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[P]
Elephants in the Living Room

By Coryoth in Op-Ed
Sun Nov 21, 2004 at 11:00:13 PM EST
Tags: Politics (all tags)
Politics

The United States is facing the possibility of a severe economic correction. Yet most of the causes of such a correction are, for the most part, being completely ignored in preference to partisan bickering. It is the proverbial elephant in the living room - except it is not just one, but several elephants that everyone is doing their best to ignore. While the likelihood that any of these issues could result in disaster is low, these are issues worth taking the time to discuss.


The first elephant is debt. There are 3 kinds of debt that are of concern: Household debt, the budget deficit, and the current account or trade deficit. Of those three, it is only the budget deficit that gets any real attention, and even then it is often brushed aside.

The current US budget deficit stands at $413,000,000,000 in the 2004 fiscal year. This is a record deficit. To put it in perspective, that's 3.6% of the Gross Domestic Product, almost a quarter of total federal spending, or 80% of the total receipts from Federal income taxes. Clearly such a situation is not good. But there are deeper implications for such a large fiscal gap. Some economists argue that such large deficits are detrimental to private investment. The deficit effectively soaks up a large portion of the US's savings, which would otherwise be invested back into the private sector. There is historical precedent for this - investment fell to record lows during the previous record budget deficits under President Reagan. But there is something else to consider as well. This debt is managed by selling Government bonds. These bonds can, and often are, sold overseas.

Currently, the two largest owners of US Government debt are Japan and China. Japan had an economic boom, but collapsed in the 90s and has been struggling since. The Japanese government is very conservative, and has been remarkably slow to introduce reforms that are seen by many as necessary to stimulate the Japanese economy. Recently however, the Japanese Prime Minister, Junichiro Koizumi, has been fighting to push through the necessary reforms, with some success. In the last couple of years the Japanese economy has shown signs of improvement. Meanwhile, the Chinese economy is strong, and only getting stronger. Why is this important? Because as both of these economies gear up there will be far less interest in investing overseas, and much greater emphasis in investing in the local growing economy. This would essentially amount to a massive sell off of US debt in the form of government bonds, something that would almost certainly fuel higher inflation in the US, putting pressure on the Federal Reserve to take action by increasing interest rates. That is to say, it would almost certainly lead to a large scale recession in the US.

The US current account deficit stood at $530,668,000,000 in 2003 and $313,341,000,000 for just the first two quarters of the 2004 financial year. That's a record figure for each of the first two quarters of 2004. This could represent a country living beyond its means, or it could represent an economic power attracting large amounts of foreign investment. Certainly as long as the US remains a significant economic powerhouse it can sustain high current account deficits. That is, as long as the US remains an attractive place for foreigners to invest, an imbalance is of limited concern. Whether such a high current account deficit is sustainable is a complicated issue affected by many factors. A reasonably coherent explanation of some of those factors can be found in a 2002 paper by Catherine Mann. In rough précis, the current account deficit is balanced by private savings, but widened by budget deficits, yet at the same time is driven by the attractiveness of US investments to foreigners. Should the current account grow too large, the perception of the ability of the US to repay the investment may decrease, causing an economic correction. In the conclusion of her paper Mann indicates that a change in trajectory (from growing to shrinking) is inevitable, and the concern is whether this will occur through slow structural and policy changes, or whether it will be caused by a sharp correction in overseas investment. Two of the major requirements she lists for structural change are greater fiscal discipline (resulting in budget surpluses) and increased personal savings. Since the paper was published in 2002 we have seen massive increases in the budget deficit, as just discussed. At the same time, the prospects for increased personal savings are very limited (which I will touch on in a moment). Add to that the beginnings of resurgent Asian economies attracting investment, and the risk of a sharp correction is certainly much greater. The consequences of a sudden shift in global investment away from the US would be extremely rapid depreciation of the US dollar, most certainly resulting in considerable economic hardship in the US.

US household debt stood at $8,454,400,000,000 in 2002, and has grown since. A quick look at the associated chart shows just how serious the upward trend in household debt is. This debt is driven both by mortgages, and by credit card debt in an increasingly consumerist society. Do you recall the "Shop for America" campaigns following September 11? It is exactly that kind of thinking that helps to drive the consumer society even further into debt. In 2004 household debt increased 4 times faster than the economy, and average credit card debt for households with at least 1 credit card increased 300%, to over $9000. Of course this is not necessarily crippling, as a recent speech by Alan Greenspan points out. It is, however, trending in the wrong direction, and getting worse fast. It is certainly far from the increase in household and personal savings required to help curb the current account deficit.

The concern about debt for the US is, in the end, quite simple. US debt, in all three forms, is huge, and it is only getting larger. All three forms of debt, while different, are connected in that both household debt and government debt have a significant influence of the sustainability of such a large (and growing) current account deficit. At the same time, either the current account deficit or the budget deficit, if they continue to grow, could easily trigger a rapid and severe depreciation of the US dollar. Which brings us to our next elephant.

The second elephant is the US Dollar. At the time of writing, the US Dollar is running at about 0.77 Euros to the Dollar. One could claim that this is simply due to a strong Euro, but in reality most world currencies, including the Japanese yen and the Great British pound are trading strongly against the US Dollar. A quick look at the historical record of the US Dollar against the Euro, the yen, and the pound shows a distinct downward trend over the last two years in all cases. Of course this need not be seen as a bad thing, certainly it is beneficial to US exports, an increase in which would be highly beneficial for the current account deficit. There are potential issues however. The US dollar has, to some extent, remained as strong as it has due its position as the de facto global currency, in which most major commodities, including oil and gold, are traded. The Federal Reserve estimated that in 2003 around $400 billion of the $680 billion US dollars in circulation were held outside the United States. This high demand for US Dollars overseas is an effective prop for the US Dollar, meaning it is unlikely to ever fall too low too quickly. This prop could, however, disappear. The possibility of the Euro becoming a new alternative global currency is increasing.

In 2001 Alan Greenspan gave a cogent speech on the possibilities of the Euro as a global currency. The first salient point is the fact that a global currency tends toward a natural monopoly - as use increases, it becomes an increasingly attractive currency to hold, while the decreasing liquidity of competing currencies makes them less and less desirable as a global currency. Transitions can of course be slow, for example the transition from the Pound Sterling to the US Dollar between the world wars, but once it begins it becomes inevitable. Greenspan then notes that, at least on the surface, the Euro possesses all the traits required of a global currency (a stable currency based in a strong economy with a well developed financial system and deep, liquid financial markets). Greenspan continues by discussing reasons why the US Dollar remained so dominant after the introduction of the Euro. He cites the strength of the US Dollar against the Euro (the Euro depreciated against the US Dollar in its first two years after introduction), the strength of the US economy on comparison to the EU, and the Euro's apparent inability to expand into foreign equity markets. As already noted, the strength of the US dollar against the Euro, and in fact most world currencies, has been in decline. On the other hand, while the relative strength of the EU economy to that of the US has increased during the US recession, the US economy is beginning to show signs of increasing growth. Lastly, however, the Euro is now beginning to extend into foreign equity markets, most notably oil. An increasing amount of Middle Eastern oil is being traded in Euros, and while the US Dollar remains dominant, both Iran and Saudi Arabia have flirted with the idea of completely converting to Euros. Equally significantly, Russia, the second largest oil producer in the world, has expressed serious interest in trading their oil in Euros instead of US Dollars, though it has not yet embarked on such an en masse conversion. For now the US dollar comfortably remains the dominant player, but there are enough signs for concern, and as Alan Greenspan pointed out, a transition will have a tipping point, after which it will be carried by its own momentum.

The threat to the US economy is that this transition, if it occurs, may not be slow. Because the strength of the US dollar is currently supported in part by its position as a global currency, a shift toward the Euro could trigger further collapse of a weakening dollar initiating a panic driven feedback cycle resulting in an almost complete collapse of the US dollar from its current point of strength. Ideally such a collapse would be halted by the closing current account deficit as the price of imports skyrockets, and US exports become ever more attractive. The US populace is, however, an habitual consumer, more than willing to spend its way into increasing household debt (as already noted). Worse still, US exports have been on the decline despite the recent weakness of the US dollar. Increasingly, the US is importing goods from China, and services from India. Which leads us to another elephant.

