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.
That's just so very, very wrong. GWB isn't *doing* anything.
Here's a little test: tell this forum *what* GWB is physically doing to the Dollar (you can't name it, by the way).
It's not like he has some magic wand pointed at the greenback, after all!
No, it's what GWB *isn't* doing that has got people like you so flustered: he isn't encouraging the Fed to intervene to buy Dollars.
In the past, the U.S. would aid our nominal "allies" in keeping the Dollar artificially propped up. We did this by purchasing Dollars (via the Fed) on the open Market, thereby creating an artificial demand for Dollars.
But those interventions in the Market had the effect of subsidizing foreign exports to the U.S. by enabling the Dollar to buy more foreign goods than would be natural in a purely free, non-intervened Market.
What has changed under GWB is that the U.S. is no longer propping up the Dollar alongside our "allies."
Instead, we're allowing the free market to take its course.
...And the free Market sees that there is an enormous trade deficit on one hand and an overvalued Dollar on the other.
The Market, if not sufficiently intervened, will therefor adjust both the Dollar and the trade deficit down.
That's how free markets work. That's capitalism.
It's not GWB. He's not "Taking" us anywhere so much as he is simply letting the free market correctly re-price Dollars and international trade.
By so doing, or really, not doing, GWB is thereby protecting the U.S. economy from losing more jobs to artificially low-cost countries.
There was for years in place a "STRONG DOLLAR" policy and the government would do everything in its power to prop up the greenback in relation to foreign currencies... The current administration has not embraced the strong dollar policy of the Clinton administration.... this has created a situation where the Dollar is naturally re-adjusting in a relatively short time frame, a readjustment that in reality has been going on for quite some time, but is only now free to do it.
I'm not losing sleep over a weak dollar vs the Euro. THere are those that say I should be, but I just don't agree with them.
The lower the dollar's value against the Euro, the lower the margin, and the more expensive goods will be in the US producted by companies tied to the Dollar. What made the US bad for manufacturing and export was the fact that the cost of goods sold was so high relative to the value of the currency in consuming nations, that US imports were too expensive to be competative.
Now, the inverse is going on.
The downside as I see it to a weak dollar will be few buyers for US Bonds... which basically are funding federal deficite spending, and have been for generations (yes, even during Bubba's reign). THis may finally force DC to deal with their bloated spending practices, that have been going on for 30-40 years now. It won't be a pleasant re-adjustment, but if it stops the notion that the public's money is for every liberal cause out there and forces a contraction of federal waste and spending.... and a fundamental shift by the electorate to how it views the federal government and its spending practices... that a few years of Pain is worth it in the long run.
We shall see.
Actually, you are quite mistaken, because what is happening is not a matter purely of market forces. But of Governmental Interference by the Chinese communist party. The $120 billion annually of currency manipulation is not even a fraction of the other shenanigans they are pulling. The Reds are expropriating our "means of production"...buying up key industrial technologies where we are clearly superior in productivity. And just relocating them, lock, stock and barrel to Tianjin.
If we were to drop the value of the dollar by 90% against the Yuan, I believe you will see absolutely no reversal of manufacturing roles. The Chinese will not facilitate any reverse re-industrialization of the U.S. We are the "Great Enemy." Trade while the Great Enemy makes China stronger...as an industrial power... is permitted. Trade which goes the other way, closing down Chinese manufacturing, and relocates it back to the U.S. will not be permitted.
As noted above, productivity is virtually irrelevant in their calculation. Possession of the industry itself, as an end in itself, is what it is all about. And what end does that serve?
Repeat after me, M-I-L-I-T-A-R-Y.
No, I covered that factor in earlier posts.
U.S. manufacturing *will* return to the U.S. as the free market devalues the Dollar. It will simply become cheaper and quicker to make higher quality products here than over there, and the Invisible Hand of capitalism will do the rest...
...So long as President Bush, Alan Greenspan, and the Fed all continue to ignore the pleas of Europe and China to intervene in foreign exchange markets to prop up the Dollar.
You think that rhetorical question implies either a plausible position, or a sound political posture? Ronald Reagan was significantly further to the right than GWB, in all particulars...including defense spending...and yet he won going away in both elections. Not even close. He stomped. The reason the liberals did so well, is because the GOP abdicated the high ground of explaining to the middle-electorate just how insane and counterproductive liberalism is. Liberalism became a dirty word thanks to Reagan. We had them on the mat. But GWB let them get up again.
