Wake up America

U.S. must prepare for day of reckoning
By Jack Davis

Asian leaders who dupe our leaders and take advantage of our free trade policies with their predatory trade policies are draining the United States of its economic wealth. The communist Chinese leaders take offense to our superpower status and show hostility to our naval fleet in oceans bordering their shores.

China does not have to fight a war to have the fleet go home. It is much easier and less costly to mislead and deceive our government officials into making decisions that destroy our wealth-producing manufacturing capacity. Cheap labor, the visions of large markets and the greed for profits have seduced our transnational corporate owners.

They outsource labor, capital, technology, research and development, manufacturing know-how and trade secrets. They are dismantling our wealth-producing industries. These owners and managers have no loyalty or allegiance to the United States. As our economic strength declines, so will our Navy’s presence in the Pacific and our ability to defend our country.

The Chinese already have accomplished so much economic damage, it is dangerous and frightening.

We had a total trade deficit of $764 billion in 2006 — a new record. With China, the trade deficit was $233 billion — the largest ever with a single country. For the last five years, the U.S. trade deficit with China has increased by 20 percent each year.

Trade is necessary for America to prosper, but it must be balanced trade. Our total national debt is $9 trillion. About $5 trillion is owed to foreign countries and $1.3 trillion of that to China. All three numbers are pointing to economic crises.

The United States is living beyond its means — borrowing $2 billion a day from foreign countries to maintain our standard of living.

A nation with a large trade deficit is similar to a person living above his means. If you have a successful career but lose your source of income, you still may have credit available on credit cards and ownership in your home and car. Thus, you can continue to maintain your standard of living for a while by increasing debt on your credit card or refinancing or selling your home and car.

But just as a person cannot continually increase debt, neither can a nation. The key difference between a nation and a person is that a nation can print money and delay the day of reckoning. Eventually, foreign countries will not accept pieces of paper with pictures of our past presidents on them of decreasing value for their products or in payment of debt.

The U.S. dollar in the last seven years has lost 50 percent of its value in relation to the euro and will continue to decline in value. At some point, the U.S. dollar as the world’s reserve currency will be replaced.

In addition to the $5 trillion we owe foreign countries, they also own or control more than 8,000 U.S. companies with a value of $8 trillion. Many of these companies were bought with the intent of gaining global control of key technologies and raw materials needed to produce advanced weapons, such as airplanes, computers, satellites and intercontinental ballistic missiles.

When blindly following the ideology of free trade, many Americans fail to see the connection and damage caused by the predatory trade policies that result in huge trade deficits and a huge national debt — a portion of which is owed to foreign countries.

Most Americans believe we are a superpower. It is only our military that is a superpower. Our economy is second- or third-world class. Most Americans don’t see or understand the emerging economic disaster.

Our government officials continue to encourage companies to offshore research and development, engineering and manufacturing.

The Wall Street Journal reported on Dec. 20 that the U.S. Treasury Department once again declined to designate China as a currency manipulator. All of the numbers indicate the yuan is 20 percent to 50 percent lower than its true market value when compared to the U.S. dollar. This is no accident. The Chinese are currency manipulators. This provides exports from China with large price advantages when competing with U.S. companies. This causes many U.S. companies to fail or be so weakened they permit foreign companies to buy them at a large discount.

China also promotes exports and discourages imports. It keeps wages low, rebates value-added taxes on its exports and charges value-added taxes on imports. It counterfeits and steals copyrights, trademarks and patents. It provides domestic industries with local tax incentives, offers special financing and charges tariffs on imports. It targets specific industries to monopolize.

No U.S. company can compete with these predatory practices. All of the above violate the World Trade Organization regulations. Even with what appears to be numerous violations, the U.S. Treasury and Commerce departments fail to take action against China.

American politicians made a terrible mistake in 1996 when they voted to join the WTO. They gave Third World country bureaucrats control of U.S. international commerce.

It is very difficult for the United States to win a case at the WTO. Most foreign Third World country bureaucrats dislike the United States. Also, many are as corruptible as the bureaucrats at the United Nations have proven to be. The chances of the U.S. getting fair treatment at the WTO are remote.

The U.S. Constitution states: “Congress shall have the power to regulate commerce with foreign nations.” But Congress gave control of foreign commerce to the WTO. Congress must do what the people elected its members to do, and what they were sworn to do — “regulate commerce with foreign nations.”

Congress must immediately cancel U.S. membership in the WTO. If it doesn’t, Asian countries will continue their predatory trade practices, continue destroying or buying U.S. companies, continue financing our debt, and continue buying our country. They will do this until we have nothing left to sell — no industries, no real estate and no natural resources.

The U.S. government will then have additional trillions of dollars of debt. If a government could be bankrupt, it would be. Social Security, Medicare and pensions will be without funds. All of our wealth-producing industries, mines and farms will be foreign-owned. The government’s ability to tax will be significantly reduced along with its ability to defend our country.

The career politicians we sent to Washington still don’t see or understand the coming economic crisis. None of the leading presidential candidates from either party seems to be aware of the coming economic crisis.

Wake up America, our day of reckoning is coming.

Jack Davis is the founder and owner ofI Squared R Element Co., the largestU.S. manufacturer of heating elements.He has 53 years of experience in manufacturingand foreign commerce.

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Posted January 23, 2008 05:37 PM
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