A Globalist Waterloo

Is President Obama about to trigger a revolution that will put an end to the globalist campaign to eradicate the American middle class? There has been very little news coverage of the president’s new initiative to replace American truckers with Mexican drivers. After all, such things are not proper topics of conversation in polite globalist society, but this is a potentially explosive issue.

There has been wrangling over Mexican truckers since NAFTA went into effect in 1994 with no political fallout. So, you might be thinking that it is a non-issue. But things are different now. We have 43 million people on food stamps and a massive unemployment problem. And that is a powder keg just waiting for a spark.

Of course, Americans workers have barely objected to being replaced by foreigners. As we speak, information-technology (IT) workers at Xerox are docilely training their Indian replacements. Perhaps they are content with their severance packages, which must be very generous considering the hit to 4Q earnings that Xerox just took.

But would truckers react the same way? Suppose a CEO of a trucking company sauntered into a Teamsters meeting, lighted a cigar with a flaming $100 bill, and announced:

“Listen up boys. Your Mexican replacements are waiting outside. You will teach them how to drive your rigs, and then you will be fired. The Mexicans will work for $2 per hour and I will purchase another Learjet while you feed your children with food stamps.”

Would the CEO get out of the room alive? And where might that cigar end up?

Of course, it wouldn’t happen that way. Mexican trucking companies would be allowed to operate in the USA. American companies would lose market share and steadily lay off drivers. But you get the idea.

We know from history that truckers are much different from IT workers, call-center operators, and factory workers. Remember the New York Daily News strike back in the 1990s? There were over 500 incidents of violence, including many bombings of delivery trucks. And trucking is no small industry; there are about 3.4 million truckers in the USA.

And that’s why this particular part of NAFTA has never been implemented. President Obama could order it into effect right now. But he’s afraid, just like presidents Bush and Clinton were. But that doesn’t mean that Obama won’t go through with the pogrom. It only means that he will make sure that he won’t take all the blame if things get ugly. So, he will seek to line up political allies, and leave the dirty work to his new chief of staff, Bill Daley.

It is Daley’s appointment that indicates how determined Obama is on this issue. Daley worked for President Clinton and helped to ram NAFTA through Congress in the first place.

Obama is getting pressure from farmers because Mexico has put retaliatory tariffs on US food exports, so this is a farmers vs. truckers battle. However, Obama will have support from the big companies because eradicating the truckers will be seen as the next driver (ha, ha) of “record” corporate profits.

Replacing American workers with foreigners is, after all, our official national business model.

And it isn’t going to be changed unless the American people insist. It’s like the Vietnam War; it might still be going on today, enriching the military-industrial complex, if Americans hadn’t taken to the streets to put an end to it. And it didn’t really take that much resistance. A few burned draft cards, a few hippies shot at Kent State. It wasn’t really a revolution, but an intensification of our democratic process.

So, will the Teamsters strike? Will they fight? They certainly have in the past, and they are probably very angry right now. They had been Republican allies, but supported Obama’s campaign, and they must feel betrayed now.

On the the other hand, American truck drivers are an aging population. Maybe they don’t have much fight left in them, and can be bought out just like those IT workers at Xerox.

The trucking industry says that there is driver shortage. But have you ever seen empty shelves at your grocery store? No, you have not. There may be a shortage of truckers willing to work for peanuts, or maybe the trucking companies are just trying to scam some more “training” dollars out of the Department of Transportation, but I’m pretty sure that we don’t need Mexicans to drive our trucks.

I don’t now how this will play out. But I do think that we might be approaching the limits of the American people’s tolerance for “free trade” induced poverty, and I think that Obama would be wise not to push that limit.

How do you say, “10-4 good buddy” in Spanish?

The War on Terror is Over

I’ve watched a lot of video of Arab rioting recently, and I haven’t seen a single American flag being burned. Only a few years ago, many of these rioters would have instead joined the jihad against the USA in Iraq and Afghanistan.

Today, it looks like anti-American fervor in the Arab world has vanished.

That’s remarkable.

Of course, all wars eventually come to an end, and I think the War on Terror is nearing its conclusion. We are tired of fighting them, and they are tired of fighting us. And that is very good news indeed.

