Saturday, August 31, 2019

Tariffs, the Impact on the USA

Listen to the radio and TV, the average family will spend $1,400 on tariffs from China this year. Kind of hard to figure their math, if you buy “Made in USA.” These are real news sources spouting this crap. The announcer seems to be satisfied with continuing to buy from China; Trump is the problem. The whole purpose of a tariff is overlooked, to make you buy from some other source.

The real problem is that we buy everything from China and are dependent upon them for what we need. This needs to stop. We don’t need to pay China 500 billion a year to produce what we should be producing here. “Buy products made in the USA” is what President Trump is saying with the tariffs on China.

These news announcers that claim tariffs will be paid by us, don’t consider that fact that people price shop. Do the math, the Chinese put tariffs on our cars. They do it, to keep their consumers from buying them. We don’t sell many cars in China. Rewrite the headline on their side and it would read “Chinese paying $3000 extra on Chinese tariffs of American Goods.” Point of fact, they are not buying them, they are more expensive than cars made in China. The real question, why do we have a 500 billion dollar deficit with them? What did they buy from us? The answer could be “nothing.”

The whole world has been sucking us dry by producing what ever we wanted. Congress made the legislation and tax laws that forced business overseas. If we can bring them back, we might just have a second chance to turn our economy around. In the past, when we taxed the hell out of manufacturers, they voted with their feet and moved to other countries.

The real problem is the mentality of the legislators in Congress. They think if they double the tax rate, they double taxes coming in. This concept failed miserably during the Great Depression; taxes collected, dropped off of a cliff.

The people in Congress have good intensions, but they have so little business acumen that the real solution are not the most obvious ones. A $15 dollar an hour minimum wage when the rest of the world gets $15 dollars a week, shows how brain-dead Congress has gotten. By god, a family can’t live on a 15 dollar an hour job in the US. Raising the minimum wage moves our jobs to people in other countries. Where you could have had an $8 dollar an hour job, now you have nothing.

So far, the tariffs have been attacked politically as a tax on the American consumer. And raising the minimum wage forces our jobs overseas. Business pass the cost of labor onto the price of the product for sale. It is the consumer that determines whose product they buy. The Tariffs level the playing field; it gives American businesses a better chance to compete with foreign imports.

What we need to realize, is that China, a communist country, does not support any investment in research, there is no incentive for doing so. As a people, they can profit by stealing what we create, and selling it back to us. A lot of the prescription pills in our system like Viagra are counterfeited in their county for sale in our country. The going joke is that they use drywall to make the pills.

We can avoid the tariff issue if we buy “Made in USA.” And that is probably too simple for the democrats running for reelection. Go figure.

China is laughing at us; Trump may set them straight. They are like a bad car mechanic that needs to make a fast dollar, and the US is the patsy. The reality, the next medical cures will not come from China, they have no money for that sort of thing.


dearieme said...

"The people in Congress have good intensions": I'd like to see the evidence for that.

Jim in San Marcos said...

Hi dearieme

You're right.

Maybe I should have said their good intensions usually lead to unintended consequences. They mean well and that's the problem.

Anonymous said...

Hi Jim,

Been meaning to write this to you for a couple of months now. In any case, hope all is well.

I just wanted you to look into the new CalPers/Calsters president/CEO. He is a chinese-american person that was born in china, educated in the u.s., became a u.s. citizen, than went back to china and worked in china's central bank for three years, and now is heading the biggest pension in u.s., if not the world.

I first learned about it from a Bloomberg article, and when I read it, I was shocked by it.
Here is a person that has an odd background, and an odd personality. For example, he talks about talking to his mom everyday and talking about her e-trade portfolio, does the sec know lol

But more importantly, the first thing I thought of was how calpers invested 15 billion into a land deal in valencia, ca at the RE peak in 2007-2008, then they sold it for 1 billion.
How many under-performing assets is this guy going to help his friends unload into the biggest pension fun. He spoke about needing to take more risk for the pension and going into investments that in the past were not held by the pension. No matter how you look at it, there is something fishy here, especially his 3 year stint in the chinese central bank. To add to that, wells fargo, is known to be the conduit between money from china and the u.s., and how convenient, wells fargo is a california bank ;)

You hear that suction sound? that's your pensions being sucked out to overseas. I would love to hear your thoughts on this issue.


