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Another US Tech Trade Deficit
eldavojohn writes "The United States is suffering again from a massive trade deficit — $38.3 billion in 2006. And it's been going on since 2002. From the press release: 'In 2006, Asia supplied 60 percent of all US imports of advanced technology products. Europe supplied more than 20 percent, and North America more than 15 percent.'"
cause Pelosi ain't got the guts
When a country exports all of it's facilities, manufacturing, and infastructure overseas, how long before that countries trading partners realize that they can cut the country out of the loop entirely?
Karma Whoring for Fun and Profit.
Fortunately, I live in a grass shack without electricity.
This way, everybody else chips in when the US has to devalue its currency to pay the debt.
President-VICE Richard B. Cheney WITH the help of YOUR CONGRESS will change the deficit into a surplus with gunrunning.
Remember: Be Patriotic:Fuck Bush
Technological advances aside, how to we compete with close to free labor?
We figured out a long time ago that it's easier to elect seven judges than to elect 132 legislators.
Holy crap, I just realized that I have a *HUGE* trade deficit with the local grocery store. I purchase almost 100% of my food supplies from them and they purchase *NOTHING* from me! And my employer is in equally dire straights. They purchase a ton of service from me, and I only a tiny fraction of service from them. Dear heavens, the world may end!
</sarcasm>
Seriously, this is a non issue. If trade deficits were an issue, then the above trade deficits would also be an issue for you personally. But it so happens that having the above trade deficits makes you, the grocery store, and your employer wealthier by allowing you all to specialize.
Nothing to see here. Move along.
Key to financial independence: Spend less than you earn. Save and invest the difference. Do it for a long time.
You didn't see Bush stopping in Michigan on his trip a few months ago telling them how great the nations economy was! Its fairly obvious that we are producing so much less on every level in this country, wait till the FDIC tells the country it doesn't' have enough cash to cover all the failed mortgage companies, and the new loaning technique work hard to remove the PMI protection for the lender. 80/15/5 or 80/20 We need a large change in the way government works or this country is going into a large slide down hill.
...we'll end up living in huts made of logs and sod, driving pushcarts full of firewood, and eating soybeans. Seriously, doesn't 'trade' mean an 'exchange' of goods and services? Obviously, the exchange is not happening, just a transfer of currency.
By definition of trade, something is given away and something is received in exchange. There is no deficit whatsoever that occurs from any single instance of trade, even if that trade involves promises to repay at a future time. Also, trade only occurs because that which is received is valued more than that which is given away in exchange. Thus, both parties *profit* from every instance of trade, at the moment of trade. That's the only reason trade occurs.
Talk of "trade deficits" is political manipulation designed to bamboozle the uninformed. Anyone who believes "deficits" result from trade is as gullible as the Emperor's New Clothes.
"From DNA to P2P, we are all Copycats now. Go Go Copycat Power! Copycat Powers activate! Form of, a Copycat." --monxrtr
Too many of the US' imports are coming from abroad.
https://www.cia.gov/library/publications/the-world -factbook/print/us.html
We import over 13 million barrels a day, which is roughly 5 billion barrels a year. Oil prices dropping $8 a barrel would nullify our deficit.
I vote in EVERY election in my precint. I vote against ALL incumbants and against any additional spending. I am doing my part. I think when the dollar finally collapses people will get a clue that deindustrializing along with de-educating our kids was a really bad idea. I am not sure if our Government fully appreciates the impact of a bunch of pissed-off gun-owning "peasants." Shrub never read the history around Viet Nam and wonderfully repeated it. I bet he knows even less about European history...regarding uprisings, inserection and revolutions, etc.
Yay, so the markets are hiccuping because people didn't understand the risk associated with the debt securities they were buying. let's get scared about the trade deficit by posting scary-looking numbers when most people don't understand any of the concepts behind them, oooooooooooooooooh. scary! :P
The World Wide Web is dying. Soon, we shall have only the Internet.
No other country tolerates such lopsided trading. Such lopsidedness creates instability for both individuals (job loss and frequent change), and the state (recessions, credit bubble poppage, etc.). The math used to justify "free trade" ONLY looks at total GDP and fails to take into account other important factors, such as stability, military secrets, income equality, etc. All factors are important, not just total GDP.
Are "they" naive or lying with math for taking us down this road? I suspect the latter. This is because multi-national corporations spread their resources all over the world so that they are more immune from the bumps caused by heavy-handed free-trade than small companies, individuals, and individual countries. They can hedge their situation better than those who will feel the brunt of the downsides. They are acting selfish by dumping the risk and side-effects of "free trade" onto others, namely us. Early pro-trade writers, like Adam Smith, didn't really understand these other factors, using simplified equations instead, and thus greed does not always work to mutual benefit.
Table-ized A.I.
Just means bigger bonuses for the guys at the top because it makes them look good at cutting costs, while the folks at the bottom continue to slog along getting 2 - 3% raises.
It's the way the free market works. Except if you're a big Wall Street brokerage firm or hedge fund in which case when the free market means you're about to go under the Fed will step in and save your asses with a bailout. But I digress.
We will bankrupt ourselves in the vain search for absolute security. -- Dwight D. Eisenhower
There is no such thing.
For every thing we buy from far away, we give back little pieces of paper. In other words, we "trade".
The essence of trade is that both sides would rather have what the other guy has.
So we fork over $49.95 for a CD player.
Some place in Taiwan has decided they'd rather have $49.95 than have a CD player. We decided the exact opposite.
After the "trade", both Ching-Chong Charlie and us, we are both happier.
That is the essence of trade.
So where is the "deficit"? We have fewer pieces of green paper, but that's okay, we got something better in exchange.