But what’s even more remarkable is that these riots have not exhibited fundamentalist Islamic fervor. We have helped to prop-up most of these Arab dictators, but we aren’t getting blamed for it.

No burning American flags. No Islamic revolutionary fervor. Could it be that the Arab people are rejecting the Islamists along with their US-allied dictators? If so, and new anti-American regimes are not established, then we can plausibly declare victory in the War on Terror.

IWM Down, FDI Up

The IWM dropped 2.5% today, but its Fractal Dimension Index went up (red arrow on chart). Let’s see why that is (click chart to enlarge):

As you can see, the IWM fell to the bottom of a trading range (green lines) which is six weeks old now. So, the FDI went up, meaning that the trading range got longer in the tooth. The FDI doesn’t tell us which way the market will go. Rather, it tells us when prices have been making unusually long trends or ranges.

So, the IWM is likely to break out of this range soon. Could be up, could be down. Maybe it will depend on whether or not the Suez Canal is closed. Obama hasn’t given Mubarak any support, so maybe the embattled dictator will shut it down just for spite.

On the other hand, Friday’s sell-off looked contrived to me. Yes, Egypt is the center of the Arab world, but the market was not alarmed earlier in the week. On Thursday, I was surprised by how little video CNBC was showing of the rioting. It was almost as if they were downplaying it so that certain players could get short positions on. Then on Friday – BAM!!! – non-stop Egyptian riot videos all day long.

So, the question is, did the cabal take profits? Or will they keep the bull-squeeze going next week?

Fractal Stock Grapher – Beta Release

Many people have asked me for the Fractal Dimension Index indicator that I have for TradeStation. So, I wrote a desktop app that anybody can use. Here’s what it looks like (click picture to enlarge):

Notice that the IWM is approaching an end-of-range signal. The last time it gave such a signal was before it blasted out of its trading-range in early December.

You can download the program on the Fractal Stock Grapher home page.

If you have suggestions, now is the time to get them in. One of the things that I’m planning to add is automatic reformatting of Yahoo data so that you don’t have to do it in Excel. This is a very basic release with pretty much nothing more than the core functionality.

A Couple of Knuckleheads

At 1:15 into the video below, you can see Erin “Beijing” Burnett and Jim Cramer exclaiming over the “fact” that Ethan Allen makes furniture in the USA and exports it to China:

But a big chunk of the production of that furniture is being done at Ethan Allen’s new Silao, Mexico plant. The plant was doing leather “cut and sew” in 2007 when Ethan Allen bought it, so I assume that it is responsible for much of the customization that Cramer was raving about.

Looking at the Ethan Allen Wikipedia page, it looks like they have closed four plants in the USA, and have three left.

This brings to mind the episode from last year when Burnett thought that the US economy would benefit from exporting iPads. She had no idea that a vast army of Chinese workers makes all of Apple’s products, as well as just about every other electronic thing. She appears to be equally clueless about how much of American industry has been moved to Mexico.

Note to Burnett: If you keep this up, I’m going to change your nickname from “Beijing” to “Bubble Head.”

Immelt is Jobs Czar??? Of Which Country?

President Obama has appointed General Electric CEO, Jeffrey Immelt, to chair the new “Council on Jobs and Competitiveness”. This is like putting the fox in charge of the hen house. In 2010 alone, GE exported seven facilities that I know of:

Plant Name City State Reason
Mahoning Glass Niles OH Replaced production with Chinese imports
GE Euclid OH Production moved to Hungary
Dothan Motor Plant Dothan AL Production moved to Mexico
GE Bloomington IL Production moved to Mexico
Fabricated Parts Group Morrison IL Production moved to Malaysia
Motor Control Switch Group Morrison IL Production moved to China
GE Motors Owensboro KY Production moved to Mexico

Source: US Department of Labor.

This appointment, along with that of William Daley and his pet project to replace American truckers with Mexicans, shows that President Obama has declared war upon the American worker. It’s an amazing thing to see a Democratic president doing. Obama is a smart politician, and he obviously thinks that exporting even more jobs will help him get re-elected in 2012. But could he possibly be right about that?

