Free Trade?

Edward Hugh comments on a Bloomberg article, expressing a high degree of Free Trader philosophy. Nowhere is there discussion about the loss of purchasing power for Japanese labor, especially for Fixed Incomes. Japan identifies with the United States in many ways, one of which consists of the distribution of Export Income gains; the majority of such Profits going to the upper 20% of the Income Earners. This translates through a rough formula where the non-Gainers from Exports suffer all of the Purchasing loss, while the Gainers from Export Income attain Profits from that involvement, plus a hedge against Purchasing losses. Free Trade holds advantage only for Those who have Trade Share capacity.

Kash provides a good Post on the disappointing 3rd Quarter revision of GDP growth. He mentions that a lot of Households are close to the Edge, potentially staring loan defaults and foreclosures squarely in the face. The major sorrow may not be the falling home prices, but the sheer inability to resell the overextended Properties before foreclosure proceedings. Most debate over the residential fixed investment issue ignore the fact that the Funds are not out there; Lenders are over-shelved with high risk Debt, faced with high Interest rates on Funds rental, and with a surplus of unsold Property existent in the Housing market. Energy pricing may be falling, but is not expected to stay there, while no one expects a quick rise in rates of Take-Home pay.

I have not been gathering materials on Retail sales through the Christmas Season, but have a suspicion that markets may not be clearing, requiring a long post-Christmas Sales season. The recent drop of the Dollar against foreign Currencies, like in Japan, will not aid in clearing the Retail markets. The American Consumer has been a little punchy since Q1,2006, and a new Generation of Consumers are learning of the hazards of Consumer Credit debt. I look outside my window, and see a Storm approaching; I look back at my Computer, and see a Storm approaching. It is not a Win-Win situation, and Free Trade philosophy may be at fault. lgl