Problems with the US trade deficit
- Thread starter vickicho
- Start date
The Allies won World War 11 mainly through the overwhelming industrial power of the Allies especially the U.S.
The tanks, aircraft submarines etc of the allies although inferior mostly in quality was more than made up for, in quantity.
This fact has not been overlooked by other nations. The Russians threw in the towel and changed to a sort of State run capitalism just to close this gap. China belatedly has been FORCED onto a similiar track to try and compete.
I think the US and Western Europe should worry about its trade deficit etc. as the competition is coming up fast. The old system is in bad need of updating or they will sail right by. The West's kicker will be gone along with any remaining power and prestige.
Lets hope Benanke ( no hope of Bush &co, sadly ) will sound the warning bells !!
To achieve peace a country should build for war
The tanks, aircraft submarines etc of the allies although inferior mostly in quality was more than made up for, in quantity.
This fact has not been overlooked by other nations. The Russians threw in the towel and changed to a sort of State run capitalism just to close this gap. China belatedly has been FORCED onto a similiar track to try and compete.
I think the US and Western Europe should worry about its trade deficit etc. as the competition is coming up fast. The old system is in bad need of updating or they will sail right by. The West's kicker will be gone along with any remaining power and prestige.
Lets hope Benanke ( no hope of Bush &co, sadly ) will sound the warning bells !!
To achieve peace a country should build for war
Whenever they decide not to lend us more, let alone if they'd want anything paid back, the interest and debt will be so high that the dollar loses world reserve currency status, we default on the debt or just inflate it away, and our world status degenerates to below that of France or Britian, more like Argentina was on a much larger scale.
We should be able to pull out of it within about 40 years if my logic is correct, basically after all the boomers are dead.
On (1): Yes, but the factory and higher pay white collar jobs (lost by outsourcing) are causing real wages to drop in the "MacDonalization" process.
On(2): Yes.
On(3): No. the Chinese internal demand is rapidly growing In less than decade the Chinese middle class purchasing power will exceed that of ALL americans (with dollar still going down) AND China must export huge volume of finished goods to countries like Brazil that are supplying the raw materials and food stocks that keep its factories "humming" at 100% of capacity. (Almost a million pesant go to the city to work each month so demand for food stocks is rapily rising to feed the growing, already huge, population of ever richer city dwellers.)
On (4) They and other central banks have already stated to buy less. large part of why dollar is falling.China is making many long term contracts and partially paying for them with capital investments. Fro example, for 30years of Brazil's ienriched iron ore, they will build new ports and railroads to ship it as well as cash.
On (1): Yes, but the factory and higher pay white collar jobs (lost by outsourcing) are causing real wages to drop in the "MacDonalization" process.
On(2): Yes, but mainly because shirts etc. made in USA will cost much more and less will be made than were imported from other lower cost Asian nations. (Chinese labor is already too costly for them to be making these low value items. China makes cell phones, digital cameras, all the worlds computers, space craft, factories, power plants, one every 8 days, etc. now.)
On(3): No. the Chinese internal demand is rapidly growing. In less than decade the Chinese middle class purchasing power will exceed that of ALL americans (with dollar still going down) AND China must export huge volume of finished goods to countries like Brazil that are supplying the raw materials and food stocks that keep its factories "humming" at 100% of capacity. (Almost a million peasant go to the city to work each month so demand for food stocks is rapidly rising to feed the growing, already huge, population of ever richer city dwellers.)
On (4) They and other central banks have already started to buy less. large part of why dollar is falling. China is making many long term contracts and partially paying for them with capital investments. For example, for 30 years of Brazil's enriched iron ore, they will build new ports and railroads to ship it as well as cash. (Brazil is worlds largest exporter of iron ore, usually of soybeans etc. but Africa will be important supplier to China also a decade from now, after Chinese capital improves their infrastructure. - China will have no need to invest in the US bonds or to sell anything to US then.
You answers are all "Yes, but...." Yes the glass is half full, but it is still half empty kind of attitude.
How exactly do you deal with CHEAP labor all over the world?
Now it is going to be China. Next, India... Next, Brazil. The Russians and the Eastern Europe have they started yet?
Yes, we have to compete to get raw material also all over the world.
China, India, Brazil, Russian and Eastern Europe still have to build up their infrastructure, water, electric, transportation, pollution control.... There is still long way to go.
Of course we want to export some of our environmentalist, lawyers and all kind of rights group to these countries to add to their cost. We want to make sure they have similar restriction on oil drilling, building dam, burn coal, clean water, clean air... They are having it easy right now. We do want to compete with them on a level playing field.
While we are getting cheap stuff from Walmart. We should be feeling very guilty about the dark side of China. The Chinese are screwing up their environment. They are polluting their air and water. They are digging everywhere for fuel and raw material. They are killing a lot of miners in thier primitive operations. They are cutting down tree. They are turning forest to desert. They are going to have a lot of problem soon.
We no longer have the plants, machinery, employees, or mgmt to take back any of what we have offshored, no matter how low the dollar goes, so when the dollar does eventually drop we will be at their mercy because we will no longer have the capacity to provide for ourselves except at a dramatically lower living standard.
As long as foreigners and foreign governments (and Americans, for that matter) want to loan the U.S. government $$$ that will be repaid to them on a depreciated basis, it's a no lose situation for our government.
I suspect, however, that this will not continue.
Bottom line? Higher interest rates to come, even amidst deteriorating economic conditions.
I suspect, however, that this will not continue.
Bottom line? Higher interest rates to come, even amidst deteriorating economic conditions.
Same thing that happened in 1979 or 1980, except this time the debt is quadrupled.
Just imagine 10% interest rates on $9 trillion plus of debt at the same time as an economy smacked with higher rates just as it was already rolling over.
Yikes...
Just imagine 10% interest rates on $9 trillion plus of debt at the same time as an economy smacked with higher rates just as it was already rolling over.
Yikes...
Lets face it guys - just about everything in the US is over-inflated and a lot of it is negative -
debt - biggest on the planet
trade deficit - biggest on the planet
national ego - biggest on the planet
the most obese nation on the planet
chucks out the most waste and toxic materials on the planet
one in two Americans can't honestly say, that while standing up straight, they can see their own toes without leaning forward
yuk yuk yuk
grab a dose of self discipline and humility guys before everyone chokes on all that crap
get WISE not SORE
debt - biggest on the planet
trade deficit - biggest on the planet
national ego - biggest on the planet
the most obese nation on the planet
chucks out the most waste and toxic materials on the planet
one in two Americans can't honestly say, that while standing up straight, they can see their own toes without leaning forward
yuk yuk yuk
grab a dose of self discipline and humility guys before everyone chokes on all that crap
get WISE not SORE