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Greenback Gloom (Not?)
Investor's Business Daily ^ | 29 Novmember 2006 | Staff

Posted on 11/29/2006 6:29:22 AM PST by shrinkermd

No one, of course, wants to see the dollar in a free fall. And no question, it has retreated against some currencies. But worried? We aren’t.

The dollar isn’t weak at all. Indeed, it’s trading 19% above its level in the mid-1990s, smack in the middle of the Internet boom. True, it’s come off the highs it set in early 2002, when foreign investors still spooked after 9/11 were desperate to invest in a safe haven with sound markets, the rule of law, low interest rates and fast economic growth. That pushed the buck up sharply.

...The other is that, contrary to lots of current market reports, the U.S. currency isn’t “nearing new lows” at all. The reason is simple: Many people focus on very narrow measures of the dollar’s value — like the dollar-euro, or the dollar-yen, or even the dollar-yuan. By those gauges, yes, the dollar is hitting new lows or close to them.

...But this is an error. Far better is looking at the dollar against a broad market basket of currencies weighted for the amount of trade they do with the U.S. When you do, you see that while it’s true the greenback has slumped in recent months, over the long term it’s not down at all. And why has the dollar fallen recently?

(Excerpt) Read more at epaper.investors.com ...


TOPICS: Business/Economy; Editorial; Foreign Affairs
KEYWORDS: decline; dollar; really
Navigation: use the links below to view more comments.
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Answer:"...The U.S. jacked up its fed funds rate 17 times since June of 2004, to 5.25%. Now the bet is it will soon start cutting rates. Meanwhile, the European Central Bank has boosted rates five times from 2% to 3.25% — and the bet is it’ll keep going. The shrinking difference in interest rates will pressure the dollar until the ECB stops tightening

"...But as Bank of America economist Joseph Quinlan notes, the world is addicted to exporting to the U.S. Last year, total world exports hit $12.6 trillion. The U.S. took in 16% of that total, with just 4.5% of the world’s population. We’re the world’s consumers of last resort. A plunging dollar could change that. So, for now, that makes a collapse in the dollar unlikely. It’s not that we can’t afford it. It’s that the world can’t.

1 posted on 11/29/2006 6:29:29 AM PST by shrinkermd
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To: shrinkermd

A falling dollar ought to be good for exports and bad for imports. So it may be time to invest in companies that face significant import competition.


2 posted on 11/29/2006 6:31:00 AM PST by Brilliant
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To: shrinkermd

"trading 19% above its level in the mid-1990"

Drudge is running headline of dollar at 15 year low.

While this is excellent for exports, it does cause problems for importing and since our government does not allow us to make much any longer this will cause us a few problems.


3 posted on 11/29/2006 6:33:53 AM PST by edcoil (Reality doesn't say much - doesn't need too)
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To: edcoil

Drudge goes for the tabloid headline, as always.


4 posted on 11/29/2006 6:37:52 AM PST by OldFriend (FALLEN HERO JEFFREY TOCZYLOWSKI, REST IN PEACE)
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To: shrinkermd

Now that the world knows that Democraps control the purse strings, that alone scared 15% off the dollar.


5 posted on 11/29/2006 6:38:40 AM PST by moonman (`)
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To: shrinkermd
Buy when everyone is selling and sell when everyone is buying. Don't put your position on in one purchase. Scale in a little at a time.

The dollar sure looks like a buy at this point.
6 posted on 11/29/2006 6:43:39 AM PST by SomeoneNeedsToSayIt
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To: shrinkermd

I always get confused by the dollar swings. With the dollar getting weaker, doesn't that mean that U.S. goods will be cheaper for foreign buyers than they were before? If so, isn't the weak dollar a good thing for U.S. manufacturers and the U.S. hospitality and tourism industries? Or do I have it backwards?


7 posted on 11/29/2006 6:49:22 AM PST by Terpin (Missing: One very clever and insightful tagline. Reward for safe return!)
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To: shrinkermd
I am notoriously ignorant in financial matters, particularly so in world currency markets. It's all Greek to me.

However my gut feeling agrees with the idea that since the world depends on us to import everything they make, that simple fact will tend to prevent a free fall.

Even countries such as China who might secretly hope to see the downfall of US power can ill afford to lose all their consumers. The Chinese economy would follow ours.

Extreme dollar pressure could be a good thing in the long run. It might even cause rethinking about having production in China vs production in USA.

What goes around comes around.

8 posted on 11/29/2006 6:52:52 AM PST by Sender ("Always tell the truth; then you don't have to remember anything." -Mark Twain)
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To: edcoil

Drudge's headlines are probably on the basis of Yen, Euro or a few currencies. This article is using the dollar index which is a bundle of currencies. I wish I knew how to post the graph that illustrates this point.

Probably, a currency free measure of the dollar value is the price of gold per oz. It now centers on $600; it centered around $350 per oz a few years ago.


9 posted on 11/29/2006 6:59:03 AM PST by shrinkermd
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To: shrinkermd

Has a lot to also be due to foreign debt. If they buy you cheap, if they lower the value of your currency, it makes it more expensive to pay them back.


