Life without the Export-Import Bank

In terms of total revenue, Boeing, the aerospace giant, had its best year ever in 2018, with worldwide sales of $101.1 billion.

Exports were particularly robust. Commercial jet deliveries to foreign airlines rose from 763 in 2017 to 806 last year. Overall, the company has a 5,900-order backlog for airplanes worth a staggering $412 billion, according to The Post last week…

For the past 3½ years, Ex-Im, as the trade-finance agency is known, has been essentially paralyzed, yet Boeing has gone from strength to strength…

In the end, Ex-Im survived, as a legal entity. Crucially, though, Senate Republican foes of the bank refused to confirm a quorum for the bank’s board; without a quorum, Ex-Im cannot approve loan transactions larger than $10 million.

As a result of this ploy, the bank has been unable to aid foreign sales of Boeing or other makers of big-ticket goods since June 2015.

And yet, in that time, Boeing has done awesomely well.

It’s not just Boeing that has survived or thrived during Ex-Im’s paralysis. Another company that received heavy Ex-Im support, construction-equipment-maker Caterpillar, achieved a record profit per share in 2018. Caterpillar’s outlook for 2019 is somewhat less rosy, due to broad economic factors such as the slowdown in China, but Ex-Im, or the lack thereof, hardly registers in analyst forecasts.

Here is more from Charles Lane.


What is the Straussian understanding here?

No clue. The non-Straussian understanding is that business lobbyists get whatever they want in Cocaine Mitch's Candy Store.

Good. Let's get rid of it. What used to be a way for the US to trade with the USSR during the Great Depression is now a festering swamp of crony capitalism. No more backroom corporate welfare.

The bank is there to finance business which commercial banks assess as "too risky".

The boundary between risky and too risky varies with the economic cycle. The best moment to assess Ex-Im's utility is during a recession, when other banks stop emitting loans. The worst moment for this is today: 115 months without recession since June 2009.

Ok...but the Ex-Im bank isn't set up as a recession-targeting program. It's loaning lots of money constantly, and the arguments for it that I have heard claim that it is essential to do this all the time.

Look at how the institution justifies itself in a recent annual report. It's not framed in terms of recessions at all:

Incidentally, that document almost explicitly argues that they are a free lunch. They provide an essential service that the private sector won't provide--but they turn a profit and don't cost taxpayers anything! There is reason to be deeply suspicious of this story.

Very interesting document, thanks dan1111.

- Exhibit 7: Top country exposure ------> Mexico 9.2% of Total exposure
- Exhibit 8: Exposure by major industrial sector ---- Aircraft 48.6%, manufacturing 17.4%, oil & gas 15.4%

The smallest market for Boeing is Latin America + Caribbean, which includes Mexico. I doubt the exposure to Mexico is from Boeing, that means other industries are exporting to Mexico with the support of Ex-Im.

Aircraft is 48.6% of the bank exposure, that means Boeing. It's reasonable if someone says, Boeing should look for risk hedging somewhere else......and that's precisely what happened: "On 2017.....small-business support represented 63.5 percent of the total dollar value of authorizations and nearly 76 percent of direct export value."

This means the political uproar of a few years ago redirected the Ex-Im tosupport small businesses, not Boeing or CAT. Mission accomplished, where's the celebration?

Thus we can conclude that Boeing planes are not ideal for drug trafficking.

Or Caterpillar bulldozers.

If by "political uproar" you mean the ongoing efforts of key senators to deny Ex-Im the right to give loans larger than $10M, which could be derailed at any time, then yes. This is that celebration.

Do America must give up tools to boost exports? You know who won't do that? Red China, the Empire of Japan and the Zionist Entity. They profit by hollowing America's manufacturing sectors out. And no one cares!

Services won't make America prosper and thrive. Americans won't learn a living buy giving one another haircuts our selling each other cryptocurrency.

I have the sense that it's easier to interpret the musings of a Straussian than to interpret the financial statement of a company like Boeing. Orders, cancellations, deliveries, receivables, sovereign/non-sovereign public buyers, this is no ordinary business. Does the Ex-Im Bank reduce the uncertainty?


You should at least spell the name of the first man I voted for to occupy the position of President of the United States of America. His name is Lyndon LaRouche, whose jail term for fraud lends him a cachet that Trump has yet to achieve.

(Though the actual voting was a farce - he was not on the ballot unlike in subsequent years, and the Fairfax polling station claimed that a write in vote was not possible - which, unsurprisingly, was not accurate. Still, it remains better to attempt to vote for LaRouche or someone equally lunatic than ever voting for any Republican or Democrat in the current two party electoral framework.)

Of course you did.

Actually, I did, And was fully aware of what a complete lunatic LaRouche he was, having seen a 1984 campaign 'commercial' - which was a half hour long, and seemed to take just first three minutes to cover launching a nuclear war. Sadly, that was probably the October broadcast, which is not on youtube, but this one (when he was still running as a 'Democrat,' before losing the nomination) does a fine job conveying LaRouche's particular style and perspective.

I have also shopped in the bookstore in Leesburg that was owned under the LaRouche umbrella - I believe its name involved Ben Franklin, but I am not that interested in researching it.

LaRouche was an interesting fringe figure with abundant free literature that was at least as entertaining as the comments here, and made a fine compliment to reading the Spotlight, which was available in news boxes outside several Metro stations in Arlington in the 1980s.

Yeah?! Well I bet you’ve never been fucked up the ass by a LaRouchite like I have, Mr.Prior!

I just to give Blumpkins at LaRouche conventions.

There is one example of a company that has done well with out exim bank and this is used to argue that exim is useless. You may want to start thinking about sample size. Marginal Revolution has turned populist.

Main issue to me is citing profitability during peak economic years, which is kind of, like, hmm.

I believe in improving government by incremental optimization, and if this incremental move proved to be optimizing so be it.

Shut it down, but I would say be prepared in the next recession that if you need something like it to start it up again. Or some substitute.

>cannot approve loan transactions larger than $10 million.

I'd argue exim is functioning as it was sold, namely as a way to help small/medium businesses vs. subsidizing Fortune 100 behemoths. We should bake this limit into the statute.

Why wouldn't they call it the Import-Export Bank -- Im-Ex? So much catchier that way. Or was that already taken?

Export-Import seems to violate the linguistic rule that it's always riff-raff, tick-tock, knick-knack, fiddle-faddle etc. rather than the other way around.

So over the past three years, Boeing’s done very well, Caterpillar has too, although it faces a challenging outlook, and GE has tanked. This is a mixed picture of a short period of time, not a monochromatic portrait of several decades. The article’s framing and conclusion are not supported by its substance.

It is of zero policy import which private companies succeed and fail. If that is, in fact, a concern, then it's just more evidence the Ex-Im Bank should be scrapped as anti-market and obscuring important price signals.

To be perfectly honest Eximbank was more useful in the days of the tax lease market. Now many aircraft are financed via the bond market, and it works just fine. However, talking of Boeing kind of misses the point. Everyone seems to forget that America has a huge trade deficit, and Congress and the president bemoan this situation, and yet Congress has decided that the one tool that works well at promoting export is, wait for it, financing. As for Caterpillar the author was quick to point out that the companies performance, PER SHARE, was good. Caterpillar profits have not been good for some time now

A few links relative to 'doing well':


Or maybe boeing simply got its subsidies elsewhere

Not really surprising, Boeing has plenty of cash and access to credit. Their debt isn't expensive, especially after tax

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