Posted on 11/27/2004 10:24:13 AM PST by soccer_linux_mozilla
The United States’ trade deficit is soaring and the once high-flying dollar has sunk to record lows against Europe’s common currency.
The dollar’s record low against the euro coincided with the government’s report that the United States was running a trade deficit through September at annual rate of 592 billion dollars. That compares with last year’s record 496 dollars billion. As a result, the country is having to borrow almost 600 billion dollars from overseas this year to pay for the imported cars, televisions and other items Americans are buying.
It's going to be worse the socialist, the communists must be rubbing their paws with the notion of how many new recruits they will be getting.
That makes sense, I forgot about dividents, and so does the advice about silver. Thanks.
It's fun to compare prices over time:
| Item | Price in 1900 | Price in 1999 |
| Sugar (1 lb.) | $0.04 | $0.78 |
| Eggs (1 dozen) | $0.14 | $1.79 |
| Butter (1 lb.) | $0.24 | $4.49 |
| Beef (1 lb.) | $0.07 | $2.29 |
| Coffee(1 lb. on commodity exchange) |
$0.07 | $1.35 |
| Kodak camera* | $5.00 | $120.00 |
| Lionel electric train | $6.00 | $150.00 |
| Train ticket** | $13.00 | $43.00 |
| First-class stamp | $0.02 | $0.33 |
OTOH, were we really better off in 1900?
Oh yeah, now I remember. IMHO the big problem in those days was good ol' Nixon screwing things up-- not only with devaluing the currency but ham fisted price controls even. In comparison, I wouldn't say GWB is taking the dollar too far, or too near for that matter-- like, what's he done?
Some people complain about a 'do-nothing' gov't (the Economist mag. for one). Personally, when I see a problem with the economy, I email Washington and say "Don't just do something, STAND THERE!".
Actually Volkswagen, Porsche, and Audi are under the same ownership. BMW and Merecedes are the othere 2.
GM has a large share of the German auto market under the Opel brand and Ford also has a big prescense in Germany.
Audi, that's the one I could not think of, thanks. I thought they were all thier own companies. Oh well, wrong again.
Nonsense. Examine the hottest regions of economic growth, such as LA out in California. Notice that their real estate is not going down in price (the definition of deflation).
Check out home prices in Nevada, too. Again, where you have economic growth, you have the opposite of deflation.
You should track down and slap whoever told you the outright falsehood that "economic growth is deflationary."
Watch the price of office space when a local economy heats up. Anyone who claims that economic growth is deflationary is so far wrong that it has to be more than ignorance; it really has to border on outright disinformation from willing propagandists.
"Not true in many parts of the country, most people just never did the math." - tortoise
In my opinion, it would be a fractional, tiny, miniscule, and *rare* occurance for renting to be a better builder of wealth than buying.
I suppose if home values were literally declining that a case could be made for renting, or perhaps if there was some obvious, "sure-thing" investment that returned so much more than homes average appreciating that a rent low-enough to leave the "investor" with more cash flow than would her mortgage...but such events are so rare as to be academic.
Lets face it, everyone has to live somewhere; might as well start the process of obtaining that "place" via incremental ownership rather than forever renting, I say.
Then deflation is that over time money is becoming relatively more valuable than the other goods in the economy. Following that logic, deflation can occur because of a combination of four factors:
1. The supply of money goes down.
2. The supply of other goods goes up.
3. Demand for money goes up.
4. Demand for other goods goes down.
Wrong. I have a business without liability.
You would think, but this is not the case in many parts of the country. The culprit is primarily property taxes (and laws pertaining thereto) and HOA, which have gone through the roof all over the place. All the places I've lived or thought about living I've actually done the math, and it surprises me how often I am better off renting in the final calculus. Where I live now for example, in this greater region of 6-10M people, I can rent a place for $1400/month that would cost me >$500k to buy. I would spend $600/month on the property taxes alone, plus $100-200/month HOA on average. Add some more for insurance, maintenance, and similar.
I haven't even gotten to the mortgage on a property that expensive, and the expenses alone are a very significant portion of the entire rent for an equivalent place. Unless I could afford to drop cash for most of the purchase price, there is no way I could come out actually making a net profit versus renting and investing. I'd be better off renting and investing or saving the substantial difference until I could afford to drop enough cash to have a very small mortgage and realize a genuine profit over renting. In other words, it would take many, many years of saving for most people in order for it to make financial sense to buy a house in these parts, though few people do this in practice.
This is true anywhere, and the important measure is how much money one has to pay upfront on a given house for the financials to be beneficial. For a few regions that number is approximately zero, and for many it is a relatively small fraction of the total purchase price. But there is a significant fraction of the US where that number is a significant fraction of the total price. Around here it would probably range from 50-75% depending on where you live. Yet I do not see people buying houses around here putting $250k+ as a down payment on their homes. $50-100k is more typical, and financially a net loss.
