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Earlier conservative press reports-6

This is a relatively new website and “the conservative financial press” is going to be a huge file. To keep downloads faster, it’s broken up into stages. This is the overflow from the previous one.


Indonesia’s credit rating is improving, despite “corruption, confusing regulations, lack of infrastructure and a tendency toward inflation”—all those things that Republicans say is bad for an economy.

How could this happen? And why are credit ratings of developed countries being downgraded?
It’s painfully obvious, and neither major political party is willing to level with the American voters: We gave the low-wage developing countries our best job-creating industries—and all so corporations could reap record profits by cutting our higher-paid workers out of the wealth creation process.

From the Wall Street Journal, January 19, 2012:

Indonesia Gets Ratings Boost

JAKARTA—Indonesia’s rise as one of the most important emerging markets for investors world-wide got a major boost Wednesday as Moody’s Investors Service lifted its credit rating to investment grade for the first time in more than a decade, a move that is expected to send new, much-needed funds to the giant Southeast Asian nation.

The decision by Moody’s, which has rated Indonesia’s sovereign debt at junk levels since 1997, followed a similar rerating by Fitch Ratings last month, and helps to bolster Indonesia’s claim that investors should consider it in the same category as the so-called Brics economies—Brazil, Russia, India, China and South Africa. Standard & Poor’s is expected to follow suit in the next couple of months, analysts said, after Moody’s raised Indonesia’s credit rating one notch to Baa3 with a stable outlook…

The country still struggles with a lot of issues—including corruption, confusing regulations, lack of infrastructure and a tendency toward inflation—that will continue to deter the more cautious investors.

Remarkable, and instructive! Unregulated world trade—globalization—was deliberately intended from the beginning to increase corporate profits by reducing labor costs. Anyone who denies that is either a deliberate liar and hypocrite, or they were conned by deliberate liars and hypocrites.



Again, the conservative press reports the class war between investors and workers. The whole point of unregulated globalization was to pit workers of different nations against each other and it works beautifully—for investors.

Now, Chinese workers make only $280-460 for 48 hours of work. So, naturally, America’s “job creators” will invest their money in Cambodia, where the pay is $76 for working a 60-hour workweek. Chinese factories are closing down, leaving the workers high and dry.

Not to worry, though, the chief executives of closed businesses have long since become millionaires and now are coming to the U.S. to buy property.

From Bloomberg Businessweek, January 12:

Where Made-in-China Textiles Are Emigrating

Low wages are drawing industry to
Cambodia and other countries in Southeast Asia

Cambodia is one popular destination. So are Vietnam, Bangladesh, and Indonesia; their combined share of exports to rich countries rose from 12 percent in 2004 to 17.3 percent in 2010, according to Oxford (U.K.) consultancy Clothesource Limited. They all have young people willing to work hard for less. In Cambodia, that means $76 for a 60-hour workweek.

Chinese workers get from $280 in low-cost Jiangxi province to $460 in Shenzhen. That’s take-home pay in his factory for 48 hours’ work, including overtime, says Fung.Federation of Hong Kong Industries. On Dec. 30, Shenzhen labor officials announced a 13.6 percent hike in the monthly minimum wage, to 1,500 yuan ($237)…

According to the Hong Kong federation, squeezed margins mean that one-third of the estimated 60,000 Hong Kong-financed makers of textiles, electronics, and toys in China’s Pearl River Delta will have to shut down or move abroad. “If you are very low-cost, very soon you will have to become a gypsy factory,” says Roy C.P. Chung, the federation’s chairman.

We now live in a world of gypsy factories, and China is a microcosm of what the U.S. is still going through, and with the same results: Increasing wealth for the elite, and huge sacrifices forced onto the poor.



Voters need to understand that an effective federal government is essential to balance the interests of workers versus corporate executives and their investors. The last three decades of a declining federal government have resulted in the condition Businessweek describes in the column below.

Technology is replacing workers with machines at an accelerating rate, and corporations and their investors keep almost all of the benefits for themselves. Because the past three decades of anti-labor government (and globalization) corporations now have all the power and wages are stagnating or declining relative to inflation.

From Bloomberg Businessweek, January 15, 2012

 

Did That Robot Take My Job?

Companies have been buying technology instead of hiring,
and Okun’s Law is broken

The U.S. produces almost one-quarter more goods and services today than it did in 1999, while using almost precisely the same number of workers. It’s as if $2.5 trillion worth of stuff—the equivalent of the entire U.S. economy circa 1958—materialized out of thin air.

Although businesses haven’t added many people, they’ve certainly bulked up on machines. Spending on equipment and software hit an all-time high in the third quarter of 2011. “Huge advances in technology have allowed businesses to do more with less,” vaporizing jobs for everyone from steelworkers to travel agents, President Barack Obama warned in December.