10 posted on 11/29/2006 7:03:38 AM PST by edcoil (Reality doesn't say much - doesn't need too)
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To: edcoil
I think you are on the right track. Currencies vary relative to each other based on expectations of inflation. The market is betting the crats will pursue inflationary policies.

if they lower the value of your currency, it makes it more expensive to pay them back.

11 posted on 11/29/2006 7:10:46 AM PST by DManA
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To: Brilliant
A falling dollar ought to be good for exports and bad for imports.

I said essentially the same thing on another thread yesterday or the day before and was flamed mercilessly. Lots of "doom and gloom" goomers out there.....

12 posted on 11/29/2006 7:12:35 AM PST by Thermalseeker (Tennessee - The last Conservative rock sticking above a deep blue sea....)
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To: Thermalseeker

There are challenges that will arise from it, obviously. Most significantly, we'll pay more for imports, and that means oil.

But there is a silver lining even so.


13 posted on 11/29/2006 7:18:30 AM PST by Brilliant
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To: Terpin
You are right. A lower cost dollar should mean demand for US exports should pick up.

The other side of this coin is that consumers will be paying more for imported goods, of which there is a lot because of all the overseas outsourcing that US has been doing over the last 3 decades.

Overall, it will hit the US consumers pocket until American manufactures can gear up to fill lower cost product demand.

14 posted on 11/29/2006 7:26:11 AM PST by 2001convSVT ("People sleep peaceably in their beds at night only because rough men stand ready to do violence")
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To: GodGunsGuts

Now this is a reasonable and well informed understanding of where the dollar is.


15 posted on 11/29/2006 7:46:55 AM PST by AmericaUnited
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To: AmericaUnited
The dollar has been falling for years against our major trading partners. I have a feeling IBD is painting an overly rosy picture because they know what will happen if the dollar closes 3% below .80 for more than a few days.

This is what's pushing the dollar down, and will continue to push it down, unless we, the American people, take corrective action:

And let me close with the words of a few good men:

"We hear sad complaints sometimes of merciless creditors; whilst the acts of merciless debtors are passed over in silence." - William Frend, 1817

"I place economy among the first and most important virtues, and debt as the greatest of dangers to be feared." - Thomas Jefferson"

"The decline of great powers is caused by simple economic over extension." --The Rise and Fall of the Great Powers, by Paul Kennedy

"There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved." - Ludwig von Mises

No generation has a right to contract debts greater than can be paid off during the course of its own existence." - George Washington to James Madison 1789

16 posted on 11/29/2006 8:16:19 AM PST by GodGunsGuts
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To: Brilliant
A falling dollar ought to be good for exports and bad for imports. So it may be time to invest in companies that face significant import competition.

This would be normal trade theory. Unfortunately, it is less than likely. We have huge trade imbalances partially because of the trade barriers imposed by China, the Pacific Rim, and the EU. They deny it of course.

But nonetheless real.

If things get really bad...they likely will make those barriers even higher. So as the dollar falls, in part because of their predations...they likely will react with even more aggressive barriers to keep the U.S. from redressing those imbalances.

Look at how the EU has reacted to being busted about its Airbus subsidies...they have threatened open trade war.

Why this should be so much worse than their thinly-veiled trade war is not explained.

Anyways...nothing is likely to happen at the WTO where the EU outvotes us 15 to one....

Yep. The WTO is to "Free Trade" what the UN is to "World Peace".

Time to get out of both.

17 posted on 11/29/2006 10:19:50 AM PST by Paul Ross (Ronald Reagan-1987:"We are always willing to be trade partners but never trade patsies.")
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To: Paul Ross

The biggie, though, is oil. We can make our own computers, autos, etc. We simply choose not to since we can buy them overseas for less.

But we've gotta buy our oil from the Saudis, at least until the American people demand that Congress permit more drilling, and that ain't gonna happen anytime soon.


18 posted on 11/29/2006 10:24:04 AM PST by Brilliant
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To: Brilliant
The biggie, though, is oil. We can make our own computers, autos, etc. We simply choose not to since we can buy them overseas for less.

Except...those computers and autos etc....were how we were formerly able to pay for the oil. We had a trade surplus in those same manufactured goods. Now we have blithely assumed that manufacturing is of no account... our creditworthiness will go the same way. As the combined deficits of energy and manufactures drain our capital.

19 posted on 11/29/2006 1:50:47 PM PST by Paul Ross (Ronald Reagan-1987:"We are always willing to be trade partners but never trade patsies.")
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To: Paul Ross; Brilliant
Now we have blithely assumed that manufacturing is of no account..

LOL!

20 posted on 11/29/2006 2:32:10 PM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: Toddsterpatriot
Your static assertions of "U.S." manufactures is obviously outweighted by the imports. You and your chart completely fails to grasp and answer the dramatic evidence of what is actually happening in the manufacturing sectors. This does. And you can't refute it.

LOL!

