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America’s financial standing with rest of world best since 1999
marketwatch ^ | March 19, 2014, 10:37 AM | Jeffry Bartash

Posted on 03/22/2014 10:51:14 PM PDT by ckilmer

America’s financial standing with rest of world best since 1999


(Excerpt) Read more at blogs.marketwatch.com ...


TOPICS: Business/Economy
KEYWORDS: fracking; tradedeficit
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March 19, 2014, 10:37 AM
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America still buys more goods and borrows more money from the rest of the world than foreigners do from the U.S., but the gap has now shrunk to a 14-year low.

The government on Wednesday said the U.S. current-account deficit fell 16% to a preliminary $81.1 billion in the fourth quarter from $96.4 billion in the third quarter. That’s the lowest deficit in 14 years.

What’s more, the deficit as a percentage of the size of the U.S. economy dropped to 1.9% from 2.3% to mark the lowest level in 16 years. The gap as a percentage of gross domestic product reach as high as 6.5% in 2005.

The current account is an eye-glazing economic statistic, but it’s still a very important one. It basically tells us how much the U.S. in in arrears with the rest of the world, based on trade and income inflows and outflows.  Surpluses reflect economic strength while persistent deficits are a sign of weakness.

The U.S. mostly ran surpluses from the end of World War Two until the mid-1970s. By then rising petroleum prices began to drain more money out of the oil-dependent domestic economy and the U.S. started borrowing heavily from abroad to finance government and consumer spending.

In short, America has been living beyond its means for decades, buying from goods from other nations only too happy to lend to the U.S. to pay for it all. The current-account deficit is a reflection of the large U.S. trade gap and the nation’s steadily rising national debt.

The good news is that the trend has sharply reversed since the current-account deficit hit a record $214.5 billion in 2006. The growth in U.S. imports has slowed, for one thing, and that’s due in large part to the biggest domestic oil boom in decades. A technique known as fracking has allowed the nation to extract far more oil and natural gas compared to a decade earlier. American vehicles are also more fuel-efficient, reducing demand for gasoline.

Higher inflows of foreign money into the U.S. and smaller outflows from America to the rest of the world have also helped lower the gap.

Foreigners have also invested more in America because the U.S. economy is better off compared to Europe and most developing nations. In the fourth quarter, for instance, foreigners bought more Treasury bonds and made more direct investments. Foreign-owned assets in the U.S. surged to $325 billion in the fourth quarter compared to a $145.6 billion increase in the prior period.

At the same time, though, foreigners are not earning as much investment income from the U.S. because of very low interest rates. Still, they’ve kept a lot of money parked in assets such as Treasurys as a safe haven given economic and political uncertainty elsewhere.

Surprisingly, foreigners appeared to take profits from the stock market in the fourth quarter. They sold a net $61.3 billion worth of shares after boosting net purchases by $127.9 billion in the third quarter.

Can the downward trend be sustained and eventually push the U.S. toward its first current-account surplus in more than 20 years? That will be a lot harder to do. As the economy improves Americans are likely to buy more imports and the U.S. still relies heavily on foreign-produced petroleum products.

– Jeffry Bartash

1 posted on 03/22/2014 10:51:14 PM PDT by ckilmer
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To: ckilmer

Translation: We are losing so many jobs and so many are having to work part time that we don’t have the money to buy stuff from overseas anymore. The rest of the world is doing better, thanks to the jobs we sent them, and are buying more of our crap.


2 posted on 03/22/2014 11:00:58 PM PDT by icwhatudo (Low taxes and less spending in Sodom and Gomorrah is not my idea of a conservative victory)
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To: icwhatudo

Only when financial analysts have to flip burgers to make ends meet will we hear a different tune.


3 posted on 03/22/2014 11:05:29 PM PDT by SpaceBar
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To: SpaceBar

Whistling past the poor house....


4 posted on 03/22/2014 11:08:11 PM PDT by Bobalu (Happiness is a fast ISR)
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To: icwhatudo

We did not send jobs to them. They created jobs with better business friendly policies. Hong Kong, Singapore, Australia & New Zealand have much more business friendly policies. I was in Singapore 2 weeks ago and they have to import foreign workers on 2 year work-permits because there are more jobs than people. Their max tax rate is 20% and there is no unemployment compensation for the unemployed. There are no food stamps or any other checks going out to people of working age. Result is they have essentially no unemployment.

