Wednesday, August 29, 2018

Trump Makes Peace With Mexico

The Bo$ton Globe is still at war with him:

"Trump scores a NAFTA win with Mexico and puts Canada in a difficult spot" by Evan Horowitz Globe Staff  August 28, 2018

The United States and Mexico said Monday they had reached a new trade deal, a step toward President Trump’s goal of rewriting the North American Free Trade Agreement that, for now, is being taken without Canada.

The deal slightly reduces incentives for carmakers to relocate to Mexico and limits some companies’ ability to challenge government trade rules, which could prompt opposition from US businesses.

At a morning press conference, Trump called it a “a big day for trade.” He also suggested he might drop the name NAFTA altogether, offering instead a new title that conspicuously removes Canada from the picture: the “United States Mexico Trade Agreement.”

Trump was joined via phone by Mexico’s outgoing president, Enrique Peña Nieto, who was quick to say that Canada should be brought back into the negotiations.

As a candidate, Trump vowed to tear up NAFTA, “the worst trade deal in history.” This agreement would merely revise NAFTA, but it’s still a win for a get-tough approach that has rattled some US manufacturers.

They can't give him credit for anything, can they?

Many hurdles remain.

Monday’s announcement puts Canada in a difficult spot. When NAFTA renegotiation began in 2017, it seemed to pit Trump against the largely pro-NAFTA front formed by Canada and Mexico. Now, that dynamic has broken down, with the Canadians shunted to the outside, deciding — alone — how to respond to these latest moves.

For now, they seem to be weighing options.

Until Monday, Trump’s trade agenda had been marked by many rising tariffs but few concessions from trading partners. He has introduced levies on steel and aluminum, targeted China with tens of billions in new border taxes, and threatened to curtail the importing of foreign-made cars — in the name of national security.

So far, the payoff has been limited to a promise of future talks with the European Union and reports of heightened concern among the Chinese, but Trump has pushed ahead, with the slack provided by the strong economy and the still-optimistic stock market, which gained ground again Monday and which has been climbing for months even as the trade war escalated.

Not even pushback from import-sensitive businesses and members of Trump’s own party have prompted the president to back down in any meaningful way.

Now, Trump can point to this US-Mexico agreement, and the rekindled prospects for a new NAFTA, even if it’s unlikely to have a a big impact on American workers and companies.

Among the potential losers from a revised NAFTA are US farmers, who have come to rely on exports to Mexico and Canada, and US automakers, which have built complicated supply chains that depend on the easy movement of goods across borders, but it’s not clear that NAFTA ever had a big impact on North America’s economy — which means tweaking it probably won’t, either.


These guys change their tune like the wind, depending on whatever narrative needs to be promoted. Now NAFTA really never meant much!

Studies from the Congressional Budget Office and the Congressional Research Service have found mostly small effects on US jobs and economic growth.

In Mexico, the benefits seem limited, despite an increase in jobs outsourced from the United States. And a recent analysis suggests eliminating NAFTA would have only a mild impact on Canada’s economy. 

I suppose if you are the Globe needs to tell its readers and themselves this.

What is more, the changes currently under consideration appear to be relatively slight, unlikely to spark any kind of dramatic shift in trade patterns.

A key focus of the new agreement involves new rules for the digital economy, which didn’t really exist when NAFTA was negotiated in the early 1990s. That’s more an update than a transformation.

On auto manufacturing, which had been one of the stickiest issues, cars would qualify as tariff-free only if they used more local steel and more local parts and were assembled by higher-paid workers. That would penalize car companies that set up low-wage plants in Mexico, but it’s the kind of change that requires adjustment, not a revolution in the auto industry.

I hate to say it, but now I'm starting to believe in the Trump economy -- if for no other reason than the fact that the pre$$ is talking him down.

Potentially more consequential is the pending non-NAFTA-related decision about whether the United States will slap high tariffs on imported autos in the name of national security.

From Canada’s perspective, then, there may be a good reason to quickly sign on to this new NAFTA: It’s a lot like the old NAFTA. One exception is the apparent watering down of rules to settle disputes. As a result, it would be harder for companies to contest government regulations but easier for leaders like Trump to impose retaliatory measures when they feel their economy is being treated unfairly.

Sign on or feel the wrath of Trump!

Canada has publicly opposed such changes, but it’s possible the United States and Mexico will make rapid concessions, since they’re eager to get a deal done this week, so the ink can dry before a new Mexican president takes office, but even if that happens — and it’s still a long way off — would that count as a victory for Trump’s “America first” trade regime?

They imply that the answer is no, and if it is, well, they begrudge him it.

