Saturday, September 12, 2009

The New War Begins Now

Dear Readers,

Today I read one news on yahoo finance and it confirmed my fear of governments resorting to protectionism. Politicians are always like that, no doubt, and it was expected. In addition, I expect a lot more of these meassures by lot more (possibly all) governments around the world.

First, the news - President Barack Obama has imposed new punitive tariffs on all car and light truck tires coming into the U.S. from China.

This is one small step by The Man which will likely be a Giant Stride for Mankind. The great American President has started New War (they are really good at it - New Wars) and sure it is going to result in other nations following suit. Any sane person with a knowledge of economics knows how bad can this protectionism be for any possible global economic recovery, but politicians don't care about that. They want to please masses and masses like such things, even if its not in their favor! To put it simply, who is going to benefit? the consumers (read masses) who will be deprived of free choice of products and will need to pay more OR the inefficient domestic producers who can sell their products at higher prices without competition?

Expectedly, the Chinese are unhappy over it. Read following para from that news :

"China strongly opposes this serious act of trade protectionism by the U.S.," a statement posted on China's Ministry of Commerce Web site said. "This act not only violates the rules of the World Trade Organization but also violates the relevant commitments made by the U.S. government at the G-20 financial summit."

Why did He do it? Well, the culprit is Healthcare Bill. He needs support of unions for the bill. As its put there in that news:

While the White House announcement late Friday is likely to placate union supporters important to the president's health care push at home, it could alienate the strategically important Asian powerhouse and trading partner.

Now this is called Double Jeopardy - First, the bill itself is not the right thing to do if one cares about free markets and long term well-being of people; Second, in order to pass the bill, He has done one of the worst possible things a politician in power could do. But, isn't it that the consequences of this move are well deserved by the masses?

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