China has encouraged people to get rich. There are one million new millionaires in China compared to just a few decades ago.


5 posted on 03/22/2014 11:10:37 PM PDT by entropy12 (If you did not vote, you helped elect the community organizer from south side of Chicago.)
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To: icwhatudo

Very appropriate 2nd post imo.


6 posted on 03/22/2014 11:19:06 PM PDT by Amendment10
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To: icwhatudo

Some of this is also our domestic oil boom.


7 posted on 03/23/2014 12:09:16 AM PDT by Vince Ferrer
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To: ckilmer
For the US, the longstanding current account deficit involves a lot more than the article suggests. With the dollar as the world's reserve currency, the US gets the benefit of seigniorage, being able to print dollars and issue debt that the world economy absorbs as transactional currency and backing for foreign currencies. In addition, countries that depend on export to the US like China and Japan buy and hold dollars in order to keep their own currencies from rising and cutting into exports.
8 posted on 03/23/2014 12:39:06 AM PDT by Rockingham
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To: ckilmer

1999 ... national debt: $5.5 trillion

2014 ... national debt: $17.4 trillion

oh yea, that’s much better

freakin morons


9 posted on 03/23/2014 2:37:06 AM PDT by sten (fighting tyranny never goes out of style)
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To: ckilmer

Bfl


10 posted on 03/23/2014 3:16:23 AM PDT by Chgogal (Obama "hung the SEALs out to dry, basically exposed them like a set of dog balls..." CMH)
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To: entropy12

There is no defense for trading with countries that have labor policies we outlawed a century ago; our jobs went to Red China and other dictatorships with minimal human rights. I can’t remember the last time I bought something made in Australia, New Zealand, Singapore, or Hong Kong; the cheap crap in our stores is from Red China, Vietnam, Bangladesh, Burma, etc.. They will always be more “business-friendly”, they work their people as slaves for basic sustenance.


11 posted on 03/23/2014 4:21:15 AM PDT by kearnyirish2 (Affirmative action is economic war against white males (and therefore white families).)
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To: kearnyirish2

~the cheap crap in our stores is from Red China, Vietnam, Bangladesh, Burma, etc..~

Are you suggesting a minimal wage for them?


12 posted on 03/23/2014 5:25:21 AM PDT by wetphoenix
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To: wetphoenix

“Are you suggesting a minimal wage for them?”

No, just explaining why our jobs went over there (and will never come back). As long as we allow that stuff to be sold here, our standard of living will continue falling. At this point, homes, higher education, and families are beyond the range of most young people; soon cars and household appliances will be as well.


13 posted on 03/23/2014 5:46:46 AM PDT by kearnyirish2 (Affirmative action is economic war against white males (and therefore white families).)
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To: ckilmer

Yeah for Obama. He does get credit for this does he not ?

Actually, he does not.

Under Obama, the USA oil output has increased from about 6 million barrels a day to 10 million.

And we used to import LNG and now we export it.

Take out the fracking boom and we are about where we always were.

Obama does get credit for the trade deficit not getting worse.

But absent the fracking boom, the trade picture has not changed.


14 posted on 03/23/2014 6:12:41 AM PDT by staytrue
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To: Vince Ferrer

Some of this is also our domestic oil boom.
...........
Its almost entirely the domestic oil boom.


15 posted on 03/23/2014 6:20:54 AM PDT by ckilmer
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To: sten

agree


16 posted on 03/23/2014 6:21:51 AM PDT by ckilmer
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To: kearnyirish2

You have no clue how bad life was in China, India, Vietnam, etc. before they discovered naked capitalism. China had virtually no jobs for ordinary people. Now there are hundreds of million Chinese who have a place to live and 3 square meals everyday. India had food shortages and had to import food for survival. There was virtually no industrial jobs. After discovering raw capitalism, India has a larger middle class than United States. It is impossible to transform from poor country to a rich country overnight. The rate of progress however is amazing.

