All the news lately has been very depressing. Whether a hurricane or tsunami somewhere causing death and destruction. Then, there is a terrorist who impales himself and takes innocent lives with his misguided deed. How about the Supreme Court nominee? The litany of negative events has two more.
NAFTA
It is now called the US - Mexico - Canada Agreement or USMCA. The whole tiff was to bring more manufacturing jobs to the US. The only thing that it accomplished on that front was that the pendulum is swinging back which is good. This moment of transition exposes why the US standard of living has declined as well as its middle class. The other reason is the Fed's destruction of the dollar along with excessive military spending.
President Trump will take bows. He should extend his face to the mud. The deal says that Mexico can only produce 2.6 million cars before a tariff is imposed. They were producing 4 million and rising. Canada gets the same 2.6 million as well as the same tariff possibility. If, and that is a BIG WORD, the two countries were to meet those agreements, the resulting 5.2 million cars will still be imported.
There is also a clause about workers receiving $16 an hour after trade limits, however this won't effect Canada as their workers get that much. Mexico can claim that through currency their workers meet that standard of living. Non-factor!
Now, total car sales have eclipsed 17 million for the last two years and is poised to reach that mark again. Those lofty figures will start to come down as the average retail price of a new vehicle is $35,700. This is more than the average cost of a new home in 1970. I put that in the piece to reflect how the Fed has destroyed our dollar's value.
Anyway, if total car sales return to 15 million plus which is where I think that they will find support, the new trade deal ensures that just from Mexico and Canada, that one-third of all sales will be imported from just those two nations. Now, consider normal imports from S. Korea, Japan and Germany make up another 50% of sales, what is left for US built producers? Also, there are other exporters vying to enter the market like China and India? Keep in mind that some importers are building plants in the US. Japan does the most, but Germany adds quite a few jobs too. This is good except these importers are not forced to join the auto union. The protection of jobs is arbitrary. President Trump did a good thing and I hope that he uses his arms to break his fall before his face hits the mud. This deal will be violated on entry permits and as a result no change or support for US workers. The shame should fall on the management of car companies and Congress for not supporting US workers because our standard of living will continue to decline.
There was one little clause in the agreement which could be a blessing. It says that if any of the three start another trade deal with another nation(read China), that nation must tell the other two 30 days before any negotiation and, (this is gold) then, the other two can kick out the third partner or do another agreement.
Now, this little clause will mean so much more with the following story from Bloomberg. This story reveals the arrogance of military leaders both in China and the US.
The US risked war and that means nuclear, with Russia back in the 1950s when they flew high atmosphere jets over Russia until the Russians shot down the U-2 spy planes. The cold war almost turned hot. Thank God for letting those with cooler heads dominate the healing.
Flash forward to today.
China
Their military leaders came up with a James Bond sequel. They put hidden chips in their servers which were ordered by US firms like Apple, Amazon and Google. They camouflaged these chips mixed with fiberglass embedded with the motherboard of the server. These chips had the ability to "block" updates under security prevention. They allowed access by hackers. This is probably how N. Korean and Russian hackers sold money from accounts. It gets worse. The chips could alter encrypted code. Now, the US military also ordered these same servers. Idiots! Imagine, the worse. We are under attack and there is no response because the command was stopped by a chip along a server line. Fortunately, this was discovered, but once is enough!
Under national security, any and all aspects of the internet must be made in America. Cut off China from making anything that can effect the internet. Anyway, this will not only create high paying jobs at home, but ensures the safety of our nation. Now, get this! Apple, has put our safety behind profits. They stated the story is not true. What Same! How does Cook sleep at night? These people risk our safety for profits. Karl Marx was right when he predicted that capitalist will come to the Communist door seeking profits before their homeland. This is Cyber War!
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