Topic: The Export-Import Bank - page 3. (Read 4659 times)

Quote from: Rigon on July 30, 2014, 08:07:09 AM

I guess I was not aware of all of the widebody, long-range aircraft being made by Chinese, Japanese and South Korean concerns...

Ex-Im finances much more outside of aviation sales, but we absolutely do have competitors in aviation sales as well, they just tend to be more European and Russian.

I am not sure it is "much more" outside of Boeing, given that a supermajority (65%) of its financing guarantees support the sale of Boeing widebody aircraft (a market where there is only one real competitor--Airbus), and almost 90% of the total goes to Boeing, GE and Caterpillar.

It does do much more outside of Boeing. A vast majority of its actual loans don't go to Boeing at all. Boeing primarily benefits from the guarantees, and Boeing is a major industry for the US overseas, as is GE and Caterpillar (which face heavy foreign competition in foreign markets). But i've worked with plenty of smaller businesses that benefit from Ex-Im when trying to compete in Africa. The dollar amounts are just smaller since they are, well, much smaller businesses and if you want to look at specific dollar amounts instead of the actual number of businesses serviced then yeah, of course it is going to appear a bit lopsided.

The issue is really not so much about corporate welfare, but more supporting the american economy. Other major countries have similar programs so their local companies gain the same types of advantages that the export-import bank gives american companies. The ex-im bank does give support to american companies but taing this support away would put america at an economic disadvantage.

zolace

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Quote from: zolace on July 30, 2014, 07:51:04 AM

Quote from: zolace on July 30, 2014, 07:51:04 AM

I guess I was not aware of all of the widebody, long-range aircraft being made by Chinese, Japanese and South Korean concerns...

Ex-Im finances much more outside of aviation sales, but we absolutely do have competitors in aviation sales as well, they just tend to be more European and Russian.

I am not sure it is "much more" outside of Boeing, given that a supermajority (65%) of its financing guarantees support the sale of Boeing widebody aircraft (a market where there is only one real competitor--Airbus), and almost 90% of the total goes to Boeing, GE and Caterpillar.

It does do much more outside of Boeing. A vast majority of its actual loans don't go to Boeing at all. Boeing primarily benefits from the guarantees, and Boeing is a major industry for the US overseas, as is GE and Caterpillar (which face heavy foreign competition in foreign markets). But i've worked with plenty of smaller businesses that benefit from Ex-Im when trying to compete in Africa. The dollar amounts are just smaller since they are, well, much smaller businesses and if you want to look at specific dollar amounts instead of the actual number of businesses serviced then yeah, of course it is going to appear a bit lopsided.

Rigon

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Activity: 994

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I guess I was not aware of all of the widebody, long-range aircraft being made by Chinese, Japanese and South Korean concerns...

Ex-Im finances much more outside of aviation sales, but we absolutely do have competitors in aviation sales as well, they just tend to be more European and Russian.

I am not sure it is "much more" outside of Boeing, given that a supermajority (65%) of its financing guarantees support the sale of Boeing widebody aircraft (a market where there is only one real competitor--Airbus), and almost 90% of the total goes to Boeing, GE and Caterpillar.

zolace

sr. member

Activity: 364

Merit: 250

Quote from: Rigon on July 30, 2014, 07:08:24 AM

I guess I was not aware of all of the widebody, long-range aircraft being made by Chinese, Japanese and South Korean concerns...

Ex-Im finances much more outside of aviation sales, but we absolutely do have competitors in aviation sales as well, they just tend to be more European and Russian.

Rigon

sr. member

Activity: 994

Merit: 441

I guess I was not aware of all of the widebody, long-range aircraft being made by Chinese, Japanese and South Korean concerns...

zolace

sr. member

Activity: 364

Merit: 250

Quote from: zolace on July 30, 2014, 06:52:29 AM

Quote from: Rigon on July 30, 2014, 06:44:11 AM

Quote from: zolace on July 30, 2014, 06:52:29 AM

So it's corporate welfare?

Nope. I'm also a little curious as to why you feel the need to attach it to some sort of over-reductionist soundbyte in order to discuss it. Why can't we just talk about what it actually does and why it is there?