The third elephant is the rise of India and China. Both the Indian and Chinese economies are growing very rapidly. These are the two most populous nations on earth, so they should not be taken lightly. Both countries are filled with young and talented people eager to make the most of their education and climb the global economic ladder. In the case of India this has taken the form of, for example, outsourced IT jobs from the US. Increasingly US companies are importing their IT service from India, where there is a vast pool of highly capable people who do not face the vast cost of living that their counterparts in the US do. In many ways this can simply be seen as globalization and free trade beginning to more evenly distribute the wealth of the world, and is not a threat as long as the US continues to innovate and create new industries for itself. There is a question as to whether this actually occurring however.

The most common statistic for measuring economic strength, Gross Domestic Product (GDP), shows the US economy to be in good shape. Current US GDP is between 10 and 11 trillion US dollars depending on whether you measure by Purchasing Power Parity (PPP) or Current Exchange Rate (CER). GDP does have problems, the most important to consider here being its ability to include work that produces no net gain, and its lack of consideration for negative externalities. It is worth considering how much work in the US is included in the GDP that has very minimal net gain. For those familiar with the SCO Group versus IBM court case, its worth noting that tens of millions of dollars have been spent, all counted toward GDP, and yet most observers would point out that, in comparison to the money spent, the gains are negligible if they exist at all. This is common to a surprisingly large number of other court cases in an increasingly litigious country. All of it counts toward GDP, much of it returns little if any gain. A more debatable issue is the current costs of management, particularly in larger corporations that have exceptionally high salaries for the many tiers of upper management - is the net gain provided by management actually comparable to the money being spent. It is certain that management provides significant value, what is unclear is exactly how much value, and how that compares to the salaries involved. As stated, this is a point for debate. The fear is that if, in fact, US GDP is inflated by such issues, the economy could find itself hollow when it comes time to compete in earnest.

Currently India is exporting low and mid level IT services to the US, but given current Indian growth, it is only a matter of time before India is in a position to cease selling its services piecemeal, and instead sell complete packages. At  present, while a certain amount of work is being outsourced to India as their economy grows, management and the corporations have remained in the US. Given the growing number of capable and experienced IT workers in India however, it is inevitable that new companies will arise in India taking advantage of the considerably lower cost of living to compete head to head with US corporations for complete solutions. Again we have to question the ability of the US to forge ahead into new industries. It could be argued that ambition for education, science, and research is lower for the current youth of the US than for their would be competitors in India, China, Korea and Japan. While there is involvement from the US in the very ambitious fusion reactor project, it will most likely be sited in Europe, and if not there, then Japan. On the other hand it was a US based company, Scaled Composites, that recently won the Ansari X-Prize and looks to be at the forefront of commercial spaceflight. The future remains uncertain, but this is certainly an issue for concern.

Finally, the rapid growth in India and China is having other visible effects. China, in particular, with its rapidly growing manufacturing sector, has had an an equally rapid increase in its demand for oil, adding a new element to the global oil market. While China is currently trying to slow its economic growth to more sustainable levels, the growth in its hunger for oil is not expected to be similarly dampened. Oil prices are already being driven ever higher, and unlike the crises in the 1970's, it is not due to disruptions in supply, but instead simply due to demand. That this is detrimental to the worlds largest oil user, the US, is obvious. Of more concern is that with increasing Chinese oil needs stretching current oil production capacity to its limits, a disruption in supply now could be catastrophic. This issue is discussed in detail in an article by Paul Krugman. In the wake of ever higher oil prices, alternative energy sources may prove to be one of the most significant new industries in the coming decade. With this in mind, the question must be asked: Which countries are going to be at the leading edge of research in alternative energy sources?

There remains one significant issue to discuss: the domino effect. This is the fact that the three major issues so far discussed are all interconnected. Increasing strength in the Chinese and Indian economies, providing goods and services to consumption-oriented Americans willing to go into personal debt to maintain their standard of living, could easily lead to a widening of the US current account deficit. If the current account deficit grows too large it could easily trigger significant depreciation of the US Dollar. Should the US Dollar start too look too volatile, or become a significant financial risk to hold (due to depreciation), global markets could easily start to embrace the far more stable Euro, potentially sending the US Dollar into free fall. During a period of such extreme uncertainty in the US Dollar, foreign investors may well seek to diversify their investments away from the US towards rapidly growing countries such as India or China. That is to say, any one of these issues could trigger the others, to a devastating end.

Much of what has been discussed is speculative. Far from being probable, the potentially disastrous outcomes outlined are somewhat unlikely. Furthermore, even if the worst did come to pass the US would rebound, and may well come back stronger than ever. The reason to consider these issues, despite the low probabilities, despite the eventual recovery, is that the possible effects could be so pernicious during the time required for such an economic correction to shake itself out. The severity of the possible outcome demands our attention. These are issues that US politicians should be discussing instead of quoting the standard divisive talking points about the usual false dichotomies. You won't hear these issues raised, however, because with these issues politicians can't give a soundbite as to how they'll spend some money, or make a law that will fix the problem. Ignoring the problem won't make it go away, and just because there are no easy solutions doesn't mean that nothing can be done. What is certain is that nothing will be done if people aren't aware of the problems.

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Related Links
o elephant in the living room
o $413,000,0 00,000
o $530,668,0 00,000 in 2003 and $313,341,000,000
o a 2002 paper by Catherine Mann
o $8,454,400 ,000,000
o chart
o "Shop for America"
o speech by Alan Greenspan
o 0.77 Euros to the Dollar
o the Euro, the yen, and the pound
o speech
o expressed serious interest
o between 10 and 11 trillion US dollars
o negative externalities
o SCO Group versus IBM
o fusion reactor project
o won the Ansari X-Prize
o rapid increase in its demand for oil
o article by Paul Krugman
o Also by Coryoth


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Elephants in the Living Room | 421 comments (370 topical, 51 editorial, 0 hidden)
Debt Elephant? Don't Make Me Laugh! (2.57 / 21) (#12)
by Peahippo on Sun Nov 21, 2004 at 12:53:53 PM EST

Former Treasury Sec'y Paul O'Neill noted that Cheney remarked in 2002:

"Reagan proved [budget] deficits don't matter."

Hence, no matter how real the Debt Elephant is, people will continue to ignore it until it gets so big that it collapses the floor, and then the entire living room will fall into the basement.

Don't get me wrong. People will then try to pretend that having your living room furniture broken amongst construction debris in the basement is an utterly normal thing. They will try to defend the collapse and will promote the idea of living as civilized people in the rubble.

But by that time, too much fraud and murder will take place amidst the shattered debris, and the "civilization faction" will fall by the wayside, howling in their irrelevence. Then things will really get nasty. America is returning to the 19th Century just to make sure the capital gains from the 20th Century will not be taxed. A sure investment for the 21st Century will be in cemetaries and crematoria. Death from disease and injuries will return to commonality.


Defecits don't matter (3.00 / 2) (#123)
by Pxtl on Mon Nov 22, 2004 at 10:15:31 AM EST

Funny how little they mattered when that party shut down the Clinton government to make sure they mattered.

Belligerent hypocritic assholes.

[ Parent ]

Newt, et al (none / 0) (#183)
by anaesthetica on Mon Nov 22, 2004 at 02:57:14 PM EST

Those were a different breed of conservatives. It goes without saying that they were different Republicans than the ones in the Executive branch today.

—I'm the little engine that didn't.
k5: our trolls go to eleven
[A]S FAR AS A PERSON'S ACTIONS ARE CONCERNED, IT IS NOT TRUE THAT NOTHING BUT GOOD COMES FROM GOOD AND NOTHING BUT EVIL COMES FROM EVIL, BUT RATHER QUITE FREQUENTLY THE OPPOSITE IS THE CASE. ANYONE WHO DOES NOT REALIZE THIS IS IN FACT A MERE CHILD IN POLITICAL MATTERS. max weber, politics as a vocation


[ Parent ]
Yea (none / 0) (#291)
by mrcsparker on Tue Nov 23, 2004 at 01:58:44 PM EST

But the same republicans are sitting in congress just waiting for their chance to change the tax code and the way bills are handled.  Denny Hastert and John McCain have some interesting ideas.

The current people in the Executive Branch are going to focus on Social Security, tax cuts, and the war.

[ Parent ]

Oh... (2.33 / 6) (#19)
by ror on Sun Nov 21, 2004 at 04:41:30 PM EST

How can I invest in collection agencies?

So the solution is then... (1.44 / 9) (#22)
by debacle on Sun Nov 21, 2004 at 05:14:38 PM EST

To invade India and China? Am I getting this right?

It's long, and usually I vote down long stories, but it's quite informative. There are some errors in verbiage, but ignoring all that +1 FP.

It tastes sweet.