In the meanwhile USA is turning increasingly socialist. 50 million on food stamps? We are screwed for many decades to come. Eventually people will wake up like they did in China and India and Vietnam. Give us 40 to 50 years of pain first.


17 posted on 03/23/2014 6:23:16 AM PDT by entropy12 (If you did not vote, you helped elect the community organizer from south side of Chicago.)
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To: staytrue

Yeah for Obama. He does get credit for this does he not ?

Actually, he does not.
....................
I don’t disagree with your thinking.

For example back in the late 90’s the booming stock market and low gas prices kicked in an extra couple hundred billion dollars to the federal government revenues. At the same time Newt Gingrich fought to keep the federal budget from growing. Clinton fought Newt tooth and claw. He wanted to spend all the extra revenue. He creamed Newt for all that Newt did—which was just to keep the federal budget from growing further.

And then once the budget was balanced—Clinton took credit for the the balanced budget. When in fact he had nothing to do with it and he did everything he could to prevent it from happening.

The democrats now now Clinton as the guy who balanced the budget. Nothing could be further from the truth. But that doesn’t stop them from saying it. The budget balanced on Clinton’s watch.


18 posted on 03/23/2014 6:29:21 AM PDT by ckilmer
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To: entropy12

“You have no clue how bad life was in China, India, Vietnam, etc. before they discovered naked capitalism. China had virtually no jobs for ordinary people.”

Don’t assume I have no clue. Those countries had agricultural economies before we build their manufacturing sectors.

“Now there are hundreds of million Chinese who have a place to live and 3 square meals everyday. India had food shortages and had to import food for survival. There was virtually no industrial jobs. After discovering raw capitalism, India has a larger middle class than United States. It is impossible to transform from poor country to a rich country overnight. The rate of progress however is amazing. In the meanwhile USA is turning increasingly socialist. 50 million on food stamps? We are screwed for many decades to come. Eventually people will wake up like they did in China”

Are you failing to see the relationships there? We are on food stamps because we exported our jobs (and associated prosperity). What are we going to do in 40 or 50 years, get those jobs back from Red China by offering to work in exchange for a new bicycle every year? Don’t expect Americans to support capitalism when our industry does an end-run around laws and competition by using Asian coolies instead of American workers; voting for socialism should be expected.


19 posted on 03/23/2014 6:43:24 AM PDT by kearnyirish2 (Affirmative action is economic war against white males (and therefore white families).)
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To: ckilmer

At some point Americans are going to get wise to the fact that the best way to drive up stock prices is to lay off American workers and replace them with foreign workers. A “booming stock market” today (when you take into account our unemployment and drop in standard of living) simply means jobs are still leaving our shores.


20 posted on 03/23/2014 6:48:21 AM PDT by kearnyirish2 (Affirmative action is economic war against white males (and therefore white families).)
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To: Vince Ferrer

>>Some of this is also our domestic oil boom.

Oil and natural gas. Cheap energy is great for business.


21 posted on 03/23/2014 6:50:06 AM PDT by FreedomPoster (Islam delenda est)
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To: Rockingham

Correct!!!!! The lower trade deficit (described in this article) helps the USD retain reserve currency status. So all in all this is good news. We get to buy more cheap stuff from China for a while. This delays Russia and China being able to sabotage the US dollar out of reserve currency status

Its not that we are exporting so much oil/gas. Its that we don’t need to import as much due to fracking, Baaken shale etc


22 posted on 03/23/2014 6:57:27 AM PDT by dennisw (The first principle is to find out who you are then you can achieve anything -- Buddhist monk)
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To: ckilmer

Look at the 2008/2009 number on the graph. The American economy went into a deep dive and it’s stayed there, with a bit of wiggle in 2010 and 2011. It’s not good news, it’s not energy, it’s a piss poor economy.


23 posted on 03/23/2014 7:05:12 AM PDT by major-pelham
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To: dennisw
Despite chronic US financial indiscipline, the dollar will be hard to displace as the world's reserve currency. For the foreseeable future, no other country is likely to develop the combination of economic size, military and political power, demographic profile, rule of law, and reliable national accounting needed to support a modern reserve currency.

