Obama's Rainbow Tour A Qualified Success?
by Dan Ehrlich

It's the Economy: First Time President's Re-Election in Doubt
Prospects in the developed nations for a brighter future haven’t become any better after the annual G-20 Summit in South Korea and a meeting in Tokyo of the Asian Pacific Economic Cooperation (APEC). In fact, things look even gloomier for the US and President Obama’s hope of re election in two years.

This gloom was first heralded at the G-20 by the Chinese refusal to devalue their currency. Also, Obama couldn’t get a free trade deal with South Korea, something that would have been a highpoint of his trip. Then in Tokyo there was the APEC final statement: "We reaffirm our unwavering commitment to achieving free and open trade and investment in the region.”

Yet, it wasn’t President Obama who leveled with the attendees there...politicians in democracies refrain from openness. That was left to Chinese President Hu Jintao who said: "The recovery is not solid, and imbalances are causing great uncertainty…The unemployment situation in developed countries is grim, and emerging markets face inflationary pressures and asset price bubbles."

Still, putting a brave face on the trip and America’s position in Asia, Obama said, "I think all of Asia is eager for American engagement and leadership… Everywhere in Asia, what I heard from leaders and people is that we are still central, and they want us there." But in reality, Asia’s main concern is for the US to continue to buy their cheaper goods. The stated goal of the APEC group is to remove any and all trade barriers between nations, if America had any trade barriers.

What this really means for the developed world is that its downward economic cycle will probably continue, as we continue to compete with slave wage nations supplying us with cheap manufactured goods at a greater rate, if you can believe it, than they are now doing. Still, things will eventually even out as an either or both situation evolves with the gradual economic regression of western populations buying less and forcing Asian producers to make things even cheaper.

As the American gross national product gets smaller and our trade imbalance greater, along with our national debt, our population will gradually become poorer…. the long-time poor may not notice things immediately the way our much vaunted middle class already has. The middle class will continue to be hit hard as many of its members become part of the new poor. (See The Regression on this site).

To say Obama’s Asia tour was a success would be a vast overstatement, the one bright spot being a new but modest trade deal with India. At the G20 main event, he came away with a rebuke from China and most members for trying to have the yuan devalued and no trade deal with South Korea. Then in Tokyo the result for the US was simply preserving the status quo.

Where the status quo isn’t being maintained is back home where voters in most states have given the Pres negative ratings two years into his first-term, opening up doubts he may not have a second term. Mike Huckabee, another former Arkansas governor, but a GOP version of Bill Clinton, is currently polling ahead of Obama. I mean the guy’s not even working in the business and he’s already a front-runner.

What’s Obama’s problem? The voters were hoping for a messiah and so far have come up short. He has had to admit he’s not a miracle worker. And Huckabee wouldn’t be a messiah, either. The fact of the matter whom ever we elect to run the nation, other than partisan window dressing, the overall state of the economy will still be one of decline.

Three things will need to happen for America to be competitive: Our wages and living standards must go down, the wages of foreign produce nations must go up and the Chinese currency must go down in value to make things even cheaper for consumer nations. When this happens China and other Asian nations will open factories in the West, hiring local workers but at the new lower wage structure. You see, while we may be sliding back to the good old days, they won’t be as good as before.

Of course Obama, Huckabee, Mitt Romney and even Sarah Palin won’t spell out such a scenario to the fantasy believing public. We may complain about less than forthcoming, lying politicians, but we will never vote for one who gives the hard truth.

No comments:

Post a Comment

comments here: