America: The Best Government Money Can Buy

These gas prices are kicking all of us in the rear end. Many blame the President, others commodity market speculators and still others OPEC. But they all are off from the way I see the issue. The real issue and the culprit is the US dollar. Specifically, its reduced value and purchasing power.

It seems almost intentional, avoiding the declining value of the dollar for the pricing increases we are seeing in everything from oil to food to gas. Politicians seem to just want to exploit the issue by appealing to popular sentiment. The fact is that the US dollar continues to hit record lows against all major foreign currencies especially the yuan, Euro and the Yen. Add to that the recent IMF findings that China’s economy will surpass that of America in 2016, it is more that meets the eye when speaking about the rising cost of gas. Why? Because we are not going through a recovery as the government suggest but rather a debt spending boom based on the home buying explosion of years past.

Truth is US household debt reached a high in June of $8.7 trillion, and with rising unemployment and no economic growth, it is reflected in the reduced value of the dollar. Such impacts negatively US Treasuries especially since now the Japanese government will need to sell its US Treasuries to deal with and pay for cleaning up and rebuilding after the Earthquake. Add to this gumbo China, which has the largest dollar surplus in the world, saw it foreign exchange reserves increased by 197.4 billion U.S. dollars in the first three months of this year to 3.04 trillion U.S. dollars by the end of March.

Now back to oil and gas. In simple terms, the weakness in the US dollar is causing everything to go up. This in an environment in which the rate of new debt growth among families is growing and the overall US manufacturing economy declines. This inherently impacts the dollar since what politicians ignore in their budget and deficit battles is the fact that US trade deficits and the Dollar System are connected.

Historically, in 1944 the Bretton Woods agreement solidified the dollar as the preeminent world reserve currency, defining the dollar in value to be 1/35th of an ounce of gold. In 1971, when President Nixon refused to pay out any of our remaining 280 million ounces of gold, he made the dollar what is today.

Oil is a critical economic and strategic resource and since it is traded in US$, when the US$ weakens, in terms of any other major foreign currency, the countries exporting oil get less. Thus when the dollar goes down in buying power they ask for more US$ for a barrel of oil. This gets even trickier since there is no shortage of oil via production currently. But what they see is our economy, let us say compared to a China which by estimates will expand from $11.2 trillion this year to $19 trillion in 2016, while the U.S. economy will rise from $15.2 trillion to $18.8 trillion. Strange, since it was just a decade ago when the U.S. economy was three times the size of China’s.

All I am trying to say is that the America we once knew with the all powerful dollar bill isn’t the same. The fact is that we have a surplus of oil and that we are not refining gasoline/ In addition, what we are seeing is the impact of a weaker dollar on oil demand in non-dollar economies. Oil producers sell their products in dollars. The dollars they get are used to buy other stuff around the globe. If it cost them more dollars to do so then they have to sell their oil for more dollars.

And as long as the U.S. Dollar is continuously devalued (inflated) by Federal Reserve and U.S. government monetary policies, oil producing nations will lose money if they don’t raise the price.

Yep the problem is our government and our monetary policies. The dollar may never be the same. Yet all the time wall street, big oil companies and politicians are getting richer as the sell all that made America great away to corporations and other nations through our monetary policy. Yep, that’s America; the greatest and best government money can buy.

What China-US Talks Mean for African Americans

If you ask the average African American about China, they will probably say very little with the exception of the query, why do they own the neighborhood soul food restaurant. If you asked what impact does US-China relations have on them, you may draw a quixotic stare, as I did recently.

This week, China’s President Hu JinTao was in the United States for the first time since 2006 to meet with President Barack Obama. The goal I suspect based on the needs of the United states, the Economic tension with China and other concerns is to both reframe and redefine the relationship between the US and China. So far so good, Already Obama has encouraged the President to acknowledge that China has a long way to go with respect to human rights as well as secured $45 billion in investments from the nation. Add to that, the announcement affirming energy deals that will engender partnerships with US and Chinese energy companies to develop clean energy.

But what of importance for me is to discern how these efforts will impact the African American community and what does it mean for us? What I can surmise thus far is that if we are to benefit equally from interaction between these two nations, we must get our stuff in order. First, it means that we will have to become financially literate. Most of us do not know anything about the Yuan, let alone exchange rates and currency markets periods as it relates to the dollars in our pocket or our economic bottom line personally.

It also asserts that we need to become innovative as a community to take advantage of any opportunities that may engender due to stronger US-China economic interaction. This mean making our children learn Mandarin, study harder, and focus on the sciences and math as opposed to sports or music. Otherwise we will not be in a position to take advantage of the skills required to go after the marginal dollars in available in these areas around the world.

Looking at it logistically, the only other option for us will be to join the military if we don’t, for unlike China, that’s where a large corpus of US spending is directed. The Chinese spend billions around the world on natural Resources to expand and sustain their manufacturing base while we spend the same amount on funding two wars in Iraq and Afghanistan.