Poor C-C Charlie is stuck with little pieces of paper, only good for buying things priced in dollars. Which would be another "trade", beneficial to both parties.
It's really that simple, is that, USA pays its people too much relative to the rest of the world, and the easiest way to fix that is to devalue the dollar.
Even at its relately "low" versus the EU of $1.30 - $1.50 vs 1EU, there's no way that a worker in detroit who does not get paid the same benefits (incl natl health care), as his german counterpart, and current economics says it does.
Beyond that, we need to invest what dollars we have in education. Stop throwing so many people into prison and build more schools. Infrastructure needs money too, and honestly, some form of national health care is obviously useful. If National Health Care is such an economic drag, how the hell does the EU actually able to export its goods to the USA and not the other way around? Why is a BMW so frigging cheap?
Currency yes, needs to be fixed, but we need to take care of business at home too.
This is my sig.
And here we thought the Bush Boom was only in Iraq.
GWB and the rest of his administration are the golden boys of conservatism. It's pretty obvious to conclude that conservatives need to be thrown in prison and never, ever released.
Conservative is just another way of saying criminal.
export more weapons. preferably weapons of mass destruction, which then can be found again (by chance, of course) and be a cause for war, which is good for the local industries!
When dollar is worth toilet paper.
Why is it in their best interest to send money through the USA when we don't make much of what they want to buy, and we can't afford to buy what they sell?
Blar.
Shouldn't "impeach" read "deep fry". I would add "extra deep fried".
I, for one, will NOT vote for the whore Hillary Clinton.
About time some Slashdotters get politically motivated.
The US declared bankruptcy on the 15th of August 1971.
Nobody noticed or seemed to care. Which I have to admit I find a touch odd. But... at the same time, in 1972 and 1973 they managed to persuade the House of Saudi to denominate oil in US dollars so everyone had to buy dollars to buy oil. Perhaps you'll start to understand the close relationship between the US and Saudi now.
This genius has allowed the US to export it's inflation to the rest of the world for decades. It may have been desperation or genius, but whoever it was that thought it up should be given the highest medal by the US government and people. It's given the US a truly massive advantage over all of the other countries.
Of course, 40 years later, everyone is starting to wake up to the importance of currency, and the oil producers are starting to switch away from the US dollar as it's value dwindles.
"A nation-state taxes its own citizens, while an empire taxes other nation-states."
And inflation is just another form of taxation.
Brilliant.
Deleted
USA and Spain has similar trade deficits, not in absolute terms but as a
percentage of their GDP. The "excuse" for Spain is that they have lots
of tourism that bring "cash", but I think that it is as much crap as
the excuses that they say in USA (not a problem).
Nevertheless, I am more worried about US because Spain shares currency
with other countries with trade surplus (EU).
No one cares where their goods come from.
No one cares about workers rights when they are shopping.
All we want is cheap and fast...
We're gonna collapse as we undercut the bottom of our pyramid...
Big surprise.
The Planet Earth trade deficit with other spacefaring worlds stands at 0 Altairian dollars, unchanged since the last reporting period.
I sure wouldn't call it suffering. I'd say we are enjoying a huge trade deficit. As another pointed out, we get to trade dollars (which we "print" at very low cost) for tangible stuff. What's not to like?
Suffering comes later, if/when everyone else decides they have enough of our dollars. Then either they won't take any more, or they will send back the ones they have and buy out our entire country.
sdb
Nothing to look at people, move along now...
Anybody want my mod points?
I guess being a factory worker is your idea of a good career path?
Conservative is just another way of saying criminal. By "conservative", you mean neoconservative, right? There was conservatism before the neo-cons.
Don't buy stuff like this or this. Or your money will be going to Japan. I know it's hard to resist and many won't be able to when these are available in November and there'll be a long waiting list for them. I already have a D70 and a D200 but man, I just gotta get my hands on these new babies that were announced today. They'll be available only on November but my money is already starting to burn a hole in my pocket.
Maybe the non-american should read a dictionary.
beyond the boundaries of one's country. No implication of overseas.
Of course, you might not be an American, and it is rather public knowledge that you will skew information to try and bring us down to your level.
I love how your post is modded down as "overrated" when it makes a completely fair and valid point that goes against the slashdot party line. This is blatant abuse of moderation points.
You are exactly right on about this non-story. In essence, we trade paper for actual goods. Sounds like a good deal to me.
No wonder this "story" came from kdawson, the resident leftist political troll.. I mean editor on this site.
and North America more than 15 percent.
Nice tactful way to say "Mexico", guys...
And I have nothing against that. "Grape-pickers" and all that - Thanks for the cheap stuff you've destroyed your bodies and your local environment to produce for us; enjoy the increasingly less valuable paper we traded it for (and to think, we laugh in school when we first learn the price of Manhattan...).
to specify neoconservatives. Traditional conservatives have been disenfranchised by their party and told they're variously Libertatians, Dinosaurs, Paleo-conservatives, etc. in order to keep them out. Too bad it also keeps out their good sense, sound monetary policies, etc.
"If still these truths be held to be
Self evident."
-Edna St. Vincent Millay
The US has been in trade deficit since 1976. At what point does it start to be "Business as usual" instead of "Suffering"?
Democrats or Republicans. They are both taking us to the same place and they are not afraid of us anymore.
Many posters seem to think this is a US-only problem. This issue is much bigger. For example, the EU has a large trade deficit with China. Since the EU and US economies are about the same order of magnitude, and their trade deficits with China are similarly sized. I would argue that their economies have similar issues. All this discussion about exporting jobs, exporting factories, etc. needs to consider this.