Is Japan in War Mode?

I was startled recently when Toyota announced a breakthrough in electric motor design that will allow them to eliminate the use of rare-earth minerals and escape the Chinese death-grip. It was so fast. It has only been a few months since Japan’s conflict with China, and here they are already making a breakthrough.

The Japanese are plenty capable, so I am not surprised that they could do such a thing. But that isn’t the point. It’s all about the speed. One thing that we know from history is that scientific breakthroughs speed up during wartime. You don’t get a Manhattan Project during peacetime, right?

This breakthrough is evidence that a sense of war-time urgency has developed in Japan. And when you add that to the fact that Japan is beefing up its military presence in its disputed islands, things are starting to look interesting. The next time a Chinese fishing boat wants to ram a Japanese ship, they just might be taking on a naval vessel, rather than a coast-guard ship.

The Japanese have been pacifists since World War II, have been suffering a “Lost Decade”, have an old population, don’t have nuclear weapons, and have been surpassed economically by China. But does that mean that they are helpless? Not hardly. And if they are in war-mode, then the Chinese will have their hands full. While it is very unlikely, I wouldn’t be surprised by a Pearl Harbor style attack on China.

The Japanese were dependent on US oil in 1941 when we cut off their supply. Today, the Japanese are dependent on Chinese rare-earth minerals. It’s not quite the same thing as oil, but it is a very big deal. Here’s what The Economist sez:

“Japan imports more rare earths than any other country. Its electronics, fine-chemicals and car industries rely on them. A disruption of supply could paralyse the Japanese economy as much as an oil embargo or food blockade.”

Prior to Japan’s dispute with China over rare-earth minerals, the Japanese were pushing hard to close the US military bases on Okinawa. Not any more. If the Chinese had played their cards right, they may have been able to maneuver Japan into a more neutral position.

Instead, the Chinese provoke Japan. And they do so at the same time as they provoke the USA with such things as their new DF-21D missile. They act as if they are eager for a two-front war.

Like I have been saying, the communist regime in Beijing is not very well thought out.

Here’s an article on Toyota’s announcement.
Here’s an article on Japan’s military measures aimed at China.
Here’s the Wikipedia article on the Pearl Harbor attack.

Taxes Cut, Revenues Rise

2011 starts off with a substantial tax cut, but guess what? The Treasury Department reports higher collections year-over-year. This table shows the first 12 days of last year compared to the first 12 days of this year. Look down at the bottom row; revenue is up 1.56%:

Federal Withholding Tax Collections (millions)

Day Date Tax Total Date Tax Total %
1 2010-01-04 26,568 2011-01-03 25,611
2 2010-01-05 4,010 2011-01-04 3,823
3 2010-01-06 9,422 2011-01-05 9,816
4 2010-01-07 2,137 2011-01-06 2,114
5 2010-01-08 6,441 2011-01-07 5,954
6 2010-01-11 10,856 2011-01-10 10,498
7 2010-01-12 1,757 2011-01-11 2,243
8 2010-01-13 5,554 2011-01-12 6,132
9 2010-01-14 1,975 2011-01-13 2,216
10 2010-01-15 7,597 2011-01-14 6,091
11 2010-01-19 17,054 2011-01-18 19,645
12 2010-01-20 3,191 96,562 2011-01-19 3,930 98,073 1.56

How is this possible? Easy: there are a lot more people working now than there were a year ago. The BLS didn’t make up all those job-creation numbers after all, as the zero-hedgers would have you believe.

And this performance has nothing to do with Laffer Curve/Trickle Down. It just so happens that taxes were cut while the economy was already expanding. The same thing happened in 2003 after the second tranche of the Bush Tax Cuts – the economy was already expanding.

However, employers have until January 31st to implement the payroll tax cut. So, it is possible that we aren’t seeing the full effect yet. Subscribers to The Daily Jobs Update can follow along where this withholding tax table is updated every business day.

