Archive for the ‘autos’ Category

Economy Sparking Protectionism, Global Trade Disputes?

February 1, 2009

The world may be on the brink of a gentler kind of trade war.

By Anthony Faiola
The Washington Post

In 1930, Congress fired the first shot in a protectionist battle that prolonged and deepened the Great Depression. After passing a bill aimed at saving American jobs by effectively barring 20,000 imported goods, including French dresses and Argentine butter, other nations retaliated by raising their own barriers on U.S. products, effectively bringing global commerce to a halt.

In the aftermath, organizations like the World Trade Organization sought to ensure that never happened again. Nations agreed to put on economic straitjackets permitting them to raise tariffs within hard-fought limits. That is likely to help prevent a repeat of the devastating and overt trade wars seen during the Great Depression, since it is now far harder for nations to increase tariffs on a wide array of imports at once.
.

But there remains a surprising amount of wiggle room in international trade and commerce treaties, and that, analysts say, is where the battle is now being fought as leaders worldwide face intense pressure at home to protect domestic jobs in the deepening financial crisis. They are engaging in a more subtle form of protectionism that often skirts those rules.

This weekend at the World Economic Forum in Davos, Switzerland, the annual event drawing the world’s leaders, luminaries of industry, commerce and philanthropy, a host of dignitaries raised a crescendo of alarm over growing economic nationalism. “We will resolutely fight protectionism,” Japanese Prime Minister Taro Aso told reporters there, giving voice to the general sentiment.

Yet even as leaders call for nations to do the right thing on the international stage, actually doing it at home is proving far tougher.

British Prime Minister Gordon Brown, for instance, delivered a particularly impassioned plea for nations to remain on the path of free trade yesterday. “This is not like the 1930s. The world can come together,” he said. However, back in Britain, the government is directing British banks with global operations now being rescued with taxpayers’ dollars to boost lending to British businesses and citizens first.

Read the rest:
http://www.washingtonpost.com/wp-dyn
/content/article/2009/01/31/AR20090
13101895.html?hpid=topnews

Related:
Obama Forced to Rethink “Buy American” in Stimulus After Hits from China, Germany, Others

Global Economy Sparks Protests; Governments Fear Greater “Social Unrest”

Obama Forced to Rethink “Buy American” in Stimulus After Hits from China, Germany, Others

January 31, 2009

President Barack Obama’s administration will examine a “buy American” requirement in economic stimulus legislation that has raised concern among U.S. trading partners, White House press secretary Robert Gibbs said.

The administration “will review that particular provision,” Gibbs said today at his regular briefing. The president’s advisers understand “all of the concerns that have been heard, not only in this room, but in newspapers produced both up north and down south.”

He refused to say whether the administration supported or opposed keeping that part of the legislation intact. Nor did he say what the president would do if the provision remains once the bill clears the House and the Senate.

The issue may cloud Obama’s trip to Canada on Feb. 19, his first journey outside U.S. borders as president. Officials in Canada, the top U.S. trade partner, are criticizing a part of legislation that passed the U.S. House of Representatives Jan. 28 that requires the use of U.S.-made iron and steel in infrastructure projects.

“U.S. protectionism is about to make Canada’s recession a lot worse,” Ralph Goodale, house leader for the opposition Liberal Party, said today in Parliament.

Read the rest:
http://www.bloomberg.com/apps/news?pid=2
0601087&sid=a37pHeTuz_HA&refer=worldwide

China, Germany Both Pressure Obama on Protectionism

January 31, 2009

China’s president urged better ties with the United States in his first phone conversation with President Barack Obama, and called for both sides to resist trade protectionism, Beijing said Saturday.

Friday’s conversation, 11 days into Obama’s presidency, followed sharp exchanges between the two sides over China’s currency policy, amid criticisms that China manipulates its yuan to boost its exports overseas.

AFP

An account of the conversation issued by the Chinese foreign ministry quoted President Hu Jintao telling Obama that China would work toward a “more constructive China-US relationship.”