This question would be easier to answer if the Trump administration were clearer about its goals. Given that NAFTA’s effect on US workers was never as consequential as the rise of China, it’s unlikely that any renegotiation could spark a rebirth in US manufacturing or dramatically reduce the trade deficit, but that may be too high a bar. Until Monday, it seemed possible these negotiations would collapse in acrimony, undermining Trump’s claim to be the dealmaker in chief.

That fear has now been quieted, and Trump can trumpet his new proof that hard rhetoric does sometimes lead to new agreements.....


Exhibit AStocks rise as US, Mexico announce preliminary trade deal

"It’s not a fluke: This economy is really strong" by Evan Horowitz Globe Staff  July 27, 2018

He starts complaining after the turn-in in his "quick study, " after he cites Brad Setser, a senior fellow in international economics at the Council on Foreign Relations, via Twitter.

This isn’t just the story of a few good months. Friday’s release reached back in time and made the first quarter better, too. The $20 trillion question is whether the United States can sustain this heightened pace of economic growth. Forecasters aren’t optimistic, with the Wall Street Journal’s survey of economists indicating a likely drop-off to 3 percent growth in the third quarter and 2.9 percent in the fourth.

Are these the same forecasters that crowed about Obama's lies, 'er, 1% growth rate?

Investors weren’t cheered either, as markets fell Friday despite the strong report. Partly, that’s a matter of disappointed expectations, as many hoped that the growth rate would be even higher, but the bigger issue is the looming prospect of stiff new headwinds, including the Federal Reserve Board’s plans to raise interest rates. Then there’s the potential fallout from Trump’s tariffs.

A closely watched survey from the University of Michigan, also released Friday, found a dip in Americans’ economic outlook, closely tied to fears of widening tariffs. And more businesses are finding their profit margins thinned by trade restrictions. Even the uptick in consumer spending may not be a reliable sign of things to come. Instead, it could be a one-time reaction to the Trump tax cuts, which started trickling through to paychecks earlier this year and which aren’t set to grow any bigger.

The state got a tax windfall from the plan and no one was complaining at the pot of money they had to spend.

Champions of the tax cuts hoped for a more durable impact, but as yet there’s no sign of that. Yes, those cuts were pitched as a way to turbocharge economic growth — and, yes, growth does seem to be juiced — but the two aren’t connected in the way boosters expected.

Always some qualifier, not as good as it looks -- when they made it look better than it was under the last guy. How shameless.

Central to the tax cut story was that reducing the corporate tax rate would free businesses to expand productivity-enhancing investments in things like new facilities and advanced robots. That way, workers could make better use of their time and warrant better pay.

Trouble is, those investments haven’t materialized. Business spending on structures, equipment, and intellectual property grew 7.3 percent in the second quarter, which is good but in line with spending levels before the tax cuts.

Meanwhile, real wages have risen a tragic zero percent in recent months, which highlights the disconnect between struggling US workers and a US economy growing at a healthy 4.1 percent.

It's a corporate economy.

This is a well-known problem with GDP. It tell us how fast the economy is growing, but nothing about who enjoys the fruits. Beyond which, it doesn’t reflect environmental costs or the value of stay-at-home parenting, even as it gives credit for the sale of stolen goods.....


Best thing to do is buy back your own stock and get a $lice of Apple.


"Companies moved fast to adapt to the post-financial-crisis world of sluggish US growth. They slashed costs and kept wage growth low, squeezing profits out of barely growing sales. They bought back huge amounts of their own stock and expanded their sales overseas, particularly to China’s booming economy. Profit margins reached record levels, as wages sunk to record lows as measured against the size of economy. With stocks richly priced, there isn’t much room for things to go wrong....."

Yeah, that's a “misleading narrative,” and history suggests some sort of cra$h this fall.

Could lead to a border skirmish

"Trump reignites tensions by declaring border wall will be ‘paid for by Mexico’" by Felicia Sonmez and Damian Paletta The Washington Post  August 28, 2018

WASHINGTON — President Trump on Tuesday renewed his pledge to build a border wall paid for by Mexico, prompting a sharp rebuttal from the Mexican government one day after both countries announced plans for a sweeping new trade agreement.

I have always felt that if it is good enough for Israel, it's good enough for us.

The offhand comments by Trump were made to reporters in the Oval Office as he met with the head of international soccer’s governing body, FIFA President Gianni Infantino. The remark underscored the lingering tensions between the two allies over the president’s oft-touted campaign pledge.

I'll let you kick around the offhand undercutting of Mattis on Korea.

‘‘Yeah, the wall will be paid for very easily, by Mexico,’’ Trump said when asked about plans for a wall at the southern border. ‘‘It will ultimately be paid for by Mexico.’’

After footage of Trump’s remarks was widely broadcast on television, Mexican Foreign Minister Luis Videgaray immediately fired back, maintaining that Mexico will never agree to fund a border wall.

