19 Facts About The Deindustrialization Of America That Will Blow Your Mind

The United States is rapidly becoming the very first “post-industrial” nation on the globe.  All great economic empires eventually become fat and lazy and squander the great wealth that their forefathers have left them, but the pace at which America is accomplishing this is absolutely amazing.  It was America that was at the forefront of the industrial revolution.  It was America that showed the world how to mass produce everything from automobiles to televisions to airplanes.  It was the great American manufacturing base that crushed Germany and Japan in World War II.  But now we are witnessing the deindustrialization of America.  Tens of thousands of factories have left the United States in the past decade alone.  Millions upon millions of manufacturing jobs have been lost in the same time period.  The United States has become a nation that consumes everything in sight and yet produces increasingly little.  Do you know what our biggest export is today?  Waste paper.  Yes, trash is the number one thing that we ship out to the rest of the world as we voraciously blow our money on whatever the rest of the world wants to sell to us.  The United States has become bloated and spoiled and our economy is now  just a shadow of what it once was.  Once upon a time America could literally outproduce the rest of the world combined.  Today that is no longer true, but Americans sure do consume more than anyone else in the world.  If the deindustrialization of America continues at this current pace, what possible kind of a future are we going to be leaving to our children?

Any great nation throughout history has been great at making things.  So if the United States continues to allow its manufacturing base to erode at a staggering pace how in the world can the U.S. continue to consider itself to be a great nation?  We have created the biggest debt bubble in the history of the world in an effort to maintain a very high standard of living, but the current state of affairs is not anywhere close to sustainable.  Every single month America does into more debt and every single month America gets poorer.

So what happens when the debt bubble pops?

The deindustrialization of the United States should be a top concern for every man, woman and child in the country.  But sadly, most Americans do not have any idea what is going on around them.

For people like that, take this article and print it out and hand it to them.  Perhaps what they will read below will shock them badly enough to awaken them from their slumber.    

The following are 19 facts about the deindustrialization of America that will blow your mind….

#1 The United States has lost approximately 42,400 factories since 2001. 

#2 Dell Inc., one of America’s largest manufacturers of computers, has announced plans to dramatically expand its operations in China with an investment of over $100 billion over the next decade.

#3 Dell has announced that it will be closing its last large U.S. manufacturing facility in Winston-Salem, North Carolina in November.  Approximately 900 jobs will be lost.

#4 In 2008, 1.2 billion cellphones were sold worldwide.  So how many of them were manufactured inside the United States?  Zero.

#5 According to a new study conducted by the Economic Policy Institute, if the U.S. trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone.

#6 As of the end of July, the U.S. trade deficit with China had risen 18 percent compared to the same time period a year ago.

#7 The United States has lost a total of about 5.5 million manufacturing jobs since October 2000.

#8 According to Tax Notes, between 1999 and 2008 employment at the foreign affiliates of U.S. parent companies increased an astounding 30 percent to 10.1 million. During that exact same time period, U.S. employment at American multinational corporations declined 8 percent to 21.1 million.

#9 In 1959, manufacturing represented 28 percent of U.S. economic output.  In 2008, it represented 11.5 percent.

#10 Ford Motor Company recently announced the closure of a factory that produces the Ford Ranger in St. Paul, Minnesota. Approximately 750 good paying middle class jobs are going to be lost because making Ford Rangers in Minnesota does not fit in with Ford’s new “global” manufacturing strategy.

#11 As of the end of 2009, less than 12 million Americans worked in manufacturing.  The last time less than 12 million Americans were employed in manufacturing was in 1941.

#12 In the United States today, consumption accounts for 70 percent of GDP. Of this 70 percent, over half is spent on services.

#13 The United States has lost a whopping 32 percent of its manufacturing jobs since the year 2000.

#14 In 2001, the United States ranked fourth in the world in per capita broadband Internet use.  Today it ranks 15th.

#15 Manufacturing employment in the U.S. computer industry is actually lower in 2010 than it was in 1975.

#16 Printed circuit boards are used in tens of thousands of different products.  Asia now produces 84 percent of them worldwide.

#17 The United States spends approximately $3.90 on Chinese goods for every $1 that the Chinese spend on goods from the United States.

#18 One prominent economist is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040.

#19 The U.S. Census Bureau says that 43.6 million Americans are now living in poverty and according to them that is the highest number of poor Americans in the 51 years that records have been kept.

So how many tens of thousands more factories do we need to lose before we do something about it?

How many millions more Americans are going to become unemployed before we all admit that we have a very, very serious problem on our hands?

How many more trillions of dollars are going to leave the country before we realize that we are losing wealth at a pace that is killing our economy?

How many once great manufacturing cities are going to become rotting war zones like Detroit before we understand that we are committing national economic suicide?

The deindustrialization of America is a national crisis.  It needs to be treated like one.

If you disagree with this article, I have a direct challenge for you.  If anyone can explain how a deindustrialized America has any kind of viable economic future, please do so below in the comments section.

America is in deep, deep trouble folks.  It is time to wake up.