Jim in San Marcos said...

I read your comments and need to correct one thing.
Yu Ben Meng was hired by Calipers to be the CIO not the CEO. I guess there is a going joke about Marci Frost the CEO lying about having a college degree.

I have run about 5 blog articles over the years on CalPERS and none of them were praising the organization.

Their basic problem is the California governor and the legislature. To put it simply, CalPERS was able to claim that their rate of return on investments was 7 percent and just recently dropped to 6.7 percent. The real rate of return is less than 2% at the present time. So, the years from 2008 to now are an anomaly as far as CalPERS is concerned.

Here are the facts. If CalPERS declares that its rate of return it 2.5 percent, the state of California doesn’t have the dollars to put into the pension fund to keep it solvent.

Here is a Link to the damage

California is hiding the fact that it faces bankruptcy. The State would have to contribute to the fund to make it solvent if the interest rate was marked to 2%. The cost would be about one trillion dollars.

On the national level, if the interest rate goes to 7% the Federal government cannot pay the interest on the national debt of 21 Trillion dollars. The interest will be more than the taxes collected. Assuming that, the Federal interest rate will probably never go above 3 percent. So, a retirement fund projecting interests rates out 20 years has no hope of 7% rates. That to me spells the doom of CalPERS in about 8 years. Using the rule of 72 where your funds double when you divide the interest rate 7% into 72 you get 10 years. Divide 2 into 72 and you see the retirement problem, 31 years is a long time. The money is not there.

The thing that is really funny, most people have no idea of what I am talking about. The ones that do (the politicians), are quiet for obvious reasons. Kick the can down the road, it will not happen on their watch.

Anonymous said...

Thanks for the response, wow, you do have a lot of information on Calipers and the hole they are in.

Calsters I suppose, is even in worse shape, female educators, are one of the longest living people in our society today, seriously. And the baby-boomers are retiring in droves,

And thank for the heads-up on Mr.Meng being the CIO. I read that Bloomberg article months ago but the theme is the same. Him being CIO is even worse, because he makes the investment decisions. In addition, this public servant said it's time for new strategies and that Calpers has to rethink its strategy in order to meet growth targets ;)

Lastly, it's not all doom and gloom. Just look at cancer screening for example. In the case of colon cancer screening, you can now poop at home and send your sample in, and they can tell if you cancer, even cysts 1 mm in size. And it costs $500 instead of the $5k colonoscopy, reducing medical costs by for that screening 90%.
Point being, there are others factors that may, and I believe will, ease and lengthen the time these institutions have before possible insolvency. And since they can tax, being they are an institutional arm of the state, their failures only depend on the public's willingness to pay more taxes, and California is a place that the entire world and the u.s. wants to move to, well, if you have the money to do so. I know, there are a lot that want to leave and there are a lot that even within the unites state want to move in. So that can be debated forever, this topic I judge with the eye test. Meaning I use anecdotal info I have over the decades and thousands of people I got to know, and the fact that overwhelmingly, people want to move to the u.s., withing the u.s., they want to come to California, and lastly, around the world, dollar is still king! Travel a bit, internationally, and you'll see.

I'm not worries about our national debt, because who he hell is going to collect a debt from Tony Soprano...nobody. And pension fund the shortfalls, not as much. I am most concerned with Calpers and Calsters loading up on risky assets at the market top.

That's my biggest concern, I hope I am wrong, but something about this doesn't make me feel good and comfortable, and it does matter to me. And the beauty of time, is that it tells all.

Take care,