posted
Well, after Paulson's diversion into buying preferred equity in the US banks, it looks like we're headed back to directly purchasing mortgage-backed securities from the banks.
quote: As the Obama administration apparently prepares to launch Hankie Pankie II — buying troubled assets from banks at prices higher than they will fetch on the open market — it occurred to me that an updated version of an old Communist-era joke may be appropriate: under Bush, financial policy consisted of Wall Street types cutting sweet deals, at taxpayer expense, for Wall Street types. Under Obama, it’s precisely the reverse.
Still, technically its a move I was in favour of when the Bush administration proposed it, so good news I guess.
For Canadians, if you missed Budget 2009, well it seems that our debt clock will be starting up again.
quote: Canada's national "Debt Clock" started ticking again Tuesday for the first time in 11 years, with each passing minute showing national debt growing by some 64,000 Canadian dollars (52,000 dollars US).
From 1989 to 1998, when Canada first balanced its budget in decades, the clock ticked as a nightly feature on a popular national television newscast.
But business organizations have re-started the clock after the federal government in Ottawa presented its first budget deficit since then.
Largely due to an economic stimulus package worth some 40 billion Canadian dollars, Canada's government predicted a 1.1-billion-dollar budget deficit for the fiscal year ending in March and a 64-billion-dollar deficit over the next two fiscal years.
Darcy Rezac, managing director of the Vancouver Board of Trade, told AFP that business organizations tend to support the federal deficit because "in uncertain times we require certain measures."
But "oversight is required," he added. The clock may fulfill this role, as it is intended to raise public awareness of debt.
Rezac credited the symbol of the clock for earlier public pressure to balance budgets. When former federal finance minister Paul Martin's Liberal government first balanced the budget in 1998, Martin swung a gong to stop the old clock.
Sadly, it appears that the Conservative deficit over the next two years will wipe out roughly 11 years of debt reduction under the liberals. Sigh.
Meanwhile in China, I bet people are mulling over an updated Geithner version of stuff like this from Bloomberg:
quote: Eighteen months ago, U.S. Treasury Secretary Henry Paulson told an audience at the Shanghai Futures Exchange that China risked trillions of dollars in lost economic potential unless it freed up its capital markets.
``An open, competitive, and liberalized financial market can effectively allocate scarce resources in a manner that promotes stability and prosperity far better than governmental intervention,'' Paulson said.
That advice rings hollow in China as Paulson plans a $700 billion rescue for U.S. financial institutions and the Securities and Exchange Commission bans short sales of insurers, banks and securities firms. Regulators in the fastest-growing major economy say they may ditch plans to introduce derivatives, and some company bosses are rethinking U.S. business models. ... The recent moves by Paulson, the former chief executive officer of Goldman Sachs Group Inc., contradict what the U.S. told Asian governments over the past decade. Thailand, South Korea and Indonesia were urged to let unviable banks fail during the 1997-98 Asian financial crisis.
...
Globally, banks have written down more than $520 billion as the credit crisis led to the demise or makeover of Wall Street's five biggest investment banks. In response, the U.S. government nationalized insurer American International Group Inc., as well as mortgage giants Fannie Mae and Freddie Mac.
``It's ironic Paulson has become the manager of many large financial institutions,'' said Wang Jun, a finance specialist at the World Bank in Beijing. ``He will have to ask the Chinese leaders about their experience of managing state-owned assets.''
posted
Hmmm, looks like those musing about renegotiating NAFTA during the Obama primaries were not entirely hot air:
quote:A "Buy American" rider in the U.S. economic stimulus package that would block the use of foreign-made iron, steel, textiles and manufactured products is triggering a wave of alarm in Canada and around the world.
"The effect would be catastrophic," said Jean-Michel Laurin, a spokesperson for the Canadian Manufacturers and Exporters, which has asked the Canadian government to urge U.S. President Barack Obama to reverse the measure.
As China, India and the European Union warned that protectionist barriers would hinder world trade, Prime Minister Stephen Harper said Canada expects the United States to respect its free trade commitments as it moves to build new roads, railways, bridges, airports and housing.
"This is obviously a serious matter and a serious concern to us," Harper told the Commons.
"I know that countries around the world are expressing grave concern about some of these measures that go against, not just the obligations of the United States but, frankly, the spirit of our G20 discussions."
...
The U.S. House of Representatives passed an $819 billion stimulus package Wednesday night that would effectively bar Canadian iron and steel from infrastructure projects receiving the federal funds. Foreign substitutes for American-made products would only be allowed if the American content drove up the cost of a project by 25 per cent – much higher than the 6 per cent to 7.5 per cent price advantage allowed under current regulations.
It would be a huge blow. In 2007, $5.8 billion in Canadian-made "iron and steel products" were exported to the United States, according to Statistics Canada.
A version of the bill in the U.S. Senate goes even further. It would exclude most foreign-made manufactured goods.
More than half of all goods made in Canada – 55 per cent – are sold to the U.S. market. More than $1.7 billion in goods and services crosses border daily.
Many of those exported products actually cross the border back and forth several times as they are built, shaped or assembled. They have Canadian and U.S. content, and jobs are at stake on both sides of the border, says Laurin, of the Canadian manufacturers lobby group.