I don't think it is reductionist to point out that subsidizing upstream equipment purchases for the foreign competitors of U.S. companies is much different from tariffs on intermediate goods. Both have the same downstream effect of favoring one American business over another.

Boeing isn't a foreign competitor. Nor are these businesses operating in the same markets (generally speaking). This also isn't a direct subsidy, it is an indirect one through risk management guarantees.

The term "corporate welfare" is a politicized term and doesn't really have anything to do with this subject. The fact that you feel the need to phrase this subject in some sort of politicized context before discussing its merits is a bit telling.

A rose by any other name...

Boeing is not a foreign competitor, but the foreign airlines it sells jets to are foreign competitors of U.S. airlines. The foreign competitor gets a subsidy to buy jets that amounts to a buy eight, get one free card. The U.S. airlines get no such subsidy and have to pay higher interest rates on jet leases and purchases. Are you truly arguing that that this does not create a competitive advantage for the foreign companies?

Slightly reduced sunk costs are hardly a barrier to free market competition between airlines. And you are also ignoring the fact that the primary point here is not subsidies. These airlines aren't necessarily getting planes cheaper than US airlines. What the loan gauntness do is reduce risk for US companies, and it is that risk, not the actual cost of the plane, that usually prices them out of the market. And those risk costs aren't present in US markets and aren't something US airlines have to deal with when buying their capital inputs. Your argument rests on some sort of market symmetry, but that symmetry doesn't exist.

The foreign airlines are getting planes much cheaper than U.S. airlines. And there are significant credit risks in the U.S. market, albeit somewhat different risks, or else the financing rates for established airlines would not be so much higher.

There are even more significant credit risks inherent within the weak institutions of developing countries than there are within the stronger institutions of the US. The risk costs are hardly equal and even with Ex-Im help there remains significant investment risk. Ex-Im doesn't eliminate risk, it reduces it so that we can compete. If we don't reduce it for our businesses then the airlines will still get the same deal, but they'll buy them from China, Japan, or South Korea instead. Even if you killed Ex-Im it would do nothing to solve the problem that you are trying to suggest exists for US companies. What you really seem adverse to here in your argument is increased international competition within industries. A long standing complaint of businesses, but hardly an argument conducive to free trade and open market activities. Are you against private market competition?

Rigon

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Activity: 994

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Quote from: Rigon on July 30, 2014, 06:44:11 AM

Quote from: Rigon on July 30, 2014, 06:44:11 AM

So it's corporate welfare?

Nope. I'm also a little curious as to why you feel the need to attach it to some sort of over-reductionist soundbyte in order to discuss it. Why can't we just talk about what it actually does and why it is there?

I don't think it is reductionist to point out that subsidizing upstream equipment purchases for the foreign competitors of U.S. companies is much different from tariffs on intermediate goods. Both have the same downstream effect of favoring one American business over another.

Boeing isn't a foreign competitor. Nor are these businesses operating in the same markets (generally speaking). This also isn't a direct subsidy, it is an indirect one through risk management guarantees.

The term "corporate welfare" is a politicized term and doesn't really have anything to do with this subject. The fact that you feel the need to phrase this subject in some sort of politicized context before discussing its merits is a bit telling.

A rose by any other name...

Boeing is not a foreign competitor, but the foreign airlines it sells jets to are foreign competitors of U.S. airlines. The foreign competitor gets a subsidy to buy jets that amounts to a buy eight, get one free card. The U.S. airlines get no such subsidy and have to pay higher interest rates on jet leases and purchases. Are you truly arguing that that this does not create a competitive advantage for the foreign companies?

Slightly reduced sunk costs are hardly a barrier to free market competition between airlines. And you are also ignoring the fact that the primary point here is not subsidies. These airlines aren't necessarily getting planes cheaper than US airlines. What the loan gauntness do is reduce risk for US companies, and it is that risk, not the actual cost of the plane, that usually prices them out of the market. And those risk costs aren't present in US markets and aren't something US airlines have to deal with when buying their capital inputs. Your argument rests on some sort of market symmetry, but that symmetry doesn't exist.

The foreign airlines are getting planes much cheaper than U.S. airlines. And there are significant credit risks in the U.S. market, albeit somewhat different risks, or else the financing rates for established airlines would not be so much higher.

zolace

sr. member

Activity: 364

Merit: 250

So it's corporate welfare?

