What 'western' countries are not running a trade deficit?
Germany, Japan, China, France, Canada, Italy, The Netherlands, Hong Kong, South Korea, Belgium, Taiwan. Singapore, Russian, Switzerland, Sweden, Malaysia, for starters.
Well, to be fair Russia and Malaysia both mainly export oil, which is a bit of a special case.
After the 1998 default of the Russian government and the collapse of the currency, it was said that there was more cash dollars circulating in Russia than in the US.
January 20th, 2006
It's amazing to me how Japan can not have a trade deficit... they have no natural resources at all, and the biggest economy next to ours, so they can afford fancy imported things. It's like Lee Iacocca said back in the day, that the system we have with Japan is like the old British empire to her colonial states, we send raw materials to Japan, and they sell us back finished goods.
The countries you mentioned there all either have oil, low imports to us, or cheap labor and/or a manipulated currency though.
"The countries you mentioned there all either have oil, low imports to us, or cheap labor and/or a manipulated currency though"
Germany, France, Canada, Italy, The Netherlands, Belgium, Switzerland, Sweden.
What don't you understand there Erik? We import more oil from Canada then the middle east, The Netherlands represent most of our imports from Royal Dutch shell. And we import very little from the other countries you mentioned. Germany represents a decent amount of imports for us though.
Oh, I forgot, only the direct relation with the US counts for you.
The oil you buy from Shell doesn't flow through the Dutch economy, it's an international enterprice.
The Dutch export most to Germany, but Germany exports to the US. International trade flows through countries, so do dollars.
So the trade deficits flow to the trade surplusses, and for the monetary balance it doesn't matter which country does the actual trading with the USA.
January 20th, 2006
Yeah Erik I forget exactly what my train of thought in regards to what other countries importing to us had to do with anything... it was before i had coffee. I guess i was thinking they just don't contribute to our deficit or something.
Things like this:
Dutch imports, and therefore the trade deficit, are over-estimated because of the “Rotterdam effect”, where goods destined for the rest of the EU arrive and are recorded in harmonised EU external trade statistics in Dutch ports. This then has a positive effect on the external trade balances with the USA of those Member States to which the goods are re-exported, as these shipments would be recorded as intra-EU trade with the Netherlands, rather than extra-EU trade with the USA.
In the idiocy that passes for cleverness in the current administration, we are running a budget deficit of from 300 to 400 billion dollars a year. This after the Clinton years of actually paying down the cumulative debt.
Now, the Federal Reserve Board has quite rightly mandated that "there shalt be no inflation" (having remembered the Carter years of 'Stagflation', and suffered mightily just before Reagan to stamp it out). So, how do you run a 300 billion deficit year after year without printing the dollars, and triggering inflation?
Well, you borrow it from overseas, of course. And why is 'overseas' (read Communist China, Japan, Germany) willing to "loan" it to you? Several reasons.
1. They HAVE the dollars because of the trade deficit. We are behaving like a South American country, borrowing dollars in order to buy goods from the people loaning us the money. Works great, until you realize that the debt service payment keeps going up and up.
2. We provide much better returns on the loans than the economies of China or Japan.
3. THEY trust the American Government not to default on the loans.
This cycle seems to work nicely, for a time. Living beyond your means always looks nice, for a time. Then the loans come due, or the economies of China, Japan, and Germany get so much better they decide they don't need us anymore.
Then things can become very bad. But Mr. Bush won't be in office when that happens.
Allan, you can hardly blame the entire deficit on Bush. Yes, his little adventure into Iraq was especially costly, but still makes up very little of our national debt. There are more then enough Democrats willing to deficit spend as well, no matter how much you want to ignore it. You also can't exactly compare the late Clinton .com boom with the resulting crash Bush inherited and the major terrorist attack the temporarily set the economy akimbo. The early Clinton years had plenty of deficit spending, and i'm sure if Gore was in the white house, there would have been a budget deficit too.
Now the issue of the Bush tax cut I agree didn't help. However, despite what your saying, the Clinton surpluses were not being used to pay down the national debt (only a small portion of them were). Therefore if the government isn't going to use my money to pay down the debt, they shouldn't be turning a profit, and thus the money should be returned. We really need a congress that can turn down spending and concentrate on paying down the debt, not just a President. The government behaves like the average americans do, spend spend during the rich times and go into debt in the poor times.
"it was said that there was more cash dollars circulating in Russia than in the US"
I remember when we changed the design of the $100 bill, six months went by and lots of people hadn't seen one yet. Our paper said that the reason there were no new bills locally yet was because they were being shipped to Russia. Apparently lots of Russians kept their savings in US 100 bills instead of at the bank, and since they were use to their government issuing new money and devaluing the old stuff, everybody wanted the new dollars.
Except, Phil, the Government should do the opposite of what the average consumer does.
That is, the Government should save save save during the boom times, and spend spend during the down times. Thus the Government can act to reduce the impact of the business cycle.
The way you have it, it is acting to increase the extremes of the business cycle. Just like 1929. Ironic, isn't it?
And I don't blame "the entire deficit" on Bush (nice strawman there). I can CERTAINLY blame the increases since he and the Republican congress took office -- since 2000, say. Since he 'inherited' a balanced budget, and proceeded to unbalance it more than any previous President.
This, through tax cuts and starting a war -- without reducing the tax cuts, by the way.
"Except, Phil, the Government should do the opposite of what the average consumer does."
I certainly wasn't suggesting they should act like the average consumer, in fact the average consumer should not behave the way they currently are either. The lack of public savings is another major concern for our economy.