Nor can you refute this and this

21 posted on 11/29/2006 3:02:37 PM PST by Paul Ross (Ronald Reagan-1987:"We are always willing to be trade partners but never trade patsies.")
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To: Paul Ross
Your static assertions of "U.S." manufactures is obviously outweighted by the imports.

My assertions? More like the facts showing what we manufacture. 80% more than Japan. 129% more than China. If you think that's of no account, well, we've already seen your poor grasp of the truth.

22 posted on 11/29/2006 3:11:44 PM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: Toddsterpatriot
My assertions? More like the facts showing what we manufacture. 80% more than Japan. 129% more than China. If you think that's of no account, well,...we've already seen your poor grasp of the truth.

Those facts...when you dig beneath the glossy headlines... say otherwise. Your manufacturing claims (which are not facts) are truly HOLLOW

23 posted on 11/29/2006 3:37:11 PM PST by Paul Ross (Ronald Reagan-1987:"We are always willing to be trade partners but never trade patsies.")
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To: Paul Ross

Did that link show we didn't manufacture $1.79 trillion in 2005? I didn't think so.


24 posted on 11/29/2006 3:41:00 PM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: Paul Ross

You're missing the point. We CAN build computers. If the cost of computers from China goes thru the roof tomorrow because of the declining dollar, then we'll build our own, and we'll even export them and use the proceeds to buy whatever we want.

The main thing we can't do here is produce oil. That's one thing we'll have to buy from abroad. And it's the largest single component of the trade deficit, so it's gonna drag down the dollar.

If we want to strengthen the dollar, then the way to do it is to find ways to import less oil.


25 posted on 11/29/2006 3:42:05 PM PST by Brilliant
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To: Toddsterpatriot
Did that link show we didn't manufacture $1.79 trillion in 2005?

And that we IMPORTED what we used to manufacture for ourselves...what, almost $2 trillion???

26 posted on 11/29/2006 3:44:41 PM PST by Paul Ross (Ronald Reagan-1987:"We are always willing to be trade partners but never trade patsies.")
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To: Paul Ross
Sure, we import more every year. That doesn't diminish the fact that we manufactured more than Japan and China combined in 2005.
27 posted on 11/29/2006 3:47:21 PM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: Brilliant
...then we'll build our own, and we'll even export them and use the proceeds to buy whatever we want.

That is not the kind of thing which can be turned around on a dime. And that is precisely the situation of vulnerability to a severing of our supply lines that we should be more wary of. Especially as the old Communists Alliances with the Jihadists and Latin America gets rolling...

The main thing we can't do here is produce oil.

That is a matter of choice. Physically the Oil is here...and we CAN drill for it.

28 posted on 11/29/2006 3:48:21 PM PST by Paul Ross (Ronald Reagan-1987:"We are always willing to be trade partners but never trade patsies.")
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To: Toddsterpatriot
That doesn't diminish the fact that we manufactured more than Japan and China combined in 2005.

Yes. It does. Especially when it is the things we used to be able to make for ourselves. And are still essential. And can now be cut off at the whim of enemies.

Not smart.

29 posted on 11/29/2006 4:04:20 PM PST by Paul Ross (Ronald Reagan-1987:"We are always willing to be trade partners but never trade patsies.")
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To: Paul Ross
Yes. It does.

No. It doesn't. You said:

Now we have blithely assumed that manufacturing is of no account..

You should tell the people who made the $1.79 trillion of manufactured goods last year that it was "of no account".

Especially when it is the things we used to be able to make for ourselves. And are still essential. And can now be cut off at the whim of enemies.

Examples?

30 posted on 11/29/2006 4:21:54 PM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: Paul Ross

It's a given, though, that we won't drill. It's not a given that we won't make computers. Or furniture, or textiles, or steel, or aluminum, or...


31 posted on 11/29/2006 4:32:44 PM PST by Brilliant
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To: Toddsterpatriot
Especially when it is the things we used to be able to make for ourselves. And are still essential. And can now be cut off at the whim of enemies.

Examples?

Oh, you mean you keep forgetting Magnequench and super-magnets? That is merely one of many deleterious examples.

32 posted on 12/01/2006 3:23:07 PM PST by Paul Ross (Ronald Reagan-1987:"We are always willing to be trade partners but never trade patsies.")
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To: Paul Ross
Yeah, you have one example. Any more?

Did you find the name of the Fed official who sets foreign T-Bill rates yet? LOL!

33 posted on 12/01/2006 3:25:17 PM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: Toddsterpatriot; nopardons; mace; expat_panama; Brilliant; Mind-numbed Robot; chimera; Jeff Head; ..
[Regarding U.S. Defense component vulnerability due to outsourcing]

Toddsterpatriot finally admits:

Yeah, you have one example. Any more?

"Yeah, you have one example."?!!

Does that mean your supposedly non-senile brain function finally remembers? LOL!

Anyways, since you concede that IS "an example" you must realize (although you won't admit) the case is made.

So in that situation...more examples should not be required.

And yes, there are vastly more than you can handle. So what would you actually DO with the extra examples? H'mmmm? File them the same place you filed...and COMPLETELY forgot...Magnequench?

