation – to lure companies to move factories and jobs to China, they are not letting those companies sell inside China. So the huge trade imbalance continues to grow.
China pursued an effective industrial policy. Meanwhile, we don’t even have one.
What are we going to do about that?
Here is something you can do today: Click here to tell Washington: Tell the truth. China is manipulating its currency and playing by its own set of rules.

The Treasury Department must report twice a year which countries are practicing unfair trade by artificially lowering the value of their currencies, making their imports cheaper and our exports pricier.
The next Treasury report on currency manipulation comes on April 15. The Chinese government is spending an unprecedented $30 billion a month buying dollars and selling yuan to keep its currency low and its exports cheap.
Yet regardless of who is in charge of the White House, the US has yet to follow the law and state the truth.

To share this:
Direct Twitter share link (click on this, don’t copy it): http://bit.ly/dAKD4P
Direct Facebook share link (click on this, don’t copy it): http://bit.ly/clpBmC
And then, after you have done these, demand that our government formulate and follow a national industrial policy so we can start bringing the jobs back home.
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Dear Deficit Commission, It’s Not Hard

Dear Deficit Commission,
It’s not hard to figure out why we have a huge deficit. It’s so easy I don’t have to use words. Here are some pictures:

Bill Clinton raised taxes on the rich. Bush cut them.
Now, about that huge national debt…

That second chart kind of explains itself.
The third chart can help you find a place to get some money:

(Note: There is no more Soviet Union.)
In case that isn’t clear enough, try this:

Let me know if you still have any questions.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Chinese Currency Manipulation Is Just One Piece

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
I’ve been focusing on the Chinese currency manipulation problem because the Obama administration is supposed to make it’s twice-a-year declaration on this on April 15. But even if this problem is addressed as it needs to be, keep in mind that it is just one piece of the larger problem of Chinese trade policies.
In a post the other day I listed the main unfair advantages China uses to its advantage:
1) Currency manipulation. China “pegs” its currency at a very low, or “weak” rate, so goods from China cost up to 40% less than they otherwise should.
2) Labor-rights suppression has lowered manufacturing wages of Chinese workers by 47% to 86%.
3) There is massive direct government subsidization of export production in many key industries.
4) China allows environmental degradation that ends up affecting all of us.
5) Intellectual property theft and piracy mean that American products that could be sold are stolen instead.
6) China has a number of policies that block U.S. firms from market access.
It is necessary to bring their currency to market rates, but this is not all that must be done to bring trade into balance. It helps, it doesn’t fix it.
All of these things that China is doing are collectively called a national industrial policy. China has one. We don’t. China’s share of the world’s business has grown exponentially because they have and follow a national industrial policy. Ours has declined dramatically because we don’t. I’m trying to drop a hint here, but for those in Washington who aren’t following let me spell it out more clearly: America needs to develop and follow a national industrial policy.
One more thing, Senators Graham and Schumer have introduced a bill, S. 295, that will “level the playing field” with China.

Specifically, the amendment allows for a 180 day negotiation period between the US and China to revalue its currency, if the negotiations are not successful, a temporary across the board tariff of 27.5% will be applied to all Chinese products entering the United States – a penalty that corresponds to their estimated currency advantage.

It’s time to call the President and your member of Congress, and tell them to let the Treasury Department know that they need to declare China a currency manipulator. And ask them to support the Graham-Schumer bill.
When you call, you can use info from this report by The Alliance for American Manufacturing and Economic Policy Institute titled, “Unfair China Trade Costs Local Jobs.” Accompanying the report is a website with an interactive map that shows job losses to by state and Congressional District:

AAM_Map

Click the map.