What explains the US net income balance?
d a nking
http://www.bis.org/publ/work223.pdf
And a great mystery for the uninitated.
http://en.wikipedia.org/wiki/Federal_Reserve_Boar
http://en.wikipedia.org/wiki/Fractional-reserve_b
http://en.wikipedia.org/wiki/Money_multiplier
I can tell that this will be a useful discussion. Once I'm finished reading the insightful and intelligent posts here, I think I'll go to the blog of The Economist or the Wall Street Journal and ask them about the latest Ubuntu release!
Quidquid latine dictum sit, altum sonatur.
They need something that they can only buy with dollars: Oil. One suspected reason for the recent "interest" that the US has developed for the middle east is that there are ambitions to trade oil in euros. If that were to happen, the demand for dollars would be reduced dramatically and that would not only leave the US with much higher prices for consumer goods, but also with a relative oil price that would cripple the country's own oil-dependant economy.
No worries - we're sliding headlong into feudalism, the conservative utopia. There will always be a plentitude of feudal lords to serve on their Manors. Surely they will treat their serfs with kindness, compassion, and generosity, as they have through all of history.
From TFA
"U.S. technology product imports exceeded exports for the first time in 2002 starting a trend that left a $38.3 billion trade deficit in 2006 after reaching a high of $44.4 billion in 2005."
So it actually went down.
Also
"in 2006, the United States continued to export considerably more than it imported in two technology areas: aerospace and electronics."
Oh, the horror.
I only go to buffets for the unlimited soft serve.
Tell me another country whose government routinely punishes their most successful companies (AT&T, IBM, Microsoft) while at the same time spending billions to prop up failing companies (Chrysler). This is backwards behavior that naturally leads to trade deficits. What surprises me is how the US government does not smarten up and notice everyone else laughing at us.
The more you regulate a company, the worse its products become.
Would you rather the US have:
a) Jobs where things like iPods and iPhones are conceived from ingenuity, designed, and perfected (ie, the way things are now) OR
b) Jobs where things like iPods and iPhones are assembled
The fact that our economy and employment are pretty strong proves that the trade deficit is meaningless.
Yup. North America contains the United States and Mexico. We're certainly not forgetting anyone, eh?
"Live as if you'll die tomorrow." Ridiculous. You could die later today.
Quite a simplistic analysis and one that basically ignores US designs being produced overseas as well as US companies with subsidiaries overseas. But apparently relevant enough for political purposes.
A deficit implies that currency is moving in one direction much more than the other. In the old days, that meant less "money" in the economy. With floating exchange rates, it means the buying power of the currency is reduced. Thus, running large "deficits" puts downward pressure on the value of the US dollar, which in turn penalizes importing, and *generally* helps exports. If the currency deflats too much, then there will be inflationary problems (penalizing exporters), and there will be no realised economic growth... which puts you in the poor house.
In the long run, every import has to be paid for by an export. On a local scale, if an economy stops exporting as much as it imports, it ends up like Flint Michigan. That the US hasn't ended up like that already is testimony to the strong domestic economy.
I'm curious to know what your point is? That the US can't overspend? What's your rational? Did you just think that up, or repeat what someone else told you. If so, what's your source? What theory is it founded on? Deficits are real problems talked about by economists in government, financial and acedemic circles. Are all of these people trying to bamboozle the uninformed?
Like all pain, suffering is a signal that something isn't right
How is this a news item? "The U.S. trade deficit, which has been enormous for the past several years, once again failed to magically disappear for no reason." In other news, crime, cancer, and car accidents are also failing to suddenly blip out of existence.
"As another pointed out, we get to trade dollars"
The trouble is, you're borrowing the dollars which you then trade.
"when everyone else decides they have enough of our dollars."
When everyone else decides they want their money back because the US, its banks and its citizens start defaulting on their loans you mean. The last weeks trouble at several European banks is a typical example; US banks have sold mortgage backed loans to European banks, which finances American consumption and trade deficit.
Sure, you can try 'printing' the money to repay the foreign debt. I think Germany tried that once upon a time, maybe you could take a look at how well that worked out?
Nothing that the US or UK or China could do to make this 'problem' go away and still retain their fiat currencies. The G8 nations have to move to a Gold standard (100% backed by gold). That way the money is backed by something tangible and limited in quantity and accrued only by plundering not by a printing press.
There you go - now you have the origins of Peace on earth - when we decimated gold and introduced the money printing press, we obviated the need to plunder another nation, so long as we allowed the US to "benevolently" plunder everyone thru inflation. Both Nixon and GWB2 said FU to benevolence and we have a monetary crisis.
The federal reserve can do all it wants but the only solution is to eliminate it.
Guys - Vote for Ron Paul. He is the only candidate who undestands these issues (Colbert report jokes apart) and is willing to do something about it.
once we no longer have the ability to pay. We have done a fine job of looking and thinking VERY short term. Far too many even on /. that think in terms of sending jobs elsewhere due to costs, with no real knowledge about teh true costs involved (ask mattel; no only are they now going to have to start doing real QA, but even the chinese gov is pushing to double the price of nearly everything).
I prefer the "u" in honour as it seems to be missing these days.
The "trade deficit" or "balance of trade" counts the value of actual goods and actual services exchanged. It does not include the offsetting value of cash or whatever is being used as a medium of exchange.
Thus if I sell you $500 in widgets and buy $400 in widget-drivers, I have a trade surplus of $100 with you, and you have a $100 trade deficit.
Another way of looking at it is that you export $100 cash to me than I export to you.
At the end if the day, if all the goods and services traded were to suddenly become worthless, I'd be $100 ahead of the game.
Of course, if the currency became worthless, well, that's another topic for another day.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
That's not a problem with the trade deficit. You can have a trade deficit without having borrowed a single dime. Likewise, you can spend irresponsibly without having incurred any trade deficit. If you're defaulting on your loans, it's not because you spent too much on imports, it is that you spent too much. There is no "foreign debt" at all. A trade deficit does not imply debt of any kind, it is nothing more than a purchase. You do not borrow anything when you purchase foreign goods in exchange for cash. There is no agreement to pay anything back later.