China Targets America

Every time I turned on CNBC today, there was Erin “Beijing” Burnett supporting China’s military build-up. At 4:17 into the video below, you can see her say:

“Isn’t it fair to say that…as a country rises, it wants to extend its sphere of influence. It makes sense that a country like China wouldn’t want US submarines cruising right off of its coast. That’s only normal, natural, anybody would be that way, wouldn’t they?”

The answer to Burnett’s question is: no, not everybody would be that way. Do you see Canada or Australia developing weapons to sink aircraft carriers? What about larger countries like the UK, Germany, or Japan? Are they using the wealth they have gained through trade with the US to target the USA?

No, they are not, because they are allies.

China’s military is preparing to fight the USA because China is not an ally any more than are North Korea, Iran, Syria, or Venezuela. Even a CNBC anchor ought to be able to figure that out. Speaking of which…

Larry Kudlow has switched sides on China. Only a couple of months ago, he was fighting tooth-and-claw against the Fed on behalf of Beijing. He was literally trying to hand US sovereignty over to the Chinese. But Kudlow switched sides as soon as budget cuts for the Department of Defense became on issue. Kudlow couldn’t get his war on Iran, and now he is campaigning for a war on China.

And Beijing should be worried about that. China is making lots of money with the multinationals in the sweat-shop trade right now. But, of course, many of those very same multinationals are members of the USA’s military-industrial complex. And if they calculate that they can make higher profits warring on China than they can slaving with China, then watch out.

Now that Kudlow is fighting on China, he finally had Donald Trump on his show. I got the impression that Kudlow was interviewing Trump on behalf of the neocons to see if Trump would make war on China without interfering with sweat-shop profits. But Trump just brushed that BS aside and was very inspiring. He says that he can turn the tables on both the Asian mercantilists and OPEC, and he is very convincing. I think he can do it. Listen to him and see if you don’t agree:

Trump is right. The USA has all the cards, and we will hold all the cards for as long as our consumer economy is so much larger than that of any other nation. Not to mention the US Navy’s control of all the world’s oceans, and thus, the global economy which does its business by cargo ship. Trump in Twelve!

There is No Substitute for Steve Jobs

Steve Jobs is a phenom. Nobody can even come close to replicating him.

Period.

Don’t let anybody convince you otherwise.

How will Apple do without Jobs? I’m sorry, but it’s going to be Newtons as far as the eye can see.

I kid! I kid! Jobs has built an incredible company filled with talented people. I won’t be the least bit surprised if Apple continues to do well. But I was a victim of John Sculley’s Newton a couple of decades ago, and I still have a sour taste in my mouth.

I was so disgusted with the Newton that I sold to another programmer in the office for whatever cash he had in his pocket. To me, it was about as useful as a rock.

I have been a Mac user since the very beginning. The very first Mac II sold in the city of Las Vegas landed on my desk in 1987. It replaced a Mac Plus where I wrote database apps in Omnis 3, and did desktop publishing with Aldus PageMaker and a LaserWriter.

You should have seen it: I had a miniature 9-track tape drive attached to the Mac II so that I could send data to larger companies with mini-computers and mainframes.

I switched to Windows in 1996 when it looked like Apple would go bankrupt. However, there was never a time where I didn’t have a Mac, and I have two attached to my LAN right now. My primary system is still a Windows box because there is no Mac version of TradeStation, amongst other reasons.

So, I have seen Apple with Steve Jobs, without Steve Jobs, and then with Steve Jobs again. And there was a big difference. But I will say that things are different this time. Apple is much huger than it was in 1985 when the company fired Jobs. And that means that Apple can get the best talent in the world to be their next CEO if they decide to look outside the company.

Hu Needs a Clue

Chinese “Paramount Leader” Hu Jintao just stated that:

“[U.S. monetary policy] has a major impact on global liquidity and capital flows and therefore, the liquidity of the U.S. dollar should be kept at a reasonable and stable level.”

He is requesting that the Fed halt QE2 because it is causing problems in China.

Note to Hu: We have an expression here in America: pound sand.

At last year’s G-20 summit in South Korea, President Obama and Treasury Secretary Geithner asked the Asian mercantilist countries for assistance on exchange rates and trade deficits. No cooperation was forthcoming. None whatsoever.