Entire books can and have been written about the profound structural weaknesses of Russia, China, Europe, and other projected rivals and adversaries to the dollar's reserve currency status. A simple observation though also makes the case: in every such rival, those who accumulate private wealth go to great lengths to move much of it out of the country and put it into dollars and dollar denominated investments. As long as mobile smart money craves dollars, the dollar will continue as the world's reserve currency even though we spend too much and get so much else wrong in our fiscal and economic policies.

24 posted on 03/23/2014 8:15:27 AM PDT by Rockingham
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To: Rockingham

Obama is doing his best to ruin our military in many ways with gays, budget cuts etc.

Few know that our strong military that can project power thousands of miles is a major support of our US Dollars reserve currency status. One example. Japan keeps one trillion in US Treasuries as a way of payment to us backing them up against China with our nuclear umbrella etc. Of course under Hussein Ubungu Japan should worry if we will follow through in a crisis


25 posted on 03/23/2014 8:40:28 AM PDT by dennisw (The first principle is to find out who you are then you can achieve anything -- Buddhist monk)
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To: ckilmer

Bunk.

America imports everything, a lot of it from Communist China, and we have spent ourselves into a massive debt.

Just one generation ago, we were on top of the world.

Now we are approaching 18 trillion in debt, and that shows ho sign of slowing.

Bring back American jobs. Now. Selling American industrial greatness to China has been a massive mistake.

Bring back American factories.


26 posted on 03/23/2014 8:43:30 AM PDT by Cringing Negativism Network (B/foreign-trade/balance/c5700.html#2013)
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To: Cringing Negativism Network

No bringing back American factories until we do away with labor unions. In the meantime, better to have it all made overseas. Quality of the products are much better with non-union labor - even if we have to bring them over here on a boat.


27 posted on 03/23/2014 8:45:54 AM PDT by SamAdams76
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To: SamAdams76

America will never get rid of labor unions.

But China how exports more than America does. A lot of Chinese imports, come right back to America. So we continue to buy our way into ever-larger financial debt, while Chinese workers make ever more money.

China has become our biggest problem now.

Bring back American jobs.


28 posted on 03/23/2014 8:48:22 AM PDT by Cringing Negativism Network (B/foreign-trade/balance/c5700.html#2013)
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To: Cringing Negativism Network

Your misunderstanding remains total


29 posted on 03/23/2014 8:51:33 AM PDT by bert ((K.E. N.P. N.C. +12 ..... History is a process, not an event)
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To: bert

Or yours is. Let’s take a look at what the two of us advocate:

I am for American businesses.

Just one generation ago, we led the world.

Now not so much. Our military budget is facing cutbacks, and Democrats are taking over our country. We are now nearly 18 trillion dollars in debt, and that is (rapidly) increasing, every single day.

Sorry but I think it is you, who are suffering a near total misunderstanding.

America needs jobs.

Jobs.

The one thing we are giving away, is the one thing our country most needs:

Jobs.


30 posted on 03/23/2014 8:56:14 AM PDT by Cringing Negativism Network (B/foreign-trade/balance/c5700.html#2013)
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To: kearnyirish2

If you think protectionism is the answer to USA jobs conundrum, you are sadly mistaken.

Whatever good standard of living we still enjoy here is because of cheap imports. If we had to pay American union wages for all these cheap goods in Wal-Mart, our standards of living will take a steep nose dive.

Stop dreaming of the monopoly we had after WWII on manufacturing. The other industrial countries were bombed out. Our factories were untouched.

Technology is no longer our monopoly. China and India can manufacture anything we can. And their labor rates are far below ours.

To summarize, get used to fierce competition from other countries. Until our students outwork and outsmart others, we will remain a mediocre country for good jobs.


31 posted on 03/23/2014 9:07:34 AM PDT by entropy12 (If you did not vote, you helped elect the community organizer from south side of Chicago.)
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To: kearnyirish2

You are suggesting “PROTECTIONISM”!
That is the worst possible solution to our problems.
I pity your lack of understanding basic economics.