When you learn of such a country please tell us about it. The U.S. runs a large trade deficit because developing economies tend to be net exporters and lift the U.S. standard of living by providing cheap goods. It also runs a deficit because many nations (Japan, China, some Euro countries) have a strong demand for safe U.S. treasuries and seek to protect their own export industries. The huge U.S. consumer economy is still a unique market in the world. Low U.S. inflation since the Reagan era has made these a particularly good deal for both parties. Higher inflation or a weaker dollar will likely end the practice as export profits look for better opportunities. The U.S. is an intensely competitive economy. It isn't perfect, but I laugh at you naysayers who predict its imminent decline. During the Bush administration the U.S. economic growth has exceeded the entire size of the Chinese economy. Judge the U.S. by how badly foreigners want to get in here. A few weeks ago they pulled some Chinese guy from the landing gear well of a 747, freeze dried. Too bad, we could use people with guts like that.
an ill wind that blows no good
See http://en.wikipedia.org/wiki/Economy_of_Second_Lif e, http://en.wikipedia.org/wiki/Channel_Islands or http://en.wikipedia.org/wiki/Cayman_Islands. Youll note they all get by very nicely in financial services and tourism.
Ah, the vaunted service industry. Look up working hours and you will see that people in those industries get worked to death for very low pay, especially in those islands.
You might have pointed to the equally hyped "information economy" where we supposedly think things up and own the ideas but that too is bullshit. That one flunked because our big dumb companies offshored their research too. Trying to keep other people from doing things with what they invent and know is currently flunking. Trying to back it up with embargo and military force will fail as our economy and technical prowess do.
Some people have gotten very rich exploiting Chinese slave labor, but they have screwed the rest of us and their children to do it. A nation that does not make things of value to others will soon be poor. A nation that trades with enslaved people is soon enslaved.
The US still has food as an export, but that depends on petroleum. Unless that dependency is solved, we can be squeezed out of that last apparent advantage.
Friends don't help friends install M$ junk.
I read the book "The World is Flat" by Thomas Friedman. It describes what has happened in the last 20 years and how many different unavoidable events have converged to "flatten" the world (globalization). We tend to think that India and China have lowered prices on cheap goods. They see things differently. They want to compete with us at the high end. That is their goal and they are racing us to the top. He argues that American creativity can keep America on the top, but Americans need to be better educated and they need to be motivated. (It was a good book.)
"TFA is saying that in the electronics sector, we are buying more than we are selling."
That's wrong. From TFA
"in 2006, the United States continued to export considerably more than it imported in two technology areas: aerospace and electronics."
The article uses the term "technology" without defining it, but it also clearly states that we are running a trade surplus in electronics.
I only go to buffets for the unlimited soft serve.
In case anyone's wondering what he's talking about...
But come on, universities dropping their cash cows on the whim of a single D-senator? Yeah, right, and Bush is going to bring the troops home from Iraq, legalize pot and gay marriage, and give us all free health care.
A big chunk of banking and government revenue is in the form of Student Loans. Diplomas are little more than job coupons. Half of the system depends on young people spending their way into life-long debt, for fear of slipping into a lower class. Do away with it and make free college for everybody? Wake up.
And with what money shall the US consume if it does not manufacture anything to sell for profit? Technology was the last real growth manufacturing field. Without turning one thing into another, to sell for profit, there is no more real consumption as rather than generating money, you are just recycling money. And then, when you buy foreign made goods, that recycled money leaves the country, leaving you with less to purchase with. It is an entropic cycle, and will eventually fail.
When that money leaves the country it leaves in Dollars, other countries may trade that currency, but eventually they are still U.S. dollars and have to come back into the U.S. The majority of these end up buying treasury bonds. China is now the biggest holder of treasury bonds. They own our asses... and our children's.
The solution (or at least part of the solution) is a very libertarian one: stop the growth of government, stop the congressional borrow and spend cycle, stop printing money and bonds. Bonds are a tax on the future.
Our trading partners buy bonds because they have dollars they've gotten from the stuff we've bought from them. They are a fairly safe investment and gives them a good return. If bonds were not so easily available they'd HAVE to spend that money in real investments in the U.S. The money that is now going to fund the growth of government would instead go to fund investment and economic growth
Trade imbalances aren't bad on their own, it all depends on what you do with the imbalance, if you use it to fuel Government they are terrible (look at the Latin American Economies of the 80's and what they did with the inflow of foreign currency in the form of loans, same effect). Use them to fund growth and trade imbalances are not a problem.
Basic Macroeconomics, cxu ne?
I don't think you have any idea how international trade actually works.
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
If someone is providing a service or item that people want, you shouldn't stand in the way of their transaction. After all, if you are replaced by robots would you still be indignant? The world is manufacturing crap for the US. The US should make things to exchange. Do you think the world wants to collect pieces of paper?? If they want to earn all this money, they are doing it because they too require services.
.. just like they have the right to refuse the service entirely.
.. this can be in the form of fabricating things in the US and shipping them elsewhere. This is already done for airplanes etc. Most of the world is severely undeveloped and needs infrastructure. As long as people have a need for roads, sewers, and houses ..this need is there.
.. until people have self contained in-home energy generators that manufactures happy pills and food from raw minerals. But at that point there would be no _need_ for jobs.
