The Perilous Position in which Job/Manufacturing outsourcing

[MANative]

places us...

This has been bugging me for years, and hearing about GM's latest round of job cuts/plant closings has just emphasized for me what a horrible competitive and security position we're in.

From the textile plants in New England to the steel plants in PA to the shoe manufacturers in the mid West and dozens of other assorted makers of what used to be high-quality American-made goods, American companies have moved the manufacturing and assembly of hundreds of product categories out of the US along with all of the well-paying jobs that were once necessary to support those industries. OK, I get that the right wing argument is that profit is good for business, keeps the economy humming and all that associated baloney, and that they are able to produce such goods at a higher profit level outside the US. Don't buy the argument, BTW, but I know that's what they claim. And then there's the fact that many of the American companies have just closed their doors, and we get these goods from foreign makers, period.

They also claim that the US needs to be strong and competitive in security issues. So here's what I don't get, at any level. IF there were to be real, widespread and on-going conflict that would involve nations that we today call our "friends", we'd be so screwed it'd be beyond imagination. In one category alone - Where are over 95% of the clothes sold in America now made? Think Far East. If we needed an immediate ramp up of manufacturing, as during WWII, where would the factories come from? Many of the closed ones have been converted to condos, torn down, or sit in massive states of decay. And what about skilled workers to fill those jobs? As today's displaced workers age and reach retirement, there's nobody in this country now being trained in the skills their moms and dads used to build what was once the greatest industrial nation ever.

So, once again, short-term thinking by government and corporate "leaders" endangers us enormously. Not even considering what would happen if we were in the horrible position of needing a legitimate, immediate military or infrastructure build-up, we've lost the ability to control our own destiny as a nation, if the vast majority of the goods we consume are produced in places not within our control. We've supposedly transitioned to an "information economy". All well and good. But do you wear "information" or cook your dinner with "information" or drive "information"? No - me neither. At the very least, we need some balance. I don't know the answer, but I need to ask the question. What do we do to get it back, and along with that balance, our ability to legitimately claim the mantle of leadership that is so threatened by our current policies and practices?

[dflprincess]

1. My mom (who is 83 and so remembers WWII)

has wondered about this. We don't make anything in the U.S. and we would be screwed.

[MANative]

2. Exactly, and I hear so few people

ever complain about the lack of USA-made goods. 'Cause we're all spoiled by the cheap prices at palces like Wal-Mart, that we've forgotten what really quality goods used to be.

But the bigger problem is overall competitive advantages that we've squandered.

[Yavin4]

3. We Are Very Well Prepared To Go To War With China

Right after they:
(1) Loan us the money to fight the war
(2) Make our guns, tanks, automobilies, and other heavy machinery
(3) Make our uniforms and body armor
(4) Program all of our weapons systems

After they do all of that, oh boy, we'll so kick their asses.


:sarcasm:

[MANative]

4. They probably even produce

our MREs...

[Yavin4]

5. Oh Yes, You're Right, Well Then China Must First...

(1) Loan us the money to fight the war
(2) Make our guns, tanks, automobilies, and other heavy machinery
(3) Make our uniforms and body armor
(4) Program all of our weapons systems
(5) Make our MREs

Then, the kicking of their asses will truly begin.

:sarcasm:

[MANative]

6. The only thing that would make it even better

is if they called in all of our existing loans first! Wow, what a whuppin' we'd deliver.

[A HERETIC I AM]

12. How exactly can they "Call in" the loans you refer to?

I am curious exactly what you mean by that statement. What precisely can China call in?

[MANative]

13. From what I understand, China owns an enormous

amount of US govt debt in the form of loans. Loans can be "called in" or made immediately payable under certain circumstances. Those circumstances are dictated by the terms of the loans, and I obviously don't know the specific terms of those loans, but I'd be stunned if such clauses didn't exist.

edited for typo

[A HERETIC I AM]

15. Well, they don't exist. What China owns are US Treasury Securities

otherwise known as bonds. What you are suggesting - that they could essentially demand their money back is called a "Put" provision and they simply do not exist with Government Bonds from ANY source, particularly the US Treasury.

China can in no way, shape or form demand their money back from the US Treasury. They purchased Bonds which have a specified coupon rate (interest rate), a market value (which can fluctuate) and a maturity date. What they CAN do is try and sell the Treasury bonds on the open market. If they do that, they are going to have to find a buyer or buyers and those buyers will want the same surety China wanted when it bought the bonds in the first place. The only way that buyer would be the US Government is if the US Government could make a profit in the transaction. Not bloody likely.

Bonds can be "Callable" that is to say the issuer can "call them in" for a specific price at or after a specific time period before maturity. The call provisions of a bond issue are clearly spelled out when the bonds are purchased.

[Yavin4]

16. Or, They Could Just Stop Buying Our Treasuries Entirely

which would have the same disatrious effect. No law that says they have to buy our treasuries.

[A HERETIC I AM]

18. That is an entirely different thing and yes, that is a HUGE danger

That is why it is critical to have sound fiscal policy in place in this country. Besides being the imperialist dickhead that he is, perhaps Bush's greatest legacy will be the damage our international credit rating has suffered under his watch.