Currency War

Are you ready for a currency war?  Well, buckle up, because things are about to get interesting.  This week Japan fired what is perhaps the opening salvo in a new round of currency wars by publicly intervening in the foreign exchange market for the first time since 2004.  Japan’s bold 12 billion dollar move to push down the value of the yen made headlines all over the world.  Japan’s economy is highly dependent on exports and the Japanese government was becoming increasingly alarmed by the recent surge in the value of the yen.  A stronger yen makes Japanese exports more expensive for other nations and thus would harm Japanese industry.  But Japan is not the only nation that is ready to go to battle over currency rates.  The governments of the U.S. and China continue to exchange increasingly heated rhetoric regarding currency policy.  In Europe, there is growing sentiment that the euro needs to be devalued in order to help European exports become more competitive.  In addition, exporters all over the world are already loudly complaining about the possibility that the Federal Reserve is about to unleash another round of quantitative easing.  Virtually all major exporting nations want the value of the U.S. dollar to remain high so that they can keep flooding us with lots of cheap goods.  The sad reality is that our current system of globalized trade rewards exporting nations that have weak currencies, and many nations have now shown that they are willing to take the gloves off to make certain that their national currencies do not appreciate in value by too much.

Some nations have been involved in open currency manipulation for some time now.  For example, Singapore is well known for intervening in the foreign exchange market in order to benefit exporters.  Also, the Swiss National Bank experienced losses equivalent to about 15 billion dollars trying to stop the rapid rise of the Swiss franc earlier this year.

But as we race toward the end of 2010, currency manipulation is becoming a major issue on the world stage.

Rumors that the Federal Reserve is considering a substantial new round of quantitative easing is already causing many major exporting nations around the world to howl in outrage. 

Why?

Well, quantitative easing by the Federal Reserve could put substantial downward pressure on the value of the dollar and that would make exports significantly more expensive in the United States.  The reality is that even a relatively small change in the value of the U.S. dollar can have a major impact on exporters.

But what could really set off a massive currency war is the ongoing dispute between the U.S. and China.

For years, China has kept the value of their currency artificially low.  Even though China has made a few small moves toward a more free-floating currency policy, at this point China’s currency is still pretty much pegged to the U.S. dollar.  It is estimated that the Chinese government is keeping China’s currency at a value about 40 percent lower than what it should be.  This is essentially a de facto subsidy to China’s exporters.

This has enabled China to flood the United States with cheap goods and it is killing entire industries in the United States.  Americans have loved rushing out to Wal-Mart to get super low prices on all kinds of stuff, but in the process we have slowly but surely been shipping our manufacturing base and our standard of living over to China.

In recent years both the Bush administration and the Obama administration have been whining about this currency manipulation by China, but both administrations have stopped short of taking any real action.

But are there now signs that the Obama administration is going to get serious and start a currency war? 

Well, last week Barack Obama did send the head of his national council of economic advisers, Larry Summers, to Beijing to discuss currency issues.

But what can we do other than whine at this point?

Are we willing to start a trade war?

Considering the fact that China holds nearly a trillion dollars worth of U.S. Treasuries, that probably would not go so well for us.

Even though China’s currency manipulation is absolutely raping the U.S. economy, China has so much leverage over us at this point that it isn’t even funny.

For example, China has almost a complete and total monopoly on rare earth elements.  If China totally cut off the supply of rare earth elements, we would have no hybrid car batteries, flat screen televisions, cell phones or iPods.  Not only that, but rare earth elements are used by the U.S. military in radar systems, missile-guidance systems, satellites and aircraft electronics.

But something has to be done.  Essentially we are caught between a rock and a hard place.

Today, the United States spends approximately $3.90 on Chinese goods for every $1 that the Chinese spend on goods from the United States. 

Last month, the monthly trade deficit with China was approximately 26 billion dollars.  For the year, the trade deficit with China will be somewhere in the neighborhood of 300 billion dollars or so.  The transfer of wealth to China that represents is absolutely mind blowing.

The U.S. economy is getting poorer and the Chinese economy is getting richer each and every month.

We are in decline and China is on the rise.  In fact, one prominent economist is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040.

This would not have ever happened if we had not put up with China’s open and blatant currency manipulation all this time.

But now they have us over a barrel and standing up to China would be incredibly painful for the U.S. economy in the short-term.

So will we actually see a currency war break out soon?

Well, it seems almost a certainly that countries throughout the world will continue to manipulate their currencies in order to gain a competitive advantage, but if you are waiting for the Obama administration to truly stand up to China you are probably going to be waiting for a very, very long time.

Globalism Destroys America: 10 Reasons Why The World Trade Organization Is Bad For The United States Economy

In 2010, education has been so “dumbed down” in America that most Americans don’t even know what the WTO is, and even fewer understand why the WTO is important. The truth is that the World Trade Organization is essentially a global government for world trade.  It is a “contract” that severely restricts the ability of member nations to direct their own economies and set their own trade policies.  The United Nations is perhaps the only international organization that has more power than the WTO.  It was created on January 1st, 1995 as a replacement for GATT (the General Agreement on Tariffs and Trade).  Today, 153 nations representing more than 97% of total world trade are members of the WTO.  It has been largely responsible for the explosion in world trade that we have witnessed over the past several decades.  In fact, world trade is now over 15 times larger than it was 50 years ago.  But is this a good thing? 