Instead of being pissed that others are making goods that people want to buy, there are plenty of things America can do to maintain its lead. People get paid for providing a useful service cheaper than others. If a service can be gotten for cheaper elsewhere, then a person should have the right to get it from elsewhere
Anyway, there are still things you can do to earn money:
1) Invent cures for diseases and slow down aging so that the life expectancy can be 120
2) Develop cheaper sources of energy that can be used to purify and distribute water to people who need it
3) Find out how to reduce crime to Japan's level, and then to one quarter of that. Then provide consulting to other countries.
4) Assist in building global infrastructure
There are simply not enough workers in the world to build all everything people need, so there will always be jobs
You are a buffoon and a non student of history. The US is HUGE. We have 50 states, a large enough "common market" so that back when we DID "make it in america", we had the fastest growing, largest middle class in the world, WITH savings, not debt. Stop equating debt with assets, they are NOT the same thing! The only thing this globalization has done is put everyone in the US at the mercy of the top 1% wall street pirates. We now have a larger wealth disparity between rich and poor than during the great depression, the largest public and private debt, the largest balance of payments deficit. And all of this can be traced back to 25 years ago when the big globalization lie was pushed.
Sure they teach "globalization=good" in business schools,because that's who business schools cater to, the next generation of PIRATES and wealth looters, the wall street conmen! And it is good-for the already rich guys. It makes billionaires out of multi millionaires, and debtors out of everyone else. And their toadies at the stupid Fed overly inflate the economy, FORCING people to support wall street because you can't even think about saving money any other way, because they run the numbers higher than the cost of living increases! It's a goddamn SCAM!
Look at this headline. Bailing out the rich guys. If the economy was doing good and the rich globalists were to be trusted this wouldn't be needed. This is desperation before a general collapse. Anyone who keeps believing those people is gonna lose, bigtime. There's a word the big casino owners have for folks like that, it's called "suckers".
Trying to run a fiat currency scam economy has been tried going way back in history, they ALWAYS collapse, every single time, it is inevitable. You can't printing press your way to prosperity! You CANNOT do it! it will collapse inevitably. Once your economy is based on just keeping the rich guys rich and you steal from the wealth producers-it collapses. Overly inflating the money supply is THEFT from the producers. Kings have tried it, other nations, other central banks. You have to base your money on actual wealth production and that's it, nothing more, all this other paper financial products gambling action is just wealth skimming. It's busting now. It is going to get really, really bad as well, because it's just starting to collapse and they are in panic mode. Once the huge flight away from the dollar gets going in earnest, it will make the first great depression and the one in the 80s look like a picnic.
Deleted
Any idiot can see that the U.S. Economy is slowly failing. The reason for this is a combination of several things but the three major contributing factors are:
Not to mention the similarities between what is going on right now in the US and the many other fallen empires! In other words hold on to your hats ladies and gentlemen we are in for a bumpy ride!
You talk as if Nixon resigned because from the exhaustion of cleaning up the Democrat's mess. I call straw man on that! If you're going to refute a claim, attack the proposed claim. Attacking a persons character (even if he was a liar) is a desperate move for politicians and has no place in academic discussion. Try again, and refute the claim with facts or admit it is legitimate.
If I mod you up, it doesn't necessarily mean I agree with what you've said, sorry.
My country buys 10 billion [currency] worth of widgets from your country
Your country buys 5 billion [currency] worth of widgets from mine
My country has a trade deficit of 5 billion [currency] in the widget sector.
It's imports vs exports.
When imports do not = exports, you have an imbalance.
For your nonsensical post to be correct, we would have to be buying and selling widgets in equal quantities. Hint: we aren't.
I really can't understand how anyone moderated you up.
This stuff isn't that hard.
Then what's your excuse for flunking it?
For one thing, your "widget" example relies on the unstated assumption that it's the same widgets being traded. It isn't.
Second, we are only able to buy more things from overseas because we have the currency to do so -- in other words, a "trade deficit" is the mirror image of a capital surplus. It's a reflection of the fact that nations are different, and does not represent a problem any more than the same "imbalances" between US states or US cities, or even between you and the local grocery, are "problems". It's a function of where the lines (borders) are drawn , no more.
Unless you're a screwball leftist who equates trade with theft, it ought to be clear that all trades involve *different* things moving in opposite directions.
Destination USA
American's Record Capital Surplus
Isn't the Capital Surplus a Good Thing?
"Free Tuition for Math, Science, and Engineering?" Who would need this? I actually have a PhD in engineering and worked in one of the most prestigious US labs, was always one of the best students and have good publications, incl. patents. Guess what? I had to look three years for a job and do all kinds of odd jobs to survive. Now I will finally start a "real job", highly underpaid. After I will have paid off my CC debt (did I mention I had not a real job for three years?) and after I will have saved some bucks I will move to Japan or China. Either to work there or to start up my own thing. I mean seriously, who would recommend studying science or technology? Roughly 10% of PhD students make the transition into academics. The rest is screwed. Taking into account the costs of your education, cost of living in the US and opportunity costs you should at least make something around 100k (not a big salary in silicon valley or NYC, a house is about 1.5 million). I promise you that you will hardly be able to cash this in. Fro 100k you can hire 10 PhD educated scientist abroad and nothing is easier outsourced than R&D work. AFAIK a NYC police officer makes 60-100k after 5 years in service. Hence think twice about career choices. Dude, my advice to you: If someone mentions science and technology: Run as fast as you can!
The DMCA is the last remnant of the Dot-Bomb era where people thought you'd be able to sell bits for profit.
The real information age isn't about selling information, it's about selling real goods with greater efficiency thanks to tech tools.
The US can't generate those tech tools when the DMCA puts every tech firm under hollywood's technophobic thumb.
I have at least 5 perfectly market viable (KILLER) ideas waiting to create entirely new leagues, but as it stands they'll be picked off in the starting gates by the DMCA if I so much as TRY to get VC for them.