And now the Paramount Leader is asking us for a favor? Are you kidding me? It’s time to start looking at these Asian countries as an enemy cartel, just like OPEC.

In other news: I wrote a piece titled: “The Creative-Destruction Deficit” for the Economic Populist. You can read it here.

China Mocks America

Much has been said about the “surprise” test flight of the new Chinese stealth fighter, but I think everybody is getting it wrong. I don’t think that Hu Jintao was “out of the loop” or that the Chinese military was trying to upstage him. Rather, they were mocking US Secretary of Defense, Robert Gates.

Gates had previously said that the Chinese would take longer to develop a stealth fighter. When the Chinese leaders “learned” of the test flight during their meeting with Gates, they acted all surprised. Just imagine Jintao slapping his forehead and exclaiming to Gates:

“Oh my god! Look at that! We Chinese made a stealth fighter! How did that happen??? Is it possible that we Chinese are not as backward as you American think?”

Get it? Jintao brought Gates to China at that specific time just so he could mock him to his face.

Historically, getting in the face of the US Department of Defense is not a healthy thing to do. Just ask Saddam, or the four members of Al-Qaeda left in Afghanistan.

I am continually amazed by the chutzpah of these Chinese communists. People think that this currency war is bad for China, but this is nothing. While food riots could bring down the Beijing regime, it is only our first level of pressure. If we escalate to tariffs, that would cause instant, mass chaos in China. And if we went to the next level, interdiction of China’s oil imports from the Persian Gulf, China would be a smoking crater in no time at all.

Here is China, with scores of ships sailing in and out of its ports around the clock via sea lanes controlled by the US Navy. And they mock the US Secretary of Defense to his face. Amazing…

Tunisia vs USA

Will the USA experience Tunisia-style riots and regime collapse? Probably not, but there are some disturbing parallels:

According to DEBKAfile:

“The unrest was kicked off three weeks ago by graduate students unable to find suitable jobs.”

Here in the USA, we have the “Boomerang Kids”. They are the 85% of 2009 college graduates who moved back in with their parents.

“[Tunisia’s] official unemployment figure stands at 14 percent, but according to economic experts it is closer to 25 percent.”

Things aren’t quite so bad here, but according to the latest jobs report, “Teenagers (16 to 19 years)” have a Tunisia-style unemployment rate of 25.4%.

“…the protesters, many of whom belong to Tunisia’s large middle class…”

Here in the USA, we are systematically shrinking the middle class via offshoring. It’s official government policy. So far, the American middle class is “going quietly”. So far…

Lucky for us, food prices are not a problem, and the economy definitely improved in 2010. But lets pray that it keeps improving in 2011 because the number of people on food stamps is still growing, and their ranks dwarf the entire population of Tunisia:

Total Population of Tunisia: 10.4 million
Americans on Food Stamps: 43.2 million

CARnage

These Americans trying to drive on an icy hill had it easy compared to the carnage in Australia below.

Make sure to see the conclusion at the very end of the video:

Hat tip to my colleague, Larry.

Copy Bears

On October 16, 2010, I began an anti-China rampage, and wrote:

“Think of China’s currency peg as a protectionist blanket that automatically raises the price of EVERY product and service that the USA seeks to export to China. The peg, in fact, is the most protectionist policy on Earth.”

On January 2, 2011, the cartoon bears repeated my meme. At 1:59 into the video below, you can see the Chinese bear say:

“…our currency intervention the single-most protectionist policy in history of world.”

Those copy-cat bears copied me. But who can resist? Who writes better memes than I do?

In any case, I will have even more to say about China soon in “honor” of Paramount Leader Hu Jintao’s visit to Washington next week.

Wasn’t Hitler called “the leader”? Just sayin’…

The China Plan

You’ve probably seen the video of the Chinese ghost mall by now. The most interesting part of the story is the explanation given for its failure: a bad location.

Why is it considered bad? Because it is located in an area where factory workers live. And there’s your trouble. What kind of idiots would pay workers $2 an hour, and then build the world’s largest mall for them to shop in, expecting vast sales?

The kind of idiots that run China, that’s who.