No, it is not.

The following are 10 reasons why the World Trade Organization is bad for America…..

1 – The WTO is not accountable to the American people or to any other voters around the globe.  It is a sprawling bureaucracy that wields an almost unbelievable amount of power that is completely unchecked by democratic processes.  The American people could try to elect a large number of politicians who are in favor of pulling the United States out of the WTO, but considering the fact that both major political parties are very much pro-WTO at this point, that is simply not going to happen. 

2 – The WTO acts as the legislature, the executive and the judiciary in matters of world trade.  The WTO has the authority to impose punishments on member nations, and it has not been shy about exercising this authority.  In essence, the WTO is the judge, the jury and the executioner and if anyone does not like this it is too bad for them.

3 – Many of the WTO regulations were authored word for word by the big global predator corporations that now dominate the world economy.  It is an open secret that the WTO is dominated by international bankers, large international corporations and the most developed nations.  Whenever new negotiations are conducted, it almost always seems as though it is the “sharks” that end up winning in the end.

4 – Any nation that attempts to protect itself against the negative effects of globalism and free trade is quickly reprimanded by the WTO.  In essence, the WTO is the enforcement arm for the powerful interests who are determined to merge us all into a one world economy.

5 – The WTO allows countries to sue each other.  This has been primarily used by the wealthy countries to push around the smaller, less developed nations.

6 – The WTO allows global corporations to sue countries.  Forget about sovereign immunity in matters governed by the WTO.  Under the WTO, the monolithic corporations who benefit the most from free trade can easily push around the smallest and least developed nations.

7 – The WTO is widening the gap between rich and poor.  Under the globalized system of free trade we are all living under, all wealth is slowly but surely being transferred into the hands of the very wealthy while the rest of us are left standing around trying to figure out how the game was rigged.

8 – The WTO forces the United States to open its doors to unsafe products.  For example, the United States had been very concerned about the safety of Chinese poultry products.  But the WTO ruled in China’s favor and now the U.S. must allow China to import massive amounts of unsanitary chicken.

9 – Under the WTO, labor has become a global commodity.  Now American workers have been put in direct competition with the cheapest labor in the world.  Millions of American workers have lost their jobs and factories are closing across the United States at a staggering pace.

10 – The American people are deeply upset about the state of the economy, but they don’t even understand what is going on.  According to a new CNN/Opinion Research Corporation survey, 81% of Americans rate the U.S. economy as “poor”.  Americans continue to get angrier and angrier about the economy and they want someone to “fix” it.  But what they don’t understand is that under the new global system that we are being merged into, it is intended that the standard of living for the poorer nations will go up while our standard of living goes down.  In the end, there is supposed to be “equality” all over the world.

But what kind of equality will that be?

If current trends hold up, the top 1% of all income earners will become fabulously wealthy, while the remainder of us will work our lives away for their giant global corporations for near slave labor wages.

A reader of my column named Joe recently left a comment that does a good job of summarizing the kind of world that we are heading into….

I still remember the 60 Minutes program that showed an old company in Massachusetts that made winter jackets and pants. The old timer who owned the company was a wonderful character. He worked hard all his life, made excellent clothes, and treated all his employee’s like his family. Dan Rather followed him throughout the mill as he interacted with each employee, the old man knew every job because he probably had to do them all at one time. This man had integrity, a hard work ethic, honesty, and every other leadership quality. His employees loved him and respected him.

Fast forward to today and we have companies like Nike and Gap who entrap their young girl employees with a scam ad in a newspaper about a job. Then they are caged into a factory with barbed wire and security guards and have to work for .35 cents per hour. The girls have to pay “rent” for a bunk bed and a little food, a debt they can never repay for their freedom. And we buy their clothes at Wal-Mart.

Where did we go off the tracks? How did we go so wrong?

The truth is that the giant global predator corporations are going to continue to use the WTO (and other globalist organizations such as the IMF and the World Bank) to rig the game in their favor and to push us all into one global market and into one global labor pool. 

The WTO is not good for the U.S. economy and it never will be.

But the vast majority of our politicians are 100 percent behind this system which is designed to deindustrialize the United States, ship our jobs overseas and substantially lower our standard of living.

Will the American people wake up and realize what is going on?

No, “Dancing with the Stars” has just announced their new cast, American Idol is looking for some new judges and football season is starting, so the American people are going to have their hands full for a while.

