The Great Obama Trick
Two days back, I read an article in the Malaysian paper Strait Times, titled "Obama aims to control "exploding" deficits.
Budget deficits today for the US, stand at US $ 1.2 Trillion!!! ( One Trillion = 1000 Billion)
Elsewhere, I read that this deficit was US $ 438 Billion for fiscal year 2008. ( 1 Billion = 1000 Million, 1 Million = 10 times 100,000)
What exactly is this deficit? How did it accumulate? Layman as I am, this means that the US is in debt to the tune of this mind boggling amount.
To me, it means that they have been borrowing left, right and centre??? Come again, is not borrowing the prerogative of third world countries??? US as a developed nation is supposed to lend, not borrow.
The where exactly did these deficits come from??? Is it related to the price they set for themselves? I mean, you ask any American to change a light bulb, he will charge you a hundred dollars whereas a Mexican, legally in the US would probably do it for 25 dollars. If he happens to be an illegal immigrant of which there are many in the Big Apple, he will do it for 5 US $.
Which means, applying the ratio above, the trade deficits can be as less as 300 billion or even 60 billion US $.
Of course, it is not that simple. The projected deficits cost may have a major content of capital goods. Still, there must be a major component of labour. The point is, as is their wont, they price themselves so high for their own good.
Take a look around any shopping mall in the US. One can hardly find anything that is authentically made in the US. Everything, literally everything comes from the developing nations, and of course China.
The decline, the depression in US started long back mainly based on the unwillingness of the citizens to work. Lazy as they are, depending on outsourcing simply because third world countries offer cheaper labour, has led them to be totally dependent on others for their daily needs. All the while paying for such services, which if were done within, would have cost a bomb.
In 2005, while I was in US, one of my colleagues returning to India wanted to buy a pair of jeans which are authentically "made in USA". We searched high and low, finally locating a pile of jeans in JC Penney, Kansas City, which was stacked so high that it was obvious none touched that pile of jeans. The reason? Very obvious . Each piece priced at 130 US $ while the pile of jeans next to it was so glaringly superior in quality yet priced at 20 US $ per piece. But, made in Sri Lanka!
Having said that, it is interesting to note as said in the article in Strait Times, that last Tuesday, 17th of February, 2009, Mr President signed away US $ 787 Billion as a stimulus package to be infused into the industries in US, to generate, in his words, .." because of this recovery plan, three and a half million Americans will now go back to work doing what America needs done.."
I wonder whether they are willing to price themselves reasonably, or still stick to outlandish rates for their "work".
Where exactly will this US $ 787 Billion come from? Definitely not the tax payers money? He has said that he will cut down on Iraq War spending, he will tax the "wealthiest" Americans more, he will increase import taxes. Wealthiest Americans being the ones who make more than US $ 250000 a year.
Which brings me to think of the purported reason for the depression. Loan defaulters from the big borrowers in real estate business in US. Real estate prices touching sky high limits, once the balloon burst, they defaulted on payment leading to collapse of some major banks too. The US $ crumbled and the repercussions felt world over.
Now, has he said a word against these defaulters? For sure the numerous real estate companies are known and have assets accumulated over time? Why is there not a word of penal action against them? Are the laws in US so easily managed that they go away scot free?
Why is he silent on this? Does it have something to do with his election funding??? In my bird brain I cannot but link these two.
Most of the sources for his election funding have not been disclosed, and have been clubbed under "small contributors" ( read less than 200 US $) which need not be disclosed under US laws. A major part of this from other countries, there is much speculation where these funds have come from.
"More than half of the whopping $426.9 million Barack Obama has raised has come from small donors whose names the Obama campaign won't disclose." So reads the lead-in to an article published by Newsmax". Source ' Read the link below
http://www.thetrumpet.com/index.php?q=5581.3894.0.0
The same article in Strait Times goes on to say " a complete recovery requires stemming the spread of real estate foreclosures and falling home values, stabilising and repairing the banking system in order to restore the flow of credit to families and businesses and reforming the broken regulatory system that made the crisis possible.."
I have two questions here. Why is it that families have to be in credit as a rule? Where I come from, a loan is taken in very exceptional circumstances.
Does the above statement infer that had the regulatory system been more efficient and doing what they were supposed to do, this crisis would not have come about? Why does not someone come clean about the failings of the regulatory systems????
In short, Mr President wants to pump in money into the system to generate more work and wages thereof, and give the wage earners more credit. The wages he facilitates will go towards paying off the loans he disburses. And he calls it a recovery.
Whereas, the real recovery lies elsewhere. Generating more purchasing power by facilitating wages and credits will mean that the US market will flourish once again. As such US by itself is more than 30 % of global demand. All other countries look to US to sell their own goods and services. And get paid in US Dollars.
Therein lies the hitch. A fat lot of other nations have their foreign exchange reserves in US dollars and they cannot afford to let the US dollar drop into oblivion. So, come what may, they collectively will see to it that the US economy recovers. Whether it be lending long term credits or agreeing to hefty increases in import duties, the US has other countries by the balls.
And therein lies a tale .. Whether it is Obama or A or B or C the US economy will recover at the cost of other nations ..