Of course, we are now on the “China Plan” of grinding wages down too. It’s all the rage, in fact.

QE Ain’t Done Until China Won’t Run

Back in the day, there was an expression to explain bugs in new versions of Microsoft DOS: “DOS Ain’t Done Until Lotus Won’t Run.” The idea was that Microsoft deliberately tried to cripple Lotus 1-2-3 in order to sell their own spreadsheet program, Multiplan.

Maybe it never really happened, and maybe the Fed is not trying to harm China with QE2.

But China most certainly is being harmed, and as I have written before, I think it all goes back to the G-20 Summit in South Korea last year. President Obama asked the Asian mercantilists to help him out with his unemployment problem, and they said no.

Now the USA is trying to “increase exports” and “stimulate its economy” with a monetary policy that is crushing those same mercantilists. And I expect it to continue until something pops in China.

I will write more about this new war with China soon. But don’t expect the Fed to end QE until China says “uncle” and lets its currency-peg go, or something very bad happens there; like food riots, a financial crisis, or a regime change.

In related news, how silly were the Chinese flying around in their new stealth fighter today as US Secretary of Defense, Robert Gates, was visiting?

Note to China: Can your new airplanes shoot down a tariff? We can crush you with the stroke of a pen! Bow to America!

China’s Suicide Bomb

China thinks that its new DF-21D ballistic missile can hit an aircraft carrier. Such a thing has never been done before. Cruise missiles, yes, but ballistic missiles, no. So, I will believe it when I see it.

But suppose that the Chinese are right. Suppose that they sink a US aircraft carrier, and succeed in taking control of Asian waters such that they are able to bring Japan, South Korea, Singapore, etc. into their orbit. Their navy couldn’t possibly secure the sea lanes all the way to Europe, so they would lose the two largest economies in the world (the USA and EU) as trading partners.

China’s new economic empire would be comprised of economies all geared to exporting to the USA and EU. What would they do then? Export to each other? How’s that going to work? It would be an instant catastrophe – a grand mercantilist meltdown.

Meanwhile, the USA and EU would boom because they would need to manufacture all the things that they have been importing from Asia.

Would China do something so stupid? Sure. Like I say, the Chinese communist regime is not very-well thought-out. It’s only a matter of time before it self-destructs.

They only way Beijing could make it work is if they were able to project power as the USA currently does. They would need to not only advance to California, but kick the door in once they arrived, and force us to take their exports.

Good luck with that.

The World’s Only Super Banana

While the USA is still the world’s only super power, we are also now what you might call a “super banana.” The number of Americans receiving food stamps is now 43.2 million, and that is double the combined total populations of the two classic banana republics: Guatemala and Honduras (click chart to enlarge):

Guatemala has a population of 13.3 million, and Honduras, 8.3 million. Combined total: 21.5 million.

The USA’s food-stamp population would rank at number 29 amongst the world’s nations, as we have just surged ahead of Sudan’s 43.2 million population. By landmass, Sudan is the largest country in Africa, and the tenth largest in the world.

The next chart compares our food-stamp population to selected countries:

Food-Stamps-Nations

Africa is famous for its starving masses, but our food-stamp population exceeds not only Sudan, but Kenya too. Canada is a G7 nation and the second-largest by landmass. We could blanket it with starving people.

President Obama is working hard to put even more people on food stamps with his South Korean trade deal, and his new Mexican trucker initiative. If he is successful, then we just might be able to move up three more notches, passing Columbia, Ukraine, and Spain in the 46 million area.

Note: See the long-term food-stamps charts here.

Jobs +103,000 – Food Stamps +289,737

The jobs report this morning showed that the economy created 103,000 jobs in December. However, today’s SNAP report showed that in the latest period, 289,737 people were added to the food-stamps program.

How is that possible? Easy. We have a growing population. The lucky new people get burger-flipping jobs, and the rest go on food-stamps.

That’s the bad news.

The good news is that the 289,737 food-stamps number is a huge improvement over previous months. (See the food-stamp charts here.)

Let’s hope that this trend continues. We now have a record 43 million people on food-stamps, so it’s still an appalling state of affairs.