32 posted on 03/23/2014 9:09:57 AM PDT by entropy12 (If you did not vote, you helped elect the community organizer from south side of Chicago.)
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To: entropy12

So am I. I am for a pro-American industrial climate.

America needs jobs. Stop sending American jobs to China, and elsewhere.

We need jobs here.

Jobs.


33 posted on 03/23/2014 9:13:27 AM PDT by Cringing Negativism Network (B/foreign-trade/balance/c5700.html#2013)
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To: entropy12
You are suggesting “PROTECTIONISM”!
That is the worst possible solution to our problems.
I pity your lack of understanding basic economics.

You are the brainwashed fool. Where did you go to college? Check out the history of tariffs in America. We were a high tariff nation until 1913 when the Federal Income tax and the Federal Reserve were instituted. What a coincidence!!!

Prior to 1913 most funding for the Federal Gov't was from tariffs. Thus we had a much smaller FedGov that did not have the money to muck around with the 10th Amendment and over-regulate the several States (United States Constitution). Federal taxes on tobacco and alcohol were also large revenue generators

Summary:   You are a fake libertarian. I am the real libertarian who wants libertarian economics within our borders while we pursue pro-American policies (keeping jobs at home) when it comes to world trade. Unrestrained free trade is for idiot nations. This is what Koreans, Japanese and Chinese say and I agree.

34 posted on 03/23/2014 10:57:37 AM PDT by dennisw (The first principle is to find out who you are then you can achieve anything -- Buddhist monk)
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To: Cringing Negativism Network

#34 :)


35 posted on 03/23/2014 10:58:14 AM PDT by dennisw (The first principle is to find out who you are then you can achieve anything -- Buddhist monk)
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Bump for later


36 posted on 03/23/2014 11:08:56 AM PDT by Lurkina.n.Learnin
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To: entropy12

“To summarize, get used to fierce competition from other countries.”

We are used to it.

“Until our students outwork and outsmart others, we will remain a mediocre country for good jobs.”

That isn’t true at all. Haven’t you noticed that many qualified people have been laid off in various fields and replaced by less-qualified, cheaper staff? At some point our corporations decided that it was worth having someone get it 75% of the time at half the salary of the person that could get it right 99% of the time.

If enough voters fear for their livelihoods, they’ll vote for “political protectionism” (also known as socialism).


37 posted on 03/23/2014 12:14:37 PM PDT by kearnyirish2 (Affirmative action is economic war against white males (and therefore white families).)
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To: entropy12

“I pity your lack of understanding basic economics.”

I pity your lack of understanding basic politics; enjoy permanent Democratic leadership.


38 posted on 03/23/2014 12:15:49 PM PDT by kearnyirish2 (Affirmative action is economic war against white males (and therefore white families).)
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To: kearnyirish2

His kind of stuck up (know it all economics) stupidity gets Democrats elected. He might as well be living on a cloud or an island. Pure economics is for chumps. One must understand politicized-economics and beyond that....geopolitical-economics. Vlad Putin and the Chinese understand this. Naive Americans are lost here


39 posted on 03/23/2014 1:38:07 PM PDT by dennisw (The first principle is to find out who you are then you can achieve anything -- Buddhist monk)
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To: kearnyirish2
If enough voters fear for their livelihoods, they’ll vote for “political protectionism” (also known as socialism).

And they will elect people who will tax Mr Free Trade  Apostle to death. Its already going on. Tariffs or taxes pick your poison

40 posted on 03/23/2014 1:40:44 PM PDT by dennisw (The first principle is to find out who you are then you can achieve anything -- Buddhist monk)
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To: kearnyirish2
Haven’t you noticed that many qualified people have been laid off in various fields and replaced by less-qualified, cheaper staff? At some point our corporations decided that it was worth having someone get it 75% of the time at half the salary of the person that could get it right 99% of the time.

Above statement of yours is perfect example of how little you understand corporations. I had a corporate managerial position for 12 years and your statement above is pathetic lack of understanding corporations.

