Posted on 11/29/2006 6:29:22 AM PST by shrinkermd
No one, of course, wants to see the dollar in a free fall. And no question, it has retreated against some currencies. But worried? We aren’t.
The dollar isn’t weak at all. Indeed, it’s trading 19% above its level in the mid-1990s, smack in the middle of the Internet boom. True, it’s come off the highs it set in early 2002, when foreign investors still spooked after 9/11 were desperate to invest in a safe haven with sound markets, the rule of law, low interest rates and fast economic growth. That pushed the buck up sharply.
...The other is that, contrary to lots of current market reports, the U.S. currency isn’t “nearing new lows” at all. The reason is simple: Many people focus on very narrow measures of the dollar’s value — like the dollar-euro, or the dollar-yen, or even the dollar-yuan. By those gauges, yes, the dollar is hitting new lows or close to them.
...But this is an error. Far better is looking at the dollar against a broad market basket of currencies weighted for the amount of trade they do with the U.S. When you do, you see that while it’s true the greenback has slumped in recent months, over the long term it’s not down at all. And why has the dollar fallen recently?
(Excerpt) Read more at epaper.investors.com ...
Wow, that's terrible, does the military use the 44% that are produced in the US?
as are nearly 69 percent of the resistors,
Does the 31% we still make satisfy our military needs?
nearly half of the electric coils, transformers, and inductors,
Does the military really need all of these components that we produce domestically?
nearly 99 percent (that’s right – 99 percent) of the capacitors and parts,
Scary! See above.
and nearly 61 percent of a broad catch-all electronic components category.
We still make electronic components in America? I'm shocked. LOL!
DoD is worried enough about the trend to have approved the construction of a “trusted foundry” in the United States. From the foundry, IBM will supply the military with computer chips whose designs will remain safely classified and that will be free of “Trojan Horses” and other sabotage mechanisms that could be inserted by foreign producers.
Hmmmm....sounds like they took my suggestion to heart. They should do the same for rare earth magnets. I feel better, do you?
Tonelson is crazy enough by saying what he said. What he implied is worse --that in the past decade Americans made nothing else that was as valuable as those stupid resisters and capacitors, and that we'll never ever be able to make them again unless we elect Democrats to raise taxes.
Your inability to focus is why things are distracting for you.
Nope. He didn't say that about Party-control at all. He has rigorously condemned the Clintons for their sojourn in the White House...for their defense holiday. A neglectful policy even worse than the current one.
But he did say that the probem is real. As did the Defense Sciences Board...which you guys were given MULTIPLE LINKS to but you can't focus on. Tonelson was merely used for a SUMMARY outline of the problem. Not anywhere close to a complete exposition.
Those so-called "stupid resistors and capacitors" as you called them... are very essential. They are part of what gives the high-end Integrated Circuits...that we are hoping to reserve our independence on... any functionality.
But you...and the "lobby"... are in denial as to their absolute essentiality.
Actually, the Defense Science Board has been concerned that this is being seriously neglected still...that the one lone foundry is not nearly enough.
They should do the same for rare earth magnets.
Yes. They should.
Of course the least cost-solution is not to lose the critical industry in the first place.
Interesting question. You think that is the only thing keeping the industry here alive? That would be further proof of the inefficiency of going your preferred "cottage industry" route...instead of the far more efficient, and cheaper approach just making the whole playing field such that the lion's share of production would naturally gravitate to the U.S. shores.
as are nearly 69 percent of the resistors,
Does the 31% we still make satisfy our military needs?
No. Not even close, apparently. And remember...the military needs 100% of what it needs. It needs what it needs...when it needs it. This 50% dependency has created a nightmare situation for real military capacity.
nearly half of the electric coils, transformers, and inductors, Does the military really need all of these components that we produce domestically?
Not all are for the military. Yet. But a lot of them are now imported for the military that we used to make here. Read the Defense Science Board reports. The hollowing-out phenomenon that you keep dis-believing...is real. You keep looking at the monetarist gloss that is put out to rationalize the damage being done with the hollowing out. The median is not the average. Even with the drastic down-sizing of our military...its needs for these discrete components is vastly larger than what we are now producing domestically.
Hence the posture of the Defense contractors which campaigned against the Buy America provisions... Those provisions would not have solved the problem...but would have only gone back to the earlier Reagan era's posture: 75% U.S. composition.