You also forgot the near train-wreck with our Swiss "Allies"? That was a real example, since swept under the rug for diplomacy's sake. But there was a real blockage. For political reasons. And if they hadn't resolved them...our JDAMs would have been useless. They finessed it publically, saying they weren't military components...to belligerents...which they could not approve, and then reclassified them as "dual use" components...where were allowed. But not until we had already been forced to try and reconstitute a U.S. capability at severe cost...and real risk. H'mmm makes me feel real comfortable outsourcing to our friends in Europe. Let alone to China. Our experience in Iraq instructs us that "trading partners" does not translate into "military allies."

Indeed, if I were simply to reprint here for your enjoyment, the entire Congressional Hearings from 2003, or the DSB Report from March 2006, or February 2006, or February 2005 on Microchip Supply, you would likely complain of being dumped on. Okay, let's just reprint an excerpt from a SMALL SUMMARY opinion piece by Alan Tonelson which reiterates some key facts that destroy your postion. Leaving you no basis for your continued...and completely unwarranted...complacency:

Memo to Bush and McCain: National Security Requires Industrial Independence, Too
Alan Tonelson, U.S. Business & Industry Council
Tuesday, February 14, 2006

President Bush shocked the world when he declared in his latest State of the Union address, “America is addicted to oil, which is often imported from unstable parts of the world.” He then unveiled proposals to bolster the nation’s security and economy by ending most of this “addiction” by 2025.

Bush’s remarks on energy independence came on the heels of a more colorful but similar warning by Arizona Republican Senator John McCain: “We better understand the vulnerability that our economy and our very lives have...when we’re dependent on Iranian mullahs and wackos in Venezuela.”

No one can know whether Bush or McCain is the slightest bit serious about this issue. The president, though, could establish some bona fides quickly by telling ExxonMobil to cool it with its insistence on energy defeatism. Scant days after the State of the Union, ExxonMobil Senior Vice President Stuart McGill told a conference that energy independence is an illusion, at least in the short and medium-term. That should prompt a Presidential rebuke on the order of: “This kind of talk has cost us thirty years of energy independence progress since the first big OPEC price hikes. More of the same will only produce further dangerous delay. The sooner we start to liberate ourselves from the Persian Gulf’s grip, the sooner we’ll succeed.”

Bush and McCain, of course, don’t get worked up about imports lightly. They’re among the nation’s staunchest trade ideologues, unshaken in their positions – even by U.S. deficits growing so large and so fast that they are threatening American and global financial stability. Clearly, Bush and McCain and so many others see oil as a special case: First, it powers so much of our economy. Second, effective substitutes for transportation uses are difficult to develop. Finally, imports reached 68.4 percent of total U.S. oil consumption in 2005 – up from about 58 percent just five years ago.

But if they ever became genuinely interested in America's strategic vulnerabilities, theyd discover that oil-like dependency situations are now shot through the entire U.S. manufacturing and even high-tech services sectors.

At the end of last year, the Census Bureau finally published the detailed economic statistics needed to bring up to 2004 USBIC’s research on the share of U.S. industrial markets captured by imports and how these percentages have changed over time. We’ll be publishing the full numbers on these import penetration rates shortly, but anyone – including Bush and McCain – who think it’s just the energy and automotive and cheap consumer goods sectors that have been overrun by foreign competition had better listen up.

Yes, even though foreign producers have set up transplant factories around the United States, vehicles made overseas are still taking sales from their Made-in-the-USA counterparts. Imports represented about half of U.S. auto consumption in 1997 (the year when the main government system for classifying different parts of the U.S. economy was introduced). By 2004, this share had climbed to 67 percent.

The situation is just about as bad in heavy duty trucks, where the import penetration rate spiked from 62.5 percent in 1997 to more than 73 percent in 2003, before settling back to 61 percent in 2004.

Examining import penetration rates also makes clear why so much of the U.S.-owned auto parts industry is either in receivership or struggling to avoid it. From 1997 to 2004, imports boosted their share of the total U.S. parts market (including tires) from about 20 to roughly 30 percent. In sub-sectors like lighting equipment, steering and suspension equipment, and transmission and power train parts, foreign-made products roughly doubled their share of U.S. markets.

The auto parts figures also show how this kind of trade is anything but win-win for everyone. Even despite heavy market-share losses from 1997 to 2002, U.S. parts makers were still able to take advantage of a buoyant economy to increase their output by nearly nine percent. But more recently, the party has stopped. Growth inched up only 0.35 percent from 2002 to 2004, yet imports kept winning customers.

But enough about autos, since they're a mere four percent of the nation’s entire economy and have only undergirded the American middle class for decades, and since the ability to make ground transportation equipment obviously has never had anything to do with national security and never will. [ /SARCASM OFF ]

As the Defense Department keeps insisting, most of the major weapons platforms used by the U.S. military are U.S.-brand products built in the United States. At the same time, all of these major defense systems are comprised of thousands upon thousands of individual parts and components, and the import penetration rate figures show that these items increasingly are made overseas.

