The Obama administration, with much fanfare, announced a WTO complaint filed against China on auto parts.

The Obama Administration is committed to protecting the rights of nearly 800,000 American workers in our $350 billion auto and auto parts manufacturing sector.

Export subsidies are prohibited under WTO rules because they are unfair and severely distort international trade. China expressly agreed to eliminate all export subsidies when it joined the WTO in 2001. China benefits from international trade rules and must in turn live up to its international obligations.

While this action is long overdue, the realty is this administration has been complicit with China, refusing to label them a currency manipulator. Additionally the Obama administration has passed even more bad trade deals and is working on a mega bad trade agreement, the TPP.

While Chinese auto part imports have surged 25% in the last two years, so has the overall manufacturing trade deficit. Below is the percent change from a year ago in the manufactured goods trade deficit. This trade deficit has increased 14% from one year ago and 26.3% from two years ago.

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Good Morning! Rise and Shine! Get that Cup O' Joe...
break out the O.J....hang out with the pooch...time to check out the Funnies!

This morning the NAPM reported a record low reading on their services index. This is the vast majority of the economy. Yesterday we learned that auto sales also declined by a record amount in November.
What both auto sales and services have in common is a continuing worsening of monthly measures compared with 2007. For example, in August car sales were down about 19% YoY. In September the loss was 21%. In October it was 23%. November's number, released yesterday,was more than 30% off from 2007.

Some time ago, I summarized Prof. Leamer's research on typical business cycle contractions: first housing, then durables (mainly cars and furniture), then non-durables, and finally services. When services go, you are in the full force of the recession. That's where we are now.

In the services report was another bomb: the prices index has also declined dramatically, also to a new all-time low -- from an all-time high only four months ago.

America cannot survive without an industrial base.  We cannot simply be a pure service economy anymore than we can be a pure agricultural one or industrial one.  Our nation is too complex, it's needs are too large to adhere to one type of sector.  The nation would be more at risk to economic cycles if it were to simply go one route or at the very least put most of its focus on say just services.  It would be like many towns in this country where there is only one employer or one type of industry supporting the economy as a whole.  One need only read the latest news about how the City of London is not doing so well because its Financial Services Sector has gone downhill.  Now take that onto an aggregate scale.

But we have alternative car companies who cares about GM or Ford?