10 Reasons Why Conservatives Should Be Against Unfair Trade With China And 10 Reasons Why Liberals Should Be Against Unfair Trade With China

There are very few things that the top politicians in both political parties agree on these days, but one of the things that that they do agree on is that free trade with China is a good thing.  George W. Bush, Dick Cheney, John McCain, Barack Obama, Nancy Pelosi and Harry Reid have all fully supported our trade relationship with China.  In this day and age, virtually anyone who even dares to question how fair our “free trade” is with China is immediately labeled as a “protectionist” and is dismissed as a loon.  But when you sit down and really analyze it, there are a whole lot of very good reasons why both conservatives and liberals should be fundamentally against our unfair trade relationship with China.  But you won’t hear these reasons being talked about on CNN, MSNBC or Fox News.  You won’t hear many members of Congress get up and give speeches about how trade with China is bleeding our economy dry.  Both major political parties have completely and totally bought into “the benefits” of globalism and free trade and there isn’t even much of a national debate about our trade policies anymore.

But there should be a national debate.  Unfortunately, most conservatives are just going to accept whatever their leaders tell them to believe.  Conservatives have been convinced that to be against unfair trade is to be “anti-business” and no conservative ever wants to be anti-business.

Similarly, most liberals blindly follow whatever Obama, Pelosi and Reid tell them to believe.  Millions of hard working Democrat voters have lost their jobs due to our nightmarish trade relationship with China, but they are still convinced that Obama is their savior and that they must not ever say anything that he does is wrong.

Well, I have a message to members of both political parties….

WAKE UP!  YOU HAVE BEEN LIED TO!  

If you are truly a conservative, there is no way that you should ever support our trade relationship with China.

If you are truly a liberal, there is no way that you should ever support our trade relationship with China.  

Globalism has allowed the big global corporations that dominate our economy to make huge amounts of money, but it has also forced American workers into one gigantic global labor pool. 

Are you willing to work 12 hours a day for less than $2.00 an hour in sweatshop conditions?  

Well, that is your new competition.

The top 1 percent of all Americans is using globalism to make huge profits, but the standard of living for the rest of us is slowly but surely being forced down toward the rest of the world.

Is that what you really want?

If after reading the reasons below you can still consider yourself a good “conservative” or a good “liberal” and still support our current trade relationship with China please leave a comment to this article.  I would love to hear your reasoning.  

10 Reasons Why Conservatives Should Be Against Unfair Trade With China

1 – Conservatives are supposed to be all about creating jobs.  But millions upon millions of good paying middle class jobs have been shipped off to China and they are never coming back.

2 – Once upon a time, conservatives were opposed to communism.  But our trade relationship with China has enabled the largest communist economy in the world to go from third world status to superpower status.  China is now the second largest economy in the world, and that would have never happened without our cooperation.

3 – Conservatives are supposed to be concerned about national security.  But thanks to the massive amount of money they have made from us, the Chinese have been able to dramatically upgrade and modernize their military.  At the top levels of the Chinese government, most officials still believe in the ultimate worldwide triumph of communism, and now thanks to us they have a world class military with which to advance that agenda.

4 – China has a very strict one-child policy which should be absolutely abhorrent to any true conservative.  

5 – China uses mobile abortion vans to help enforce the one-child policy.  How any social conservative can justify trade with China after learning this is a total mystery. 

6 – If Republicans actually started fighting to protect American jobs from going overseas they could win the “angry working class vote” and take both houses of Congress and the White House in 2012.

7 – Conservatives don’t like when other countries try to take advantage of the American people.  Yet China is taking advantage of the American people by keeping their currency artificially low and most conservatives are strangely quiet about this.  This currency manipulation has put large numbers of U.S. small businesses at a huge competitive disadvantage and has forced many of them to shut down.  Essentially, this currency manipulation has enabled China to get us down on the mat and continually beat the stuffing out of us.  Meanwhile, our politicians stand by and do nothing.     

8 – Our trade deficit with China has enabled them to accumulate about a trillion dollars of our debt.  This gives them tremendous leverage over us and is a very serious threat to our economy and to our national security.

9 – Conservatives are traditionally very protective of national sovereignty and state sovereignty.  But a global economy governed by the G20, the WTO, the IMF and the World Bank is a giant step toward world government and a giant step away from national sovereignty and state sovereignty.

10 – The giant trade deficit that the United States runs is making us poorer as a nation each and every month.  Each year, somewhere around half a trillion dollars of our national wealth gets transferred out of the United States.  Much of that gets transferred to China.  The United States spends approximately $3.90 on Chinese goods for every $1 that the Chinese spend on goods from the United States.  The transfer of wealth that this represents is absolutely mind blowing.  China is literally bleeding us dry.

10 Reasons Why Liberals Should Be Against Unfair Trade With China

1 – Liberals are supposed to defend unions, yet our trade relationship with China has done more to hurt unions than anything else and most liberal politicians don’t seem to care.  Globalism has put the average American worker in direct competition with the cheapest labor in the world.  Unemployment is going to continue to increase unless something is done to stop the offshoring and outsourcing of our jobs.

2 – Liberals are supposed to care about the environment.  But our trade relationship with China means that thousands of factories and businesses leave our shores and end up in China where the environmental regulations are not nearly as strict.  In fact, China has become a complete and total environmental nightmare at this point.  If liberals truly cared about the environment they would want to keep factories and businesses here.