Between 1997 and 2004, the import share of the U.S. aircraft engine and engine parts market (military and civilian alike) increased from just under 40 percent to just under 52 percent. America’s biggest foreign suppliers are a mixed bag geopolitically. In the lead is France, which hasn’t exactly been backed U.S. foreign policy to the hilt since we liberated Paris from the Germans, followed by so-far-reliable Britain.

Then come two countries that seemed pretty unhappy with America’s international goals for years until voters recently elected friendlier leaders by razor-thin margins – Canada (which by U.S. law is part of the American defense manufacturing base) and Germany.

These countries, of course, are hardly “unstable” or led by “wackos,” pace Bush and McCain. And according to the Defense Department, even French and German defense suppliers have seemed completely unaffected by their governments’ positions during the Iraq War. But no prudent leader would take their continued dependability for granted – especially over the longer term and especially since it may take only one politically inspired supply cutoff to produce a major battlefield defeat.

America’s foreign dependency situation is much worse in electronics components, which are used in virtually every modern military system for vital purposes ranging from power to guidance to navigation to communications.

More than 56 percent of the electron tubes used in the United States are imported, as are nearly 69 percent of the resistors, nearly half of the electric coils, transformers, and inductors, nearly 99 percent (that’s right – 99 percent) of the capacitors and parts, and nearly 61 percent of a broad catch-all electronic components category.

Indeed, in 2003, when Congress was debating tightening up the Buy American provisions governing Defense Department procurement, the thoroughly globalized high-tech industry in this country went into total panic mode. In the process, the industry wound up admitting how little production it has kept in the United States.

According to the Information Technology Association of America, “If all procurement of commercial information technology products by the Department of Defense were conducted under the terms of the Buy American Act...procurement would come to a crashing halt. Even at the current domestic minimum of 50%, much less under the proposed domestic content minimum of 65%...few if any commercial information technology products are capable of meeting Buy American Act requirements.”

ITAA’s solution – and the solution pushed hard and successfully by the rest of the defense industry and the outsourcing lobby: Keep the Buy American requirements where they are and keep making it easier for defense suppliers to replace their U.S.-made parts and components with foreign products whenever the short-term bottom line will benefit. And no two public servants parroted the outsourcers’ line more energetically than President Bush and Senator McCain.

The United States is doing somewhat better in semiconductors – where only about 43 percent of our domestic supply is imported, and the broad industry has actually gained a bit of home market share in recent years. Yet as a 2005 Defense Science Board (DSB) report found, “Most leading edge wafer production facilities (foundries), with the exception so far of IBM and possibly Texas Instruments, are controlled and located outside the United States.”

The DSB went on to specify that “the driving forces behind the ‘alienation’ of foundry business from the United States to other countries” include a raft of interventions in free markets by foreign governments to bring semiconductor fabrication to their shores. The Board might have added “interventions that recent U.S. trade policy has almost completely ignored.”

DoD is worried enough about the trend to have approved the construction of a “trusted foundry” in the United States. From the foundry, IBM will supply the military with computer chips whose designs will remain safely classified and that will be free of “Trojan Horses” and other sabotage mechanisms that could be inserted by foreign producers.

Yet the DSB warns that this lone foundry can only be the first step in even slowing hollowing out of the domestic chip industry, as not only manufacturing but research, development, engineering, and design move offshore. I’m still waiting for Bush and McCain even to mention the problem, much less explain how their relentless support for the giveaway trade agreements and the outsourcing they have facilitated can fail to keep worsening the situation, and undercutting American security.

Finally there’s the problem of machine tools. They’re used in the production of virtually all defense systems. Yet foreign-based producers have captured nearly 89 percent of the U.S. market for metal-cutting tools and more than 72 percent of the U.S. market for metal-forming tools.

That’s why during the 2003 Buy American debate, the outsourcing-addicted major defense contractors eagerly cited a DoD assessment that if the new, more stringent tooling guidelines were approved, “It would take well into the next decade to produce the required replacement tools. There are many cases where American tools do not currently exist [ anymore anyways ] and new production lines would have to be built to produce them. U.S. machine tool builders currently have neither the ability nor capacity to meet an increased demand....It will take at least ten years to make the American machine tool industry viable again, especially in the ultra-precision market in which America does not participate.”

But again, the outsourcing lobby, Bush, and McCain all firmly agreed that the best answer to a foreign dependency situation that has clearly spun out of control was “more of the same.”

So the next time President Bush and Senator McCain talk about the national security imperative of greater energy independence, or about any national security issue, Americans will be entitled to express more than a little skepticism. And I, for one, would forgive them if the term “wacko” kept coming to mind.

_____________________________________________________
Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation

Pinging your lobby here for your...and their...much needed education....

Also fellow national-security-concerneds to this thread to examine your little lobbying outfit's continued and malicious influence-peddling of the sinister kind...against national defense. The Toddster Lobby doesn't think national security...is hazarded by their "free trade."

Mindless trade heedless of Foreign Interventions where, as one consequence, they are allowing the "Invisible Hand" to become Transmogrified into "The Chinese Fist."