But the main reason why Treasuries continue to be bought by foreign governments is this:

The United States financial markets are very deep, extremely liquid, very well regulated, politically stable and transparent. More so than just about anywhere else on the planet. Also, the real value of a US treasury bond is the fact that the United States Congress has virtually unlimited taxing power over the people of this country and so the issuance of debt securities by our government is seen as extremely low risk. We are seen as low risk because as a whole, the American people will get up in the morning, go to work and pay their taxes. And they have done so for quite a long time now and have yet to burn down the capitol or riot in the streets forcing an overthrow of an elected government.

[Yavin4]

20. All China Would Really Have To Do Is Threaten To Not Buy Our Debt

and that move alone would make us scamper back into our yard with our tails between our legs.

[A HERETIC I AM]

22. The retaliation for such a threat would probably be tariffs on trade.

We could and probably would just tell them "Ok, since you aren't going to buy Treasury bonds anymore, it is going to cost your manufacturers another $10,000 per container to place cargo on the docks in LA (or whatever figure and whatever dock)

We all must realize though, that China has a vested interest in making sure our economy hums along. Until theirs overtakes us as the leading consumer society (and it will, someday) they need this country to have a stable economy.

[MANative]

17. Thanks

for that explanation, and please note that my first comment on this was in reply to a purposely facetious and sarcastic comment. I'm admittedly not well-versed enough in the nature of the US dollars that China holds to get into a major technical discussion about it, and I will do more homework to get better informed. If I read you correctly, however, there are circumstances under which those bonds could be used negatively against US interests.

The main gist of my original post was to point out our competitive disadvantages in manufacturing and infrastructure issues. The money piece is another whole story, and if nothing else, my intent here is to point out that the huge amounts of debt, whatever the form, held by foreign nations can't be good in the long run.

[A HERETIC I AM]

19. You're welcome and i agree entirely. Massive debt is NEVER good.

You do read me correctly in that there are ways that China's bond holdings could be used against us but the thing is, the US Treasury already has the money from the sale of the bonds! As the poster above suggests, the biggest threat from China in this regard has less to do with the bonds they currently hold but the bonds they may buy (or not buy)in the future.

[MANative]

21. That certainly makes a lot of sense

and makes all this war spending that much more disconcerting. What if the conflict were not with Iraq but with No Korea? Not a pretty thought.

[toddaa]

7. Global economy depends on cheap energy

Our entire way of life is based on cheap energy. The food on your plate, the clothes in your closet, and the car in your garage not only come from very distant places, but also required additional resources from other far away places. Take the avocado. At the grocery store, an avocado costs about $0.99. But how much oil was required to grow, harvest and deliver that avocado to your grocery store and finally into that guacamole you just made. When global peak oil is reached, the cost of producing that avocado will greatly eclipse the $0.99 you paid.

It doesn't matter if the country that avocado came from is a friendly ally or not. If it costs hundreds of dollars to move it 3,000 miles to your plate, you won't be having guacamole again for a very long time.

[MANative]

9. Absolutely - a very big part of the equation.

And all the more reason to produce goods closer to home. If I recall correctly, there was a time not all that long ago when the Railroad system transported far more of our goods internally than long-haul trucking. And look what's happened to that transport infrastructure.

[The_Casual_Observer]

8. Increasingly the american population doesn't know how to do anything

but sell, collect & count money, feed & fix broken humans and cars and build/remodel houses.

These "skills" were at one time support enterprises to the "real" business of making things. Anymore they are in support of each other only. Apparently, if the hard goods are cheap enough they no longer factor in to the process, and the whole thing is sustained by the services only.

[MANative]

10. Yes - becoming a "closed loop" of an ecomony

If I remember Econ 101 (from 25 years ago), those types of systems don't survive very long or very well.

[blues90]

11. I don't know if it was by design or what

It seems the corps are only interested in cheap goods at a high profit . Try to find anything not made in China today or Asia .

I recall in the early 80's while working for ford as a tech people thought they were buying american and the wire harness were made in China as well as wany other countries including canada and mexico .

I don;t know how we will ever get these jobs back . Some say fair trade with high taxes but then you would have to build plants and hire and train people all over again . What would these be , min wage jobs or $10 per hour jobs , who can say .

We have nothing here worth doing much anylonger and I am frozen in time . Either I retrain and work for nothing or hang myself to end the worry and suffering of the future .

I can't find even a shit job at 57 now since ford laid me off at their dealerships and ford dealers here are closing and no one is hiring .

So now what , I have no idea with now promise in the furure for me that I can see . Many people my age are going through this hell and it is not a joke but a tragic event .

[MANative]

14. It makes it no easier to know that

you're not alone in this. I've lost count of the number of friends who've been downsized or outsourced, and many have just given up being part of the "normal" workforce. They do odd jobs, try to find contract work or make do with what they have left in savings. That only lasts so long. I wish I had answers.

[blues90]

23. Sadly knowing others are going through this does not help

Knowing I'm not alone at times makes this even more scary . There are no groups of jobless people gathered in a joint effort . They seem to go it alone as I do .

If I end up on the streets then I am screwed because if I can't find work now with a roof then what .

It becomes a choice of how much one can take . You have to have something to look forward to and a purpose in life in order to feel human .