Also, look at CAF’s breakout page on the China trade problem: On Jobs, China Has Us In The Red
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After Waiting 14 Months Obama Finally Chooses To Show Up, Govern

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After being in office for 14 months President Obama is finally, finally, finally, finally, finally, finally choosing to begin to govern the country. Today, for example, he finally, finally, finally, FINALLY decided it would be a good idea to put a few people into vacant offices. See President Announces Fifteen Recess Appointments, Including Craig Becker,

The President today announced recess appointments for fifteen nominees who have been waiting for confirmation in the Senate for an average of 214 days. Included in those nominees are two members of the National Labor Relations Board, which has been non-functional without a quorum for over two years.

Of course, this is only putting 15 appointments into vacant positions when there are literally hundreds of vacancies. But heck, it’s something, after months and months and months and months of nothing.
Here is what is going on. President Obama is way behind in nominating people to vacant posts and judgeships. On top of this the Republicans have used the filibuster to block many of the candidates that Obama has nominated. In the case of the Labor Board there were only two people left serving on the 5-member Board when 3 are required to make rulings, and some 600 cases have backed up.
The President has the power to make what are called “recess appointments” which means he can just put people into many of these vacant slots when the Senate is not in session. Such use of legitimate power to make the government operate as it should is also known as “governing.” Until today he has refused to use this power to get the government operating. Today he finally, finally, finally, finally put 15 people into positions where they can start getting their agencies operating.
Finally.
A couple of weeks ago, after a year of delay that enabled Republicans to almost start a civil war, the President finally showed up and started working to get health care passed, and today it is law. Of course, the President didn’t fight for a public option — he was afraid that Republicans would call him a Socialist if he did –so instead he fought for a Republican-originated plan to make us all buy insurance from the monopolistic insurance giants that have been ripping us off. But at least that kept him from being called a Socialist.
So maybe the President will learn that actually showing up and fighting for something is a good way to get things done. Maybe. We’ll see.

Even Chinese Officials Understand — Their Currency Must Rise

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
When a policy is just wrong it’s just wrong. I have written about how Chinese CEOs and Chinese economists have been making the case for China to bring its currency up to market rates.
Even Chinese government officials are making the case for a stronger currency. In a must-read NY Times story, China Officials Wrestle Publicly Over Currency,

The current drama began on March 6 when the governor of China’s central bank stunned analysts by saying that the bank’s policy of keeping the renminbi at a constant exchange rate against the dollar was a “special” response to the global financial crisis.
The new description suggested to many economists that the current value of the renminbi was temporary and that the central banker, Zhou Xiaochuan, was preparing the Chinese public for a stronger renminbi.

Why is all of this discussion about Chinese currency coming to a head now?

The debate is far from academic. In the coming weeks, the Obama administration faces a series of politically charged deadlines set by Congress to decide whether to continue negotiating with China over currency and trade issues or to take a more confrontational stance and name China a currency manipulator.
If the administration labels China a currency manipulator, it would face further Congressional pressure to impose punitive tariffs on many Chinese goods.

Please read the entire NY Time story for its explanation of some of China’s internal tensions over the currency-rate problem. The Commerce Ministry is close to exporters who have been enjoying this manipulated advantage, and fights for their interests. The central bank has accumulated a vast store of foreign currency and would be blamed for the value drop of this pile of foreign cash as their own currency gets stronger. But the pile also means that the central bank cannot easily raise interest rates to fight rising inflation. Because of this inflation companies are starting to import and stockpile commodities. Etc. It’s a tense mess with the highest of stakes. (Yes, I feel the excitement of a thriller when I read about economics. My wife rolls her eyes.)
The Chinese government is trying to just manage all of these market forces instead of letting them operate as markets. The resulting imbalances are causing tremendous pressures – and bubbles – to build up both inside and outside of China. If China won’t resolve this as the danger to the world’s economy grows, the rest of the world must step in. On April 15 President Obama has an opportunity to start restoring balance to the world’s economy by declaring China a currency manipulator and taking steps designed to force them into balance with the rest of the world. Think of it as an intervention for their own good.
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Pressure Rises For China Currency Fix — Yesterday Chinese CEOs, Today Chinese Economists

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Yesterday I wrote about Chinese CEOs calling for China to bring its currency up to market rates. Today Chinese economists are joining the call.
Chinese economist Gong Shengli, in his book, China is Very Happy, calls for a strong yuan,

“In order for China to survive and to continue developing, it is imperative that the renminbi goes global,” says Mr Gong. “That means it is absolutely necessary and inevitable that the currency should appreciate.”

