Hummer is dead, long live the trade war between China and the US [updated]

Here's the news as published by Bloomberg:

Feb. 25 (Bloomberg) -- General Motors Co. said it will close Hummer after Chinese regulators blocked Sichuan Tengzhong Heavy Industrial Machinery Co.’s purchase of the brand, whose military-style vehicles clash with government policy.
[...]
“The government still wants overseas acquisitions as long as it fits into its plans,” said Wang Liusheng, Shenzhen-based analyst at China Merchants Securities. “This is a standalone case.”
[...]
“Closing Hummer simultaneously improves the health of GM, China and the planet,” said Daniel Becker, director of the Safe Climate Campaign at the Center for Auto Safety, an advocacy group in Washington. “Hummer should rest in pieces.”

U.S. deliveries for Hummer peaked at 71,524 in 2006, according to Autodata Corp., an industry researcher based in Woodcliff Lake, New Jersey. Last year’s total was 9,046.

A few things to note:

• Who believes China is a capitalist country? It's still very much dominated by government central planning and state owned companies play the biggest part in the countries economy
• The trade war started by the US is still very much alive, and this just another strike... (see
  2009-09-12 The Greater Depression starring Obama)
• I couldn't agree more with Daniel Becker, even though I don't believe in the Global Warming theory.

Speaking of tariff, I never reported this one, but it thinks it's worth mentioning it now:

U.S. to Impose Tariff on Tires From China (Washington Post)
Saturday, September 12, 2009

In one of his first major decisions on trade policy, President Obama opted Friday to impose a tariff on tires from China, a move that fulfills his campaign promise to "crack down" on imports that unfairly undermine American workers but risks angering the nation's second-largest trading partner.

The decision is intended to bolster the ailing U.S. tire industry, in which more than 5,000 jobs have been lost over the past five years as the volume of Chinese tires in the market has tripled.

Of course this is all non-sense, Obama is punishing 300 million americans to satisfy maybe 10 or 20 thousand workers in the tire industry...

Then what does the Chinese gov do? China Moves to Retaliate Against U.S. Tire Tariff

The Wave of Protectionism is rising

MacroMan points to several interesting articles showing that Brazil, Taiwan, South Korea and Indonesia are following the path of the US and the UK (and probably many others I haven't spotted yet) into protectionism. This is a trend I have been forcasting for quite some time, and which is going to make things worst for the economy and the people in general:

(FT - 2009-10-20) Brazil’s currency and stocks fell sharply on Tuesday after the government imposed a 2 per cent tax on foreign portfolio investments to stem the rapid rise of its exchange rate.

(Reuters 2009-11-19) - Indonesia's central bank is "studying" possible limits on foreign ownership of short-term debt, but has no plans for controls on capital or the currency.

(Asian Business - 2009-11-19) South Korea announced measures on Thursday aimed at tightening control over foreign exchange liquidity to make the banking system less vulnerable to the capital flight seen during the financial crisis.

(WSJ 2009-11-10)--Taiwan's financial regulator said Tuesday it is banning foreign investors from putting money in time deposits. The ban is effective immediately, and foreign investors can't extend their existing time deposits, the Financial Supervisory Commission said in a statement.

Other related posts here.

The Greater Depression starring Obama [update]

Whatever you call it: déjà-vu, remake of the Great Depression starring FDR, or a bad sequel, one thing is for sure, billions of people will be forced to live the Greater Depression starring Obama (and of course Ben Bernanke).

We are leaving step by step the Great Depression: Crash, followed by money printing, destruction of productive goods (cash for clunkers), and now, tariffs:

BEIJING (Reuters) — China on Saturday denounced a decision by the United States to impose a 35 percent tariff on Chinese-made tires, saying that the move sent a dangerous signal before a Group of 20 summit meeting and could set off a global chain reaction of protectionist measures.

A White House spokesman said the decision on Friday was “to remedy the clear disruption to the U.S. tire industry” from cheap Chinese imports.

In a statement issued on his ministry’s Web site, China’s minister of commerce, Chen Deming, called President Obama’s decision “a grave act of trade protectionism” that violated rules set by the World Trade Organization.

The Chinese Ministry of Commerce spokesman, Yao Jian, said the move could set off a “chain reaction of trade protectionist measures that could slow the current pace of revival in the world economy,” according to the ministry Web site.

This is probably just the beginning, the foot in the door for more tariffs of all kind (as usual...).
And yet again, Chinese 'communists' are the voice of reason where American 'capitalists' are doing the exact things that Marx would recommend.

Update on 2009-09-14: Mish writes:

To date, Obama is repeating the same mistakes Roosevelt and Hoover made during the Great Depression. Cash-For-Clunkers was a horrid policy decision that led to the destruction of productive assets much the same as Roosevelt's policy of illegally burning crops hoping to force up prices. See Government Bailouts and the Stock Market - The Seen and the Unseen for more details.

Now, Obama's tire and steel tariffs will strongly encourage more unions and labor groups to seek relief under "Section 421" of U.S. trade law. That misguided law does not require petitioners to prove unfair trade practices.

If Obama keeps this foolishness up, which right now seems highly likely, he risks a global trade war similar to the global trade crash kicked off by the Smoot-Hawley Tariff Act signed by President Hoover in the early stages of Great Depression.

Protests against foreign workers spread in UK

The Economy in the UK is in extremely bad shape, and will keep on getting worse and worse even though Moorad Choudry thinks that Rolls Royce will save the whole British economy thanks to its exports. I have wrote about this many many times and some people like Jeremy Grantham and Jim Rogers think the same. So hopefully, I am not the only idiot who believes the UK is finished.

I have also been mentioning for quite some time that we will start to see lots of protests - many of them will be violent - and maybe revolutions in the next few years if not wars. So far, we have seen protests in Spain, Italy, Greece, Iceland, violence in Madagascar, and now the UK.

The interesting thing in the UK, is that the protests are against foreign workers. Whoever lives in London knows that the foreigners handle most of the lowest end jobs (bus drivers, 24/7 cashiers in Tesco, Sainsbury's, janitors, etc.) and that most of high-end jobs in finance are handled by the Americans, French, etc. But now, nationalism is spreading, and it's not the first time I heard that recruiters should give priority to British citizens and avoid hiring foreigners when they do not have a good reason to do so...

Things look really bad... And now protests on top of all that:

LONDON – Thousands of energy workers across Britain walked off the job Friday, joining a growing campaign of protests against foreign citizens being hired for an oil industry construction project in England.
Seven hundred employees held a wildcat strike at the Grangemouth refinery in Scotland, provoked by the decision of Italian construction company IREM SpA to use Italian and Portuguese workers for a 200 million-pound ($280 million) project at Total's Lindsey refinery in northeastern England.

Expect to see a lot more of these, and not just in the UK, but everywhere in Europe, and probably in the US as well.