U.S. Productivity Advances Solidly Good News for Inflation, Interest Rates and Stocks
by Peter Morici


Today, the Department of Labor reported productivity in the nonfarm private business sector increased at a 2.6 percent annual rate in the second quarter of 2007. This was significantly higher than the 0.7 percent increase recorded in the second quarter of 2007.

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"We don't want to start a trade war!" say the folks who oppose enforcing rules against trade distortion.  But is there a low level war going on now?

More reports are coming out on China espionage against us.   They hack our military networks.

I am travelling.  So posting will be patchy for 4 business days. 

Below the fold is an article with important facts on the Panama Trade Agreement.  Panama is the home of U.S. corporation subsidiaries used to cheat on U.S. taxes, Panama won't cooperate with us to rein in the problem, and the Panama Trade Agreement will encourage more of it.

Mattel's third recall this summer for Chinese made toys with lead paint.  (Yawn).  A locomotive and Barbie accessories. 773,900 toys. Mattel's Summer '07 Recall Trilogy.  Memo to Mattel's procurement office:  "Is this stuff really so cheap now?"

And the China government is inviting foreign journalists to to on factory tours to show what a good job they do.  The catch(es)?  You can't visit plants tainted by recalls.  And factory executives can't talk about problems at competitor companies.   

A little dark humor is good for the soul:  Bill Maher commented on China toys on August 24:

New Rule: If you were surprised that the Chinese don't care about toy safety, then the child who needs protecting is you. Over the last couple of months, American consumers have been learning a shocking lesson about supply and demand: if you demand products that don't cost anything, people will make them out of poison, mud and shit. Now, since April, approximately 17 million toys in the United States, all of them made in China, have been recalled. Which is amazing considering that no one in the Department of Justice can recall a thing. Okay.

Now, believe me, I was devastated when Mattel recalled almost everything in my Barbie Dream Closet. Although I had suspected something when Ken discovered a lump on his testicle.

Until recently, I never even worried about being harmed by the Chinese. Unless they were in the left-hand turn lane. I kid. I love the...

But then we found out that their dog food was deadly and that they were making toothpaste out of antifreeze, and that the Number 62A at the Szechuan Palace is Beef with Bronchitis. They're the Chinese. They don't care if your precious little Britney sucks a little lead. Because in China, their kids aren't playing with the toys. They're the ones in the factory all day making them.

Now, I know you're saying, "But, Bill, I don't have time to ponder whether these $12 jeans are the product of child labor. I just know I'm an American on a budget and our lifestyle is a blessed one. And I want to look nice while I'm standing in line for my iPhone."

But, there is something to be said for thinking about why these bargains are such bargains. Wal-Mart is the most American thing in the universe, but all it sells is crap from China. Wal-Mart wouldn't exist without the American consumers' endless thirst for the cheapest stuff China has to offer. Like $30 DVD players and Jackie Chan.Yeah, you're right, it was a great movie.

Anyway...in America, there is nothing more sacred than a bargain... And Jackie Chan. And that even includes the war. Yeah, there's too much lead in the kids' toys, but not nearly enough on the Humvees in Iraq. "Let's have a war and cut taxes; what could go wrong?" "Let's give mortgages to the homeless. Sounds like a plan." "Let's buy toys from a Communist police state. You just know they'll put in a little extra love."

Speaking of which, you know why today's modern Chinese capitalist puts lead in the paint that goes on toys? Because it makes colors brighter. You've got to love America, a country that's literally being killed by the stuff that makes objects shiny.