Sunday, April 06, 2003

A Few Things to Remember to Forget

Lest we forget that something other than a war is going on, and that war sometimes sporadically has effects that transcend the blood and trauma we as viewers try to forget and whimsically consider 'the cost of war' when either get too close for comfort, a couple of links.

One to a present economic reality, that jobs are even more scarse today than they were eleven months ago:

Initial jobless claims rose by a larger-than-expected 38,000 to 445,000 in the week ended March 29, the Labor Department said Thursday. That marked the highest number since April 13, 2002. The four-week average, which smoothes out weekly fluctuations, climbed by 2,500 to 426,250.

[. . .]

Nearly two million Americans have lost their jobs over the last two years after the economy sank into recession, and the war with Iraq has made businesses even more reluctant to hire workers, analysts say. In February, employers slashed 308,000 jobs, the largest number since the Sept. 11, 2001 terrorist attacks.

Economists think an additional round of cuts occurred in March. Some economists say the war with Iraq, which began two weeks ago, will have roughly the same effect on the world economy as the September 2001 terror attacks. The World Bank said Wednesday that economic output around the world could be reduced by about $75 billion to $100 billion this year. Most forecasters, however, don't expect the war to tip the U.S. economy into a new recession.

Another to an analysis of a nascent economic reality, anti-Americanism might not help you get a job in eleven months:

We are unlikely to see massive boycotts of American companies, although the possibility can’t be totally eliminated. But there could be a long, slow erosion of the position of U.S. multinationals. For example, in nations where governments still have a say in the awarding of big business contracts, such as China or Saudi Arabia, fewer could go to American companies. In Europe, the best and the brightest local talent might find a stigma attached to U.S. firms and seek employment elsewhere. The cost of physical security could become a competitive disadvantage for U.S. multinationals.

The most vulnerable American firms could be consumer-product companies. In December, a bombing at a McDonald’s in Indonesia killed three people, and brands like Nike and Coca-Cola could also be targets. There is a particular risk in industries where competition is brisk and the symbolism of being American is high—this risk applies to companies like Boeing, which have rivals such as Airbus, or General Motors, which vies with Toyota. The corporations that have least to fear may be financial firms like Goldman Sachs or Citigroup, which so clearly dominate the global landscape.

If overseas American business is hurt, the U.S. economy won’t be immune. At the end of 2001, American multinationals had invested more than $2.3 trillion abroad, not counting stocks and bonds. Many have become dependent on overseas markets for more than 30 percent of their revenue. American businesses have become central to global supply chains that service the United States itself; more than 25 percent of the products America imports come from the foreign subsidiaries of U.S. firms. We will never know the cost of American companies’ deciding not to invest abroad or not to expand because of a perceived hostile environment overseas.

And one more to a related but even more startling possibility, which, incidentally, ain't going to help you get a job anytime soon either, Asia might not bail America out of debt this time around:

For years now, foreigners have been willing to lend Americans all the money they could spend, allowing the richest nation on earth to live beyond its considerable means. The United States now borrows $500 billion a year from foreigners, who still, as a rule, believe America remains the most promising growth economy in the world. Japan is a mess, and Europe is sluggish. American consumers buying houses and cars are the only real engine for global growth. While Wall Street may be too risky, U.S. Treasury bonds look secure. The big question has been whether this lending train will come to a gradual halt, or crash, and why.

[. . .]

Over the past three years, total U.S. Treasury holdings have been shifting from Europe to Asia, as Japan’s share has risen from 26 to 31 percent, and China’s from 4 to 9 percent. The dollar has been falling, but would have fallen faster, says economist Paul Donovan of UBS Warburg, if Asian central banks weren’t buying dollars to keep their export prices competitive in cheaper yen and renminbi. In the fourth quarter last year, China edged ahead of Japan to become the largest net buyer of U.S. Treasury bonds.

[. . .]

And there are other conflicts looming along Washington’s Axis of Evil, one of which would affect both China and Japan directly—North Korea. It’s not inconceivable that the two countries might use their financial clout to push a reluctant Washington to cut a deal with Pyongyang. “Monetary nationalism is an obvious lever to play in the game of diplomacy,” says Princeton economic historian Harold James, recalling Charles de Gaulle’s steps to protest the Vietnam War by shifting French dollar reserves into gold between 1965 and 1968. “In military terms China is no match for the U.S., but there are many things they can do.” Threatening to convert reserves into euros would be a start. Most economists expect the U.S. deficit will surge to $600 billion by next year, heightening the risk to creditors. “There will be a really big crunch coming,” warns James. That means the end of easy money and the American spending spree that has sustained the global economy.

Oh, but don't worry about that big continent way on the other side of the world. They don't speak American, and they look a little funny. Go about your business, or lack thereof. Plug your ears, squint your eyes tight, shake your head whilst screaming 'la la la' or maybe 'There's no place like home', or maybe as you praise Jesus for his rescue of Private Jessica Lynch -- whatever you do, don't find fault, don't question. Remember to anesthetize yourself in work, in play, and in family; remember to vote Republican; remember to boycott the Dixie Chicks; remember that you are not a pretty person without buying new clothes (hopefully on credit), the less you need them the better; remember that using your car more, the fewer people in it the better, is actually good for America and thus should be encouraged; remember to keep your refrigerator door open from time to time; remember that homosexuality is an abomination, and that not only will homosexuals burn in hell they should, when possible, be legally prohibited from their despicable sexual acts. Yes, just remember that America is all that matters, that ignorance is bliss and holds the key to the New American Century; and, oh yes, that the International concourse at the airport is only for arrivals, not departures. Remember all this, and nothing I've posted today will ever matter at all.

Now, if you don't mind, please pass the Xanax.