How to get some spare change out of it? (2.50 / 6) (#23)
by TheOnlyCoolTim on Sun Nov 21, 2004 at 05:14:38 PM EST

Is there some way I could say, buy $200 of gold and a few months later cash it in for $250, without the profits getting eaten up by fees?

I know for example I can't go to the money changer at Grand Central and get some euros to hold on for a few months, because they don't give you the real exchange rate and take fees...

Tim
"We are trapped in the belly of this horrible machine, and the machine is bleeding to death."

If you're asking here... (none / 1) (#50)
by bjlhct on Sun Nov 21, 2004 at 09:49:48 PM EST

...then no.

*
[kur0(or)5hin http://www.kuro5hin.org/intelligence] - drowning your sorrows in intellectualism
[ Parent ]
There're a couple of ways you could do this (3.00 / 6) (#78)
by IndianaTroll on Mon Nov 22, 2004 at 01:14:44 AM EST

The basic gist of what I'm going to suggest is that you need to:

1)  Open a special type of bank account called variously a "brokerage account" a "market account" or an "investment account."  These are financial accounts of various forms, kind-of like bank accounts, only they generally don't offer FDIC insured deposit accounts...the basic "account balance" in a brokerage account is in a non FDIC insured Money Market account.

Ok, so you go to Schwab, Datek, E-Trade, Fidelity or any of the bazillion brokerage firms out there and you open an account.

2)  Put some money into your account.

3)  You can use the money in your account to buy investments.  Usually (unless you have millions and millions of dollars in your account) you're going to pay fees to buy or sell the different sorts of things you can buy or sell.  It's like DNS registrars, the less you pay for the fees, the worse the support you get (usually).

4)  One kind of investment you could make would be to buy mutual funds which trade in european government bonds.  Do some research at morningstar.com or poke around with the investment tools your broker provides you to see what sorts of good european-focused funds are out there.

5)  You could also invest in European stocks.  Their value will usually be derived on the basis of the Euro, and will therefore seem "higher" to those who're doing translations into dollars as the dollar declines.

You can apply the idea of foreign mutual funds/equities (stocks) to Asian markets as well.

6)  Alternatively, just open a bank account in a foreign country.  Then put some money in there.  You'll pay a nominal fee to transfer the money into the other currency (and pay to deal with a wire-tranfer) but at the end of the day you'll get an ATM card that'll work just fine over here and when you draw money out it'll be drawn out in US Dollars, but at the current exchange rate.  Minus a fee, of course.

So, to recap:

*  Open a bank account with a brokerage or with a foreign bank.  This can be done on-line.
*  Put money into the bank account.  This can be done on-line.
*  Invest the money (if it's a brokerage account) in foreign securities.  This can be done on-line.
*  Wait a while (at least a year or two).  This can be done on or off-line.
*  Take your profits/losses.  If you lose money, you can count it against your income for the year in which you take the losses, and therefore not pay taxes on the lost money.

*** DISCLAIMER ***
This is not financial, legal or tax advice.  I am not a professional investor, and this comment is only intended to convey the basic gist of what steps are required to invest money in foreign markets.
*** DISCLAIMER ***

Your personal experiences don't mean diddly in a nation of 300 million people. jubal3
[ Parent ]

A friend is about to do the reverse... (2.75 / 4) (#89)
by hughk on Mon Nov 22, 2004 at 04:16:17 AM EST

A friend who is sitting on a pile of Euros (he has been working in Europe) is trying to anticipate the 'bottoming-out' of the US market. At this point he wants to invest heavily in US equities and govt bonds as they are becomming so cheap compared to the European variety. The inbuilt flexibility in the US system (otherwise known as 'hire and fire') also means that it should recover faster.

[ Parent ]
buy & hold (none / 1) (#186)
by krkrbt on Mon Nov 22, 2004 at 03:10:35 PM EST

$200 would get you about 4 tenth ounce ($5) American Gold Eagles, at current market price.  That's not a whole lot of gold, so why not just buy a couple, and hang onto them?  There's a 10% premium for the small coins.  Look in your phone book under "gold", or use an internet retailer like Colorado Gold or Gold Finger Coin & Bullion Sales

Then there's digital gold.  E-gold has been around the longest (1996?  1998?), E-bullion is the largest competitor I know of (haven't been keeping up with the digital gold scene like I used to).  Digital gold accounts are kind of like internet bank accounts, where your balance is kept as a weight gold.  Gold Money is the third one, though I don't have an account with them...  (e-gold does have a referral program.  There is no difference to you whether you sign up through my link or not.  E-gold [like most digital currencies] charges a small percent as a transfer fee [1%, maximum .05 grams (equivalent of somewhere between $0.50 and $1 at the current price of gold)] - if an account has a referer, that account gets 1/10 of the transfer fee.  Otherwise that 1/10 stays with e-gold.  E-bullion has no such program.)

Exchange providers (3rd party businesses) exist to facilitate buying and selling of digital currencies.  Two I've used are cambist.net and the previously mentioned Gold Finger Coin (again, it's been a while since I've purchased any significant amount of digital gold).

The nice thing about using digital gold is that the buy/sell premiums are very small, especially when you're buying small amounts.  The disadvantage is primarily that you don't have the gold in your hand.  You have to trust the issuer of the digital currency - there have been "fake" digital gold currencies (in that they didn't really have the gold they claimed to have, but that one collapsed a couple of years ago).   And what happens if the internet goes down?  With that said, most of my gold holdings are split between e-gold and e-bullion.

Is there some way I could say, buy $200 of gold and a few months later cash it in for $250, without the profits getting eaten up by fees?

Your time frame is too short.  You'll know to sell when magazine covers and newspaper headlines pronounce that "the gold bull has arrived!".  

Use kitco for all your metal charting needs:

http://www.kitco.com/charts/livegold.html

I like the gold eagle editorials - they have a nice variety of authors.  
http://www.gold-eagle.com/editorials.html

[ Parent ]

Some crackpots on gold eagle (none / 0) (#215)
by CtrlBR on Mon Nov 22, 2004 at 08:15:16 PM EST

This one is particularly glaring : Confiscation

Where the author exposes his belief than since a workday used to be valued at a silver dime and that now it is valued at 278 silver dimes silver is undervalued by a 278 factor...

If no-one thinks you're a freedom fighter than you're probably not a terrorist.
-- Parent ]
Hmm yes (none / 0) (#234)
by xria on Mon Nov 22, 2004 at 10:24:30 PM EST

Because advanced minerology, cheap and abundant energy for refining, and large transport system, and mechanised extraction of silver ores have had no effect on the amount of days of work it takes to create a silver dime.

[ Parent ]
Teh Realpolitik (2.12 / 8) (#27)
by bjlhct on Sun Nov 21, 2004 at 06:16:00 PM EST

The US economy has gotten pretty f-ed up but we can still save it. Here's my economic plan for the US:

Sell lots of Treasury bonds.

End agricultural subsidies over a few years.

Use this money to add manufacturing capability, hoard some iron, copper, and aluminum and/or take over some 3rd world countries with lots of mines, and expand national laboratories to do more research and add "apprenticeships."

Now, default on the debt. The dollar plunges, but we don't care. We have oil from Iraq, We have metal. We have manufacturing. We have R&D. We screw over China, Japan, and a bunch of rich folks in our country. We save trillions.

Now, some of this may seem hard for you to believe.
For example:

How can such a radical plan pass? Well, the Republicans now control the government well enough that they could pass something this radical if it because the (secret) party position.

How can we take over some African countries without making other countries suspicious? Well, with a little bit thought, we can use puppet corporations to drain them dry a la a more subtle East India Company. There are lots of private armies for hire. We can offer the soldiers food and drugs. We can offer the leaders money and the option of asylum. With two layers of puppets, nobody ever suspects anything, because, well, people are dumb.

I can only conclude that Bush, DeLay, and the PNAC are geniuses.

Discuss.

*
[kur0(or)5hin http://www.kuro5hin.org/intelligence] - drowning your sorrows in intellectualism

End the war on drugs for more available capital nt (2.66 / 3) (#30)
by trane on Sun Nov 21, 2004 at 07:01:12 PM EST



[ Parent ]
Exactly. (2.00 / 2) (#46)
by bjlhct on Sun Nov 21, 2004 at 09:17:55 PM EST

I don't know how I forgot that part.

http://www.mind-trek.com/articles/pct07a.htm is about right.

Maybe we can use some prisons as factories. The law enforcement people that don't want to work for business can go to the army or be retrained for employment in new camps in Iraq for brainwashing.

I think this is why Bush replaced Asscroft (protecting us from bronze boobies...drugs...terrists...civil liberties...and now himself) with Gonzales.