Education and immigration issues will be of major importance for the Obama administration and African Americans need to push for changes that will enhance both. Mathematically, we need to be able to sell things and services and skills if we are to move forward on an equal economic footing. We are a nation of 300 million compared to 1.3 billion in china – we need to be involved in this market. Thus, the importance of education specifically for African Americans and all Americans for that matter cannot be overlooked. The deal with energy companies mentioned earlier mainly deals with developing carbon capturing technologies and clean coal technology. And frankly, we will miss the boat if we do not engage in these areas and understand what is at stake for us.

Plain and simple, many of us write off the importance of understanding the china-US relationship yet wonder why we maintain the same economic status as a community decade after decade. If we truly desire to reap the benefits of an African American President, then we need to study policy and make it work for us and stop kvetching about things that are not really that important.

Constipated Now Nows

While many of us continue our habitual over zealous consumption of stuff and things of no real economic value, two events have occurred since the November mid-term election that may be of critical economic importance regarding the future of America, three if one includes the proposal presented this week by President Obama’s National Commission on Fiscal Responsibility and Reform.

The first was the announcement by the U.S. Federal Reserve this week of $600 billion of extra money being put in the economy. Specifically they will use the loot created out of thin air and computer virtual reality to buy $600 billion of long-term Treasury bonds (about $75 billion a month) through March 2011. They call this “quantitative easing.” In theory, this can be defined as a willy nilly, hocus pocus way to promote a stronger pace of economic growth and recovery. By my math, in addition to the pronouncement made by the New York Federal Reserve Bank to reinvest maturing mortgage securities owned by the Fed in Treasury bonds, that projects to approximately $900 billion of Federal bond purchases in the next six months or almost half the loot issued to finance this year's federal deficit.

The second is the meeting of the G-20 in South Korea. We know that most of the attention during this meeting will be directed towards the global economy. Particularly, monetary and currency policy and international trade. This will be an up hill battle for the US, since most of what we see that is jacked-up economically is our fault. I mean since the time of Nixon, we as a nation encouraged all of this, when we decided to get cheap stuff abroad via Chinese, Vietnamese and Latin American labor and taking the dollar off the gold standard.

Yes, once upon a time there was a gold standard in which the monetary unit is a fixed weight of gold. This came about via the Bretton Woods agreement put in place after World War II, allowing several countries to base their exchange rates to the U.S. dollar. But like I said previously, this ended in 1971 when President Richard Nixon ended the dollar-gold peg, leading to what we have now - floating exchange rates. Even stranger is that at this time, Alan Greenspan, who arrived in Washington in 1967, as a campaign advisor to Richard Nixon, wanted to reshape the economic landscape of America via deregulate, But I digress.


The China/US relationship is a clear example of what I am trying to say. They have pegged their currency to the dollar, which keeps the value of the Yuan artificially low, thus giving them the ability to flood the US market with cheap products. The consequence was that it gave China the ability to use the dollars they earned to buy US debt, which let us live way above our incomes. Unfortunate for us, this created a trade imbalance between the two nations, growing dollar reserves in China and creating a trade surplus (just as what we see with Germany).

Chinese dollar reserves currently are estimated at about $2 trillion. If the Feds puts too much money into circulation, these reserves may be devalued. And if China isn’t happy, and their value is decreased because the dollar is reduced in strength by the Feds actions, a trade war and a worldwide recession would not be far fetched as a probably outcome. Funny thing is we complain about china keeping the value of the Yuan fixed, but the actions the US central bank is doing by flooding billions in the world market, is the same thing, only via monetary policy.

What the federal Reserve has done is to take more risk with respect to our economy, an untested risk, which could not have come at a more dangerous time globally for the US. Banks already have about $3 trillion in cash, they just are hoarding as opposed to lending or spending. Thus such actions seems to increase the risks of higher inflation sooner than latter, especially now since the places we used to get cheap labor from is outcompeting us and holding our economic growth stagnant.

Now, other wealthy nations are super critical of the US economic policy as were of theirs 30 years ago, with the clout being on their side now. Especially the German and Chinese with respect to the Feds actions and overall macroeconomic policies. I just don’t get it, what will buying bonds do to encourage job creation? We still spend too much. On December 31, 2010, the Obama stimulus package, will end and thing will really be up in the air.

I do not know what the end game will be but I can say from our actions at home and our buddies around the world. And on the real the U.S. needs to generate at least a million plus jobs annually to keep up with new workers entering the job market alone. From the actions of the G20 summit there are several things we see. First is obvious, that no one wants to be in any paper currency. This may be why a former banker at Goldman Sachs and deputy secretary of state under George H. W. Bush, suggested a return to a modified gold standard. Second, that we are not in a position to tell other nations how large of a surplus or deficit they can run. And last, Unfortunately neither individual folk or our government have learned anything from the last 6 to 10 years of economic disarray. It is very obvious that folks still think and behave the same and still have not taken responsibility and just spend as much loot as they brought in – Governments included. Foir even with this second round of “quantitative easing," Amercia sure feels constipated to me. And may require Funkadelic - Promentalshitbackwashpsychosis Enema Squad.

