Retaliation by China?

In a previous entry possible effects of the Obama administration's imposition of a 35% tariff on Chinese tires for cars and light trucks were alluded to. The Smoot-Hawley Tariff Act was a major contributory cause of the Great Depression but historic lessons are not long remembered.

The Cost of Trade 'Enforcement' is a Wall Street Journal article with an ominious news item from China. The Chinese Ministry of Commerce imposed preliminary antidumping duties on imports of nylon 6 from some nations including the United States. Nylon 6 is found in varied products. They include socks and toothbrushes. American companies were hit with the harshest duties. U.S. corporation Honeywell and a U.S. unit of Germany's BASF were given 36% and 30% increases, respectively. So is this the start of a trend like the one preceding the Great Depression or will advocates of free trade be able to stem the obvious protectionist sentiment here and abroad?

The 2010 Tax Calendar is Available

You can order the 2010 Tax Calendar now at the IRS website. Or you can call the IRS at (800) 829-3676. Quoting the website description:

The Tax Calendar for Small Businesses and Self-Employed (Pub 1518, Catalog Number 12350Z) is now available. This 12-month wall calendar is filled with useful information on general business taxes, IRS and SSA customer assistance, electronic filing and paying options, retirement plans, business publications and forms, and common tax filing dates. Each page highlights different tax issues and tips that may be relevant to small business owners with room on each month to add notes, state tax dates, or business appointments.

Permanently Higher Unemployment Rates?

A Yahoo article titled Higher jobless rates could be new normal contains some sobering economic observations. The newer and higher unemployment rates could become economic fixtures. Unemployment rates of close to ten percent have becomes norms in countries where the public sector expands and the private sector contracts. That is what is taking place today in America.

The article points out some reasons for the pessimism. They include the crippling of the auto and construction industries which have been key components of past recoveries, problems small and mid-sized businesses have securing bank loans and cutbacks in consumer spending caused by huge financial investment losses.

Investing in Cleaner Energy

Today’s Calamity: Cap and Trade Costs Fly Sky High is a blog entry of The Foundry which makes a valid point about the best route to cleaner energy technology. A bill passed by the House of Representatives known as Waxman-Markey or Cap and Trade would punish businesses with added taxes on energy useage to further environmental objectives based on assumptions that global warming would occur without these types of legal sanctions. According to a cited source Cap and Trade would add an additional five billion dollars in energy costs for the airline industry. That either makes airlines less competitive and more likely to engage in employee and other cutbacks, makes it likely that additional costs will be passed on to consumers or some of both.

The article raised another concern though, which might be an even more telling blow, based on the logic behind the bill. Income losses, in the form of increased taxes, will lessen capital available for reinvestment in more efficient energy technology. That would be the ultimate irony. A bill designed to reduce carbon emissions having the effect of making less funding available for newer and cleaner technology.

The assumptions related to effects on climate are dubious as well but that will be the focus of another blog entry.

Orders for Durable Goods Dropped in August

A September 30th article in ThomasNet News titled Durable Goods Orders Drop Unexpectedly provides another negative economic indicator showing that emergence from this recession could be very difficult indeed. That news is that in August new orders for manufactured durable goods declined. Durable goods include appliances, automobiles and machinery. The decline was unexpected. The gimmicky cash for clunkers program provided a slight upward impetus. However, the cause for that trend disappeared when rebates ended in August. Doubt and lack of confidence describe current attitudes of potential purchasers.