34 posted on 12/02/2006 8:43:14 AM PST by Paul Ross (Ronald Reagan-1987:"We are always willing to be trade partners but never trade patsies.")
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To: Paul Ross
Does that mean your supposedly non-senile brain function finally remembers?

Not my fault that I'm younger and clearer thinking than you.

the case is made.

Is China the only source of these magnets? Do we have a strategic reserve of them? If the answers are yes and no, then we're already doomed. That was easy.

You also forgot the near train-wreck with our Swiss "Allies"? That was a real example, since swept under the rug for diplomacy's sake. But there was a real blockage. For political reasons. And if they hadn't resolved them...our JDAMs would have been useless.

Yeah, that was terrible. We should now make those parts ourselves.

which reiterates some key facts that destroy your postion(sic).

Destroy my position that we made $1.79 trillion in manufactured goods last year? How does that work again?

Also fellow national-security-concerneds to this thread to examine your little lobbying outfit's continued and malicious influence-peddling of the sinister kind...against national defense.

Maybe Paul would have an example where anyone has lobbied against national defense?

35 posted on 12/02/2006 10:56:28 AM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: Paul Ross; Toddsterpatriot
Pasting the entire article made the post look bigger than if you'd have just given us this link but it didn't make it any more easy to follow.   Probably just as well though, the AFL-CIO links just go off to Tonelson's resume (Princeton BA in History, author of The Race to the Bottom: Why A Global Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards) and from there on in it got really distracting.   How about we focus on what you're really trying to say in post 34.   

What I'm getting is something about how America's weaker militarily now than we were back in 1997 with Clinton because US manufacturers are not making as many strategic products as before.  If that's what you're saying then you probably already know how unconvincing it sounds.  If that's not what you're saying, then see if you can state it better, and please take the time to make it brief and without posting another 2,000 word tract.

36 posted on 12/02/2006 12:49:00 PM PST by expat_panama
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To: Paul Ross
U.S." manufactures is obviously outweighted by the imports

That doesn't make any sense.  We're making more than ever before.  Huge amounts of goods are coming out of the factories and are being sold for more money than ever before.  It's real, and it's been counted.

Our buying lots of imports can't possibly make the production records and all time high sales profits magically disappear.

37 posted on 12/02/2006 1:10:31 PM PST by expat_panama
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To: Toddsterpatriot
Dang it Todd, trying to get Ross' ideas sorted out and organized is like trying to teach a bunch of cats to walk single file.

What's happened with American trade and industry is that over the past decade our factories have increased production to the equivalent of a jillion new combat trucks, and Ross is saying that this is bad because we've also gotten rich enough to import a jillion new tires for these trucks.

-- and he's saying we had more military power before?

38 posted on 12/02/2006 1:51:35 PM PST by expat_panama
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To: Toddsterpatriot; expat_panama; Paul Ross
You also forgot the near train-wreck with our Swiss "Allies"? That was a real example, since swept under the rug for diplomacy's sake. But there was a real blockage. For political reasons. And if they hadn't resolved them...our JDAMs would have been useless.

With Paul's penchant for quoting from left wing sources like E.P.I. I've always though it important to find another source to confirm (or deny) what he's asserting.

Manufacturing and Technology News

I'm not saying Paul's take is wrong, just that we should always consider the source.

39 posted on 12/02/2006 2:08:06 PM PST by Mase (Save me from the people who would save me from myself!)
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To: Mase
I'm not saying Paul's take is wrong, just that we should always consider the source.

Thanks, I should have known better than to trust Paul or his sources, even a little.

40 posted on 12/02/2006 2:20:41 PM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: Paul Ross
More than 56 percent of the electron tubes used in the United States are imported,

Wow, that's terrible, does the military use the 44% that are produced in the US?

as are nearly 69 percent of the resistors,

Does the 31% we still make satisfy our military needs?

nearly half of the electric coils, transformers, and inductors,

Does the military really need all of these components that we produce domestically?

nearly 99 percent (that’s right – 99 percent) of the capacitors and parts,

Scary! See above.

and nearly 61 percent of a broad catch-all electronic components category.

We still make electronic components in America? I'm shocked. LOL!

DoD is worried enough about the trend to have approved the construction of a “trusted foundry” in the United States. From the foundry, IBM will supply the military with computer chips whose designs will remain safely classified and that will be free of “Trojan Horses” and other sabotage mechanisms that could be inserted by foreign producers.

Hmmmm....sounds like they took my suggestion to heart. They should do the same for rare earth magnets. I feel better, do you?

41 posted on 12/02/2006 2:28:11 PM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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To: Toddsterpatriot
 resistors... , electric coils, transformers, and inductors...  ...nearly 99 percent (that’s right – 99 percent) of the capacitors and parts

Tonelson is crazy enough by saying what he said.  What he implied is worse --that in the past decade Americans made nothing else that was as valuable as those stupid resisters and capacitors, and that we'll never ever be able to make them again unless we elect Democrats to raise taxes.

42 posted on 12/02/2006 2:44:53 PM PST by expat_panama
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To: expat_panama
I gave you the link with the Author's name.

Your inability to focus is why things are distracting for you.