‘‘We just reached a trade understanding with the US, and the outlook for the relationship between our two countries is very positive,’’ Videgaray said in a tweet. ‘‘We will NEVER pay for a wall, however. That has been absolutely clear from the very beginning.’’

A little over 24 hours earlier, Videgaray was among the Mexican officials who met with Trump in the Oval Office.

The Trump administration announced Monday that it had reached a preliminary 16-year trade agreement with Mexico that would alter the North American Free Trade Agreement.....


Only one problem now: how is the stuff going to get here?

Make sure you $tack it $ecurely.

"Canada and US meet as Trump moves ahead with Mexico trade deal" by Alan Rappeport New York Times  August 28, 2018

WASHINGTON — Canada’s foreign minister cut short a trip to Europe and rushed to Washington on Tuesday as President Trump’s top trade advisers reiterated that the United States is prepared to leave Canada out of a revised North American Free Trade Agreement with Mexico.

I humbly admit I am in awe of the AmeriKan Empire and its raw dollar power. Iran is on the brink of ruin, and I've no idea how Turkey has been doing the last week or two. No one can really stand up to them.

Touting the agreement with Mexico as a major win, Trump administration officials attempted to ratchet up the pressure on Canada, emphasizing the need to get a deal completed by the end of the week.

“The president, as he’s indicated, is fully prepared to go ahead with or without Canada,” Wilbur Ross, the Commerce secretary, said on Fox Business. “We hope that Canada will come in.”

He added: “If not, they will then have to be treated as a real outsider.”

The irony.

Those comments are pressuring Canada to decide whether it would join the pact negotiated by its North American neighbors or allow itself to be cast out of a three-country agreement that has endured for nearly a quarter of a century.

Chrystia Freeland, the Canadian foreign minister, was expected to meet with Robert E. Lighthizer, the US trade representative.

“We will only sign a new NAFTA that is good for Canada and good for the middle class. Canada’s signature is required,” Adam Austen, a spokesman for Freeland, said Monday.

Ross said it was imperative to move quickly because of the lengthy process involved in getting a deal approved by Congress. The United States and Mexico have expressed hopes that they will have the agreement fully in place before the next Mexican administration takes office later this year. The Commerce secretary said he was confident that Canada would ultimately join the deal because the Canadian economy “can’t survive very well” without the United States.

Couldn't they just abrogate it like Trump did with Iran?

Steven Mnuchin, the Treasury secretary, also said that the United States was prepared to move ahead without Canada, but suggested in an interview with CNBC that the two countries would likely strike a separate bilateral deal in that event.

“The US market and the Canadian markets are very intertwined,” Mnuchin said. “It’s important for them to get this deal, and it’s important for us to get this deal.”

The biggest changes to the trade agreement between the United States and Mexico would impact the automobile industry. Car manufacturers would be required to produce at least 75 percent of an automobile’s value in North America under the revised agreement, up from 62.5 percent, to qualify for NAFTA’s zero tariffs. They must also utilize more local steel, aluminum, and auto parts and have 40 to 45 percent of the car made by workers earning at least $16 an hour, which represents a victory for unions that have criticized NAFTA.

Meaning some jobs and production will in fact be brought back the United States.

Some industry groups and trade analysts warn that these changes would ultimately raise prices on American cars, hurting buyers and straining US automakers, which would struggle to compete with imports from other countries. That could, in turn, give US automakers more of an incentive to shift production outside of North America. 

Looks to me like they have us coming and going.


Make that two problems:

"Trump’s promises to ‘forgotten man’ undercut by wage stagnation" by Toluse Olorunnipa and Shobhana Chandra Bloomberg News  August 28, 2018

WASHINGTON — President Trump heads into a midterm referendum on his presidency showing no real progress on a core promise: to raise the wages of America’s ‘‘forgotten man and woman.’’

Says Bloomberg.

Once the impact of inflation is included, ordinary Americans’ hourly earnings are lower than they were a year ago.

Finally, Bloomberg looking out for the common man.

Real wages have remained mostly stagnant, despite an expanding economy, record stock prices, soaring corporate profits, and a giant deficit-fueled stimulus from Trump’s tax cuts that took effect Jan. 1. The Trump administration claimed its policies would immediately boost wages, with its tax overhaul ultimately increasing average pay by $4,000 to $9,000.

Yeah, turns out that was an ACTUAL ECONOMIC $TRATEGY by the corporations these last ten years, and what could go wrong?

That hasn’t happened. And though Trump regularly boasts of the economy’s performance, many Americans don’t feel they’re sharing in the gains — a risk for Republicans as they seek to defend their House and Senate majorities in the November elections.

Providing the narrative for a Democratic takeover of Congre$$.

