Wednesday, August 5, 2015

Export Import bank of the United States of America -- Now that's intersting

The tea party has won, this fight anyway, it looks like US Eximbank's  may end up in the dustbin. The long term impact is minimal, the US can work to remove the other export import banks.  For companies the short term is more serious.  Exim Bank provided credit support to many many companies from confirmation of letters of credit to loan guarantees to Boeing.  For some reason America's far right has real issues with Boeing and the aerospace and defence sector, as a Canadian I can only say -- bring it on, because Canada would be a natural home for a lot of Boeing's non-defence work, these are very high paying jobs that require lots of skills and once the jobs are gone, they tend not to come back.

Canada has an export import bank called EDC, they too use Canada's credit rating to provide Canadian exporters with long term finance, letters of credit etc.  the cost to the Canadian tax payer has been nil for several years, in fact, EDC has only used Canada's borrowing capacity.  It has proven to be a very successful program, and by the way, Canadian banks have very limited interest in stepping in their shoes!

What the GOP congress is doing is just strange, Boeing's CEO will now look seriously at offshoring a lot of their activities.  So that they can benefit from other credit agencies support.  They seem to think that banks love the finance exports to Africa (they don't) or to confirm letters of credits from strange country (that too they don't like).  Exim is a very important tool to help America's export sector. Then again I suspect that many of the GOP have no real use for these pesky foreigners!

The idea seems to be that the banks will step in (maybe they will) but in general banks are not too keen on this type of business, new capital rules (for banks) make that business cumbersome and unprofitable (yes yes that too).  My guess is that the anti-Eximbank is driven by a fear of big government and they probably think that Eximbank is in cahoot with the world bank and its all part of a big plan to take over 'merica and impose martial law!

Its very strange, but then this is the party that think that Donald Trump and Scott Walker are heros!


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