3 – Our trade relationship with China (and with the rest of the world) has caused the income inequality gap in America to explode.  The top 1% of all Americans have done very well in this environment while the rest of us suffer.  For much more on this phenomenon, please see my recent article entitled “Winners And Losers“.

4 – Dangerous products from China are pouring into the United States. Liberals should be horrified that so many of our products are now made outside the United States far from the watchful eyes of our regulatory agencies.  Over the past couple of years, there has been headline after headline about dangerous products made in China.  The following is just one example of this: 10 Babies Die Mysteriously At Fort Bragg: Toxic Drywall From China Used In Base Homes The Culprit?

5 – In a global economy, every piece of legislation that Democrats intend to help American workers with ends up backfiring.  For example, a rise in the minimum wage or a law increasing worker benefits causes American workers to become even more expensive and gives corporations even more incentive to move jobs overseas.

6 – “Free Trade” has been the most destructive in the inner cities where Democrats have traditionally gotten a tremendous amount of support.  Shiny new factories are going up all over China while at the same time formerly great manufacturing cities such as Detroit have degenerated into rotting war zones.  This is not good for liberals.

7 – Democrats won’t get elected if there are no jobs.  Each month, more jobs leave the United States for China and the growing number of long-term unemployed workers in the U.S. is not going to be inclined to keep the same politicians in office if this continues.  If liberal politicians value their jobs they should start protecting the jobs of average Americans.

8 – Free trade with China threatens to ruin our social safety net.  It is a good thing to help those in need, but there comes a point where too many people jump on to the net and it breaks down.  Already, one out of every six Americans is enrolled in at least one anti-poverty program.  Over 40 million Americans are on food stamps.  These are not good numbers for liberals.

9 – True liberals should be absolutely horrified by the exploitation of labor in China.  In China, millions of people work in horrific conditions for what is essentially slave labor pay.  The fact that big global corporations are getting rich from this should make the stomach of every liberal turn.   

10 – The giant trade deficit that the United States runs is making us poorer as a nation each and every month.  Each year, somewhere around half a trillion dollars of our national wealth gets transferred out of the United States.  Much of that gets transferred to China.  The United States spends approximately $3.90 on Chinese goods for every $1 that the Chinese spend on goods from the United States.  The transfer of wealth that this represents is absolutely mind blowing.  China is literally bleeding us dry.

Liberals and conservatives should both be able to agree that it is not a good thing for millions of American jobs to leave the United States and go to China.

Liberals and conservatives should both be able to agree that it is not a good thing that billions of dollars in wealth gets transferred from the United States to China every single month.

But will our leaders wake up and start pursuing a more logical approach to China?

Don’t count on it.

Winners And Losers

When you mention the word “globalism” to most people, they think of something that is going to happen someday in the future.  But the truth is that globalism is already here.  At this point we essentially already have a one world economy.  Goods and services flow across national borders more freely today than at any other point in human history.  A major economic event on one side of the world instantly affects financial markets on the other side of the world.  Labor has become a truly global commodity.  You can go to the exact same fast food restaurant or buy the exact same iPod on six different continents.  A whole host of international trade agreements are making national borders economically irrelevant.  Today our “big box” stores and shopping malls are jammed full with products that have been made overseas and it is becoming increasingly difficult to find American-made products.  The reality is that it has now become undeniable that globalism has arrived and we are now part of a world economy that is integrating at lightning speed.  Unfortunately, all of this globalism has created some very clear winners and losers.  But most middle class Americans are in such a deep sleep that they don’t even realize that they are the losers.

The sad truth is that as work has become a global commodity, middle class American workers have been placed in direct competition with the cheapest labor in the world.  For years the U.S. economy was so strong that nobody really noticed that it was bleeding thousands of jobs every single month.  But now that 14 million Americans are unemployed and the U.S. economy is literally hemorrhaging jobs people are starting to sit up and take notice.

Let’s take a look at one recent example.  Ford Motor Company has just announced the closure of a facility that produces the Ford Ranger in St. Paul, Minnesota.  Approximately 750 good paying jobs are going to be lost.

But isn’t Ford doing better these days?

Sure.

Don’t people still need Ford Rangers?

Of course they do.

Minnesota Governor Tim Pawlenty even offered Ford a multi-million dollar incentive package full of tax cuts and job creation incentives to keep the factory going.

Basically, Pawlenty did everything except get down on his hands and knees and beg Ford to keep the plant open.

But it wasn’t good enough for Ford.

So where is Ford going to make those Ford Rangers now?

Well, the statement issues by Ford did not say, but it did offer some clues….

“Ford continues to concentrate on implementing the plan we initiated four years ago to streamline our plant operations and better leverage our global platforms. At this time, the Twin Cities Assembly Plant does not fit into our global manufacturing strategy.”

Did you notice that the world “global” was used twice there?

In other words, Ford plans to move their factory some place where labor is cheaper.

But the truth is that this is happening in every industry.

Between 2004 to 2008, tire imports from China increased 215 percent by volume and 295 percent by value.

During that same time period, tire manufacturing in the United States fell by 25 percent.

