Vince Wade produced this video, the first in a series.  The topic here is the U.S. university role in transferring sensitive military and civilian technology to China.  It supports the FBI's conclusion that Chinese government espionage is a top worry.  See here, and here.

Farmers and domestic manufacturers have common problems... the associations claiming to represent them are actually working to bury them.  See this link for one farm association trojan horse. 

Today the National Association of Multinationals... er... the National Association of Manufacturers says outsourcing is the way to go.  Of course they don't call it "outsourcing".  They use the happy term "external partnerships."

You see, NAM opposes meaningful legislation to neutralize currency manipulation, and supports the trade agreements that now have the Peruvian president explicitly soliciting U.S. companies to manufacture in Peru to sell back to the U.S.    

The NAM report is titled “Forging New Partnerships:  How to Thrive in Today’s Global Value Chain."  Former Michigan Governor John Engler rolled out the report.

So this is the NAM strategy.  Pass trade agreements that lower U.S. tariffs but leave the VAT-tariffs of the other country in place at about 19%.  Then oppose enforcement of trade laws or agreements by shouting "trade war."  Oppose neutralization of currency manipulation.  Then claim the free market is at work and advocate more outsourcing with feel good language.

God bless America.

Unrestricted Warfare.  Morgan Stanley is succumbing.  Selling itself to China. 

Foreign government owned investment funds are much bigger than all the world's hedge funds combined.  Oil money (Middle East) and trade surplus money (China) generate the incomparable wealth.  When big U.S. financial firms get into trouble, foreign governments buy them.  Morgan Stanley lost a boatload of money this year and is now selling 5% of itself to China's government. 

Citi sold a 4.9 percent stake to Abu Dhabi’s investment arm, while UBS sold stakes to the Singapore government and an unnamed Middle Eastern investor.

But Morgan Stanley made happy talk about it:

“We are delighted to welcome CIC [China Investment Corporation] as a long-term investor in Morgan Stanley, and believe it is an important step in increasing the flow of capital between our countries and across these increasingly critical markets,” Mr. Mack said in the statement. “The investment from CIC will help to strengthen our deep ties in these growth markets and ensure that Morgan Stanley has the resources necessary to pursue growth opportunities globally across our Institutional Securities, Global Wealth Management and Asset Management businesses into 2008 and beyond.”

Chinese military officers wrote a book called Unrestricted Warfare in 1999.  Their names are Qiao Liang and Wang Xiangsui, two People's Liberation Army senior colonels.  They said this:

Can using financial instruments to destroy a country's economy be seen as a battle?

And they thought about Morgan Stanley, explicitly:

In addition, we have yet to mention the crowd of large and small speculators who have come en masse to this huge dinner party for money gluttons, including Morgan Stanley and Moody's, which are famous for the credit rating reports that they issue, and which point out promising targets of attack for the benefit of the big fish in the financial world [see Endnote 14].  

The officers contemplated the 1990's Southeast Asian financial crisis:

A surprise financial war attack that was deliberately planned and initiated by the owners of international mobile capital ultimately served to pin one nation after another to the ground--nations that not long ago were hailed as "little tigers" and "little dragons."

And concluded this:

Financial warfare has now officially come to war's center stage--a stage that for thousands of years has been occupied only by soldiers and weapons, with blood and death everywhere. We believe that before long, "financial warfare" will undoubtedly be an entry in the various types of dictionaries of official military jargon.

Has Morgan Stanley now succumbed to the financial warfare?  Taken over on the battlefield?  It was so smooth, so easy, nobody got hurt.

Leo Hindery, Jr. is an economic adviser to the Edwards campaign, and has run large companies.  This letter to the editor, from him, appeared in the Financial Times.

US must tackle unfair mercantilist policies adopted by its competitors

Published: December 17 2007 02:00 | Last updated: December 17 2007 02:00
From Mr Leo Hindery, Jr.

Sir, I agree with Michael Bloomberg that the US must confront the challenges of globalisation (“America must resist protectionism”, December 12). But we cannot do so by ignoring the deleterious impact that our current international trade and economic policies are having on our nation’s productive capacities, and on the standard of living of the vast majority of our citizens.

The US’s trade deficit this year with China alone will exceed $250bn, and our overall trade deficit will exceed $800bn. Our former trade surplus in high-technology products has now turned into a rapidly increasing trade deficit. And in just the past six years the US has lost overseas 3.3m manufacturing jobs and 1.6m service jobs. The continuing loss of high-paying, high-technology jobs does not help our nation compete better in a global economy, because there is no commensurate inflow or creation of jobs here. And the countries to which we are sending our dollars for imported items are now using them to buy our vital productive assets.

The interests of US-based multinational corporations are often not aligned with our national interests. Yet other nations, particularly those in Asia, have instituted economic policies with incentives, including illegal subsidies and underpriced exchange rates, to induce foreign corporations to transfer production facilities and technology there. Sixty per cent of China’s exports now come from foreign-invested companies, which may be good for China and those companies’ shareholders, but it is certainly not good for our economy. Most Americans now believe our nation’s present international economic and trade policies are undermining our nation’s standard of living, and ultimately our national security.

And the electorate in both parties, as Mayor Bloomberg acknowledges, are calling for changes. But then, with typical pure free trade orthodoxy, he claims that politicians who respond to these legitimate demands of our citizens for a change in course are “pandering” and “protectionist”.

Our nation must address the unfair mercantilist practices being used by our global competitors to entice US-based multinational corporations to serve their interests and not our own. And responding to the challenges of globalisation certainly also demands reforming our tax system, reforming healthcare and worker education, achieving energy independence and modernising our outmoded infrastructure.

But with respect, Mr Mayor, making America’s trade policies fairer and furthering American jobs is absolutely not protectionism.

Leo Hindery, Jr,
New York, NY 10075, US
(Member, Council for Foreign Relations, and Senior Economic Policy Adviser for Presidential Candidate John Edwards.)