41 posted on 03/23/2014 1:47:49 PM PDT by entropy12 (If you did not vote, you helped elect the community organizer from south side of Chicago.)
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To: Cringing Negativism Network

Bring back American jobs. Now. Selling American industrial greatness to China has been a massive mistake.

Bring back American factories.
...........
I actually think that’s going to happen with the 3d printing and advanced robotics revolution that’s about to take center stage sometime in the next 5-10 years.


42 posted on 03/23/2014 4:05:13 PM PDT by ckilmer
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To: major-pelham

Look at the 2008/2009 number on the graph. The American economy went into a deep dive and it’s stayed there, with a bit of wiggle in 2010 and 2011. It’s not good news, it’s not energy, it’s a piss poor economy.
................
except that you’ll notice that after 2009 the numbers started to move back up again. that is all oil/gas related. Now we’re above the top set in 2009 which was bad economy related because the USA wasn’t sucking in imports. The reason the numbers are now above 2009 is because of falling demand for imported oil because of rising domestic oil production due principally to fracking oil in the baaken, eagle ford and a half dozen smaller formations in oklahoma colorado new mexico utah and elsewhere.


43 posted on 03/23/2014 4:44:00 PM PDT by ckilmer
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To: kearnyirish2

A “booming stock market” today (when you take into account our unemployment and drop in standard of living) simply means jobs are still leaving our shores.
................
this has been the plan for about the last 30 years or so.

But the technology is changing because of 3d printing and advanced robotics. and problems with the long supply lines to asia. Consequently, we’re in the very first years of a very large turn back of manufacturing to america’s shores.


44 posted on 03/23/2014 4:46:23 PM PDT by ckilmer
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To: dennisw

Correct in all respects. For similar reasons, the Fed had to provide liquidity to support European central banks and financial institutions during the 2008 financial crisis. More so than any other country, the US has developed the institutions and expertise to run a reserve currency and to act intelligently in a major economic crisis. In a financial pinch, the world looks to and trusts the US for answers, rather like New York bankers once looked to J. P. Morgan to figure out how to settle markets when they panicked.


45 posted on 03/23/2014 5:27:04 PM PDT by Rockingham
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To: ckilmer

“But the technology is changing because of 3d printing and advanced robotics. and problems with the long supply lines to asia. Consequently, we’re in the very first years of a very large turn back of manufacturing to america’s shores.”

We had the problem with long supply lines to Asia (where the consumers are); Asia fixed it by manufacturing over there. I think one reason for the de facto amnesty here is that a country of 300 million consumers is a small fish when Asia has two countries of over a billion consumers each.


46 posted on 03/24/2014 3:01:54 AM PDT by kearnyirish2 (Affirmative action is economic war against white males (and therefore white families).)
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To: ckilmer

This type of analysis an ignorant throwback to mercantilism. You cannot tell that we’re doing better because our BOP is falling. That’s stupid.


47 posted on 03/24/2014 6:12:10 PM PDT by 1010RD (First, Do No Harm)
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To: sten

Our national debt isn’t the same as our BOP account.


48 posted on 03/24/2014 6:12:54 PM PDT by 1010RD (First, Do No Harm)
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To: entropy12

The next GOP President is going to be long remembered. Just tightening up SSDI will push people into work. Imagine people who have a whole series of “diseases” and “disabilities” that prevent them from “working”.

That’s the biggest growth in welfare and the easiest to correct.

I’d like to see his executive office go after Commerce Clause violations at the state, county and local level. That’s where the real trouble and real money is.


49 posted on 03/24/2014 6:15:12 PM PDT by 1010RD (First, Do No Harm)
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To: 1010RD

This type of analysis an ignorant throwback to mercantilism. You cannot tell that we’re doing better because our BOP is falling. That’s stupid.
.................
So the Chinese are generally known as mercantilists. They have a huge balance of payment surpluses. So, unlike everyone else in the world — you would consider that to be a sign of weakness?

Or do you think rather that because the dollar is a reserve currency—the USA has unlimited ability to borrow and print money so as to cover unlimited trade deficits.

You make a point that people from tony B schools make that’s never made sense to me. Kindly school me.


50 posted on 03/24/2014 7:43:30 PM PDT by ckilmer
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