It turns out that there are lots of people who are willing to make tires for near slave labor wages in China.

In our new “global economy”, American workers are just far too expensive.  So middle class manufacturing jobs are fleeing our shores at a staggering pace.

Since 1979, manufacturing employment in the United States has fallen by 40 percent.

Are you alarmed yet?

You should be.

The truth is that we did not have to merge our economy with nations like China.  China does not have the same minimum wage laws that we do.  China does not have the same environmental protection laws that we do.  In China, companies can treat their workers like crap.  As a result of open trade with the United States, scores of shiny new factories have opened all over China while once great manufacturing U.S. cities such as Detroit have degenerated into rotting war zones.  We continue to expand trade with China even though their communist government stands for things that are absolutely repulsive and has a list of human rights abuses that is seemingly endless.

But politicians from both parties swore up and down that globalism would be so good for us.  Now we have created a network of free trade agreements that would be virtually impossible to unwind.  The following are just some of the free trade agreements in force around the world right now….

The ASEAN Free Trade Area (AFTA)
The Central American Integration System (SICA)
The Central European Free Trade Agreement (CEFTA)
The Common Market for Eastern and Southern Africa (COMESA)
The Commonwealth of Independent States Free Trade Agreement (CISFTA)The G-3 Free Trade Agreement (G-3)
The Greater Arab Free Trade Area (GAFTA)
The Gulf Cooperation Council (GCC)
The North American Free Trade Agreement (NAFTA)
The Southern African Development Community (SADC)
The South Asia Free Trade Agreement (SAFTA)
The Trans-Pacific Strategic Economic Partnership (TPP)

Of course the most important trade organization of them all is the World Trade Organization (WTO) which is constantly working to expand world trade and further integrate the economies of the world.

But the American people don’t understand all this.  They just want the U.S. government to do something to create more jobs. 

But whenever the U.S. Congress tries to do something nice for U.S. workers like raising the minimum wage or requiring companies to give them more benefits it ends up backfiring.

Why?

Because those things make American workers even more expensive and it gives companies even more incentive to send our jobs overseas.

We have recklessly merged our economy with economies around the world that are far less developed than our own.  Unless this thing is reversed, it is inevitable that the standard of living of American workers will be forced down until it approximately matches workers in the rest of the world.

Already, millions of high-paying manufacturing jobs are being replaced by low-paying service jobs.

The U.S. Labor Department’s 2009 Occupational Employment and Wages report found that retail sales, cashiers, general office clerks, food preparation and service workers, and nurses were the occupations with the highest levels of employment in 2009.

Retail sales and food service workers?

Those are jobs for 17 year old kids.

But today apologists for this flawed system tell us that we just need to suck it up and take two or even three low paying jobs because things will never go back to how they used to be.

So has globalism created any winners?

Of course.

As I noted yesterday, the folks down on Wall Street are doing quite well.  New York state Comptroller Thomas DiNapoli says that Wall Street bonuses for 2009 were up 17 percent when compared with 2008.

The reality is that the exploitation of very cheap foreign labor has enabled many large global corporations to make insane amounts of money.  Things are very good if you are at the top of the food chain.  According to Harvard Magazine, 66% of the income growth between 2001 and 2007 went to the top 1% of all Americans.

In addition, our elected officials are doing quite nicely these days.  According to an analysis by The Hill, the 50 wealthiest members of the U.S. Congress saw their collective fortunes increase 85.1 million dollars to $1.4 billion in 2009.

Yes, it is very profitable to be part of America’s ruling class.

Meanwhile, tens of millions of average Americans continue to suffer.  Recently a user on Unemployed-Friends named Jim shared his tragic story….

My Name is Jim and I was laid off last June.

My whole department was outsourced.

There was talk of it and when I heard it from my boss (the CFO) when I went home I started to send out resumes.

Then the day came when the layoff came.

So in 1.3 years I have sent out 160K resumes, between blasting, send out from job boards and e-mailing my resume blindly to companies HR departments.

I was on 5 interviews.

I want to work badly.

Everyday I send out resumes but lately I have been getting depressed, I found out who my real friends and family are now.

I have been kicked down substantially in these 1.3 years.

I feel like I’m staring into an abyss of no jobs, will I ever work again? IDK.

When I used to talk to “Friends” and “Family” they all say “Things will get better” “Don’t worry”, Yeah right.

I feel so alone and worthless.

I wish I had at least 1 GOOD friend but it seems like no-a-days the dog eat dog world is worst than ever.

I’m NOT suicidal, not at all.

Then I found this site.

I have been saying we are in a depression for 2 years but nobody listened and people have dismissed what I have said.

The sad thing is it seems like we are on the verge of an economic collapse or worst.

So that is my story

Americans like Jim don’t understand why they can’t get jobs anymore.

They feel like failures, but it is actually the system that is failing.

Globalism is not good for middle class American workers.

Democrats can continue to pass law after law that attempts to help American workers, but unless something is done to protect American jobs they are going to continue to be shipped overseas.