*
[kur0(or)5hin http://www.kuro5hin.org/intelligence] - drowning your sorrows in intellectualism
[ Parent ]

Fatal Flaw (2.50 / 6) (#43)
by Peahippo on Sun Nov 21, 2004 at 08:52:05 PM EST

Your plan sounds OK ... except for the fatal flaw in your assumption that utterly kills your conclusions. You assume that the American taxpayer is NOT the patsy in all of this. But he is the patsy. He's the one who has to shoulder all the burden of all these elite scams going on.

For instance, you said: "End agricultural subsidies over a few years."

This won't happen since those subsidies are simply how the elite in government arrange for their buddies in the agri industry (Cargill et al) to get paid more from the US Treasury than they pay into it ... which can only mean the average sad sack like yourself has to pay INTO said treasury, more than you get back. Organizations like Cargill are run by the wine-and-dine jet-setters who have nothing in common with you, but have everything in common with the same elite who end up in government positions.

Your plan needs to address the ongoing need to rape the American taxpayer by increasingly globalist organizations and people (who David Korten calls the "Stratos dwellers"). That will entirely change your conclusion about things like your alleged Great American Debt Default. America's current rulers would never let it default, since that would mean bankrupting themselves. Instead, America will be put onto something like an IMF-arranged repayment plan that continues the rape of the common man ... as long as the Stratos dwellers continue to have their limos, their mansions, their jets, their vacations spots, the best food, etc.

It's all about class war, man.


[ Parent ]
You underestimate them! (none / 1) (#49)
by bjlhct on Sun Nov 21, 2004 at 09:46:46 PM EST

The elite can dump their own kind pretty quick when they see them going down or as leeching off them.

You are thinking too short-term. The elite have already learned to hose the population of the US as much as they want. Instead of the proles paying mostly China (our enemy!) and some to the elite, they don't pay more taxes and have more money for the elite to take the usual ways, which they're more happy about than taxes.

The elite controls the US, so to them the important thing is not how to better get money from proles - they have that down - but to increase the size and power of the US and decrease the size and power of competitors such as China.

*
[kur0(or)5hin http://www.kuro5hin.org/intelligence] - drowning your sorrows in intellectualism
[ Parent ]

Farsight (1.50 / 1) (#57)
by Peahippo on Sun Nov 21, 2004 at 10:50:00 PM EST

Your rationales seem sound but I think that you are not admitting the extent that Americans have yet to fall ... and as well the real potential of the fall we're realistically facing here. Imagine being pushed into NYC-style "working man" (i.e. shitty) apartments. Imagine eating meat once per 2 weeks, often less. Imagine sharing a car with neighbors since no one can really afford to run one on their own. Imagine a First World economy being doled out to you one teeny-tiny dollop at a time, simply because some rich fucker arranged some spreadsheet to make it so (and you let him do it, too!).

America can fall pretty damned far. It's still quite well off, considering that large cushion of air underneath it. You can lose the SUV and call it a hit to your lifestyle ... but you will still be able to get from point A to point B at 60mph in a used Honda Civic. You can lose the 3300-sq-ft McMansion and call it a hit to your lifestyle ... but will still get a cozy 1800-sq-ft home in an "undesirable" neighborhood with a garden, full kitchen, bookshelves, workshop, laundry, etc.

What I'm talking about is an enforced Third World status. That's where the current class war in America is going. This has the potential to go very much beyond the destruction of conspicuous consumption. It can go all the way to outright ghetto-ization of much of the American population. I believe that it will. America's very First World status will be sacrificed on the alter of Hypercapitalism.


[ Parent ]
Silly, silly, silly! (1.50 / 1) (#77)
by bjlhct on Mon Nov 22, 2004 at 01:14:42 AM EST

  1. A certain level of luxury is useful for a brainwashing state. The future America I described needs some smart people to do research, so a brainwashing state is better than a police state.
  2. Of course I know how far Americans can fall. But to me, it has already happened. I just see the future better than you and see no point arguing about the certain.
  3. What, me worry? I am the ubermensch, too smart to fall for this crap! I'll be retired in New Zealand, just pining away for you suckers!


*
[kur0(or)5hin http://www.kuro5hin.org/intelligence] - drowning your sorrows in intellectualism
[ Parent ]
Aw dammint. (none / 1) (#207)
by bjlhct on Mon Nov 22, 2004 at 06:27:25 PM EST

I can't get the hang of this! What am I doing wrong? Baldrson, circletimessquare, teach me the ways of turmeric! Perhaps additional alcohol is required?

*
[kur0(or)5hin http://www.kuro5hin.org/intelligence] - drowning your sorrows in intellectualism
[ Parent ]
R34p t3h \/\/h1rlw1/\|> (3.00 / 2) (#248)
by Peahippo on Tue Nov 23, 2004 at 02:11:48 AM EST

A certain level of luxury is useful for a brainwashing state.

That's called the investment phase of establishing social controls. We are leaving that, and are arriving in the profit-taking stage. People are very indoctrinated now from being bribed with cheap Chinese nigger goods, cable nigger TV, cell nigger phones, and all the trappings of being "nigger rich". (Can you tell how much I despise conspicuous consumption, and overall living beyond one's means?)

In the profit-taking stage, the wealthy will reduce the bribes and start to really enjoy their illicit earnings. This will mean expensive necessities like food, gas, electricity, etc. The mass of foolish people we call "the wad" will simply whimper and suffer under this regime. After all, their very cognitive abilities took a steep dive in the Era of Great Bribery (1985-2000), so they will be quite unprepared for the era when the government of implied social contract is whisked out from underneath their feet. A society like that takes a long time to fall though the air and crash heavily to the ground. But it's happening.

I just see the future better than you and see no point arguing about the certain.

Does that mean that you're armed? If you're not armed, then you have no idea what future we're facing. Corporate security men will end up having their way with your wifey wife, and unless you're equally armed, you will have to watch them rape her. After all, this is the upcoming era of Corporate Rule. Government is going away just enough to entirely support corporate movements of wealth. There will eventually be no recourse against the frankly violent actions of corporate structures. No court will support your pleas, since the very courts will be "outsourced" ... hence only answer to their corporate masters (which is kind of a pointless prediction, since the law itself will be almost entirely devoted to protecting corporations from popular actions).

The future is written in Human agony. Look at how you live. You are living a terrible future NOW, as it is. It's likely that even when you are off work, even on vacation, your days are filled with stress and worry. People from the 1800s would be wowed by the cheap plastic nigger shit you get to play with, but would be utterly mortified by the very lifestyle you probably pursue. You live in hell RIGHT NOW. And all we are setup to do in the future is to expand upon this monstrous theme.

I'll be retired in New Zealand, just pining away for you suckers!

Well, smart guy, ubermensch, whatever, NZ will be right there with a special "immigration tax" on Yankees like you. Ever hear of supply and demand? By then, many Americans will be trying to get the holy fuck out of the half-class, half-race civil war going on across what we'll laughably call America. Also, NZ is a REAL country of the world ... which means their immigration is tightly controlled. America is the easy bitch of the world, with her extremely lax immigration policies. You simply have no idea what you are talking about, and have no idea what you're in for. Unless you're some multimillionaire (and buddy, if you get up for work 5-6 days a week, you WILL NEVER BE RICH) you are just another potential drain on the socialized medical care system of the country you'd want to be in.

The only way your testimonials make sense is that you live by the old ways of early-American frugality. And what are the chances of that being true?


[ Parent ]
What would Dogbert do? (none / 0) (#313)
by bjlhct on Tue Nov 23, 2004 at 04:49:21 PM EST

He'd say "Bah."

It's true that some parts of America will become much like you describe. However, smart rich people know that continued R&D is to their benefit. Mdeical technology comes to mind. Therefore you need some areas with moderately smart content brainwashed people, which involves some amount of luxury goods.

As for me, I got me a nice 1911 .45 ACP.

Don't knock on my door
If you don't know my Rottweiler's name.

And I'm looking to inherit over a million shortly. And I have some talents when it comes to stocks.

Also, think a little bit more about what ubermensch means. Heh.

/smug mode

*
[kur0(or)5hin http://www.kuro5hin.org/intelligence] - drowning your sorrows in intellectualism
[ Parent ]

Wow, you're a complete bastard! (none / 0) (#256)
by Russell Dovey on Tue Nov 23, 2004 at 04:52:37 AM EST

too lost in admiration to write: no text

"Blessed are the cracked, for they let in the light." - Spike Milligan
[ Parent ]

I don't get it (2.50 / 10) (#28)
by squidinkcalligraphy on Sun Nov 21, 2004 at 06:22:12 PM EST

What I fail to understand is this: conservative governments are regarded as being good for the economy. With record budget deficits under Bush and Reagan, how come on election eve, the markets indicators dropped under the expectation that Kerry would get up? Is this because budget deficits don't really matter to the state of the economy/business, or is that view so firmly ingrained in the public mind?

