The NAFTA sell-off is underway. Relax. No big deal. The “NAFTA Reality Correction” is approximately 5 to 7%. Multinationals hold greatest exposure. Everything is temporary.
(LINK To Story)Twists and turns as Wall Street paper economy shifts toward ultimate equilibrium with Main Street real economy. Real company P&L results (MAGA) will eventually replace speculative stock valuations. Volatility is the norm while navigating the space between.
First, the essential problem with NAFTA was an evolution over time. In its current form NAFTA became an exploited doorway into the coveted U.S. market. Asian economic interests, large multinational corporations, invested in Mexico and Canada as a way to work around any direct trade deals with the U.S.
By shipping parts to Mexico and/or Canada; and by deploying satellite manufacturing and assembly facilities in Canada and/or Mexico; China, Asia and to a lesser extent EU corporations exploited a loophole. Through a process of building, assembling or manufacturing their products in Mexico/Canada those foreign corporations can skirt U.S. trade tariffs and direct U.S. trade agreements. The finished foreign products entered the U.S. under NAFTA rules.
Why deal with the U.S. when you can just deal with Mexico, and use NAFTA rules to ship your product directly into the U.S. market?
This exploitative approach, a backdoor to the U.S. market, was the primary reason for massive foreign investment in Canada and Mexico; it was also the primary reason why candidate Donald Trump, now President Donald Trump, wanted to shut down that loophole and renegotiate NAFTA.
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It can be a little confusing to listen to business or economic news analysts discussing the current state of the economy. They are all generally positive, but the inherent delivery of their forecasts is cast against the backdrop of their experience. Almost no-one, currently in the business of economic analysis, has experience, life skills, analytical training or educational understanding based on anything other than a Wall Street economic outlook.
Business Schools stopped teaching the principles of Main Street economics forty years ago. All modern analytical tools, and the data-systems therein, were structurally built upon an economic theory that establishes Key Performance Indexes based on Wall Street economic models. Titans of industry were replaced by fast-talkers pushing paper.
The paper economy and the monetary policy therein, has been the underlying architecture of economic analysis for decades. Within this process Main Street U.S.A., was assigned the role of a “service driven” economy. Institutionally everyone accepted this reality. Thus, those same voices are conflicted and cannot reconcile today’s economic shifts.
The Atlanta Federal Reserve is now estimating the potential growth for the first quarter of this year at 5.4%. This is a stunningly high projection when historic assumptions are factored. However, in the new MAGAnomic economy, it’s high, but not out of line.
The Main Street economic engine is roaring back to life. Real consumer spending jumped from 3.1 percent to 4 percent in the latest quarter. Consumer spending is approximately two-thirds of our GDP. However, the real key figure is ‘investment”. Private fixed-investment growth surged from 5.2 percent to 9.2 percent, that’s where the growth projections should be focused. Trump’s MAGAnomic policies are driving investment in the U.S. economic base. The current growth in private investment has doubled.
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Commerce Secretary Wilbur Ross appears on CNBC to discuss ongoing trade initiatives including NAFTA, China and the more broad Asia background. Additionally, Wilburine discusses growth in GDP and anticipated economic enhancements from the tax cut legislation.
NAFTA renegotiation round six ended yesterday in Canada will no substantive progress on the most contentious trade issues. One negotiation chapter on corruption was closed, but there was little to no agreement on much else.
Each of the primary Trade Representatives gave a closing statement at the conclusion of Round #6. U.S.T.R. Lighthizer blasted Canada for attempting to inject schemes, fraud and deceptive dealing within the negotiations. Princess Rainbow Sparkles from Canada tried to pretend the Canadian proposal was realistic. It was all awkward. Hopefully President Trump will soon get us out of this nonsense. Lighthizer Transcript below video:
Round six of NAFTA renegotiation talks continue today as Canada and Mexico claim cautious optimism that a round seven will take place. This round of talks is scheduled to continue through Monday and end with a much anticipated a joint press conference between Ildefonso Guajardo (Mex), Chrystia Freeland (Can) and U.S. Trade Rep. Robert Lighthizer. There were seven rounds initially scheduled.
Canada and Mexico are trying to close less important, and less controversial, trade chapters in an effort to give the illusion of progress and frame a political narrative that lends itself toward continuing to talk; ie. round seven.
However, if there’s no significant progress on the larger issues it’s doubtful Lighthizer will find value in endless words that amount to nothing.