So in many places, the average total monthly unrecoverable losses when purchasing a house with a substantial mortgage exceeds the rent you would pay for an identical place. In these cases it would be better to rent and invest your money in a stock index until you have enough cash that purchasing a house would not be a net loss versus renting.
If you can afford to pay cash for a house outright, then you are correct that renting is worse for wealth-building than buying generally, though there are some cases where even this is not true.
No, that's specifically *not* a "net loss." That's a *temporary* cash flow loss. When the house is sold, all of that $50-100k temporary cash flow loss is typically recovered, plus a substantial profit on top.
A "net loss" would be a permanent unrecoverable loss. That's clearly not the case for most home owners in the U.S. during recorded history.
...Also, most homebuyers already have a home that they are selling; again typically putting a large portion of the profit from the previous sale into the new home purchase.
No, that's not only wildly wrong, it's not even *mathematically* possible. Republicans only have 15 Senate seats up for re-election in 2006. Democrats only hold 44 Senate seats. 15 + 44 does NOT equal 60.
You people need to calm down. You are at least the second person on this thread to post the ridiculous notion that somehow Republicans could face catastrophic election losses in 2006 if your pet concepts aren't promptly supported by every Pubbie.
That's just not how our system works.
Shifts in power are very gradual in the U.S. From the Civil War until the early 1900's, Republicans ruled. But by the end of that era, Democratic voter registrations had finally caught up to Republican registrations. Then Democrats moved from parity up to 66% of all voter registrations in America.
But from that peak between 1930 and 1960, Democrats have steadily lost their voter registration edge, with Republicans and Democrats reaching parity this year with 37% each.
It will take another 20 to 40 years before either Party takes a commanding lead in voter registrations (say, 25% above the other).
That sort of glacial change does *not* indicate a national election skunking no matter how bad either Party behaves or how bad a national event impacts our collective pysche (e.g. Pearl Harbor, Vietnam, Watergate, 9/11).
Moreover, you've got to comprehend basic math. Democrats physically *can't* win 60 Senate seats in 2006. In contrast, Republicans could mathematically take all 18 non-Republican Senate seats in 2006 to theoretically yield up to 73 Senate seats under Pubbie control. Of course, that won't happen either. Americans simply aren't that radical. We're a centrist nation that re-elects the same crew, with rare exceptions as well as in line with established trends (say, voter registration shifts, red-state - blue state prejudices, etc.).
Its obvious that a case can be made for renting or owning. One good debate is paying for your home in full(if you have the funds of course) or making payments. Many people like the idea of a tax rebate and investing the month. Others like the security of not having to make a payment.
That said back to the renting or owning question. I have noticed that maintaining your home, payments to the HOA, property tax payments and being tied down to that house for some time may outweigh what many think is common sense to own the home. Depending on the market at the time it may take awhile to sell and there is always the possibility that the market may go down.
Not to mention the last house I owned I had to spend 12 grand getting it into shape to sell. I did make some money off it but I think I could have recieved a better return on my money. I am currently debating in my mind if I should buy again or just rent. I am leaning to investing my money elsewhere and renting.
If I was certain I had my "dream house" and would not be moving for at least 10 years I might buy a house.
Excuse my pure speculation...
Major holders of dollars realize they must reduce their dependence on the dollar. But they cannot rebalance right away in a sinking market, for fear of accelerating the fall. So, the dollar will enter a trading range vis-a-vis the Euro, and the next significant move for the dollar may be UP. The major holders will seek incremental profits in the trading range, while slowly reducing their holdings. The range will last a while (2-4+ years).
End of speculation.
Nixon had no choice on the currency matter. Foreign governments realized we were turning them into bag holders (basically stealing from them) and they didn't like it. Who can blame them? The price controls were done out of panic once the currency system failed, and made the problem much worse. The ultimate in idiocy was Carter (big surprise). He weakened the currency when he didn't have to, and then he also did price controls.
But if someone is going to claim the dollar is overvalued, looking before 1973 is a must to see it isn't so. I once had a chart of the estimated CRB index for the past 250 years. The value always returned to normal, even after the hyperinflation of the Revolutionary War. We never have returned to normal after the inflation of the 1970's. My guess is it will happen at some point. I'd rather have it happen gradually rather than all at once. GWB is heading us in the wrong direction. There will be hell to pay at some point. TANSTAAFL.
Nonsense. The *only* place to look to see if a currency is properly valued is the current balance of trade.
If you import more than you export, then your currency is overvalued. If you export more than you import, then your currency is undervalued.
That's it. That's the test. That's what the "free market" examines when valuing currencies.
Of course, the "free market" can be manipulated by foreign government intervention...creating temporary distortions, but in the end the Market always prevails.
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