43 posted on 12/02/2006 4:10:05 PM PST by Paul Ross (Ronald Reagan-1987:"We are always willing to be trade partners but never trade patsies.")
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To: expat_panama
Tonelson is crazy enough by saying what he said. What he implied is worse --that in the past decade Americans made nothing else that was as valuable as those stupid resisters and capacitors, and that we'll never ever be able to make them again unless we elect Democrats to raise taxes.

Nope. He didn't say that about Party-control at all. He has rigorously condemned the Clintons for their sojourn in the White House...for their defense holiday. A neglectful policy even worse than the current one.

But he did say that the probem is real. As did the Defense Sciences Board...which you guys were given MULTIPLE LINKS to but you can't focus on. Tonelson was merely used for a SUMMARY outline of the problem. Not anywhere close to a complete exposition.

Those so-called "stupid resistors and capacitors" as you called them... are very essential. They are part of what gives the high-end Integrated Circuits...that we are hoping to reserve our independence on... any functionality.

But you...and the "lobby"... are in denial as to their absolute essentiality.

44 posted on 12/02/2006 4:20:01 PM PST by Paul Ross (Ronald Reagan-1987:"We are always willing to be trade partners but never trade patsies.")
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To: Toddsterpatriot
Hmmmm....sounds like they took my suggestion to heart.

Actually, the Defense Science Board has been concerned that this is being seriously neglected still...that the one lone foundry is not nearly enough.

They should do the same for rare earth magnets.

Yes. They should.

Of course the least cost-solution is not to lose the critical industry in the first place.

45 posted on 12/02/2006 4:23:02 PM PST by Paul Ross (Ronald Reagan-1987:"We are always willing to be trade partners but never trade patsies.")
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To: Toddsterpatriot
...does the military use the 44% that are produced in the US?

Interesting question. You think that is the only thing keeping the industry here alive? That would be further proof of the inefficiency of going your preferred "cottage industry" route...instead of the far more efficient, and cheaper approach just making the whole playing field such that the lion's share of production would naturally gravitate to the U.S. shores.

as are nearly 69 percent of the resistors,
Does the 31% we still make satisfy our military needs?

No. Not even close, apparently. And remember...the military needs 100% of what it needs. It needs what it needs...when it needs it. This 50% dependency has created a nightmare situation for real military capacity.

nearly half of the electric coils, transformers, and inductors, Does the military really need all of these components that we produce domestically?

Not all are for the military. Yet. But a lot of them are now imported for the military that we used to make here. Read the Defense Science Board reports. The hollowing-out phenomenon that you keep dis-believing...is real. You keep looking at the monetarist gloss that is put out to rationalize the damage being done with the hollowing out. The median is not the average. Even with the drastic down-sizing of our military...its needs for these discrete components is vastly larger than what we are now producing domestically.

Hence the posture of the Defense contractors which campaigned against the Buy America provisions... Those provisions would not have solved the problem...but would have only gone back to the earlier Reagan era's posture: 75% U.S. composition.

The clear implication of their lobbying posture...is that they are already in violation of the 50% U.S.-content requirement...but no one is pressing the point in the administration.

46 posted on 12/02/2006 4:38:51 PM PST by Paul Ross (Ronald Reagan-1987:"We are always willing to be trade partners but never trade patsies.")
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To: Paul Ross
36 "...America's weaker militarily now than we were back in 1997 with Clinton because US manufacturers are not making as many strategic products ...   ... see if you can state it better..."

You really pegged me with that "inability to focus" observation   Lets face it --2k words can get anyone turned around, like even you forgot what you pinged me about: --trade's impact on US military strength. 

Your take in 25 words or less, is it like my above guess or what am I missing?

47 posted on 12/02/2006 5:11:05 PM PST by expat_panama
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To: Paul Ross
"the military needs 100% of what it needs. It needs what it needs...when it needs it. This 50% dependency has created a nightmare"

Congress could pass a law saying that every single thing needed by the military from now on will come from within the US.  

You don't want that and you don't mean that because we all know this would rule out stuff like foreign intelligence, sat fotos, etc. just like you don't mean prohibiting taking on supplies at ports of call.   You probably don't mind some US radar station in Alaska tapping electricity off a Canadian grid.  OK, how about Canadian diesel for the generator or maybe an air filter?  Looks like where we're going is somewhere less than 100% and more than 0%.  That happens to be what we got. 

Everyone likes to bellyache about the Pentagon buying $500 toilet seats but it won't wash.   What we need is a better idea.  If anyone here is suggesting say, a new law or (better) repealing an old one, let's hear it.

48 posted on 12/02/2006 5:42:22 PM PST by expat_panama
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To: Mase
Jack Spencer is a rather clear apologist...rationalising non-stop. His little group inside Heritage never did the "analysis" they claim they did.

They merely said..."our political and financial backing from the Import Lobbies trumps the domestic defense needs." They more or less claim that defense needs are per se "parochial." That's frankly what it came down to at the Heritage Foundation.

I should know since I'm a member. Are you?

And he admits to not being an economist...yet he makes grandiose economic statements as if he were.