Canada and Mexico have been lobbying U.S. politicians hard to retain their parasitic trade positions. Additionally, a significant number of Washington DC politicians are willing to take massive bribes from the U.S. Chamber of Commerce lobbyists and support the export of American economic jobs and wealth. This is another key UniParty indulgence issue.
Big Corporate Agriculture (Big AG), the consortium of massive multinational agriculture companies who hold stakes in the entire continent, are pushing hard to keep their “controlled market” dominance in place, and is attempting to stoke fears using false claims about farms and negative trade impacts to farmers. Pure nonsense.
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President Trump and U.S. Trade Representative Robert Lighthizer held an open-press Oval Office event to announce trade action, tariffs, against China (solar) and S-Korea (washing machines) for product dumping. [Details Here]
The backdrop of this executive action happens on the first day of NAFTA round six talks beginning in Canada. Ambassador Lighthizer will be traveling to Canada shortly. It is increasingly likely that President Trump will exit NAFTA as part of the larger initiative to draw manufacturing jobs back into the U.S. In this round, we are hearing from those close to the work that Mexico and Canada are panicked and ready to concede in an effort to keep access to the U.S. market they are dependent on.
President Trump and Ambassador Lighthizer are now in the process of leveraging the U.S. business tax policy changes to hammer bilateral trade deals. This is where the teeth of Team wolverine become visible. All future action builds on all preceding action.
If the U.S. were to exit NAFTA (North American Free Trade Agreement), the price you pay for most foodstuff at the grocery store would drop 10% in the first quarter and likely drop 20% or more by the end of the first year. Here’s why:
Approximately a decade ago the U.S. Dept of Agriculture stopped tracking, and reporting, U.S. consumer food prices. The food sector joined the ranks of fuel and energy in no longer being measured to track inflation and backdrop Fed monetary policy. Not coincidentally this was simultaneous to U.S. consumers seeing massive inflation in the same sector.
There are massive international corporate and financial interests who are inherently at risk from President Trump’s “America-First” economic and trade platform. Believe it or not, President Trump is up against an entire world economic establishment.
When you understand how trade works in the modern era you will understand why the agents within the system are so adamantly opposed to U.S. President Trump.
The biggest lie in modern economics, willingly spread and maintained by corporate media, is that a system of global markets still exists.
It doesn’t.
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Well, that didn’t take long. About a decade ago we needed a phrase to describe a very specific set of republican senators, thus originated the term “Decepticons”.
Decepticons are different from traditional ‘establishment’ types in that they are a cloistered club, a sub-set of the upper-tier within the GOPe, and they protect their exclusive position because of the payments and benefits they receive from an individual lobbyist, Tom Donohue.
Tom Donohue is the President of the U.S. Chamber of Commerce, the largest single lobbying group in all of Washington DC. Donohue represents the interests of massive financial institutions and multinational corporations. Donohue receives hundreds of millions from his corporate conglomerates; and he controls the distribution of tens-of-millions toward individual senators on capitol hill who agree to uphold those interests.
A ‘Decepticon’ will NEVER break ranks with the Chamber. EVER. Regardless of the Chamber position. That character trait is what makes them uniquely “Decepticons.”
WASHINGTON DC – Senate Republicans are growing frustrated with what they see as a lack of clear direction in President Trump’s trade agenda, which they warn is hurting U.S. exporters.
Republican members of the Senate Finance Committee vented their concerns in a recent meeting with U.S. Trade Representative Robert Lighthizer.
PART I – As the year winds down there will be lots of reviews of all things political. Lists of shifts and outlined accomplishments will be compiled to either show the advances or declines depending on tribal affiliation of the pundit.
However, not many people ever ask the questions behind the “why”. Why is there so much opposition to President Trump?
In the larger analysis, Donald Trump and the Make America Great Again (MAGA) proposition is a daily reminder that citizen inspired government can eliminate the decades-long notion of politics as a profession.
There are hundreds-of-thousands of people within the institutional system known as politics. Each member carving out a specialty and selling their expertise as necessary within the opaque organization known as government. From city council, through state legislature and into federal representation, the primary selling point of each participating member is to declare their operational skill within the institution.
Heck, the professional political enterprise is so accepted as ordinary you can even go to college and earn a degree in how to be a politician. Why?
Boil down government to its most basic of institutional objectives and the entire premise is about operating common systems to the benefit of the aggregate assembly. The only thing that changes is the scale of the assembled constituency, local, state or federal.
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