"I think it's a very troubling development if it gets signed into law," said Scotty Greenwood, executive director of the Canadian American Business Council in Washington, D.C.
posted
Hmm. According to the American Iron and Steel Institute we imported about 2 million net tons of steel, including 1.8 million net tons of finished steel in December 2008. So if that's about half of what we used, we'd have to ramp up production of finished steel by about 2 million net tons a month to replace that.
quote: In the week ending January 24, 2009, domestic raw steel production was 1,025,000 net tons while the capability utilization rate was 43.1 percent. Production was 2,154,000 tons in the week ending January 24, 2008, while the capability utilization then was 90.3 percent.
So how much raw steel do we need to make finished steel? Well, I can't find that, but I'm assuming it's more than the finished product. So even at full capacity, we couldn't make half of what we import.
The question for me is, do we just want to get US steelworkers back to full capacity, or do we want to make it all ourselves? I certainly don't support building new factories that will run for four years or so and then go back into disuse. Frankly, I'm not even a fan of artificially employing out of work steelworkers and then when they're four years older and more set in their ways tell them to go back to finding a replacement career.
This is one of those things that sounds all patriotic and happy, but I just don't see any good coming from it in the long run.
Posts: 2283 | Registered: Dec 2003
| IP: Logged |
posted
Yep, it is a measure that will make businesses and people in the US have to pay more, and end up either putting the steel industry on the government dole, or having massive, disruptive layoffs and closings when the support is removed.
If we're lucky, there will be a loophole and companies will use it to avoid changing how much is produced in the US, merely wasting some large amount of money to use the loophole. That's the best case scenario.
Posts: 15770 | Registered: Dec 2001
| IP: Logged |
posted
I'm guessing we get most of our non-domestic steel from China.
How are they doing with quality these days? Last time I heard anything about it was when there were a ton of problems with the steel we were buying from them being of very poor and unreliable quality. I'd like to think that they've fixed that by now and that we aren't still buying low quality steel, but if not, well, I don't have a problem paying more for domestic steel if it's better quality. Low quality toys are one thing, low quality structural steel for bridges is another.
Posts: 21898 | Registered: Nov 2004
| IP: Logged |
posted
And the government needs to decide what must be purchased . . . why?
Put the quality standards that matter on construction, by all means. Then let steel that meets those quality standards be purchased from places that have it to sell.
Measures like this are what cost US consumers hundreds, possibly thousands, of dollars a year (and not primarily the wealthy, either; food trade restrictions probably cost most families several hundred dollars a year, alone).
Posts: 15770 | Registered: Dec 2001
| IP: Logged |
posted
Steel is a red herring. The proposal is largely symbolic, I can't imagine that infrastructure steel is a particularly huge fraction of sales and its short term.
The bigger issue is that while its obvious that US steel workers would benefit in a scenario where the US could bar all foreign steel, its not obvious that either customers or taxpayers would benefit.
Adding to this messy problem is the fact that if Canadian steel workers find such a visible explanation for their job losses in the States, you can bet they'll want their pound of flesh and this will repeat itself around the world. Thats why later in the article you see this:
quote: Already, opposition to the policy is emerging from the U.S. Chamber of Commerce and industrial heavyweights like Caterpillar, General Electric and the domestic aerospace industry, who fear an international backlash.
NDP Leader Jack Layton said Canada should respond with a "Buy Canadian" policy as part of the government's stimulus package.
Caterpillar may benefit from a stimulus package that bars use of foreign hardware, but they don't want to get shut out of stimulus packages abroad either. Same with Boeing which is in a heavy politicized industry which is easily subject to trade reprisals.
In the end, maybe US steel workers might be better off *if* the US is a net importer of steel, but in a very real sense the US would lose greatly in higher-end industries (and so would the rest of us in highly globalised industries caught in the crossfire).
Posts: 7593 | Registered: Sep 2006
| IP: Logged |
I wasn't suggesting that the government mandate that domestic steel be used, just that they actually pay specific and special attention to quality requirements. And I was possibly implying that doing so MIGHT lead to increased purchasing from domestic sources that don't have those same quality problems.
I said I didn't have a problem paying more for domestic steel if it was worth it for the quality, not that it should be mandated regardless. Relax.
Posts: 21898 | Registered: Nov 2004
| IP: Logged |
posted
China now provides a large quantity of the worlds steel......and the quality has vastly improved in the past 5-6 years as well.
Posts: 15082 | Registered: Jul 2001
| IP: Logged |
quote: "We are concerned about contagion, that is, other countries also following protectionist policies. If Buy American becomes part of the stimulus legislation, the United States will lose the moral authority to pressure others not to introduce protectionist policies," he writes.
"A rush of protectionist actions could create a downward spiral like the world experienced in the 1930s."
The U.S. House of Representatives passed legislation last week that bans all foreign iron and steel from the $820-billion (U.S.) stimulus package.
A Senate version of the bill currently under debate would extend that ban to everything bought with taxpayer money that is ultimately devoted to the recovery plan.
...
Trade lawyers are all but universal in their view that the provision would violate international trade rules if it became law.
The rules overseen by the World Trade Organization and the North American free-trade agreement explicitly forbid governments from attempting to block domestic companies from buying imported goods, said Debra Steger, a professor at the University of Ottawa and the first head of the appellate body at the Geneva-based WTO.
"It's kind of black and white, it's not that grey," Prof. Steger said.
And the US ... considers our concerns?
quote: Mr. Obama told Fox News he wants to see “what kind of language” can be worked out on the measures.
“I think it would be a mistake, though, at a time when worldwide trade is declining, for us to start sending a message that somehow we're just looking after ourselves and not concerned with world trade,” he said.
He told ABC News: “I think we need to make sure that any provisions that are in there are not going to trigger a trade war.”
Printer-friendly view of this topic