And let's see how credible Jack Spencer is on his 72-hour claim on the Swiss crystal for the JDAM...and it turns out not very! According to folks I know at Honeywell...it in fact took much longer...it took months to hire and start up a replacement line for the crystal...which we had fortuitously just happened to still have the idle reserve capacity to convert to this production. So while the deal was set up in the plane flight...it wasn't "turn-key" as implied by this blow-hard Jack Spencer.

It was trulry fortunate for us that the entire idled line hadn't been boxed up and sent to Tianjin...yet.

You think I'm exaggerating about Spencer? Let's note a rather clear test of his dogmatism from that same interview:

Q: But that's the Swiss. What happens when hundreds of high-tech components like those crystals have to come from China?

Spencer: As we rely more and more on China, they could use that as a leverage point against us because they could be the adversary, and if they are the adversary, they will use those leverage points against us. That comes back to the transparency. They can't use it against us if we know where it is, or at least it provides us with time because war with China doesn't happen overnight. War with China happens at the end of a chain of events. As you begin down that chain of events, then you need to understand, "Where do I get this widget from? Does this widget come from China and if so, can I build it in Peoria? If I can't build it in Peoria, I need to figure out a place where I can build it. And if I can't build it in Peoria I should be able to scour the globe for it and have the channels in place to easily scour the globe for it." That is why you focus on access. That is where the transparency and access equations come together.

Q: So there is no real worry about the production capability of the United States?

Spencer: When people start making these arguments that we have to be able to do it at home, no we don't. We just don't. And if we can, great. If I can buy my ammunition at home and Americans can have jobs and Billy and Sally can get an education and their parents never have to go on welfare, well that's just dag-gone perfect, but if that's not the case, then we shouldn't have men and women in uniform who don't have the best weapons when they need them because our government is making the wrong decisions.

Q: Do you think that providing U.S. taxpayer dollars to foreign companies to give them the capability they need to innovate and develop new technology and also produce it for adversaries is okay?

Spencer: What does it mean when you keep technology here? Does it mean that you're not sharing it with the Brits or Australians? So that's another one of our principles: that not all trading partners are created equal. We would take a more open approach to almost all defense technologies with a small handful of allies.

As it is we already share too much "with a a small handful of allies." There are numerous examples of blowback in the technology we have shared via "trusted allies" the Swiss [SWATCH], the French [EADS]...the Japanese [Toshiba] ...not to mention China. And Spencer wants to increase the sharing...which implicitly means increasing the degree of vulnerable dependancy, as well as compromise of the IP security.

As W once famously said..."that don't make any sense."

Spencer has proved with his mis-characterization of the Swiss crystal ...and this one statement about increased techsharing... his complete untrustworthiness in national security.

His position about having warning is simply and straightforwardly...unserious. He admits that what one should do is: "war with China doesn't happen overnight. War with China happens at the end of a chain of events. As you begin down that chain of events, then you need to understand, "Where do I get this widget from? Does this widget come from China and if so, can I build it in Peoria?"

The same mindset that put us in that situation refuses to either recognize "the chain of events" in time if ever. And do those additional required steps though. And is opposed to re-sourcing back in the U.S.

49 posted on 12/02/2006 5:43:58 PM PST by Paul Ross (Ronald Reagan-1987:"We are always willing to be trade partners but never trade patsies.")
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To: Paul Ross
Interesting question. You think that is the only thing keeping the industry here alive?

Not at all.

No. Not even close, apparently.

Not even close? Are you saying the military uses more than the entire output of American made resistors? Not that I don't trust you, but I'd need to see some backup for your claim.

Not all are for the military.

Do you want to stick to one topic at a time? You said (well Alan Tonelson) we need these items for the military. So let's look at what the military uses. Don't pull a fast one like the protectionists who whine about steel usage and talk about national defense. We make over 100 million tons of steel a year while the military uses about 1 million tons. Don't tell me we need to protect 100 million tons, tell me we need to protect 1 million tons.

If we need resistors during wartime, I'm more than happy to see our military take all they need out of the 31% we still make here.

Read the Defense Science Board reports. The hollowing-out phenomenon that you keep dis-believing...is real.

Who said I disbelieve any hollowing out? All I've said is that we made $1.79 trillion in manufactured goods last year. If we had to, I'm sure we could move some of that capacity around, while we also increase total output, like we did in WWII.

If we're hollowed out, at $1.79 trillion, China must be positively anorexic at only $780 billion in manufactured goods. How much of their production is cheap TVs, toasters and CD players? Not gonna help them much if war breaks out.

You keep looking at the monetarist gloss that is put out to rationalize the damage being done

Monetarist gloss? Which of your whiners coined that phrase? Does this "monetarist gloss" make the $1.79 trillion look bigger than it really is? What does this gloss do, exactly?

Even with the drastic down-sizing of our military...its needs for these discrete components is vastly larger than what we are now producing domestically.

So you claim, with no solid numbers.

50 posted on 12/04/2006 7:04:02 AM PST by Toddsterpatriot (If you agree with EPI, you're not a conservative!)
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