Chinese Checkers

Normally I would have probably written a little something on penal politics in honor of Sean Bell. However, my mundane expression could do little if any more given the inordinate post I have read on this since the verdict was passed down. But It is like what did one expect? This is America, this is not a democracy- what did you expect (this is why studying history is important, for it tells us we should have expected such)?

Instead, I am reminded of the time when I used to play games, all kinds of games from four square, to any sport, to kickball and checkers and chess. But there was one game I could never get, and the strange thing was that seemed like me and all my friends had it - Chinese Checkers. Now I may be sating myself but it came with every game of checkers ever sold.

To connect the dots, I keep hearing that the Cold War is over. Maybe it is, maybe it isn’t. I do know that they, Russia, formerly the USSR does not exits anymore. But if you asked me - which no one has, I would like to suggest that the cold war is alive and kicking.

Just like Dusty Rhodes versus Ric Flair, the U.S. and China have been locking horns and doing battle like it was for a championship belt. And it seems as if China is winning, or at least has the upper hand. Starting with the yuan and the way they have pegged the currency to how they assist in creating higher gas prices based on us being one of the biggest exporters of refined oil to them; and don’t even mention how they crushed our steel industry back in the day. But I won’t get into that for its enough new info on the latter for food for thought.

Now aside for the “knock this off my shoulder shit”, like picking on them for Tibet and Dafur, or them picking on us because of Iraq, there is some major stuff going on that I never see and barely read in the news - I guess that’s a function of having a zillion debates and candidates saying the same thing over and over and such being considered news.

First it was their disagreement with the U.S. Steel energy report that suggested China had supported its steel industry with energy subsidies of 27.1 billion U.S. dollars from 2000-07. Thus why it was a big issue in the Penn primaries, given non of the democratic hopefully could thoroughly address the issue.

Yep China is winning. Not only do they make bird flu, and scare the shit out of US and make toys and baby cribs that can be considered as booby traps that harm and mutilate, even kill our children, now they are hitting us with tainted drugs. According to the USFDA, there may be at least 81 deaths across the country that may be related to contaminated blood thinner made in China. The FDA has been engaged in a bitter battle with the Chinese government over this. The agency publicized that the active ingredient in Heparin sold by Baxter Pharmaceutical was contaminated at Chinese manufacturing facilities, with a dietary supplement made from animal cartilage called chondroitin sulfate. Heparin is a polysaccharide that is found in the human body with the greatest concentration in tissues around the liver. It is used to prevent blood clots from forming.

I tell you, the cold war is not over, I mean, just because the name of the enemy is changed, don’t mean jack to me. So Like in Ender’s Game by Orson Scott Card, we may need to learn how to fight the Chinese at their own game, maybe not with learning how to play video games as in the aforementioned book, but maybe by learning Chinese checkers, so get the kids ready folk.


WEAR BLACK MONDAY FOR SEAN IF U CAN

the new super hero

Growing up I was a big fan of comic books. I loved the super hero’s and arch villains even more. I didn’t lean much for DC comics and the likes of Superman and Flash, but towards the Marvel group with Luke Cage, Black Panther, Iron Man and the Avengers. Although I haven’t picked one up in a while, I do see a new Super Hero or super villain arising on the world stage – China.

The way I see it, China is about to move in front of all these rinky dink powers of the G-8 great west delegation. And they doing so with professional criminal without a criminal record accuracy. You can start off with the Yuan. It was devalued for the first time in a decade in 2005 when the changed it from being valued on the dollar to a group of currencies.

Since then, the Yuan has appreciated 6.35 percent against the US dollar and this past July hit a new high against the US dollar given a trade surplus at mid-year projected to be US$100 billion. But that’s not all. If that wasn’t enough, they started attacking our kids via toys. Most of the recently recalled toys (lead or chocking hazards) were made in China (about 75% of U.S. toys are now made in China). And these re dangerous toys after the Chinese get through:” Easy-Bake Ovens that trap children's fingers in openings, resulting in burns; Portable baby swings that entrap youngsters”.

Then there is the toothpaste that has been reported to contain diethylene glycol, a toxic chemical used in engine coolants that has been distributed through the US to hotel chains. Add to this, the recall of some 450,000 tires made by Hangzhou Zhongce of China due to a fault that increases their chances of blowing out while driving causing the driver to lose control.


I tell you, we worried about the middle east when China is on a slow creep to jump over us. It shouldn’t be long, seeing that the trade surplus grows larger each day between US and China, which was estimated at 15 billion with US in august 2006, and their exports increasing yearly. I guess this means a new super hero or super villain is on the block so find some kryptonite.