From the Financial Times story,

A small but prominent group of economists at the Chinese Academy of Social Sciences has been pushing in recent months for a sizeable appreciation of the currency. In an article published this year, Zhang Bin called for a 10 per cent rise and greater flexibility in daily trading limits in order to give the authorities more control over monetary policy and to restrain inflation.
“There is a very urgent need” for reform of the currency system, he wrote.
Zhang Shuguang, another Cass researcher, said a stronger currency was needed to boost China’s services sector and reduce the emphasis on exports.

The fact is that this currency imbalance distorts everything in the world economy. Chinese consumers face a barrier of up to 40% keeping them from being able to buy goods produced outside of China. Chinese businesses face the same problem. Meanwhile the rest of the world continues to lose jobs, factories and purchasing power.
On April 15 the President must declare China a currency manipulator and take the necessary steps to being to remedy the problem.
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Even Chinese CEOS Call For Chinese Currency Fix

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
The pressure from the huge Chinese currency imbalance shows up in surprising places. Even Chinese CEOs are calling for China to increase the value of its currency to market rates.
China CEOs Join Obama in Supporting Yuan Appreciation

Yang Yuanqing, chief executive officer of Beijing-based computer maker Lenovo Group Ltd., said gains would boost consumers’ purchasing power. Qin Xiao, chairman of China Merchants Bank Co., said an end to the yuan’s 20-month peg to the dollar would let lenders set market-based interest rates. Chen Daifu, chairman of Hunan Lengshuijiang Iron & Steel Group Co., said a stronger currency would cut import costs.
[. . .] Chinese banking executives blame the yuan peg for disrupting money markets. China’s dollar purchases to maintain the link have driven currency reserves to $2.4 trillion and flooded the financial system with yuan.

By pegging its currency to the dollar the Chinese government is distorting the entire world’s economy. This has negative effects for the Chinese as well as positive effects, and as the imbalance becomes greater those affected negatively are going to apply more pressure. In this case it is Chinese people and companies who want to buy from outside of China who are feeling the pain.
Chinese currency is only one part of the trade imbalance equation — but it is a very big part. It accounts for a price differential of as much as 40%! Another part of the equation is China’s suppression of labor rights. Chinese workers would be calling for a currency revaluation — if they could. If workers were allowed to organize they would apply pressure on the government to … revalue its currency so they could afford things made elsewhere. And they would certainly apply pressure on the government to clean up its environmental act – one more area where China is distorting the natural balance.
P.S. In case you missed it yesterday, see this interactive map showing just how many jobs have been lost to China since 2001.
Everyone knows that we have lost a lot of jobs to China since 2001. Now you can find out exactly how many, and where.
The Alliance for American Manufacturing and Economic Policy Institute released a report titled, “Unfair China Trade Costs Local Jobs” by EPI’s Robert Scott. Along with the report AAM has set up a website with an interactive map that shows job losses to by state and Congressional District.

AAM_Map

Click the map.

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Find Out How MANY Jobs Have Been Lost To China Where YOU Live

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Everyone knows that we have lost a lot of jobs to China since 2001. Now you can find out exactly how many, and where.
The Alliance for American Manufacturing and Economic Policy Institute released a report today titled, “Unfair China Trade Costs Local Jobs” by EPI’s Robert Scott. Along with the report AAM has set up a website with an interactive map that shows job losses to by state and Congressional District.

AAM_Map

Click the map.