Want to stop the tech trade deficit? KILL THE DMCA ALREADY.
VLC FOR MAC IS DYING! IF YOU DEVELOP, PLEASE SAVE IT!!
Wanna learn something about History AND economy? http://www.amazon.com/Rise-Fall-Great-Powers/dp/06 79720197
The Rise and Fall of the Great Powers (Paperback)
by Paul Kennedy (Author)
I wonder who we bought it from back in the 60s and 70s when the microchip was invented...
Probably not a commie country, that is for sure! I'm sure we could find these rare materials from a country that plays fair.
Maybe Canada?
Blar.
Perhaps if China paid 4 all their software instead of stealing it, the deficit would be reduced.
Karma? Sorry, i don't believe in superstition. http://talk.thinkingmatters.org.nz
IRI to stop pricing oil in dollars
12:34:24 È.Ù
Islamic Republic of Iran plans to stop pricing oil in dollars, IRI's Central Bank governor told IRIB on Friday.
"Iran plans to stop selling its oil in dollars," Ebrahim Sheibani said, adding that Islamic Republic of Iran had reduced its assets held in dollars to 20 percent.
Islamic Republic of Iran declared in December it would replace the dollar with the euro in foreign transactions and state-held foreign assets.
> I challenge you to find an item we need from abroad,
> that has NO domestic production and NO potential for
> domestic production and NO alternative technology.
Oil, in the quantity that it is now used in the US?
According to Wikipedia:
http://en.wikipedia.org/wiki/Petroleum
U.S. Production is 8.7 Mio. Bpd, U.S. consumption is 20 Mio. Bpd.
There is no way to make up for the difference in short time (say an election term) without a recession exceeding the scale of the 30's Great Depression.
If you want to achieve it in a 20-year timeframe, then buy an american-made 50mpg car *now*, even if that means it would have to be a Toyota!
Those exporting countries are willing sit on trillion+ dollar reserves because oil typically hasn't been available for import with any currency other than US dollars. Cutting a deal with Saudi Arabia (the OPEC swing producer) to price oil only in dollars in exchange for propping up their oppressive dictatorship, has caused the rest of OPEC to fall in line... at least until 2000 when Iraq switched from the dollar to trading oil exclusively in euros.
In other words, there was an artificially-maintained relationship between oil and the US dollar, creating great demand for our currency and causing the world to subsidize the lavish/wasteful lifestyles of so many Americans. The more oil gets pumped to third parties, the more demand there is for greenbacks, and the more we can print up over here to send abroad in exchange for real goods and services.
The oil-backed dollar is sometimes called the 'petrodollar'.
Since 2000 Iran, Russia and Venezuela have started trading in euros as well and as of last month Iran has thrown down the gauntlet and excluded the dollar. Last month was also when China decided to start spending/investing that pile of dollars (their first investment fund, with more to follow, is $300bn.).
I read through a few of the posts here, and I think some of the posters are not experts in econ despite their claims.
Although I'm not an economist, I am interested in the topic and have read some books about it.
Some facts accepted by all trade economists:
1. When the United States has a "trade deficit", it means that foreigners are buying US bonds (typically treasuries), or are increasing their reserves of dollars. (If you count selling bonds and sending currency as exports then the trade deficit is always 0).
2.At some point in the future, foreigners will want their money back or will want to spend their dollar reserves, at which point the US will have to export more than it imports. Then the trade deficit will run the other way. There is no chance of other countries "cutting out" the US, because that would mean they sent us products and lent us money while getting nothing in return.
3. The trade deficit increases the standard of living for Americans in the short term. It means that we can buy more things at Wal-Mart and other places than we otherwise could. It does not affect our overall unemployment rate. The only problem with the trade deficit is that it can't be extended indefinitely, which means that at some point we will have to export more than we import, which will be unfortunate for us.
4. Although China accounts for a larger share of the trade deficit than any other single country, it accounts for much less than Europe and Japan combined.
5. The reason Europe and Japan export things to the US is because they want to pay for imports from the US, either now or in the future.
6. The trade deficit by itself is not necessarily a problem. The only problem is if there's a "hard landing" which means that Europe, Japan, and China demand their money back more quickly than the US economy can adjust, which would harm all parties.
...the more we'll fall behind in everything--especially tech.
expandfairuse.org
"Everybody knows all the best stuff is made in Japan."
Crisis is the rule, not the exception.
Objects are cheapier so the country is wealthier, but for how long?
That depends of what kind of objects people buy and what they do with the savings of buying cheapier objects.
There are two ways of making wealth last. Invest your wealth on production of more wealth or buy products that last long.
People are generally buying consumer products like eletronics and big cars. Both usually don't last much since they're luxury products where the motivation to buy is buying the most "modern" model. They even do the opposite of producing wealth since both are energy hogs.
Stuff are cheapier but people isn't buying the same thing cheapier but all their money can buy. So there's little real savings in the process to invest in production.
In the short term it gives people a good life, since they're buying more luxury products, but if they shift wealth production overseas in the future they won't have money to buy those products.
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
The US dollar is falling in value so it isn't worth as much to them back home. This means they have to put up the price of oil to compensate.
Meanwhile the US continues to waste trillions on defence/Iraq/public security theatre/etc.
See a downward spiral coming...?
In the late 90's the trade deficit was very stable, almost flat in fact. Now it's more than eight times bigger.
Worried? You should be....
No sig today...
However, most transactions are not even swaps of goods or services. Most have a partial or complete cash component on one side or the other. If the Kid A traded 1 banana plus 10 cents for 1 apple, it would be clear that his deficit is 1 banana and 1 dime, and his surplus is 1 apple. Kid B's surplus is 1 banana and 1 dime, and his deficit is 1 apple. The term "trade deficit" or "trade surplus" refers to the cash component of the trade: Kid A has a 10-cent trade deficit with respect to Kid B for this transaction. Kid B has a 10-cent trade surplus.