Hu told Obama China welcomed US efforts to shore up the American economy, but warned against moves toward protectionism, the statement said.

“We hope to strengthen communication and coordination on macroeconomic policy and firmly resist trade protectionism,” Hu was quoted saying.

Read the rest:
http://news.yahoo.com/s/afp/20090131/w
l_asia_afp/uschinadiplomacyobamahu_200
90131055621

*****

Germany’s Merkel Working With China To Stop Protectionism

Reuters

 German Chancellor Angela Merkel said on Thursday her country and China would avoid protectionism and maintain last year’s trade volumes in 2009.

“Despite the economic situation we have undertaken with China to at least maintain our trade volume if not increase it,” Merkel said at a joint news conference with Chinese Premier Wen Jiabao.

Wen was in Berlin as part of a European tour to discuss cooperation in solving the international financial crisis.

China, the world’s third-largest economy, has slowed much more sharply than expected due to the financial crisis, as wilting U.S. and European demand have hurt its export sector.

******

“Don’t let’s lose sight of what creates wealth. It is open markets, it is capitalism,” News Corp CE Rupert Murdoch said yesterday.

Business Day
http://www.businessday.co.za/articles/frontpage.aspx?ID=BD4A927967

Merkel and Brown Challenge Obama, Call for Global Economy Rules

January 31, 2009

German Chancellor Angela Merkel and British Prime Minister Gordon Brown argued for tougher control of the international economy, opening up a potential split with the United States on ending the financial crisis.

AFP

Merkel said a UN economic council based on the UN Security Council may have to be created to police the global economy, while Brown said his “shared revolution” would strengthen current international institutions.

Both proposals went counter to US ideas rejecting any global enforcer. At a Group of 20 summit in November, Washington fought for national regulators to take precedence.

Brown and Merkel set out the case for greater international control at the World Economic Forum in Davos, both looking forward to a new G20 summit on the crisis to be held in London in April.

The British prime minister, his concentration broken by his own mobile phone ringing during a press conference, called for “a shared revolution in common action to deal with real problems.”

Read the rest:
http://news.yahoo.com/s/afp/20090131/
ts_afp/davoseconomypolitics_20090131
074426

Related:
Germany Calls U.S. Auto Bailout “Protectionism”
http://edition.cnn.com/2009/BUSINESS/01/
30/davos.wef.friday.wrap/index.html

Democrats Admit: “We Are Our Own Worst Enemies”

January 6, 2009

The new Congress sweeps into town Tuesday with many members comparing themselves to the 1933 Congress that enacted much of President Franklin Roosevelt’s New Deal and changed the government’s relationship to its citizenry.

By NAFTALI BENDAVID and GREG HITT
The Wll Street Journal

These times are very different from 1933, when the 73rd Congress enacted 16 major laws during Mr. Roosevelt’s First 100 Days. Today’s economy, for all its struggles, doesn’t remotely resemble the turmoil of the Great Depression, with its 25% unemployment. Also, the public’s appetite for broad change isn’t yet clear.

None of this is deterring the Democrats. Like the Congress of 76 years ago, they are converging on Washington with a popular new president, significant congressional majorities and, perhaps most important, a shaken public eager for government to try something new.

“We are at a unique moment in history — we have an opportunity that maybe comes only once in a generation,” Rep. Henry Waxman said recently. “We may well turn out to be as historical as the Congress was in 1933.”

Democrats see the best chance in decades to expand health coverage, move toward energy independence, tackle climate change and re-regulate the financial-services industry.

“We certainly have the obligation to attack big problems,” says Rep. David Obey of Wisconsin, sitting under a large photo of Mr. Roosevelt in his personal office. “We have been playing small-ball for a long time here.”

The first order of business on the Democrats’ agenda will be acting on a two-year economic-stimulus package. Still under construction, the plan could be as large as $775 billion, and it could include about $300 billion in tax cuts, $350 billion in infrastructure spending and billions more in aid to states and other measures. Democratic leaders hope to have the bill on President-elect Barack Obama’s desk by mid-February.