Nope. I'm also a little curious as to why you feel the need to attach it to some sort of over-reductionist soundbyte in order to discuss it. Why can't we just talk about what it actually does and why it is there?

I don't think it is reductionist to point out that subsidizing upstream equipment purchases for the foreign competitors of U.S. companies is much different from tariffs on intermediate goods. Both have the same downstream effect of favoring one American business over another.

Boeing isn't a foreign competitor. Nor are these businesses operating in the same markets (generally speaking). This also isn't a direct subsidy, it is an indirect one through risk management guarantees.

The term "corporate welfare" is a politicized term and doesn't really have anything to do with this subject. The fact that you feel the need to phrase this subject in some sort of politicized context before discussing its merits is a bit telling.

A rose by any other name...

Boeing is not a foreign competitor, but the foreign airlines it sells jets to are foreign competitors of U.S. airlines. The foreign competitor gets a subsidy to buy jets that amounts to a buy eight, get one free card. The U.S. airlines get no such subsidy and have to pay higher interest rates on jet leases and purchases. Are you truly arguing that that this does not create a competitive advantage for the foreign companies?

Slightly reduced sunk costs are hardly a barrier to free market competition between airlines. And you are also ignoring the fact that the primary point here is not subsidies. These airlines aren't necessarily getting planes cheaper than US airlines. What the loan gauntness do is reduce risk for US companies, and it is that risk, not the actual cost of the plane, that usually prices them out of the market. And those risk costs aren't present in US markets and aren't something US airlines have to deal with when buying their capital inputs. Your argument rests on some sort of market symmetry, but that symmetry doesn't exist.

Rigon

sr. member

Activity: 994

Merit: 441

So it's corporate welfare?

Nope. I'm also a little curious as to why you feel the need to attach it to some sort of over-reductionist soundbyte in order to discuss it. Why can't we just talk about what it actually does and why it is there?

I don't think it is reductionist to point out that subsidizing upstream equipment purchases for the foreign competitors of U.S. companies is much different from tariffs on intermediate goods. Both have the same downstream effect of favoring one American business over another.

Boeing isn't a foreign competitor. Nor are these businesses operating in the same markets (generally speaking). This also isn't a direct subsidy, it is an indirect one through risk management guarantees.

The term "corporate welfare" is a politicized term and doesn't really have anything to do with this subject. The fact that you feel the need to phrase this subject in some sort of politicized context before discussing its merits is a bit telling.

A rose by any other name...

Boeing is not a foreign competitor, but the foreign airlines it sells jets to are foreign competitors of U.S. airlines. The foreign competitor gets a subsidy to buy jets that amounts to a buy eight, get one free card. The U.S. airlines get no such subsidy and have to pay higher interest rates on jet leases and purchases. Are you truly arguing that that this does not create a competitive advantage for the foreign companies?

zolace

sr. member

Activity: 364

Merit: 250

So it's corporate welfare?

Nope. I'm also a little curious as to why you feel the need to attach it to some sort of over-reductionist soundbyte in order to discuss it. Why can't we just talk about what it actually does and why it is there?

I don't think it is reductionist to point out that subsidizing upstream equipment purchases for the foreign competitors of U.S. companies is much different from tariffs on intermediate goods. Both have the same downstream effect of favoring one American business over another.

Boeing isn't a foreign competitor. Nor are these businesses operating in the same markets (generally speaking). This also isn't a direct subsidy, it is an indirect one through risk management guarantees.

The term "corporate welfare" is a politicized term and doesn't really have anything to do with this subject. The fact that you feel the need to phrase this subject in some sort of politicized context before discussing its merits is a bit telling.

Rigon

sr. member

Activity: 994

Merit: 441

So it's corporate welfare?

Nope. I'm also a little curious as to why you feel the need to attach it to some sort of over-reductionist soundbyte in order to discuss it. Why can't we just talk about what it actually does and why it is there?

I don't think it is reductionist to point out that subsidizing upstream equipment purchases for the foreign competitors of U.S. companies is much different from tariffs on intermediate goods. Both have the same downstream effect of favoring one American business over another.

zolace

sr. member

Activity: 364

Merit: 250