Republicans can pass tax break after tax break, but unless those tax breaks are linked to jobs the ruling elite and the big global corporations will just pocket those tax breaks and will continue to ship jobs overseas in order to make bigger profits.

What both parties should be doing is trying to figure out ways to keep American jobs in America, but at this point both parties are completely sold out to globalism.

Globalism was the official policy of the Bush administration and it is the official policy of the Obama administration.

Unless something dramatic changes, the U.S. economy is going to continue to lose huge numbers of jobs and people like Jim are going to continue to wonder what in the world happened to their lives.

But in 2010, most Americans are so busy drinking beer, watching sports, keeping up with Lady Gaga and Justin Bieber, and obsessing over the new cast of Dancing With The Stars that they aren’t even aware that things are literally falling apart all around them.

It is really sad.

The Death Of Cash? All Over The World Governments Are Banning Large Cash Transactions

Are we witnessing the slow but certain death of cash in this generation?  Is a truly cashless society on the horizon?  Legislation currently pending in the Mexican legislature would ban a vast array of large cash transactions, but the truth is that Mexico is far from alone in trying to restrict cash. All over the world, governments are either placing stringent reporting requirements on large cash transactions or they are banning them altogether. We are being told that such measures are needed to battle illegal drug traffic, to catch tax evaders and to fight the war on terror. But are we rapidly getting to the point where we will have no financial privacy left whatsoever? Should we just accept that we have entered a time when the government will watch, track and trace all financial transactions? Is it inevitable that at some point in the near future ALL transactions will go through the banking system in one form or another (check, credit card, debit card, etc.)?

The truth is that we now live at a time when people who use large amounts of cash are looked upon with suspicion. In fact, authorities in many countries are taught that anyone involved in a large expenditure of cash is trying to hide something and is probably a criminal.

And yes, a lot of criminals do use cash, but millions upon millions of normal, law-abiding citizens simply prefer to use cash as well.  Should we take the freedom to use cash away from the rest of us just because a small minority abuses it?

Unfortunately, the freedom to use cash is being slowly stripped away from us in an increasingly large number of countries.

In fact, as countries like Mexico “tighten the noose” around big-ticket cash purchases, our freedom to use cash is going to erode rather rapidly.

The following is a summary of some of the very tight restrictions being placed on large cash transactions around the globe right now….

Mexico

In Mexico, a bill before the legislature would completely ban the purchase of real estate in cash.  In addition, the new law would ban anyone from spending more than MXN 100,000 (about $7,700) in cash on vehicles, boats, airplanes and luxury goods.

$7,700 is not a very high limit, and this legislation has some real teeth to it.  Anyone violating this law would face up to 15 years in prison.

Greece

In Europe, some of the “austerity packages” being introduced in various European nations include very severe restrictions on the use of cash.

In Greece, all cash transactions above 1,500 euros are being banned starting next year.  The following is a comment by Greek Finance Minister George Papaconstantinou at a press conference discussing the new austerity measures as reported by Reuters….

“From 1. Jan. 2011, every transaction above 1,500 euros between natural persons and businesses, or between businesses, will not be considered legal if it is done in cash. Transactions will have to be done through debit or credit cards”

Italy

Even Italy has gotten into the act.  As part of Italy’s new “austerity measures”, all cash transactions over 5,000 euros will be banned.  It is said this is being done to crack down on tax evasion, but even if this is being done to take down the mafia this is still quite severe.

The United States

The U.S. government has not banned any large cash transactions, and hopefully it will not do so any time soon, but it sure has burdened large cash transactions with some heavy-duty reporting requirements.

For example, your bank is required to file a currency transaction report with the government for every deposit, withdrawal or exchange over $10,000 in cash.

Not only that, but if a bank “knows, suspects, or has reason to suspect” that a transaction involving at least $5,000 is “suspicious”, then another report must be filled out.   This second type of report is known as a suspicious activity report, and it is also filed with the government.

But the reporting does not stop there.  As Jeff Schnepper explained in an article for MSN Money, if you are in business and you receive over $10,000 in cash in a single transaction you must report it to the IRS or you will go to prison…..

If you’re in a business and receive more than $10,000 in cash from a single transaction, or from related transactions within a 12-month period, you have to file Form 8300 and report the buyer to the IRS. Don’t file, and you go to jail.

The IRS isnt kidding. I had a client who was a dealer in Corvette sports cars. He told me he didnt have time to file the forms. I told him several times to file. He thought he knew better. He went to jail. So did his children who were involved in the business.

This is very, very serious.

Just because someone forgets to file a certain form with the IRS, that person can go do serious jail time?

Yes.

According to Schnepper, quite a few Americans have already received very substantial sentences for this kind of thing….

In fiscal 2004, the Internal Revenue Service initiated 1,789 criminal investigations. There were 1,304 indictments and 687 convictions — and an 89.1% incarceration rate. The average sentence: 63 months.

In fiscal 2005, the IRS started 4,269 investigations, winning 2,406 indictments and 2,151 convictions and an 83% incarceration rate. Average sentence: 42 months.

The reality is that governments around the world are getting very, very sensitive about large amounts of cash and they are not messing around.