Underlying the recovery plan and the Democrats’ other agenda items is a determination to shift the nation’s economic balance of power back to workers and the middle class — by making it easier for employees to unionize, pushing banks to restructure mortgages and rewrite credit rules, and providing health coverage to more people.

What’s to stop the Democrats? There are serious obstacles, starting with the party itself, which is hardly unified. Some Democratic congressional factions, like the more-conservative Blue Dogs, are deeply suspicious of expanded federal spending. Democrats from old industrial states worry that colleagues from California want to be too hard on the auto industry. Coal-state Democrats fear the party’s environmental wing will go too far with efforts to clamp down on fossil fuels.

Read the rest:
http://online.wsj.com/article/SB123120199307655729.html

Republican Chasm: RNC Will Condemn Bush Bailouts

December 30, 2008

In what would amount to a slap in the face to a sitting Republican president and the party’s Senate and House leaders, national GOP officials, including the vice chairman of the Republican National Committee, are sponsoring a resolution opposing the resort to “socialist” means to save capitalism.

“We can’t be a party of small government, free markets and low taxes while supporting bailouts and nationalizing industries, which lead to big government, socialism and high taxes at the expense of individual liberty and freedoms,” said Solomon Yue, a cosponsor of a resolution that would put the RNC — the party’s national governing body — on the record as opposing the U.S. government bailouts of the financial and auto industries.

By Ralph Z. Hallow
The Washington Times

Republican National Vice Chairman and constitutional law attorney James Bopp Jr. authored the resolution and is asking the rest of the 168 voting members of the committee to sign it.

“The resolution also opposes President-elect Obama’s proposed public works program and supports conservative alternatives,” while encouraging the RNC “to engage in vigorous public policy debates consistent with our party platform,” Mr. Bopp said.

The RNC has never played a leading policy role or any policy role except once every four years in framing the national party platform, which is quickly forgotten and almost never referred to for another four years.

Read the rest:
http://www.washingtontimes.com/news/2008/
dec/30/rnc-pushes-unprecedented-criticism-of-bailouts/

China to offer incentives to scrap old cars

December 27, 2008

China plans to offer incentives for car owners to scrap their old models in favour of new ones, in a bid to lift the auto industry as it enters a period of crisis, according to state media.

The measure is part of a new package being prepared in Beijing aimed at avoiding a US-style collapse of the local auto sector, the Xinhua news agency reported.

AFP

“Details of the plan will be announced very soon,” said an unnamed official with the commerce ministry. He did not give any details.

The official was speaking shortly after dismal figures were released showing that Chinese auto sales fell 14.6 percent in November from a year earlier.

Other measures that China may adopt to bolster auto sales include cuts in the 10-percent vehicle purchase tax and easier access to car loans, according to Xinhua.

The health of the auto industry is crucial for the overall well-being of the Chinese economy as economists have argued more than 150 industries depend on it, including the steel and petrochemical sectors.

“The auto industry’s current difficulties are what concern me the most,” Premier Wen Jiabao was quoted as saying in a recent trip to the southwestern city of Chongqing, a car manufacturing key area of China.

Read the rest:
http://news.yahoo.com/s/afp/20081227
/bs_afp/chinaeconomyauto_081227024548

Will Stimulus be Big Enough, Soon Enough? Economic Data Today Expected to Show More Weakness

December 24, 2008

Several reports due Wednesday are expected to provide more evidence that consumers are cutting back on spending and companies are eliminating jobs in the face of a deepening recession.

The new figures will come a day after the government said the gross domestic product, the broadest measure of the economy, shrank at a 0.5 percent annual rate in the third quarter. Many economists expect the GDP to shrink by much more in the current quarter.

Wall Street economists forecast that a report on consumer spending in November, to be released by the Commerce Department on Wednesday, will show a drop of 0.7 percent. That would be the fifth straight month of decline.