An identity card is better that no identity at all
Nope (2.75 / 4) (#36)
by BadDoggie on Sun Nov 21, 2004 at 07:34:07 PM EST

A weak dollar is good for exports. No one in living history managed to weaken the dollar more than the current regime in Washington. When I moved to Germany in 2000, a Dollar bought you 1.2 Euros; it barely buys you EUR 0.76 now. The dollar has sunk against the Euro (and other world currencies) by about a third, which means other currencies have gone up against the dollar by almost half, all of this during Shrub's time in office.

Great for exports, shitty for everyone not exporting goods and service. Racking up trillions in debt is hardly "conservative".

woof.

"Eppur si muove." -- Galileo Galilei
"Nevertheless, it moves."
[ Parent ]

Bush is a radical (3.00 / 2) (#108)
by wiredog on Mon Nov 22, 2004 at 08:47:28 AM EST

not a conservative.

Wilford Brimley scares my chickens.
Phil the Canuck

[ Parent ]
Though as a Canuck... (2.50 / 2) (#122)
by Pxtl on Mon Nov 22, 2004 at 10:11:21 AM EST

It gives me sweet buying power on eBay.  You people need to fix your courier services though - shipping prices in the States are just stupid.

[ Parent ]
What's past is past... (2.25 / 4) (#37)
by Tyler Durden on Sun Nov 21, 2004 at 07:36:00 PM EST

The Republicans are no longer the fiscally responsible party they once were perceived to be.  (This is not to say that Democrats are either.)

I think there are two reasons why this is so.  Part of it is the idea of supply-side economics.  The idea that giving money to businesses instead of individuals is better for the economy.  A good idea in theory, but the supply curve is extremely difficult to move in practice.  The second reason is this push toward fundamentalism.  It's okay to spend more money and go into debt, because it's a richeous  cause and God will make everything okay in the end.

Jesus Christ, EVERYONE is a troll here at k5, even the editors, even rusty! -- LilDebbie
[ Parent ]

Supply side economics (3.00 / 3) (#130)
by Pxtl on Mon Nov 22, 2004 at 10:46:23 AM EST

is why the stock market likes Republicans.  The stock market has about as much long-ranged foresight as a four-year-old playing with a lighter.  An end to Bush is an end to supply-side economics.  Regardless of whether that would help the nation (and its economy) in long term, it would represent an increase in operating costs in short term.  Hence, the market reacts badly.

So it only makes sense that the market favour Bush.  Even if individual shareholders expect a long-term payback from Kerry, the best bet would be to sell now, wait for the bad reaction to bottom out, and then buy like nuts in anticipation of a theoretical glorious Kerry recovery.

So regardless of whether or not the marketeers perceived that Kerry would be good long term, the market is based on short-term predictions, and Bush is very good at thinking short term.

[ Parent ]

Bush thinks about economics? (none / 0) (#200)
by xria on Mon Nov 22, 2004 at 04:47:36 PM EST

After the pure stupidity he pulled with the steel tariffs, I personally think Bush only cares about the short term political spin of an economic policy, and doesnt care at all about any even short-medium term effects.

[ Parent ]
Liberal and Conservative compared to what? (3.00 / 8) (#45)
by Coryoth on Sun Nov 21, 2004 at 09:05:15 PM EST

What I fail to understand is this: conservative governments are regarded as being good for the economy. With record budget deficits under Bush and Reagan, how come on election eve, the markets indicators dropped under the expectation that Kerry would get up?

A large part of the issue is that, in US politics anyway, everything has to be reduced to a liberal/conservative dichotomy.  That means the Republicans are branded conservative, and the Democrats liberal, even though for the most part those labels are rather misplaced.  For practical purposes there is little real difference between the two main parties.  As soon as people start to look past the artificial divisions to the practicalities things might change.

An interesting meme I encounteed a while ago:

Fisher's Deduction:
"The more issues a person tries to shoehorn down into an artificial liberal/conservative dichotomy, the more certain you can be that the person is an American"

Jedidiah.

[ Parent ]

This much I had gathered (none / 1) (#80)
by squidinkcalligraphy on Mon Nov 22, 2004 at 01:47:35 AM EST

A very similar situation applies here is Australia, but somehow I would have thought that the corporate world might see beyond this i.e. drop their so-called ideology in favour of the party that might _actually_ deliver a stronger economy.
An identity card is better that no identity at all
[ Parent ]
Confidence (2.66 / 3) (#92)
by xria on Mon Nov 22, 2004 at 05:02:28 AM EST

Most modern markets are built on confidence, if the markets believe that most people believe the Republicans are conservative and make the economy work better, then they expect the market to react accordingly, regardless of whether it is true or not.

[ Parent ]
Both parties will create a deficit .. (2.50 / 2) (#255)
by Highlander on Tue Nov 23, 2004 at 04:19:58 AM EST

Both democrats and republicans can find reasons for deficit spending, but the expectation is that a republican goverment will hand the money to corporations first, while a democratic government is said(perhaps wrongfully) to hand it to the masses first to spend.

Moderation in moderation is a good thing.
[ Parent ]
My take (none / 0) (#301)
by Cro Magnon on Tue Nov 23, 2004 at 03:01:17 PM EST

The Democrats hand the money to the bureaucracy, and a tiny fraction goes to the poor after they've lined their pockets.

The Republicans give it to the corporations expecting it to trickle down to the masses. But all that trickles is some yellow liquid! :-P
Information wants to be beer.
[ Parent ]

Or alternatively (3.00 / 3) (#304)
by Coryoth on Tue Nov 23, 2004 at 03:48:29 PM EST

They both shuffle cash to corporations as fast as possible, the Democrats just bother to have a diversionary tactic of claiming to give to the poor to make the sleight of hand less noticeable.

Pretty much every major difference you can find between Republicans and Democrats is a matter of rhetoric rather than reality.  They claim to hold very different positions, and certainly their original motivating philosophies are different, but it terms of practical application to reality (bills actually passed while in power) there is no apparent difference between the two, and there hasn't been for years.  I'm just curious as to when the US public will notice, or whether they'll just keep believing the rhetoric.

Jedidiah.

[ Parent ]

What the declining dollar means to me (2.16 / 6) (#31)
by MichaelCrawford on Sun Nov 21, 2004 at 07:04:02 PM EST

I'm paid in US dollars. Usually I ask my clients to wire my pay to my business account in Maine. But my living expenses are in Canadian dollars, because I live in Canada now. It turns out it's cheaper to take my pay out in chunks at the ATM here than to wire it to my account in Canada.

My US bank has a limit of USD$300 that I can withdraw from the ATM each day. What I do is figure the equivalent Canadian dollar amount, to the nearest twenty, and withdraw that. (As long as I have enough in the account.)

Well since I've been in Canada, I've been able to withdraw less and less money. At one time I could take out CAD$400. Now it's CAD$340.

That would be OK if things were getting cheaper here in Canada, but that doesn't seem to be the case. I would think that imported items would be getting cheaper, but I haven't seen that either. In general, equivalent things cost more in Canadian dollars in Canada than they do in US dollars in the US, and that's still the case.


--

Live your fucking life. Sue someone on the Internet. Write a fucking music player. Like the great man Michael David Crawford has shown us all: Hard work, a strong will to stalk, and a few fries short of a happy meal goes a long way. -- bride of spidy


Canada, Canada, Canada (1.04 / 23) (#35)
by Esspets on Sun Nov 21, 2004 at 07:17:24 PM EST

Nova Scotia Canada Canada Nova Scotia Canada Canada Nova Scotia Canada Canada Nova Scotia Canada Canada Nova Scotia Canada Canada Nova Scotia Canada Canada Canadian Bonita Nova Scotia Canada Canada Bicycles Nova Scotia Canada Canada Bicycling Nova Scotia Canada Canada depression Nova Scotia Canada Canada the couch Nova Scotia Canada Canada device drivers Nova Scotia Canada Canada consultant Nova Scotia Canada Canada Nova Scotia Canada Canada fraudulent voting attempts Nova Scotia Canada Canada mental illness Nova Scotia Canada Canada


Desperation.
[ Parent ]
If I understand you right (1.25 / 8) (#38)
by thy privy member on Sun Nov 21, 2004 at 08:21:40 PM EST

You are evading the taxes of your adoptive country.  If this is so, why don't you use the money you're not paying in taxes to buy Google ads for your mental illness story?