They don’t want all of us running around with big piles of cash.  They want our money in the banks where they can track it, trace it and keep a close eye on it.

On the one hand, it is a good thing to catch criminals and terrorists, but on the other hand how much privacy and freedom are we willing to lose just so that we can feel a little safer?

And as cash becomes criminalized, are all of us going to be forced into the banking system whether we like it or not?  If we cannot pay for things in cash, what other choices are we going to have?

The truth is that the more you think about this issue, the more disturbing it becomes. 

So what do you think about all of this?  Feel free to leave a comment below.

The Trade Deficit Nightmare

When they hear the word deficit, most Americans immediately think of the U.S. government budget deficit which is rapidly spiralling out of control.  But that is not the only deficit which is ripping the U.S. economy to shreds.  In fact, many economists commonly speak of the “twin deficits” that are destroying the U.S. financial system.  So what is the “other deficit” that they are referring to?  It is the trade deficit.  Every single month, we buy much more stuff from the rest of the world than they buy from us.  That means that every single month there is a massive outflow of wealth from the United States.  Every single day, America becomes just a little bit poorer as Americans continue to run out and fill up their shopping carts with cheap plastic crap from China and dozens of other emerging economies.  Not that trade is a bad thing.  Trade can actually be a very good thing.  But the gigantic trade imbalances that the United States has been running for years are absolutely bleeding us dry.  Unfortunately, our politicians have just stood idly by as each month we continue to transfer massive amounts of wealth out of the United States.

The U.S. Commerce Department recently announced that the U.S. trade deficit increased by 18.8 percent in June to $49.9 billion.  Most analysts had expected the figure to be somewhere around 41 to 43 billion dollars.

In the month of June, imports rose to approximately $200 billion while exports fell to about $150 billion.

So can we afford to have a net outflow of 50 billion dollars each and every month?

Of course not.

We had so much wealth as a nation that we could afford to do this for a while, but the reality is that if this keeps up the rest of the world will eventually drain us dry.

So just how dangerous is the trade deficit?  Well, world famous investor Warren Buffett once put it this way….

“The U.S trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to political turmoil… Right now, the rest of the world owns $3 trillion more of us than we own of them.”

But very few Americans talk about the trade deficit.

Why?

Number one, it is because our education system has become so dumbed down that most Americans (especially among the younger generations) do not even know what the trade deficit is.

Number two, most Americans are so obsessed with frivolous things such as American Idol, Dancing With The Stars, Lady Gaga and their favorite sports teams that they couldn’t care less about thinking about real issues.

But they should be thinking about foreign trade, because it is literally destroying the nation.

What we have done is we have allowed the monolithic predator corporations that dominate our economy to slowly but surely move their operations to countries such as China and India where labor costs less than a tenth of what it does here.  In the process, executives at those predator corporations are earning huge “performance bonuses” while millions of hard working middle class Americans are losing their jobs.

It is time to wake up.  Have you ever wondered why it is so hard to find a decent job out there right now?  Well, there is a good reason.  The giant predator corporations have decided that they don’t really need us anymore.

Once upon a time, great American companies provided great American jobs for great American workers.  We created the biggest middle class in the history of the world and great industrial cities like Detroit, Michigan were the envy of the world.

But have you been to Detroit lately?

One of the greatest cities in the United States has become a hellhole.  The mayor says that nearly half the people there are out of work.

So what happened?

Did the giant corporations who used to make stuff in Detroit stop making stuff?

No, they are still making lots of stuff.

They just aren’t making their stuff in Detroit anymore.

Now, the truth is that it is really easy to jump on Detroit.  It is a city that has been mismanaged for decades.  But Detroit is far from alone.

All throughout the “rust belt” you can find other Detroits.

At this point many of you may be thinking that people living in places like that should just move.

That may be good advice, but the truth is that what has happened to Detroit is going to be happening everywhere.  It is going to come to your own neighborhood soon enough.  The giant predator corporations are going to continue to try to outsource and offshore every job they can.

Your job may be next.

Perhaps you should start learning about the trade deficit.

Perhaps you should start asking your representatives about it.

Just look at what all of this “free trade” and “globalism” did to our trade deficit between 1991 and 2005…..

Are you troubled by that chart?

You should be.

The U.S. economy is bleeding and the top politicians from both political parties act as if they could really care less.

What do you think is going to happen if tens of billions of dollars continue to pour out of the United States month after month after month?

The economic prosperity that we have all been enjoying is not guaranteed to last forever.

The system of world trade that has developed over the past few decades has provided us with gigantic mountains of cheap plastic crap, but it is not a good system for America or for middle class American workers.

Someday we will look back in horror at how incredibly stupid it was to ship our manufacturing base, our jobs and our prosperity to China.   

But the American people have made their choices.  They allowed the politicians to convince them that NAFTA, GATT and the WTO would be wonderful things for Americans.

They didn’t listen to the warnings about what would ultimately happen to our jobs and our economy.

They didn’t take the time to get educated about foreign trade and the exploding trade deficit.

So now we all get to pay the price.

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