The Guts of the Trans-Pacific Partnership Agreement

Senator Bernie Sanders voiced his disagreement to President Obama’s big trade deal. Organized labor in the U.S. argued, during the negotiations, that the trade deal would largely benefit corporations at the expense of workers in the manufacturing and service industries. The Economic Policy Institute and the Center for Economic and Policy Research have argued that the TPP could result in job losses and declining wages.

Obama was granted fast-track authority to negotiate this and other trade contracts with various countries. Obama contended that this authority was important to completing the TPP then sending it to Congress for a vote. The Senate won’t have the ability to delay the TPP and lawmakers will not be able to change it. Supporters say that the TPP would force China to increase standards and regulations.

The Trans-Pacific Partnership or TPP has become additionally politically combative with groups worried about trade contracts. The TPP is not the only one, but it is a very big one and the negotiations are complete.

It began with a trade contract between Brunei, Chile, New Zealand and Singapore that came into effect in 2006. That arrangement detached tariffs, intellectual property, and trading policies on most goods traded between the countries. The TPP has grown into a giant free trade deal between the US, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru. TPP wants to extend economic bonds between these nations, cutting tariffs on goods and services, and raising trade to increase growth. The 12 countries have a population of about 800 million and are accountable for 40% of the world’s GDP and 26% of the world’s trade. The deal is a notable achievement given the very different approaches and standards within the member countries mention the special protections that some countries have for certain industries. That makes it roughly the same size as the Trans-Atlantic Trade and Investment Partnership, another trade contract currently being used. The contract could make a new single marketplace like the EU.

After too many years of American foreign policy being bogged down in the Middle East, the Obama administration is aiming its focus on Asia. The TPP is the focus of the US economic re-balancing and a stage for regional monetary integration. Some say the TPP goes further, as an effort to contain China and provide a monetary counterbalance to it in the area. Many parts of the TPP are designed to exclude China. The TPP is thought to be a strategy to keep China contained.

Most of the disapproval for the TPP has been for the mysterious consultations, in which countries were planning to be bringing in large changes for the countries’ futures without voters’ knowledge. But much of what has been exposed involves changes to intellectual property, state owned property, and international courts. The TPP, as well as other trade deals, have a wide array of regulatory and legal concerns that make the deals influential on foreign policy and US lawmaking.

Information on the TPP’s effect on intellectual property has exposed that the U.S. has been forcing tougher copyright security for music and film, as well as more comprehensive and longer-lasting patents. The TPP would also increase the difficulty of the approval procedure for generic drug makers and extend protections for biologic medicines, which has concerned members of Congress. Public health and internet groups have campaigned hard against the TPP for a long time about these matters because it may restrict public access to knowledge.

Many TPP governments basically own huge portions of their economies. Discussions have intended to limit public support for public sector businesses in order to raise competition with the private sector. But some assert it gives companies the ability to sue governments that change policy to favor public-provided services. The TPP will is also said to increase competition between nations’ work forces.

After World War II, investors were concerned about investing money in 3rd world countries, where the legal systems were not as reliable. They were concerned that an investment is made in country one day only to watch a dictator repossess it later. Enter the provision called “Investor-State Dispute Settlement,” or ISDS. The ISDS was installed in previous trade contracts, and is installed in the TPP, to encourage foreign investment in countries with weak legal systems. The ISDS could lead to huge penalties in the event that steps are taken of a country confiscating corporate assets. The ISDS provision in the TPP would also tip the balance of power in the US further in favor of huge multinational corporations and weaken U.S. autonomy.

A Golden Opportunity to Prepare

Amid all the clatter of a new administration and new legislative priorities in Washington, it’s easy to see the trees but lose sight of the forest.

In this case, we’re talking about the U.S. government’s annual budget deficit.

Last year, the deficit grew by more than 30% to $587 billion.

And, according to a new report by the Government Accountability Office (GAO) and Congressional Budget Office (CBO), it’s on “an unsustainable path.”

No doubt the current Congress will pay lip service to the latest warning, as every other Congress and administration before has… just before turning around and opening up the spending spigot a moment later.

This situation has been well documented by experts before.

But the new key point from the GAO is its forecast…

Barring important changes in fiscal policy, the nation’s debt, relative to the size of the economy, will move to catastrophic levels within the next 15 to 25 years. Or it could happen sooner, if federal spending rises at an even faster pace without appropriate cuts elsewhere.

The Path to Ruin

In the wake of World War II, the size of the national debt relative to the economy was a historically high 106%. In the decades since, the long-term average held at roughly 44%.

The debt-to-GDP ratio was just 39% as recently as 2008.

But the fiscal crisis, bailouts and slower economic growth – as well as the lapse of “pay as you go” federal budgeting rules instituted during the 1990s – put the debt-to-GDP ratio into overdrive.

In 2015, the ratio soared to 74%. And last year, it climbed further to 77%.