If you don't like it, make up a better term to describe the same thing. "Net cash outflow after all trades" to describe a trade deficit or "Net cash inflow after all trades" to describe a trade surplus seem a bit unwieldy.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
I realise that this side-steps the point, but there are still some countries that live or die on the US dollar, for better or worse. The US dollar can also be used to purchase their goods, and the money doesn't necessarily make its way straight back to the US.
One thing that caught me by surprise when I was leaving Peru a couple of months ago was that the standard customs departure form asks people how much money they spent, expressed in US Dollars. US dollars are effectively the other half of a dual currency in Peru, along with Peru's on Soles currency. Virtually everyone accepts them, and some prefer them, at least on the tourist trail, and much moreso than in Bolivia or Chile (where I also visited). What amazed me most, though, was that even the Peruvian Government doesn't seem to have confidence in expressing amounts in its own currency.
I suppose the main point, though, is that most countries that leech off the US dollar are probably doing so because they don't have a strong enough economy to keep their own currency stable... and so they're probably not in a good position to help keep the US dollar valuable if the USA isn't.
As a European, it I amazes me how many slashdotters seem to live in a complete state of denial, even going as far as to claim that "Trade Defcit" is an artificial and meaningless term - it is not! Unlike many other figures like the official GNP (which includes positions like "good will" and and other magic) or the official (hedonic) inflation rate, or the unemployment rate (determined by a telephone poll), the trade deficit is a very solid and easy to understand thing: the value of (real, tangible) goods and servicies going in minus the value of products going out.
If you buy more stuff than you sell, then you have a net flow of dollars out. Whoever receives these dollars can do one of 3 things: (1) use the dollars (directly or indirectly) to buy US products, (2) lend the dollars back to the US (US bonds, treasury bills), expecting to get even more dollars back, or (3) buy stuff in the US (stocks, equity, real estate), again in the hope to make even more dollars from his investment. Since, for one reason or another, the US economy fails to offer enough products anyone outside the US wants to buy (1) (hence the trade deficit), we're taking about debt (2) and sell-out (3).
A "normal" country wouldn't be able to do this for very long; as he would quickly (a) have its currecy devalued (if you have nothing to sell, no one outside needs your currency), (b) run out lenders (most countries dont have the luxury to indept itself abroad in their own currency to begin with) and (c) local assets to sell. Depending on whether you do or do not fire up the printing press you either end up in bancruptcy or hyperinflation.
A super power like the US which is able to strongarm or otherwise convince the producers of some key commodities to trade exclusively in their own currency, can get away with it considerably longer as their are alway products to buy for dollars (most prominently oil) even if those are not made in the USA by US labour. This gives the dollar the liquidity which is necessary so that it even makes sense to lend back dollars to the US (instead of demanding real goods right away).
It is even more helpful, if you can convice some producers of said key commodities (as e.g. Saudi Arabia), to set a good example by putting most of the money into US treasury bills and US assets (petro dollar recycling), as this postpones inflation and the devaluation of the dollar which in turn allows to keep the interest rates in a sane range as long as those bills are kept in the vault and are constantly renewed.
Of course, not even the US can live on credit alone, eventually the lenders will want something "tangible", and if you cannot or don't want to provide goods, at least you can provide them "assets". Of course, there is only so much you can sell, so the trick is to invent more things to sell (e.g. "intellecual property") and to inflate the prices of existing investments. Since the inflation is in assets and not in consumer goods, this is not called inflation but a "boom" (after all, inverstors want prices to rise) before and a "bubble" after people realize that a high price dose not imply a sound and profitable investment (as happend in the dot-com crash and is happening right now in the real estate and mortage sector).
You can, as some in this thread do, consider this a good thing for the US, after all, it basically means converting paper into Mercedes' and BMWs, and they would be correct if this games can be played infinitely - if you happen to be in the group that actually profits (that is, if you work in or close to the finance sector - if you're a production worker, well, too bad - maybe you can get a job as buttler or bodguard by those with better luck). Then it would make sense to deindutrialize your country and neither do you need an efficient education system as the rest of the world is supplying you with consumer goods basically for free.
It won't work infinitely, though. The non-US world sits on an ever increasing pile of trillions of dollars in US-dept and overvalued assets. Ever
Thank - I think that this is succinct. I wish I could mod you up.
This is all just my personal opinion.
Chinese products are so low because they are cheaply made. In particular, the chinese foreign minister recently blamed Americans for the issues in Chinese manufactuering. His point was that mattel and other companies are only willing to pay so much for the goods (competition). As such, China is forced to keep their energy costs low( high pollution that we are ALL paying for; China accounts for about 90% of all mercury in the air), lighter-weight products to save construction and shipping costs( for the most part, read inferior material), decreased quality control (which is what we see is penny wise, pound foolish) and of course, low cost labour. Surprisingly, the labour cost it is NOT that low. Most of central America (and I would imagine the bulk of the 3rd world) make about the same amount of money. America, and probably the bulk of the west, would do better to use Central America for production. Energy is long term better deal for all (far less pollution in them), less transportation costs, and better quality control. Sadly, far too many ppl simply THINK that china is the place to be, rather than look into it.
I prefer the "u" in honour as it seems to be missing these days.
Even the wealthiest of Americans are fleeing the dollars. The top 10 richest Americans have been moving their holdings out of here. In particular, Gates and Buffett have made a LOT of noise about the deficits, but few are listening. They have moved more than a 1/3 of their money elsewhere (supposedly with more to go).
