Return of the Great Depression?

Status
Not open for further replies.

darkdog

New Member
Joined
Jul 1, 2007
Messages
1,354
Reaction score
0
I saw this today and it alarmed me. I'm afraid history is repeating itself.

US-EU trade war looms as Barack Obama bill urges 'Buy American'

The prospect of a trade war between the US and Europe is looming after "Buy American" provisions were added to President Barack Obama's $820 billion (£573 billion) stimulus package.

The EU trade commissioner vowed to fight back after the bill passed in the House of Representatives late on Wednesday included a ban on most purchases of foreign steel and iron used in infrastructure projects.

The Senate's version of the legislation, which will be debated early next week, goes even further, requiring that any projects related to the stimulus use only American-made equipment and goods.

The inclusion of protectionist measures has quickly raised hackles in Europe.

Catherine Ashton, the EU trade commissioner, said: "We are looking at the situation. The one thing we can be absolutely certain about, is if a bill is passed which prohibits the sale or purchase of European goods on American territory, that is something we will not stand idly by and ignore."

Despite the parlous state of the US economy, some major American firms, including General Electric, are also opposed to the Buy American stipulations, fearing reprisals from overseas and further damage to the global economy.

Bill Lane, government affairs director for Caterpillar, which has just laid off nearly a fifth of its 112,000 work force and is the tenth largest US investor in Britain, warned it was a dangerous step.

He said: "We are the first to recognise that if the US embraces Buy American then the whole notion of buying national will mestastasize and limit our ability to take part in overseas projects.

"We are students of history. A major reason a very deep recession turned into the Great Depression was the fact that countries turned inward."

Countries in Europe and Asia are planning major injections of cash into infrastructure to boost their economies, and US firms don't want to be left out of potentially lucrative contracts.

"We would be a primary beneficiary of any type of infrastructure project in the US, but at the same time we are one of the country's largest exporters," he added.

Some industrial giants also question whether the Buy American laws would contravene US obligations reached in various World Trade Organisation agreements.

They also point to the 1930s as a lesson in the perils of protectionism. Congress passed the Buy American Act in 1933, allowing the government to favour US products for government contracts. Restrictions were eased in 1982, but the plans currently working their way through Congress would bring the new law close to its forebear of 75 years ago.

Foreign steel would only be allowed if using US steel drove up the cost of a project by more than 25 per cent, while the bill passed on Wednesday required that the Transportation and Security Administration use American-made uniforms.

Supporters of Buy American argue that tighter measures are required to protect American jobs and point out that the US steel industry is losing out to Chinese imports subsidised by Beijing.

"As we are losing jobs in record numbers, we obviously need to devote these funds to direct creation of American jobs," said Sherrod Brown, a senator from Ohio, part of the struggling industrial heartland.

Unemployment in his state has risen to 7.6 per cent, up from 5.8 per cent in December 2007.

"To do that, we must ensure that federal funds are used to buy American products and to help promote manufacturing in our country. Ultimately I want taxpayers to know where their dollars are being spent. Are they being spent on American products or products coming from Germany or Mexico?"

Mr Obama has sent mixed signals on free trade throughout his campaign and the early days of his presidency. He has argued that the North American Free Trade should be recalibrated in favour of American workers, but has stressed the need for a co-operative international approach to the economic crisis.

Though fellow Democrats in the house and senate drafted their versions of the stimulus bill, the new president and his advisers had major input and influence over the contents.

The bill failed to win a single Republican vote in the house, despite a major charm offensive by Mr Obama, which included a visit to Congress and an invitation to Congressional leaders to drinks at the White House.

It passed thanks to the Democrats' healthy majority, but the senate bill could see a tougher fight. Each rendering of the bill will be merged at a process known as conference, before being returned to both chambers for a new vote. The president has asked that a final bill be presented to him by February 13.
I posted about the abomination that is the "stimulus" bill here: http://www.alldeaf.com/war-political-news/61347-stimulus-boondoggle.html. I worry the effects will be similar to the Hawley-Smoot tariffs. For those who have seen Ferris Bueller's Day Off (anyone? anyone?), you may remember the scene where Ben Stein talked about the Hawley-Smoot tariffs in the most boring economics lecture ever. Here's a recap:

After the stock market crash of October 1929, unemployment rose to 9% by December. The Hawley-Smoot tariffs were meant to keep out foreign competition and protect American jobs. Economists warned against it since it would lead to trade wars and decrease exports. However, it was politically popular, so it passed in June 1930, even though unemployment dropped to around 6.5% by that time. Within months, the unemployment rate went back up to 10% and by 1932, it exceeded 20%. FDR's interventions in the economy thereafter kept it high and prolonged the depression. Notice how the "solutions" were far worse than the original crisis. The original crisis yielded a 9% unemployment rate at its worse. The solutions yielded unemployment rates there were sustained above 20% for years. Barack Obama has been compared to FDR. I hope that's not true, but I don't like what I'm seeing.
 
Last edited:
So... you guys think a trade war is acceptable given the current situation and history?
 
I already smelled the "Great Depression II" No question.... History has and WILL repeat no matter how hard we tried to avoid.

