October 11, 2010
New Survey Shows Industrial Sector Moving Forward
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- Trade Barrier Exchange is a better indicator October 12, 2010
Reviewed by 'Stephen J. Schoonmaker'
Although the information on the manufacturing sector of the economy is welcome news, it is important that your readers understand that international trade barriers are, by far, the most important factor in whether the US will have any industrial/manufacturing capacity. And, trade barriers are traded on a Trade Barrier Exchange every day. This is called the currency market.
The currency market is not realy a market. It is not "policed" in any way. Who would do it? The UN? Ha-ha. Currency trading is the playground of those with a hankering for cornering and manipulating markets. You buy a bunch of Brazilian money because you know somebody in the Brazilian government that knows that a good crop report is coming; the next day your buddy announces the good news, your Brazi-money goes up, and bingo, money for nothing. This happens every day. And whether GM builds a factory in Brazil, China, or Mexico is manipulated in the exact same way. GM's future choices are vastly influenced by their perception of the currency "market".
Right now you can go to Yahoo Finance and plot the US Dollar against other currencies. You can do this against the Yen and the Euro and see what is happening with a somewhat-market-forces-based trade barrier (the values go up and down - but Japan in particular has admitting to manipulating it). Then you can plot against the Communist Chinese currency (Yuan/Remimbi). Here you will see a constant/controlled value within ranges that are "pegged". The US and Chinese government collude to make this so (US lends to China via Treasury Bills). The Chinese signed World Trade Organization papers to not peg their currency, but the plot does not lie (like they apparently do).
Changes in these trade barriers completely dictate the future. They are trade barriers because they act precisely the same as tarriffs. When you exchange the money from one currency to the other; the value of one versus the other can give you different values (just like a tax). If you are China (like Japan and Korea before it), you make sure your currency is "weak". This means the dollar is "strong" (sounds good but its bad). Your dollars buy more if you travel to Asia (CEO's say yippee here since they love to travel over there and act important). But it makes their stuff cheap here, as expected (Investors say yippee here since closing factories and opening strip malls is what they really like).
Why not show the plots of currency values on your web site? This is the real indicator for our industrial future. Interestingly, if every factory in America were to do a wildcat strike all at once, it would probably sink the dollar by 25% on the Trade Barrier Exchange. This would make imports 25% more expensive here, and ironically the GM executives would probably move production back to the US.
Stephen J. Schoonmaker