GWB's policy and speeches allowed liberalism to be rehabilitated...and his puny "anti-liberal" attacks at the tail end of the campaign had virtually no traction. He had undermined his own credibility as an "anti-liberal". GWB had openly equated conservatives as bigots, or uncompassionate. He was a big-spender. Big Government. KennedyDasche-BiPartisan toady. We had a battle for the lesser liberal. And the more communist lost. Just barely.
Well, I expect you are wrong, although I hope that I am wrong and you are right.
As I have said, this is not a "free market" situation. The full weight of Chinese industrial/governmental policies and espionage efforts are intended to de-industrialize the U.S. and industrialize China.
Just think how much industry we would still have if China were compelled by a canny U.S. policy to BUY $120 billion annually of U.S. manufactures (not industrial plant, but manufactures) instead. The Free Fall of U.S. manufacturing, steel, automotive, machine tools, semiconductors, circuit boards, and engineering...would be slowed.
China and Mexico Have Lost 22 Million Manufacturing Jobs in the Past 6 Years
With the system in place in Europe, and all the social costs they are forced to pay-- is it any wonder that things from Europe cost more to buy every year.
They are going to keep getting more expensive as they sink further into socialism most likely.
The electorate has changed since Reagan. They are more liberal now. Do you actually think they are not? We had a massive turnout this election and Kerry -- the more liberal candidate of the two -- got 48% of the vote. If GWB moved more to the right of Kerry then his current position, then Kerry would have done even better.
You can't attribute more to the voting public than what is evident. The are pathetic (generally speaking).
' You would think, but this is not the case in many parts of the country. The culprit is primarily property taxes ...blah, blah, blah"
Except for that ol' resale thingy! I bought my house earlier this year. I pay twice what I was renting for... however, since I bought my house, it's appreciated in value about $30K. I paid just under $200K and 8 months later the same EXACT floorplan house sold up the block for $230K. If I chose to sell I would get nearly the same if not more. How would a rental have done that for me?
You can blame GWB's speeches for the increase in liberalism. I could blame the media. The bottom line is the people are still responsible for their own actions and their own vote. To think otherwise is pure liberalism.
Not a chance.
Americans don't wake up everyday wondering about the foreign exchange value of the Dollar. Americans don't go to Wal-Mart wondering what that cheap Chinese flashlight will cost in Euros.
In fact, 85% of American GDP is domestic. That's 85% of our economy that won't even notice a 30% decline in the value of the Dollar (i.e. the decline that we've *already* had in the past 2 years).
With that 30% decline in the Dollar, American consumer sentiment is jumping up yet again with day-after-Thanksgiving "Black Friday" sales up 10.8% over the previous record level of American shopping.
In other words, Americans are *more* optimistic as the Dollar has declined.
You can say they are becoming more productive workers. But for Bejing this is not about the workers. Focussing on Chinese workers misses the real point in what is going on. The Red Chinese Government is getting our steel-making plant and abilities. Something they previously lacked.
And the closure of the old obsolete plants frees up more of Bejing's resources to continue its economic Black-Hole operations against the U.S. It gives them more currency, and a fresh labor force to throw into the export sector.
Keep your eye on the ball.
so many people here just think their lives are going to end if they don't have access to $39 DVD players and $10 shirts and jeans. you can't reason with them. how much of their monthly budgets are spent on foreign made manufactured goods? very little. yet they panic and scream "inflation" when, heaven forbid, that $10 shirt might cost $13. they don't care what else happens, what jobs are lost, what's happening to our industries, our deficits, etc. as long as they can wander around walmart picking up cheap crap.
Reagan would have changed that. Let Reagan be Reagan. Let GWB BE Reagan. Stop being Karl Rove.
Would you mind explaining how the banks can actually do that? There is no provision in a mortgage for any such thing to be allowed.
that is true, but its hard to get people to look into the future. textile, consumer electronics, small appliances, xmas tree lights, toys - those industries aren't coming back to the US, even if the chinese currency floats. we need the revaluation of chinese currency to stop the current wave of industries leaving the US for china - semiconductors, technology, automobile manufacturing, high multiple manufactured products like aircraft subassemblies, etc, etc.
No replies.
Deafening silence...
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