[ Parent ]
I'm paying taxes to Canada (3.00 / 6) (#111)
by MichaelCrawford on Mon Nov 22, 2004 at 09:04:52 AM EST

No, I'm paying taxes to Canada. I'm very careful with my accounting.

According to the US Canada Tax Treaty, I'm supposed to pay taxes to the country I reside in, not where I get paid.

One does not move to Canada to avoid taxes.


--

Live your fucking life. Sue someone on the Internet. Write a fucking music player. Like the great man Michael David Crawford has shown us all: Hard work, a strong will to stalk, and a few fries short of a happy meal goes a long way. -- bride of spidy


[ Parent ]

No shit eh? ;-) .... n/t (none / 0) (#137)
by Morphine007 on Mon Nov 22, 2004 at 11:52:48 AM EST

n/t

[ Parent ]
um... (none / 1) (#144)
by Run4YourLives on Mon Nov 22, 2004 at 12:20:47 PM EST

I would think that imported items would be getting cheaper, but I haven't seen that either.

Why would you think that? This would only be true if  Canada were breaking away from the rest of the world economically, which isn't the case.

Rather it's the US that's slipping, and we're alreay running a trade surplus from them. I doubt many consumer products are coming in from the US, but rather from the same asian factories that Americans are importing from.

It's slightly Japanese, but without all of that fanatical devotion to the workplace. - CheeseburgerBrown
[ Parent ]

Good point (none / 0) (#151)
by MichaelCrawford on Mon Nov 22, 2004 at 01:07:59 PM EST

Maybe I should start making my clients pay me in Euros. You know, getting on the bandwagon early.


--

Live your fucking life. Sue someone on the Internet. Write a fucking music player. Like the great man Michael David Crawford has shown us all: Hard work, a strong will to stalk, and a few fries short of a happy meal goes a long way. -- bride of spidy


[ Parent ]

It's the currency, not the country (none / 0) (#185)
by svampa on Mon Nov 22, 2004 at 03:05:26 PM EST

doubt many consumer products are coming in from the US, but rather from the same asian factories that Americans are importing from.

That would be true if the Asian factory sells in its national currency, but usually the sells in USD

They used to sell a PC for 300 USD, and now they still sell it for 300 USD. You used to buy it for 400 CAN and you buy it for 340 CAN. Things are really cheaper. Another problem is how long time will pass before the final consumers see this change.



[ Parent ]
What kind of Solutions? (2.50 / 6) (#42)
by teece on Sun Nov 21, 2004 at 08:49:02 PM EST

Ignoring the problem won't make it go away, and just because there are no easy solutions doesn't mean that nothing can be done. What is certain is that nothing will be done if people aren't aware of the problems.

So what kind of things can be done to fix any of these problems.  The only one that has an obvious solution is deficit reduction, but that one is not easy, either.  Reduce spending (not easy, and probably almost impossible with one party in charge of everything), raise taxes (this has become tantamount to murder by those in charge), hope (pray!) for big economic growth (which raises revenue from taxes).

What else?

-- Hello_World.c, 17 Errors, 31 Warnings...

The Government (2.75 / 4) (#47)
by Coryoth on Sun Nov 21, 2004 at 09:33:24 PM EST

I generally tried to avoid giving too much in the way of opinions on "solutions" because ultimately that's more the subject of a whole new essay in and of itself.

Let me just suggest that perhaps looking for solutions purely in terms of "Things the Government Can Do to Fix the Problem" is probably not going to be helpful.  If there were simple actions the government could take to fix the problems, they'd probably already be enacting them.  Several of the problems were due to personal issues anyway: Household debt, rampant consumerism, and lack of ambition for education (or perhaps simply complacency about ones place in the world).  Such issues must be addressed, I would think, on a personal/individual level, and can't be mandated by government.

Those issues that could be addressed by the government - budget deficit reduction for instance - are, as you point out, impractical given the current political climate.  Change would require a significant shift in the mood of the electorate.  

In summary I think a large part of the "solution" might simply be to make as many people as possible aware of the problems, and what they, personally, can do to help alleviate them.

Jedidiah.

[ Parent ]

Great story. (2.87 / 16) (#48)
by waxmop on Sun Nov 21, 2004 at 09:44:49 PM EST

When Cheney said deficits don't matter, he should have said deficits don't matter politically, because that's what he meant. Nobody with half a brain really believes there are no economic consequences of open-ended government deficits.

The Brookings Institute did some research earlier this year on possible long-term consequences of the deficit and on ways to fix it. You can read their findings here.
--
Limberger is the angeldust of cheese.

More sore LOSERS on the Left. (1.14 / 50) (#54)
by the ghost of rmg on Sun Nov 21, 2004 at 10:17:18 PM EST

The only kind of dollars you should be worried about are the POLITICAL DOLLARS President Bush is deciding how to spend right now.

You can gloat all you want about the economic situation Obstructionist Democrats like Tom Daschle (who lost in big fat way, by the way -- LOL!) created by opposing President Bush's economic agenda and gumming up the Senate with philibustering bullshit, but in the end the President has a plan to deal with all you anti-American Leftivists. With you losers' loss of five seats in the Senate and a lot more in the house, the President will finally be able to get this country back on track after the Al Qaeda/Democrat Party tag team derailed it in his first term.

You stupid liberals lost like the bunch of losers you are. Now the voice of the people will finally be heard, not the voice of far left activists and the liberal "Justice System." President Bush won a mandate and it's just a matter of time before he gets rid of all the Democrat bureaucracy that's been fucking up our economy since the 40s.

So you guys just keep gloating about how you've destroyed our economy with your Clinton recession. Come midterm elections, you'll see how far your Obstructionist, far left, amoral philibustering gets you. Oh wait, I'll tell you what it will get you: Another big loss. LOL!

Oh yeah, and you voter fraud conspiracy theorists are the biggest losers of all! You can't believe you lost fair and square just like you lose in every other election? What a joke. Better put on your tinfoil hats or Diebold will start telling you how to cast your vote! LOL! You'll never find the fraud and even if you do, you losers will have to get through the 53% percent of this country who voted your loser down before you put the most liberal Senator in the Senate into the Whitehouse. Too bad you hate guns so much, huh?


rmg: comments better than yours.

When did I take a position? (2.60 / 5) (#55)
by Coryoth on Sun Nov 21, 2004 at 10:28:32 PM EST

You might care to note that I pointed out that neither the Republicans nor the Democrats have either raised these issues, or offered anything but the most empty platitudes with egard to trying to solve them.  I will gladly state for the record that had Kerry swept to victory, with a Democratic senate and house to boot, I doubt the the US would be in any better position with respect to these issues.

I would tend simply call you a troll, but you do provide a fine example of exactly the problem I was discussing with regard to politics: pointless partisan bickering, the need call everything in terms of false dichotomies, and most importantly, the utterly futility in that.  For that I thank you.

Jedidiah.

[ Parent ]

Brains, my friend, are useful (1.00 / 4) (#58)
by Roman Gurovich on Sun Nov 21, 2004 at 10:57:55 PM EST

Good sir, your entire comment was just a bunch of fluff. You sound like a four-year-old jumping up and down because mommy bought you candy. It would do you well to realize first-off that politics do not constitute the core of human existence. If you are going to go about in your dull mindset, however, then at least learn the issues. Take that lollipop out of your mouth. It impedes mental development.

[ Parent ]
Whatever, you guys got PUNK'D! (1.14 / 7) (#59)
by the ghost of rmg on Sun Nov 21, 2004 at 11:13:28 PM EST




rmg: comments better than yours.
[ Parent ]
Rated a 1.. (none / 0) (#309)
by Kwil on Tue Nov 23, 2004 at 04:28:57 PM EST

..simply because it's poor form to tell people you've trolled them.

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


[ Parent ]
Don't use emotions, use logic to bash (none / 0) (#194)
by svampa on Mon Nov 22, 2004 at 03:50:01 PM EST

I'm sure democrats have lost and they don't like it, and ....but it has nothing to do with this article.

The writter states that there is a big problem, that may have really bad issues in long term. If you think that he is plain wrong, just say why. Saying "you loosers, you loosers" like a child goes nowhere.

All that things about "we won", "gun hate" has nothing to do about the article. The only points about aconomy you have told are:

Democrat bureaucracy that's been fucking up our economy since the 40s.