The clear implication of their lobbying posture...is that they are already in violation of the 50% U.S.-content requirement...but no one is pressing the point in the administration.
You really pegged me with that "inability to focus" observation Lets face it --2k words can get anyone turned around, like even you forgot what you pinged me about: --trade's impact on US military strength.
Your take in 25 words or less, is it like my above guess or what am I missing?
Congress could pass a law saying that every single thing needed by the military from now on will come from within the US.
You don't want that and you don't mean that because we all know this would rule out stuff like foreign intelligence, sat fotos, etc. just like you don't mean prohibiting taking on supplies at ports of call. You probably don't mind some US radar station in Alaska tapping electricity off a Canadian grid. OK, how about Canadian diesel for the generator or maybe an air filter? Looks like where we're going is somewhere less than 100% and more than 0%. That happens to be what we got.
Everyone likes to bellyache about the Pentagon buying $500 toilet seats but it won't wash. What we need is a better idea. If anyone here is suggesting say, a new law or (better) repealing an old one, let's hear it.
They merely said..."our political and financial backing from the Import Lobbies trumps the domestic defense needs." They more or less claim that defense needs are per se "parochial." That's frankly what it came down to at the Heritage Foundation.
I should know since I'm a member. Are you?
And he admits to not being an economist...yet he makes grandiose economic statements as if he were.
And let's see how credible Jack Spencer is on his 72-hour claim on the Swiss crystal for the JDAM...and it turns out not very! According to folks I know at Honeywell...it in fact took much longer...it took months to hire and start up a replacement line for the crystal...which we had fortuitously just happened to still have the idle reserve capacity to convert to this production. So while the deal was set up in the plane flight...it wasn't "turn-key" as implied by this blow-hard Jack Spencer.
It was trulry fortunate for us that the entire idled line hadn't been boxed up and sent to Tianjin...yet.
You think I'm exaggerating about Spencer? Let's note a rather clear test of his dogmatism from that same interview:
Q: But that's the Swiss. What happens when hundreds of high-tech components like those crystals have to come from China?Spencer: As we rely more and more on China, they could use that as a leverage point against us because they could be the adversary, and if they are the adversary, they will use those leverage points against us. That comes back to the transparency. They can't use it against us if we know where it is, or at least it provides us with time because war with China doesn't happen overnight. War with China happens at the end of a chain of events. As you begin down that chain of events, then you need to understand, "Where do I get this widget from? Does this widget come from China and if so, can I build it in Peoria? If I can't build it in Peoria, I need to figure out a place where I can build it. And if I can't build it in Peoria I should be able to scour the globe for it and have the channels in place to easily scour the globe for it." That is why you focus on access. That is where the transparency and access equations come together.
Q: So there is no real worry about the production capability of the United States?
Spencer: When people start making these arguments that we have to be able to do it at home, no we don't. We just don't. And if we can, great. If I can buy my ammunition at home and Americans can have jobs and Billy and Sally can get an education and their parents never have to go on welfare, well that's just dag-gone perfect, but if that's not the case, then we shouldn't have men and women in uniform who don't have the best weapons when they need them because our government is making the wrong decisions.
Q: Do you think that providing U.S. taxpayer dollars to foreign companies to give them the capability they need to innovate and develop new technology and also produce it for adversaries is okay?
Spencer: What does it mean when you keep technology here? Does it mean that you're not sharing it with the Brits or Australians? So that's another one of our principles: that not all trading partners are created equal. We would take a more open approach to almost all defense technologies with a small handful of allies.
As it is we already share too much "with a a small handful of allies." There are numerous examples of blowback in the technology we have shared via "trusted allies" the Swiss [SWATCH], the French [EADS]...the Japanese [Toshiba] ...not to mention China. And Spencer wants to increase the sharing...which implicitly means increasing the degree of vulnerable dependancy, as well as compromise of the IP security.
As W once famously said..."that don't make any sense."
Spencer has proved with his mis-characterization of the Swiss crystal ...and this one statement about increased techsharing... his complete untrustworthiness in national security.
His position about having warning is simply and straightforwardly...unserious. He admits that what one should do is: "war with China doesn't happen overnight. War with China happens at the end of a chain of events. As you begin down that chain of events, then you need to understand, "Where do I get this widget from? Does this widget come from China and if so, can I build it in Peoria?"