So are robots getting all the good jobs? This year may provide the answer as the economy gathers steam. Most economists, cheered by 540,000 hires since Labor Day, say technology inevitably destroys some jobs even as it ultimately creates new ones. But with more than 20 million Americans still jobless or underemployed, others worry that something fundamental has changed.

“What’s different now is the speed and scale of what’s happening,” says Erik Brynjolfsson, director of the MIT Center for Digital Business. Brynjolfsson and Andrew McAfee, co-authors of the recently published book Race Against the Machine, argue that the economy is in the early stages of a “Great Restructuring” that is hollowing out the labor market and exacerbating inequality….

Technology is not just revolutionizing the assembly line. Paralegals can’t match software in accurately searching thousands of documents for specific words or patterns. New software apps easily best journeyman sportswriters at penning routine game wrap-ups. “The era we’re in is one in which the scope of tasks that can be automated is increasing rapidly, and in areas where we used to think those were our best skills, things that require thinking,” says David Autor, a labor economist at Massachusetts Institute of Technology.

As digital technology spreads, the classic relationship between rising output and rising employment—known as Okun’s Law—now appears to be broken. If the law, which postulates that every 3 percent gain in output should reduce the jobless rate by a percentage point, still applied, then today’s nearly 9 percent rate would be about 1 percent.

To better understand how government was responsible for reducing the standard workweek from 60 to 40 hours, 6 days to five, check out the file The Most Important Two-Minute Video for Election 2012.

Just as happened in 1938, work needs to be spread out and the lowest paid workers must receive a federally mandated minimum wage. If this seems unrealistic, it’s because people forget what economists, sociologists and “futurists” predicted in the 1960s. They cited the explosion in computers, robotics and technology generally, and predicted that by the year 2000 the average workweek would be 32 hours, 4 days.

Of course, it never happened, Government didn’t legislate conditions that would force corporations to share their increasing wealth with the workers who made them successful. Instead, they did what they always do when not forced to do otherwise: they minimized labor costs by terminating workers and increasing workloads.

 



One of our most respected conservative financial publications exposed the hypocrisy of Mitt Romney’s claims of “creating jobs.”

Dan Primack of Fortune magazine pointed out that Bain Capital has actually never done a systematic job of arriving at a realistic number of jobs created.

From Fortune magazine, December 22, 2011

Why Bain Capital doesn’t track lost jobs

There’s a good reason why private equity firms
don’t track jobs created or destroyed.

Mitt Romney likes to say that he helped create around 100,000 jobs through his work at Bain Capital, even though Bain Capital itself claims to have never tracked such figures. And since reporters rarely challenge Romney on the claim (latest example here), it’s basically Romney’s word vs. that of skeptics.

But earlier today someone asked me why Bain Capital didn’t track such numbers. Shouldn’t it have, as a measure of its effect on the overall economy? Or, at the very least, because employment growth/decay would be an important metric for an investment firm to have handy when approaching a new takeover candidate?

My answer is that while net employment may indeed be helpful to track, it would be extremely difficult to do. In fact, I think people would poke all sorts of legitimate holes in Bain’s numbers—and by extension, Romney’s credibility—were they to exist…

… Or what about when companies do layoffs in preparation for a takeover (something which often happens)? Do those count in the negative column? Or what if Bain takes an underperforming company, helps turn around its finances by cutting jobs and then sells it to someone else who is able to hire based on growth Bain helped create?

And should quality of jobs matter? Is creating 100,000 minimum-wage jobs better than creating 50,000 jobs that pay a living wage? And do we count jobs at Bain Capital itself, which has over 100 investment professionals and an untold number of support staff?

There are no correct answers to any of the above questions. Just opinions. No wonder Bain and many other private equity firms don’t think it’s worth the hassle.

 

In addition to the issues raised in the article, there are even more important considerations relating to the impact of firms like Bain Capital:

  • The top corporate executives of the “saved” company are always paid (bribed) huge bonuses for agreeing to the deals Bain sets up. They are richly rewarded, no matter what happens later to the corporation.
  • Bain Capital executives and their investors take a huge percentage of the financial transaction for themselves, leaving less for the “saved” company to meet its future needs.
  • They leave the saved company with huge debts. It’s through taking on more long term debt that allows the two conditions above to exist. The long term debt also puts a lid on workers’ wages and decent working conditions. “We can’t raise your wages because we won’t be able to meet our debt payments. We’ll go out of business, and you’ll lose your jobs if we raise your wages.”

Wages are stagnating or going down relative to inflation for many reasons, but the practices of corporations like Bain Capital is certainly a major one.

 


“America’s conservative press” file is going to be huge. For faster downloads it will be broken up into segments. To view previous excerpts from the conservative financial press, go here.

 


 

The biased conservative
financial press

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