Clinton recession

You don't show figures to support your statement, you can add them now. Comparation of economy in Democrat's mandates and Republican's mandates, and Clinton recession figures and data.



[ Parent ]
Haha your an idiot (none / 0) (#307)
by phraud on Tue Nov 23, 2004 at 04:04:15 PM EST

It's funny that you correct yourself in your own post but don't realize it. You say that it's time for the voice of the people to be heard. Dude, half of your country voted the other way. Their voices were already heard when they realized that their existing president is completely evil in every way and he was creating an evil image of the USA in the eyes of the rest of the world. Most countries hate you. The US of A is THE MOST arrogant nation in the world by far (well, half of you are anyway), and as soon as you realize that the only reason Bush won is because of a bunch of blind, religious-led children, were tricked into thinking that dubya is speaking for God - you'll be far better off.
You create your own reality. Leave mine to me.
[ Parent ]
the rise of india and china (1.61 / 13) (#60)
by circletimessquare on Sun Nov 21, 2004 at 11:32:28 PM EST

is a bad thing only if you are a useless nationalist

the point is not to be able to shout "rah! rah! we're number one!"

the point is stability and prosperity and peace in as many places as possible, which is good for you wherever you are, and a rich india and china makes enormous strides towards that

we SHOULD export all our manufacturing jobs to china, and export all of our IT work to india- so fucking what?

it's not like you can do anything to prevent that anyway, it's economically inevitable! why fight progress?

look folks: the us is not in decline, rather, india and china are on the rise

only if your pov of the world is limited a la useless nationalism to that of the united states does it look like a "decline"

if your pov is that of the globe, what you see is other areas rising up towards the us in terms of economic strength

how, in any way, that that is anything but a good a thing, all the way around, is completely beyond me

let the blind stupid nationalists complain, who cares, fuck them

india and china are rising

and there ain't nothing anyone can, or should, do about that


The tigers of wrath are wiser than the horses of instruction.

Mostly true (2.66 / 3) (#64)
by Coryoth on Sun Nov 21, 2004 at 11:52:18 PM EST

is a bad thing only if you are a useless nationalist

It is a bad thing if you are an American.  Not because the rise is itself inherently bad, but rather, as I was trying to explain, because this rise could help trigger a number of other serious economic issues in the US, triggering a distinct fall for those in the US.

the point is stability and prosperity and peace in as many places as possible, which is good for you wherever you are, and a rich india and china makes enormous strides towards that

we SHOULD export all our manufacturing jobs to china, and export all of our IT work to india- so fucking what?

I agree.  I even said as much in the article - this is merely the effects of globalisation finally beginning to spread the wealth.  It is (in the broad view) a good thing if China and India become more powerful economically.  Trying to fight that, via protectionism, will potentially only bring on calamity all the more swiftly.  Exporting jobs is a good thing - as long as you have something with which to replace those jobs.  And the important reality is this - the jobs will move the China and India no matter what you do - that needs to be accepted.  It is the fact that the US itself is failing to advance that is at issue, not the continuing advance of India and China.

only if your pov of the world is limited a la useless nationalism to that of the united states does it look like a "decline"

What I am discussing in the article is not the relative economic power of the US compared to China and India (which may well be decreasing - that aspect is irrelevant), but rather the marked fall from its current position brought on by debt, a reliance on the US dollar, and complacency that the US will simply always remain powerful (among other things).

I repeat, the concern is not that India and China may become powerful in the global economy, but rather the effects that that may induce in the US economy given a variety of potential weaknesses in the US economy.

Jedidiah.

[ Parent ]

what doesn't kill you... (2.33 / 3) (#68)
by circletimessquare on Mon Nov 22, 2004 at 12:05:50 AM EST

makes you stronger

i don't see anything in the rise of india and china that will kill the us

rather, i see healthy competition that will spur on us on to even bigger and better things

in fact, the case could be made that europe, historically, experienced such a rapid rise in technology and economic strength because of all the nationalistic and regional rivalry that didn't really exist in china and india historically: they tended to be either monolithic sleeping superstructures, or social units of such overlap and granularity that large-scale nationalistic units didn't rise

and so europe is as historically powerful as it was because of all that geopolitical rivalry spurring on technological advances

yeah sure, they wasted the rivalry on one stupid war after another

but i really don't see the usa getting in a land-grab war a la napoleon or hitler any time soon with china or india... war is not behind us, but the age of "i'll just grab alsace-lorraine, yeah, that's a good idea" is behind us: america is not going to grab assam, china is not going to grab california, india is not going to grab manchuria

so: let china and india rise, and let the healthy competition make us all even richer


The tigers of wrath are wiser than the horses of instruction.

[ Parent ]

We seem to be talking past each other (2.50 / 2) (#72)
by Coryoth on Mon Nov 22, 2004 at 12:23:44 AM EST

i don't see anything in the rise of india and china that will kill the us

Did you read the article?  There are side effects that could easily trip other economic issues.

rather, i see healthy competition that will spur on us on to even bigger and better things

If it does simply provie the US some competition, spurring them on, then I have no objection.  I am all for that.  I am merely warning that the US economy may in fact be much weaker than we think, and instead of spurring competition it could burst the balloon.

I am not trying to claim that India and China gaining economic power is inherently bad.  I am certainly not suggesting that it should be stopped or prevented - quite the contrary, I've said it is inevitable, and any attempts to act against it will only make things worse.  What I am saying is that the US needs to be aware that this is happening, will continue to happen, and has notable side effects if the US economy is actually as weak/hollow as some indicators suggest it may be.

so: let china and india rise, and let the healthy competition make us all even richer

You seem to be arguing against a point that is neither stated nor implied anywhere in the article.  I agree with you - by all means let India and China continue to rise.  The issue is that, given that that is happening, what is the US actually doing to compete?

If the US fails to compete, if the US fails to curb it current account deficit in the face of this competition, if the US fails account for this increase in demand in the oil market, if the US fails to take steps to cushion the blow should the US dollar lose its status as global currency - then the US could be in trouble indeed.

Those are all big "if's", but my point is simply that the results of any one of those "if's" coming true could be catastrophic.  It is something to be aware of.

Jedidiah.

[ Parent ]

look at japan (2.50 / 4) (#73)
by circletimessquare on Mon Nov 22, 2004 at 12:43:34 AM EST

if you think the rise of china and india threatens us, how the heck do you think the japanese feel?

and for them, with china, it is an ancient rivalry to boot

and china's rise is also coming as they have a continuing lethargy to their economy dating all the way back to the 1980s, AND the rise of chinese nationalism has seen a lot of anti-japanese sentiment bubbling to the surface

so if you want to worry about anyone, don't worry about the us, worry about japan! lol ;-P

but, really, while you talk gloom and doom about portents and vague shapes on the horizon, you don't have anything concrete to warn us about

now it doesn't hurt to be wary, but it does hurt to be superstitiously conservative

not that i'm saying that you are, but come on: really, if the rise of india and china reveals some sort of "weakness" in the us economy, it will be of value to us, a service to us, not something of negativity! really, the weakness will be of such shape that it won't suddenly turn us all out into the street a la the great depression, it will manifest itself gradually... how can i be so certain of this? because we are so interdependent as it is, any dampening effects we see on our economy will be felt in their's as well... so there is nothing about the rise of china and india that happens at our detriment that would somehow accelerate with their rise

in other words, it's not a zero sum game

and you even alluded to one potential weakness that might be revealed: oil supplies

china has announced a major committment to pebble bed fission reactors recently: they see the writing on the wall- oil is too volatile and increasingly scarce

now your warnings about the threat of china and india's rise is useful if the us is so brain dead addicted to petroleum that we also do not adapt as china does, and develop the political will and stomach to confront that which stands in the us's way to more widescale pebble bed reactor technology implementation: the ignorant nimby crowds who do not understand the science and safety of pebble bed reactor technology and would chain themselves to train tracks to prevent uranium shipments... as if sending their kids to fallujah to protect our precious, precious oil from islamonazi wackjobs makes more sense!

but, i assert to you, that the us is not that brain dead, really

and even if we are, which i don't believe, but even if we are that brain dead, then we will get what we deserve if we don't move beyond petroleum!


The tigers of wrath are wiser than the horses of instruction.

[ Parent ]

We still seem to be mostly agreeing (2.66 / 3) (#75)
by Coryoth on Mon Nov 22, 2004 at 01:07:00 AM EST

We mostly agree - the rise of China and India is a good thing for the world (except possibly the US), and shouldn't be stopped or impeded in any way.  Let me just address the few points that I do disagree with.

if you think the rise of china and india threatens us, how the heck do you think the japanese feel?