I also predicted that we are into serious change, and I do not see much choices here.
 
They also point to the 1930s as a lesson in the perils of protectionism. Congress passed the Buy American Act in 1933, allowing the government to favour US products for government contracts. Restrictions were eased in 1982, but the plans currently working their way through Congress would bring the new law close to its forebear of 75 years ago.


urgh, protectionism is what we need NOW, and reel back the corrupted greed of those hell bent on taking advantages of the outsourcing which has been a MAJOR factor contributing to the economic shits we in right now

and oh, return of the great depression......ah well its due to the oil crash
they just not saying it, for sake of keeping people calm.......
 
Problem with America is that she isn't being financially responsible when it comes to paying her bill.....
 
Problem with America is that she isn't being financially responsible when it comes to paying her bill.....

neither is former president bush after creating the highest national debt in american history.
 
Problem with America is that she isn't being financially responsible when it comes to paying her bill.....

I am responsible about paying my bills so dont blame me! :lol:
 
They also point to the 1930s as a lesson in the perils of protectionism. Congress passed the Buy American Act in 1933, allowing the government to favour US products for government contracts. Restrictions were eased in 1982, but the plans currently working their way through Congress would bring the new law close to its forebear of 75 years ago.


urgh, protectionism is what we need NOW, and reel back the corrupted greed of those hell bent on taking advantages of the outsourcing which has been a MAJOR factor contributing to the economic shits we in right now
And there was a great deal of economic pain for years after 1933.

it's about time our citizens start buying american. in fact, it's long overdue.
That's what they said before the Hawley-Smoot tariffs were enacted, and what a disaster that turned out to be. If this leads to a trade war, that means Europe won't import as much of our stuff, and that hurts our economy and our workers. Furthermore, the "Buy American" clause drives up our costs since the option of using cheaper foreign materials is taken off the table. The fact is that open trade has always benefited both sides. It's not a zero-sum game where one side loses what the other side gains. It's a win-win game.

neither is former president bush after creating the highest national debt in american history.
Yes, he did spend too much. He ran as a conservative, but did not act like it when it came to spending for which he got a lot of flack from his supporters.

If you're going to stick to principle, then you have to vehemently oppose Obama and the Democrats for now creating deficits several times larger than what Bush ever created.

I am responsible about paying my bills so dont blame me! :lol:
Keeping our own financial house in order is very important and commendable, of course. However, we also have a responsibility to throw out and refuse to elect Santa Claus politicians who promise us endless goodies with only lip-service to the costs. We need to stop demonizing those who want to cut programs and entitlements and painting them as callous and hateful towards whoever the programs and entitlements are supposed to benefit.
 
darkdog,

how can you say that obama created a larger deficit than the one bush created? bush was the one who enacted measures to spend $12 billion/month on the iraqi war. besides, obama hasn't been in office long enough to create any kind of a deficit.
 
darkdog,

how can you say that obama created a larger deficit than the one bush created? bush was the one who enacted measures to spend $12 billion/month on the iraqi war. besides, obama hasn't been in office long enough to create any kind of a deficit.
I explained that in the thread I linked to in post 1.
So this stimulus package is currently $825,000,000,000 ($825 billion) and growing. The estimated 2009 deficit is $1,200,000,000,000 ($1.2 trillion). Oh, and that figure does not include the stimulus package. President Bush got a lot of criticism for excessive spending and running up the debt, and rightfully so. However, his largest deficit was $455,000,000,000 ($455 billion). We're talking about nearly triple that before this "stimulus".
The source on that is the Congressional Budget Office (CBO). You can read more about it here: Main Homepage Feature: January 7
 
darkdog,

how can you say that obama created a larger deficit than the one bush created? bush was the one who enacted measures to spend $12 billion/month on the iraqi war. besides, obama hasn't been in office long enough to create any kind of a deficit.

Doncha just love amateur political forecasters?:giggle:
 
"So this stimulus package is currently $825,000,000,000 ($825 billion) and growing. The estimated 2009 deficit is $1,200,000,000,000 ($1.2 trillion)."

this hasn't even been passed yet, so how can you call it a deficit? :roll:
 
i bet if obama read some of the posts in this thread, he'd enjoy a good laugh.
 
it's about time our citizens start buying american. in fact, it's long overdue.

try telling that to the corporate fuckers in USA...... they knew all about it and yet they dont give a shit, all they care about its MORE PROFIT to themselves and too bad about even their own country.......
 
try telling that to the corporate fuckers in USA...... they knew all about it and yet they dont give a shit, all they care about its MORE PROFIT to themselves and too bad about even their own country.......

exactly.

unfortunately, all of that started back in the 80s when corporations and the like took center stage. it's too bad things haven't changed, but instead, have become worse.
 
I want HIGH tariff on all imported goods, except for some cases and we don't need buy any stuff from China to boost their country, our dollars are weak and need work to strength our currency.

I wish that congress need lift the ban on oil drilling to increase of domestic oil and find other energy in combined then would reduce of foreign oil from other countries, especially greedy OPEC.
 
Status
Not open for further replies.
Back
Top