I prefer the "u" in honour as it seems to be missing these days.
The problem is that China and others have their money fixed to ours. For example, up till recent times china's money was fixed to ours and several years ago, moved to the "basket", to which they control (but do not explain how they control it; in addition, the forumula is not forthcoming as it appears to be moved on other reasons).
But, the real problem with China is that they are NOT a democracy. In a democracy with free trade, if trade is being screwed over by the gov, then the voters will tend to remove those leaders. With china, that is not possible. Worse, their leaders have a different goal in mind, but nobody really knowing what. I am a big fan of global trade. As you say, us is not a zero-sum game. But that requires money to float and it requires govs. to be freely elected. And that is NOT the case with a number of these countries where our manufactuering is increasingly being sent to.
But you know that, after all your dad is an economist, right?
I prefer the "u" in honour as it seems to be missing these days.
What's scarier--the fact that the news item has an error (the 2006 US trade deficit was around $750 billion, not $38 billion), or that none of the prior comments picked up on the error?
So basically we have a goose that lays golden eggs, one a day. This is great, because everyone wants golden eggs. But there is a problem: the goose hands out IOUs for golden eggs all the time, and by now everybody has a big hoard of IOUs, much more than can reasonably be converted into golden eggs. As long as we don't question the proposition 1 egg = 1 IOU we can all feel rich, and the goose will continue to convert one IOU into one golden egg for someone every day.
The problem is to make the goose stop issuing IOUs at will, while still converting golden eggs.
Two constraints on the solution:
1) It cannot depend on fooling the goose, because the goose is very shrewd. We wouldn't be stuck with the IOUs if it wasn't.
2) It cannot depend on using or threatening force, because it is a mean monster goose out of hell that eats babies for breakfast.
I fail to understand why China would be the first to break the status quo, except out of sheer malice. China will wait at least several decades until most Americans and Europeans with engineering skills are dead before it pulls a stunt like that. For now it will be content sending hordes of PhD students to the US and Europe.
"The United States is suffering again from a massive trade deficit -- $38.3 billion in 2006.".
Geez. Next year this will turn US economy inside out.
OK, no joking: frankly, the only reason of this deficit is that USA has money to spare and the rest of world doesn't (because it engages in war, or like in Europe, because it spends faithfully on govt projects and govt sectors, and then wonders why life gets worse instead of better).
Python is nice quick and flexible... but it provides so much rope a monkey would hang the whole ecosystem with it. -- in
The concept which we are talking about: the dollar/currency outflow from a country to purchase goods and services minus the dollar/inflow into a country from the sale of goods and services, exists. Any argument that the concept should be done away with will be ignored by most people and most economists.
If you don't like the term, feel free to come up with a new term and get the world to adopt it.
In the meantime, accept that a phrase's meaning comes from how it is used, not the literal meaning of its words.
As to politically loaded terms: I disagree that the term "trade deficit" has any inherent "good" or "bad" connotations to it. It is true that politicians and others with an agenda have used the term in contexts that imply "goodness" or "badness" but on its face, it is nothing more than a neutral mathematical statement: Country A sent more of its local currency out of the country than it brought in through trade. Likewise, "trade surplus" is equally neutral: Country A brought in more of its local currency than it sent out through trade. Despite what those with agendas may imply, there is nothing inherently good or bad about either statement.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
Aging Infrastructure
t m
August 27, 2007
The recent and tragic bridge collapse in Minnesota raises many questions in Americans' minds about our aging infrastructure, and what is being done to maintain it. Questions such as: "Was I-35 an isolated accident or are we approaching days when crumbling bridges and bursting pipes will be regular features on the evening news?"
The poor ratings on the inspection report of that bridge, and similar deficiency findings on as many as 25% of our bridges suggests the latter. Estimates on what it will cost to bring deficiencies in our infrastructure back up to par range from massive to astronomical.
Billions of tax dollars at all levels of government are devoted to infrastructure, but one problem is that politicians love to cut ribbons. Political capital is gained not from maintaining or repairing our systems, but from building new bridges, new stadiums, and new roads, often of questionable real utility. Seldom is there a ceremony or photo opportunity for repairing or maintaining something already in place.
As the so-called Highway Trust Fund is set to go bankrupt as early as 2009, private investment firms are gearing up for partnerships, which could be a positive step, if handled sensibly. What we need to avoid are items such as the Trans Texas Corridor (TTC), which is phase 1 of the NAFTA Super Highway . The Spanish firm Cintra is set to take over toll collections after the TTC's completion, however it is unclear that they'll have any obligations for maintenance. The cost is being socialized, while the profit is privatized, effectively making the American people pay for it twice.
Read the rest here...
http://www.house.gov/paul/tst/tst2007/tst082707.h
Libertas in infinitum
Have you researched Ron Paul? I think you would like his views and voting record.
Libertas in infinitum
The latter is by far the largest category, and the vast majority of them are accurately described as kooks. Unfortunately, people being human, they will tend to pigeon-hole you into the largest possible subgroup of "people who say they have Nobel-prize-worthy proofs" unless you give them a strong reason to think they are wrong. Having a Ph.D. or a book used in university classrooms on your c.v. top the lists of ways to get people to take claims of Nobel-prize-worthiness seriously. Making such a claim on
Whether or not trade is profitable to none, one, some, or all parties in a trade is orthogonal to the discussion at hand.
By the way, I agree that in a fair trade, when all parties are trading with all the facts at their disposal, all parties gain. However, that statement has nothing to do with the terms "trade deficit" and "trade surplus" in their mathematical sense.
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
You should check out some economic papers written by Ron Paul who is running for President:
http://www.lewrockwell.com/paul/paul-arch.html
You'll find them interesting I'm sure.
Libertas in infinitum