A majority of voters believe their personal financial situation has remained the same or gotten worse over the past two years, said Tim Malloy, assistant director of the Quinnipiac University poll. ‘‘When you look at that backbone of the country — the middle class — people think that there’s stagnancy and not much has happened for them,’’ although ‘‘things might be marginally better nationwide,’’ he said. ‘‘That could be a problem in the midterms for a lot of people. At least some people believe that promises were not fulfilled.’’

Inflation-adjusted hourly wages dropped 0.2 percent in July from a year earlier, their worst reading since 2012, according to the Labor Department, amid faster price gains. They’ve grown at an average 0.3 percent annual pace under Trump, compared with 1.1 percent during Barack Obama’s second term.

At this point you $imply wonder if they are cooking the books

Trump’s escalating tariff disputes risk eroding buying power further by driving up prices. At the same time, many Americans received a boost in take-home pay from the tax cuts, though some ended up paying more in taxes. About 65 percent of taxpayers will receive a tax cut in 2018, averaging $2,200 from the new law’s individual provisions, while 6 percent will receive an increase of about $2,800, according to estimates from the Tax Policy Center in March.

Yeah, but their personal $ituation has gotten worse, blah, blah, blah, and forget the erosion of your buck as those Federal Reserve printing pre$$e$ rolled throughout the Obama years.

As a candidate, Trump excoriated his predecessor for slow growth in workers’ incomes. ‘‘Household incomes are over $4,000 less today than they were 16 years ago,’’ he said during a campaign rally in Pensacola, Fla., in September 2016. ‘‘We’ll get your salaries and your wages up, up, up.’’

Workers are still waiting. By a margin of 58 percent to 38 percent, US voters believe the Trump administration isn’t doing enough to help middle-class Americans, according to a Quinnipiac University poll released Aug. 14.

The White House didn’t respond to requests for comment.

Before the tax bill passed, the White House Council of Economic Advisers chairman, Kevin Hassett, said he expected reducing corporate taxes would spark ‘‘an immediate jump in wage growth.’’

Speaking to Fox Business Network this month, Hassett said those higher wages will come with time, citing the low unemployment rate, growth in capital spending, and rising productivity.

‘‘That stuff, historically, helps blue-collar workers,’’ he said. 

Has he hurt them?

Trump has been telling voters that wages already are rising at historic rates, though economic data don’t show it. In various recent speeches, he has falsely claimed that wages are going up for the first time in 18 years, 19 years, 20 years, 21 years, and 22 years. 

Look who is talking!

‘‘We have so many jobs now coming in, but they’re raising wages,’’ Trump said last month at a roundtable event in Iowa. ‘‘The first time that’s happened in 19 years, where wages are going up.’’

Average hourly earnings, not accounting for inflation, rose 2.7 percent in July from a year earlier, the same pace as the month before Trump’s election. They’ve been rising at an average 2.2 percent pace since the recession ended in mid-2009.

Trump’s claim is also belied by other measures of wages often used by economists, including the employment cost index and the Federal Reserve Bank of Atlanta’s wage-growth tracker.

As if those are unquestioningly accurate.

Tepid wage growth throughout the current economic expansion also bedeviled the Obama administration and remains one of the biggest challenges even with unemployment near the lowest level since 1969. On top of that, workers are failing to reap benefits of legislation cutting corporate taxes, an outcome predicted by some economists before Congress passed the law in December. 

Thank God we have Bloomberg to look out for the working man's intere$ts!

‘‘It was our expectation that the major elements of the tax plan likely wouldn’t trickle down into stronger wages for the average worker,’’ said Michael Gapen, chief US economist at Barclays. ‘‘It was more likely to go as returns to shareholders.’’

Companies in the S&P 500 index are set to authorize $1 trillion in stock buybacks in 2018, a record and a 46 percent jump from last year, according to an estimate this month from Goldman Sachs. 

Which falsely pumps up stock prices while producing nothing. 

That's what it is all about now. Keep the stock price up. 

Can you say Enron?

Only 37 percent of Americans approve of the tax package, compared to 45 percent who disapprove, according to a Monmouth University poll released Aug. 20. Such unpopularity is hampering Republicans who had hoped the law would give them a boost in midterm elections.

I gue$$ you gotta shovel as much $h*t as you can.

One in four Americans don’t think they’re ‘‘at least doing OK’’ financially, and more than one in five respondents said they were unable to pay the current month’s bills in full, according to the results of a late 2017 Fed survey released in May.

‘‘People that depend on wages — and that’s essentially almost everyone except higher-income or higher-wealth individuals — are not seeing as much benefit from this economy,’’ said Gregory Daco, head of US macroeconomics at Oxford Economics in New York. ‘‘People at the lower end of the income spectrum are actually more constrained.’’

Doesn't feel like when you are on that gerbil wheel.


Looks like Coke got some Moxie

Here's your straw.