It’s bad. According to the report, between 2001 and 2008, 2.4 million jobs were lost or displaced with losses occurring in every Congressional district. (Note – This report does not track service industry job losses, and does not track indirect job losses.)
Here’s the surprise: since 2001 we have lost more tech jobs than manufacturing jobs! — We lost 628,000 tech jobs -26 percent of all jobs displaced by trade- between 2001 and 2008.
The main unfair advantages China uses to its advantage are:
1) Currency manipulation. China “pegs” its currency at a very low, or “weak” rate, so goods from China cost up to 40% less than they otherwise should.
2) Labor-rights suppression has lowered manufacturing wages of Chinese workers by 47% to 86%.
3) There is massive direct government subsidization of export production in many key industries.
4) China allows environmental degradation that ends up affecting all of us.
5) Intellectual property theft and piracy mean that American products that could be sold are stolen instead.
6) China has a number of policies that block U.S. firms from market access.
I joined a press conference call announcing this report, with Senators Charles Shumer (D-NY) and Lindsey Graham (R-SC).
Senators Schumer and Graham are introducing legislation in which “the wiggle room will be gone” and the Treasury Department must cite the Chinese for currency manipulation if currency is misaligned without having to say there is “intent,” and impose additional penalties. Schumer:

“In the past Dem and Rep admins turned a blind eye to this problem. We are tired of the Chinese not playing by the rules that everyone else has to play by.

Later on the call Senator Schumer said,

Imagine if you had two stores across the street and one had a 40% price advantage – could charge 40% less than the other, where do you think people would shop?
[. . .] Every day we wait is a day we lose wealth, we lose economic advantage, we lose jobs.

Sen. Graham,

It is hard for American political leaders to keep their head in the sand any longer. … To ignore China”s currency manipulation is to ignore economic reality and the way economics works. … I am hopeful they [the Treasury Dept.] will go ahead and speak truth to power and the truth is that China’s currency is misaligned.

Previous administrations allowed all of this to continue with impunity. It is time to do something about it and bring the world’s trade back toward some kind of balance.
To help you read the report:
“Unfair China Trade Costs Local Jobs” by Robert Scott of Economic Policy Institute.

Download the PDF
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The Coffee Party This Weekend

Helping spread the word: the Coffee Party is setting up local events this weekend. They have reached 178,000 members, held 350 gatherings in coffee shops, and so far have 400 planned for this weekend.

We’re calling on the Coffee Party Movement to have coffee shop gatherings all across the country next Saturday and Sunday. (Can’t do March 27 or 28? No problem. You can create your event on a different date.)

Visit their website to either join a local gathering, or set one up: Coffee Party | Wake Up and Stand Up.
There is a lot at that website, so go explore.

Ten Million Jobs Needed – Ten Million Jobs That Need Doing

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
Dot: No net job gains since 2000. 8 million jobs lost in the recession. Never mind jobs for the 86,000 new people entering the labor force every month…
Dot: According to the American Society of Civil Engineers (ASCE)

“congested highways, overflowing sewers, and corroding bridges” were creating a “looming crisis that jeopardizes our nation’s prosperity and our quality of life.”

Dot: From a recent NY Times story on our country’s water systems,

Today, a significant water line bursts on average every two minutes somewhere in the country, according to a New York Times analysis of Environmental Protection Agency data.
. . . State and federal studies indicate that thousands of water and sewer systems may be too old to function properly.
[. . .] “There’s a lot of evidence that people are getting sick,” he added. “But because everything is out of sight, no one really understands how bad things have become.”

Connect the dots.
Ten million jobs needed. Ten million jobs that need doing.
It’s called the infrastructure deficit. Right around 1981 we stopped improving the country’s infrastructure and even started to defer maintaining it. We started “living off the seed corn.” Now it is all catching up to us.
I’ll be writing about infrastructure. Boring. Until it isn’t.

Workers were repairing corroded joints on Minnesota’s busiest bridge when it collapsed into the Mississippi River yesterday, killing at least four people and leaving more than 20 missing, state officials said.
… As many as 50 cars plunged into the river along with the six-story structure, authorities and eyewitnesses said.

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