By MARTIN CRUTSINGER, AP Economics Writer

Meanwhile, the Labor Department’s tally of initial applications for unemployment benefits last week is expected to rise slightly to a seasonally adjusted 560,000 from 554,000 in the previous week.

And the Commerce Department is expected to report that durable goods orders fell by 3 percent in November, after a 6.2 percent drop in October. October’s decline was the largest fall in two years.

Two reports on home sales Tuesday also sketched a bleak picture. Demand for both new and existing homes fell more sharply in November than expected.

Read the rest:
http://news.yahoo.com/s/ap/20081224/a
p_on_bi_ge/financial_meltdown

Saving Capitalism No Sure Thing If “Cure” Undermines Economy

December 22, 2008

What’s good for General Motors may not ultimately be best for the global economy.

The Bush administration’s $13.4 billion rescue of GM and Chrysler is a fitting finish to a year in which governments around the world expanded their role in the economy and markets after three decades of retreat.

The intervention comes at what may prove to be a steep price. Future investment may be allocated less efficiently as risk-averse politicians make business decisions. Whenever banks decide to lend again, they are likely to find new capital requirements that will curb how freely they can do it. Interest rates may be pushed up by government borrowing to finance trillions of dollars of bailouts.

“We’re seeing a more statist world economy,” says Ken Rogoff, former chief economist at the International Monetary Fund and now a professor at Harvard University in Cambridge, Massachusetts. “That’s not good for growth in the longer run.”

It’s not good for stocks either, says Paola Sapienza, associate professor of finance at Northwestern University’s Kellogg School of Management. Slower economic growth means lower profits. Shares might also be hurt by investor uncertainty about the scope and timing of government intervention in the corporate sector.

“If the rules of the game are changing, people are reluctant to invest in the stock market,” Sapienza says.

From Bloomberg
By Simon Kennedy, Matthew Benjamin and Rich Miller

Read the rest:
http://www.bloomberg.com/apps/news?pi
d=washingtonstory&sid=aDjmuEpDoctc

Does the bailout spree signal the end of democracy?

December 22, 2008

“A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship….

“Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage.”

These words – the author is unknown – are particularly sobering today. In the past few months, Uncle Sam has bailed out Wall Street, Fannie Mae and Freddie Mac, home-owners, banks, and US automakers, while the incoming administration promises a massive infrastructure investment.

Thomas Jefferson
Thomas Jefferson

Is it any surprise that cities, counties, and states are jostling for space at the federal trough? Who’s next? Big Media? Big Sports? Agribusiness?

By Randy Salzman
Christian Science Monitor

With the bailout “mother of all precedents,” it’s become difficult for Washington politicians to say “no” to any special interest that’s too massive, too economically important, or too well connected to fail.

Nor can politicians forget the poor. Or the crucial swing voters in the “struggling middle class.” And they can’t ignore seniors – AARP members are very vocal.

Virtually every group today is trying to meet with the Obama transition team to convey the urgency of its “crucial” spending requests. My local paper recently informed me that our area university is preparing its wish list for infrastructure dollars. Even the National Council for the Social Studies and the American Sportfishing Association have sent pitches to President-elect Obama.

Have we gone from “rugged individualism” to the complacency or even dependency of the national trajectory quoted above?

At the time of America’s founding, the Federalist Papers discussed the dangers of democratic politicians being forced to count on the votes and support of citizens or organizations too self-involved or uneducated to realize that short-term individual or group gain often precludes long-term prosperity.

And Thomas Jefferson sought to deal with politicians’ catering to their constituents’ convenience by founding the University of Virginia (UVA). He wanted an informed, intelligent, and thoughtful population in hopes of helping democracy survive. Today, sadly, UVA is the area university I read about in the paper seeking funds for its infrastructure wish list.

Read the rest:
http://news.yahoo.com/s/csm/20081222/cm_csm/ysalzman