Trade Deficit Threatens Double Dip and Depression

http://www.foxbusiness.com/story/markets/industries/government/trade-deficit-threatens-double-dip-depression/?test=latestnews ^

[Red in Blue PA]

The trade deficit bottomed at $24.9 billion in May 2009, just before the current economic recovery began. Now, a rising trade deficit and continued weakness among regional banks threatens to derail the recovery.

If the economy goes down a second time, it will not likely recover easily or quickly. The unemployment rate will rise into the teens and conditions reminiscent of the Great Depression will prevail through much of the nation.

Oil and consumer goods from China account for nearly the entire trade deficit, and without a seismic change in energy and trade policies, the U.S. economy faces grave peril.

[ClearCase_guy]

Quick! Raise taxes on US businesses! Regulate something! Hire more bureaucrats! There’s no time to lose!

[Red in Blue PA]

Don’t laugh. If you were to walk the halls in DC that is precisely what you would be hearing.

[goodnesswins]

DUH

[Oceander]

[Cringing Negativism Network]

Quick!

Let’s send more good American jobs to communists.

[OrioleFan]

Obama lets no crisis go to waste. It’s gonna get ugly folks.

[kingu]

Everything will be just fine, as soon as January rolls around and the Bush tax cuts expire. Yep, that’ll fix those trade deficits right away...

Do they seriously think these tinkering numbers mean much? One out of ten people who still are bothering to look for work are unemployed, 1 in four in the 19 to 25 demographic are employed, most of them don’t even bother looking for work. Small businesses, the heart of our economy, are looking towards January, looking at rising minimum wage rates, required health benefits, and are deciding that they don’t need to hire anyone else right now.

And in California, 1 in five who have jobs work directly or indirectly for the government. I’m sure that trade deficits are enjoyable to watch, but how can you miss the glaring sinkholes in the underlying economy?

[Cringing Negativism Network]

Obama didn’t send our manufacturing base to the Chicoms.

Obama is a lot of things wrong.

But it was our side, which has been busy sending American jobs overseas.

How about we look in the mirror this once.

[YankeeReb]

Just a question from a non-economist: What happens to China’s economy when we run out of money to buy Chinese goods? All those newly rich Chinese aint going to be too happy going back to the rice paddles.

[Cringing Negativism Network]

To venture an answer to your question:

A good portion of the investment capital for all those joint venture companies.

Is from the PLA.

Do the math. We run out of money, who has it?

[goodnesswins]

TAXES, REGULATIONS and lack of a coherent immigration policy etc have sent jobs overseas.....

[sefarkas]

Professor Morici writes/proposes policies that are completely opposite of what Adam Smith observed over 200 years ago. A nation is better off buying what it is not efficient at creating and selling what it is efficient at.

Large trade deficits tax economic growth by reducing the demand for U.S. goods and services. They also lower productivity by causing workers to shift from export and import-competing industries to less productive sectors of the economy. Were the trade deficit cut in half, GDP would increase by nearly $300 billion, or about $2000 for every working American. Longer term, trade deficits reduce U.S. investments in R&D. As a consequence of the cumulative effects of trade deficits over the last ten years, the U.S. economy in 2006 will be about $1.7 trillion dollars smaller than it otherwise would have been. See more at this link.

There is neither the manufacturing capacity nor the workforce in-place in America that could replace what the Chinese provide so cheaply even in the intermediate term. You want a job sewing clothes? You want a job soldering circuit boards? Americans are able to stretch their stagnant income into the highest living standards on the Earth precisely because we do not waste our money on inefficient businesses that are protected and subsidized by a federal or state agency.

[unkus]

This is only one of the cards in the house of cards. A big gust of wind is a commin’.

[Cringing Negativism Network]

“TAXES, REGULATIONS and lack of a coherent immigration policy etc have sent jobs overseas.....”

-

In related news.

An SUV ran over an innocent pedestrian today downtown.

Oh. And a semi-automatic held up a liquor store.

[Cringing Negativism Network]

“You want a job sewing clothes? You want a job soldering circuit boards? “

-

No offense, but have you bought (anything) recently?

Are you living in a cave?

Sewing clothes? Are you kidding? EVERY job in America is being lost.

All of it. Top to bottom.

[sefarkas]

If you were to eliminate trade with China, then where do you propose to obtain the goods you used to buy from them? Someone has to make them. Are you suggesting that we buy Chinese products because we just feel like it and if we do not feel like it anymore, then we just do not need that shirt or toy or whatever it was we were just willy nilly spending money on? Not every job is leaving the country. What planet do you live on?

[lmr]

Aside from the trade deficit, we have a housing market that quickly tanked after the clock ran out on Obama’s homebuyer credits. Also, instead of counting over 600,000 people that quit receiving unemployment benefits in June as ‘unemployed’, they’ve been shuffled into a category in which they don’t have be included in the unemployment rate at all. The ceased to exist, I guess. There are lies, damned lies and statistics. That they don’t count them as ‘unemployed’ any longer doesn’t mean those people quit looking for work and quit hurting. They have done things that have papered over the demise and also hid many problems with a trillion dollar Stimulus that produced nothing of long-term value except greater debt. It was a short term sugar high. There was no ‘recovery’ as many Democrats and the Left have claimed. No double dip. We’ve been in the chasm the whole time and it’s only going to get quite a bit deeper now. They only put off the day of reckoning and now it is nigh.

[ClearCase_guy]

In an utterly free market system, you buy the cheapest stuff you can from whomever can make it at that price. Manufacturing in the US? Costs too much. Software development in the US? Costs too much. It goes on and on. Almost everything is cheaper if we buy it overseas.

So where does that leave us? Much of our population have no skills, no education. Any jobs that they might be able to do (sewing, soldering, etc) is done cheaper in China. So many millions of Americans have no means of income.

In an utterly free market system, we say "tough" to those Americans and we allow them to die in the gutter.

On the other hand, we could have some degree of government intervention to help people avoid the death-in-the-gutter outcome. As part of that government intervention, we could consider international trade policies which encourage some manufacturing jobs to come back to the US and provide income for Americans. It may not be the cheapest way to get your sewing done, but it just might be in the nation's interest.

[Cringing Negativism Network]

“Not every job is leaving the country. What planet do you live on?”

-

Oh?

Why not?

Because there are too many jobs, and it couldn’t happen?

China alone, could absorb every American job. Then again. And one more time. And still have enough productive workforce to absorb every job in the EU.

Name ONE job in America, that cannot be outsourced.

I’ll try one, I guess is nurse. Garbage collector I suppose.

Otherwise, what job is safe?

Gas station attendant? Not when nobody can afford to drive.

Sales clerk? Selling what?

Teacher? Paid for, with what?

Face it. This is end game, if we don’t stop it.