Sunday, April 13, 2008

More confirmation that Obama's Fair Trade rhetoric is mere pretense

The following quote was reportedly said by Senator Obama at a San Francisco fundraiser:

You go into these small towns in Pennsylvania and, like a lot of small towns in the Midwest, the jobs have been gone now for 25 years and nothing's replaced them. And they fell through the Clinton administration, and the Bush administration, and each successive administration has said that somehow these communities are gonna regenerate and they have not.

And it's not surprising then they get bitter, they cling to guns or religion or antipathy toward people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.

For more about Obama's phony pretense that he would actually do something about the US loss of industry to foreign government predations see our March 3 commentary Obama's NAFTA Hoax.

It is also worthwhile to observe that all of the presidential candidates, especially the Democrats, are being strongly supported by the Wall Street banks. Here's a selection from an April 11 Wall Street Journal article:

The race for president follows [the pattern of more Wall Street contributions to Democratic candidates than Republicans], with Democratic candidates Sen. Hillary Clinton of New York and Sen. Barack Obama of Illinois greatly outraising Arizona Sen. John McCain, the pending Republican nominee. Sen. McCain raised about $3 million from employees of securities and investment firms through February compared with $6.6 million for Sen. Clinton and $6.7 million for Sen. Obama. But Sen. McCain may be able to close the gap: According to names released by the campaigns and gathered by, a research Web site maintained by the nonprofit, nonpartisan group Public Citizen, Sen. McCain counts an army of Wall Street executives among his most prolific fund-raisers, suggesting he will be able to tap them in the future.

At the same time that the Democratic candidates are receiving heavy contributions from Wall Street banks who want increased inflows of foreign savings, they are being supported by industrial unions who want to keep the jobs that are being destroyed by the inflow of foreign savings.

I don't think that the industrial union leaders understand what is happening, but the Wall Street banks do. As we noted in our commentary It's a Wonderful Life revisited: Morgan Stanley just sold out to Potter:

At the short-sighted urging of Treasury Secretary Donald Regan back in 1984, the withholding tax on interest earned by foreigners was eliminated so that the United States could get more foreign loans. At the hearings on Regan's proposal, unprincipled Morgan Stanley, represented by John C. Evans, endorsed Regan's proposal, while their responsible sibling Morgan Guarantee, represented by Roberto C. Mendoza, warned that it would cause trade deficits. Bob McIntyre of Citizens for Tax Justice went even further, pointing out that Regan's proposal would "cost thousands of Americans their jobs in export- and import-sensitive industries." He predicted that the United States "will soon move into a position of being a net international debtor – along the lines of Third World countries." McIntyre was correct. The United States became a debtor nation in 1985 and has since lost industry after industry to these foreign loans.

Those union leaders who don't understand the connection between foreign savings inflows and loss of U.S. industry, should read union lobbyist Bob Mcyntire's 1984 testimony. He explained it succinctly in this passage (quoted from page 45 of Trading Away Our Future):

(I)n deciding what to do with the dollars we are sending overseas to buy imports, foreigners have two choices: They can either buy our goods or they can buy our assets. That is, they can either spend dollars on the products that Americans make or they can lend dollars back to us...


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