The same mindset that put us in that situation refuses to either recognize "the chain of events" in time if ever. And do those additional required steps though. And is opposed to re-sourcing back in the U.S.
Not at all.
No. Not even close, apparently.
Not even close? Are you saying the military uses more than the entire output of American made resistors? Not that I don't trust you, but I'd need to see some backup for your claim.
Not all are for the military.
Do you want to stick to one topic at a time? You said (well Alan Tonelson) we need these items for the military. So let's look at what the military uses. Don't pull a fast one like the protectionists who whine about steel usage and talk about national defense. We make over 100 million tons of steel a year while the military uses about 1 million tons. Don't tell me we need to protect 100 million tons, tell me we need to protect 1 million tons.
If we need resistors during wartime, I'm more than happy to see our military take all they need out of the 31% we still make here.
Read the Defense Science Board reports. The hollowing-out phenomenon that you keep dis-believing...is real.
Who said I disbelieve any hollowing out? All I've said is that we made $1.79 trillion in manufactured goods last year. If we had to, I'm sure we could move some of that capacity around, while we also increase total output, like we did in WWII.
If we're hollowed out, at $1.79 trillion, China must be positively anorexic at only $780 billion in manufactured goods. How much of their production is cheap TVs, toasters and CD players? Not gonna help them much if war breaks out.
You keep looking at the monetarist gloss that is put out to rationalize the damage being done
Monetarist gloss? Which of your whiners coined that phrase? Does this "monetarist gloss" make the $1.79 trillion look bigger than it really is? What does this gloss do, exactly?
Even with the drastic down-sizing of our military...its needs for these discrete components is vastly larger than what we are now producing domestically.
So you claim, with no solid numbers.
Exactly. A.Pole posted an article that said we need to "finance" the trade deficit. I asked him why? Shockingly....he never answered.
When we buy from, say Japan, they get train-loads of dollar bills. They have our cash, what needs to be financed? If they keep those bucks, we're not harmed. It's in their best interest to invest that money, to at least keep pace with inflation.
Too bad our resident protectionists are too dim to understand.
American Industry disagrees, Todd.
As their testimony at the House Armed Services Committee Hearings indicated...they think it would take over 10 years to reconstitute a lot of what has been lost, as with the machine tool industry.
You need tools to make tools, and then to re-make entire production plants...which have been boxed up and shipped to Tianjin.
Are you saying the military uses more than the entire output of American made resistors?
As a matter of fact, it requires more types of resisistors, and more quantity than even those that are currently still made here.
We make over 100 million tons of steel a year while the military uses about 1 million tons. Don't tell me we need to protect 100 million tons, tell me we need to protect 1 million tons.
That is economically unfounded. Without an industry...of a much larger scale...you could not even maintain that purported 1 million tons capacity. You know why? Because we need HEAVY PLATE STEEL. For subs, for ships, for tanks. And the small steel plants can't do it. You need the huge integrated mills that can produce it [the small electrics can't]...and in the quanitities needed...for surge etc...not for somnolent peace-time orders.
If we're hollowed out, at $1.79 trillion, China must be positively anorexic at only $780 billion in manufactured goods. How much of their production is cheap TVs, toasters and CD players? Not gonna help them much if war breaks out.
First...the burden of proof is on you to dispute the numbers already given. Quibbling is not persuasive disputing. I have more than adequately made the case already.
Second, pertaining to your attempted quibble...I will quibble right back at you: what would be the U.S.-equivalent purchase price for domestic production of the Chinese-stated production numbers. I.e., in real-world terms how much are they really producing? Adjusting for their substandard wages...which your lobby never does.
What would the measures of Chinese production really have to be...? So let's look quantitatively rather than by claimed value. An objective measure is where the manufactures are commodities that can be quantitatively compared. You brought up steel production. China is now producing more than the next four closest countries put together. This is including the U.S. and Japan.
Your argument is analogously a lame variation of the "buggy-whip" smear on the industries we have outsourced.
The Chinese don't need to clip us at all points in the production chain. Just critical ones. The U.S. "Production Chain" is only as strong...as reliable... as its weakest link. And the Chinese are subsituting themselves for our own production..up and down those chains.