You can see where this is going. As the CBO notes, large and growing amounts of federal debt:

Mean higher interest costs.
Limit government’s ability to respond to unforeseen events.
Reduce long-term national saving and income levels.

And, more importantly, it makes a fiscal crisis more likely.

The Search for Solutions

The prescription put forth by the GAO and CBO is one that will sound very familiar to you: lower federal spending (with reduced interest-carrying costs), and change programmatic spending on Social Security and federal health care programs.

I won’t plow into that thicket here, but let’s just say that both are going to be a challenge for any Congress or president.

So where does that lead us? It points to preparations for stagflation.

For many investors younger than 50, the idea of stagflation – an economy with both inflationary and recessionary tendencies – is hard to grasp. All that most of this age group has ever known in the past three decades is reliance on paper assets, like owning stock through a mutual fund.

We have to go back to the 1970s and the tremendous rallies in gold and silver to see the value of owning hard assets and the securities backed by them. With gold and gold securities at low prices, it’s not a bad idea to start preparing for that time again.

Young Investers

Since youth are the dominant contributors to the Gross Domestic Product (GDP), they make a great difference to the economy. All the major concern center around young population. As compared to the past, today the individuals are more financially potential and independent and it is all because of steep rise in tertiary sector. Now-a-days spending a few bucks on coffee or on shopping has become a casual activity which was very rare some time ago. It is all because of changes in lifestyle and adoption of western culture not the youth of today hardly think of ‘savings’ for the future. There is a need to focus on the disability of savings despite the fact that there are insufficient earnings.

There are just few things we should understand and minor changes we should bring to inculcate the habit of investment to bridge the gap between income and spending. One should know the sum of money earned in the form of salary and the avenues where this income is spent. Now what is salary? It is the amount working people take home after deducting the tax and contributions to EPF from gross income. This balance is also called net salary. Thus, to save you need to deduct expenses from salary.

Analysing goals-
Goals are basically the personally set standards which one wants to achieve to reach the target. These are our milestones which can help in taking right decisions. Goals can be set for different time periods say-
a) For one or two years, called the short term goals. They require immediate attention.
b) For five or seven years, called the medium term goals. They give us time to wait and analyse things between investment period and return period.
c) For ten or fifteen years, called the long term goals. These are meant for retirement.

Opting for a suitable investment plan-
Investment plan means channelising your money in the most efficient method. Since various plans are available in the market but only right plan can reap benefits in the future and for that an expert advise is highly appreciable. After selecting an appropriate plan start your investment considering the retirement because a small amount invested today can make your future bright.

Investment planning is not a one time phenomenon but it needs to be received and readjusted according to the present need and trend to make investment successful. Thus, it is high time that the youth of our country should be made aware about the best investing options and its benefits for them in the long run. Also since the young generation is the representative of the present and future economic condition of the country so they should be driven by the right motive and prospective.

1. Investment – A thoughtful task making investment is not an easy task so it requires a careful analysis of its pros and cons. You should know the purpose and need for using your hard earned income in the most profitable venture. Don’t be convinced by what your friends or neighbours or relative advice you to invest in because all have their own needs. Besides realising your need you should also be aware about the risk associated with investment plan. As it is said that more the risk, higher the chances of returns, so to earn more profit you should make careful decision about your risk taking ability. Let us consider a situation where we want to buy a bungalow in next seven-eight years so for that traditional method of investment would not be efficient rather we have to invest in stock or mutual funds for an additional advantage.

2. Get insurance – Financial goals can only be fulfilled when one lives a healthy and secured life. You should not get a term plan which has a greater coverages and last till 75 years at least. It should also increase with increase in income. In case of change in job where insurance facilities are not available on increase in coverage becomes essential. At any stage of Life you can suffer from health problems so you should try to get the best facilities and the most efficient as well as reliable term plan. Investing in health or life insurance not only protect you but also your family from unpredictable circumstances. The young generation should set up an emergency fund that would benefit them in long run. Thus, the youth are not that young that they do not know how to increase their earnings or make better returns. They are responsible for their own expenses and with other demands or commitments in their pay check it becomes more important to do systematic investment planning at a young age to secure life after retirement.

So, it is essential to invest in better and profitable plans to lesser the risk of losing money. Also for some people investment is a means of growth as it keeps up with inflation. By calculating your ROI you can get better idea about how well planned your investment is.

ROI=Investment Gains/Costs

Since investing is not an easy task and requires the help of an expert so for that you need to pay them fees but with your efforts and research you can minimize it. Even you have to pay taxes on investments made. So considering all the pros and cons of investment at a young age one can make provisions for the ins and outs of funds. It won’t be always successful but then one learns from one’s mistake and experiences.

Making investments at the earliest has an additional advantage and that is devoting time because if you lose your site, you have the time to make up for the loss. It is advisable not to use your short-term money for investment purpose because you would not like to block your money during the time of need. Investing at the right time and in the right plan is your ladder towards becoming rich.