You misjudge the technology they have gained...and total capacities they are accumulating. Most all of these plants...where the U.S. firm has to partner with the Chinese entity...are required to compromise or "share" the technology.
And you misjudge the defense implications. It is not just a supply disruption, of course, but a long-term direct threat to our military...enabled by the transfusions being pushed by your lobby. That Chinese entity is often thinly-veiled in its connections to the PLA. Wherein they require that the production can be made dual-use from the get-go. I.e., military applications for those same assembly lines...much of what you can deem frippery may be quite startling. And the bulk of their trade surplus is now no longer low-end, but high technology. Note this article: China Replaces U.S. As World's Largest Exporter.
During the first six months of this year, China surpassed the United States as being the world's largest exporter. Only five years ago, the United States exported more than double the amount of China. During the first half of 2006, Chinese exports of manufactured goods reached $404 billion compared to $367 billion in exports by the United States."This dramatic reversal, together with the increasingly high-tech orientation of Chinese exports, poses a serious challenge to U.S. export competitiveness and long-standing leadership in technological innovation,"
And the Dual-Use of that high technology is apparent to all.
We produced $2.2 billion on machine tools in 2003. I'm sure in war time we could boost that number. Aren't you?
You need tools to make tools, and then to re-make entire production plants...
Yeah, you have to do lots of things during wartime.
As a matter of fact, it requires more types of resisistors, and more quantity than even those that are currently still made here.
So you've said, with no backup.
That is economically unfounded. Without an industry...of a much larger scale...you could not even maintain that purported 1 million tons capacity.
We need to protect 100 million tons just to make 1 million tons? Says who?
You need the huge integrated mills that can produce it
As I've said before, give the mills a large enough, profitable enough contract to keep that production available. That's cheaper than making all 100 million plus tons more expensive through tariffs.
First...the burden of proof is on you to dispute the numbers already given.
You want me to dispute that America's $1.79 trillion in production is higher than China's $780 billion in production? LOL!
...I will quibble right back at you: what would be the U.S.-equivalent purchase price for domestic production of the Chinese-stated production numbers.
LOL! I'm laughing too hard to respond to this one.
China is now producing more than the next four closest countries put together.
Great, take their production and multiply by the price of steel per ton. Do the same for American steel. Then do the same for all our production. When you add it all up, American production is 129% higher than Chinese production. Unless you have some data of your own?
False.
Huge amounts of goods are coming out of the factories and are being sold for more money than ever before.
Chinese factories, yes. U.S. factories simply slapping together Chinese components....
It's real, and it's been counted.
LOL!
Tell it to the Machine Tool industry...the foundation and core of ALL industry.
On this subject...defense procurement...Dr. Williams assertion is non-operative. This is the Government...the Country...doing the trade. It pays for it. And it sets the rules and bounds. The individuals are mere factors in the trade.
On that you are, of course, correct but I addressed the defense argument above.
Looks like we're not looking at the same info on industrial production.
What I was using was real output of the manufacturing, mining, and electric and gas utilities industries based on monthly reports for physical units. I pay the Fed (with my taxes) to get data "on physical products, such as tons of steel or barrels of oil... ...from private trade associations and from government agencies". More method description info here. Graphs and numbers here.
Sure, I know the Fed isn't perfect, and I'll admit that it was the best I was able to get a hold of on short notice. Please show us what you're using and we can compare. It would be even better if you had stuff going back to say, 1920 --then we could check everything out better, but what's important is just show us what you got so we can be on the same page in the hymnal on this.
We produced $2.2 billion on machine tools in 2003. I'm sure in war time we could boost that number. Aren't you?
I work in the machine tool industry. The problem is lack of skilled machinist. As manufacturing jobs are offshored and manufacturing jobs decrease each year in this country the result is people are no longer interested in entering the skilled machine trades. It takes on average, after trade school, 15 years for the average person to become what I call a competant and skilled machinist. A person can watch a video or read a book 500 times on doing a procedure but until it is actually done hands on, correctly, it does not mean didly squat.
CNC machines can and have helped production requirements but you still need the competant machinist to design the initial part or tooling and set up the jigs and fixtures(many times more complicated than the part itself)
Yes, we could boost production if a major war broke out today but at my place of employment the average machinist is probably in his late 50's or early 60's. Not good.
We are 10 machinist down at this point but they are not to be found.
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