Not quite so threatened - they had their bubble, and it burst.  You may recall it back in the early 90s.  The potential of a US bubble yet to burst remains.

but, really, while you talk gloom and doom about portents and vague shapes on the horizon, you don't have anything concrete to warn us about

I thought I was relatively specific with regard to the current account deficit, the US Dollar and the resulting potential for rampant inflation in the US.

really, if the rise of india and china reveals some sort of "weakness" in the us economy, it will be of value to us, a service to us

I agree - that is in fact true no matter how harsh the correction - because a harsh correction will only occur if there is indeed a bubble to be burst, and no matter how painful it is to burst, you are always better off with it gone (in the long term).  The issue is merely how long before the long term good (the inevitable rebound of the US economy I spoke of in the article) occurs.

really, the weakness will be of such shape that it won't suddenly turn us all out into the street a la the great depression, it will manifest itself gradually... how can i be so certain of this? because we are so interdependent as it is, any dampening effects we see on our economy will be felt in their's as well

You're gambling.  Please note that I stated clearly, several times in the article, that any sort of economic correction is a slim possibility.  You are claiming that, should it occur, it will be minor - I think there are no such guarantees.

Yes, India, China and the rest of the world gain much from their trade with the US, and any pain the US economy feels will most certainly be felt elsewhere.  That is not complete insurance.  The global markets have their own momentum and follow their own dictates, and, for example, should the US be overtaken by the Euro as the global currency the significance of a US decline for the rest of the world is dampened.  Similarly, the more powerful the rest of the world's economy, again, the less significant the decline of the US economy becomes.

It is a matter for argument as to how deeply any correction cuts, if it even occurs, but I do think there is good reason to believe it may well be considerably worse than you imply.

in other words, it's not a zero sum game

I never claimed it was - the reason for a US fall would be a bubble popping rather than a counterbalance to India and China.  The bubble is the US Dollar, and the ever growing current account deficit (among other things).

but, i assert to you, that the us is not that brain dead, really

I would like to think so.  Current trends in oil dependence are not exactly promising however.

Jedidiah.

[ Parent ]

oil dependence is a weakness (2.33 / 3) (#81)
by circletimessquare on Mon Nov 22, 2004 at 01:51:21 AM EST

and yes, we mostly agree

however, i assert to you that the interdependence between the major economies of the world today is such that if one suffers, they all suffers

in other words, it is not possible for a bubble to burst in the us and the rest of the world happily go about it's game

in fact, the reverse is true: china is overheated, and should THAT bubble burst, the us will suffer, dramatically

this is the basis for my assertion that any weakness in the us economy is a weakness in the world economy, and visa versa

we really are entering the age, economically at least, and eventually, politically, that we cannot talk about us versus them, the us versus china, china versus europe, etc.

it's just one big global economy

so rather than run counter to what you say, i merely intend to change your word's import: their value, in most wyas, are more valuable as observations and assertions about the world economy, not the us economy, and therefore singling the us out for this that or the other thing is not really that revelatory


The tigers of wrath are wiser than the horses of instruction.

[ Parent ]

True, but (2.75 / 4) (#86)
by JanneM on Mon Nov 22, 2004 at 03:22:00 AM EST

A really trivial observation is that for any country, trade with all the rest of the world is more important to that country that trade with that country is for the rest of the world. It is true for the US, for Europe, for China.

A violent correction in the US would be painful for Europe, of course - but not nearly as painful as for the US itself. Same for China or any other part of the world. Even assuming that any group of people actually has the kind of control needed to steer this, it is all but certain that the points of pain for supporting an individual country will be different for that country than for others.

At some point, it will cost other economic powers less pain to let the US take a "correction" than to continue underwriting these deficits. That point will most likely not be at the optimal point for the US.
---
Trust the Computer. The Computer is your friend.
[ Parent ]

au contrair no freir (2.33 / 3) (#87)
by circletimessquare on Mon Nov 22, 2004 at 03:42:54 AM EST

right now, a lot china's growth is fueled by foreign investment

investment multiplies money

so if the us stopped investing in china due to an economic downturn, then the effect of the us's economic downturn would be multiplied in china

study the asian tigers of the mid-1990s and what happened to them when foreign investment slowed- the investment downturn had a cascade effect, it's impact was amplified across the region

so it is quite possible that an economic downturn in the us could be more painful for other countries than for the us of they rely upon american investment, for example... there are other examples where this effect could happen

The tigers of wrath are wiser than the horses of instruction.

[ Parent ]

Not so simple (2.66 / 3) (#91)
by Coryoth on Mon Nov 22, 2004 at 04:55:31 AM EST

study the asian tigers of the mid-1990s and what happened to them when foreign investment slowed- the investment downturn had a cascade effect, it's impact was amplified across the region

The collapse in 1997 and 1998 of several Asian economies is, indeed, instructive.  They were all running high (5% of GDP or greater) current account deficits, and the result was a sudden and drastic depreciation of the local currencies, spiralling downward as panic spread through foreign investors.

The cascade effect was less to do with foreign investment between the immediate countries involved, and more to do with concerned US and European investors withdrawing their money from the whole region.  The deficits run by all the countries in the area were highlighted as soon as one began to tumble, and hence foreign capital began to flee the entire region - the more countries that collapsed, the more investors withdrew their money from the region as whole.  A decent explanation of some of this can be found in this paper on the subject.

A better question to ask might be why the Asian crisis was limited to only the Asian tiger countries instead of causing a global shock.  Rather than the Asian crisis being a gentle fall and having global effect as you would suggest, we saw a situation where a severe correction was felt in a limited area, while the rest of the world felt only a gentle slowdown.

A large part of the reason for that is net capital flow, which in the case of the Asian tigers, was a large net inflow (hence the current account deficits).  Thus the net effects were mostly felt in the countries in question.

The US has a huge current account deficit driven mostly by net inflow of foreign capital.  Thus any lack of US investment overseas can easily be made up for by investment shifting away from the US.  It would not be hard to find the US relatively isolated.

Having said all of that...

right now, a lot china's growth is fueled by foreign investment

investment multiplies money

so if the us stopped investing in china due to an economic downturn, then the effect of the us's economic downturn would be multiplied in china

China is most certainly riding a bubble of foreign investment right now.  The current 8% growth is far from sustainable - the Chinese government is currently doing everything in their power to reign it in. I could well imagine a withdrawal of US investment causing that bubble to burst, so I agree, China is most certainly at risk.

The other countries most likely at risk are Mexico and Canada, due to the vast majority of their trade being with the US.  Should the US Dollar depreciate, the Canadian Dollar and Mexican Peso would have to fall with it to some extent.  How much the effects on Canada and Mexico can be mitigated is up for debate - nothing quite like this has happened, so its all speculative.

Jedidiah.

[ Parent ]

Of course the problem.. (2.40 / 5) (#76)
by Kwil on Mon Nov 22, 2004 at 01:08:57 AM EST

..is that when people in the US get panicky, brown people in foreign countries tend to die.

If you don't think the US will turn to land-grabs if the bottom falls out of the dollar then I fear you have either far too much faith in the American people or far too little cynicism of the American politicians.

If there's one thing other countries have learned about America it's that America is only nice when it's on top. Once it's not, it'll do practically anything it can get away with to pull itself back up.

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


[ Parent ]
man you're a moron (1.00 / 4) (#79)
by circletimessquare on Mon Nov 22, 2004 at 01:44:23 AM EST

dude, you see in the us what exists in all of human nature

and if what you said was really true, canada, cuba, and mexico would be invaded as of yesterday

they are not

and that's because over here, we have reality, and over there, we have your moronic drivel

the way you think of the us is about as perceptive as a concrete wall

you're just

dumb


The tigers of wrath are wiser than the horses of instruction.

[ Parent ]

ignoring the past is fun, right? (2.25 / 4) (#84)
by reverius on Mon Nov 22, 2004 at 03:07:13 AM EST

right... what exactly do you mean by yesterday? US history has shown that the US is willing to invade other countries pretty much whenever it wants to (whenever they have something it wants, be it political influence, natural resources, vast amounts of land, etc.)

see:

http://en.wikipedia.org/wiki/U.S.-Canada_relations (US invasion of Canada in the War of 1812... not quite relevant to this, though)

http://en.wikipedia.org/wiki/Spanish-American_War#Cuba (US invasion of Cuba in the Spanish(-Cuban)-American war of 1898. The US also annexed Puerto Rico and the Phillipines.)

http://en.wikipedia.org/wiki/Mexican-American_War
(US invasion of Mexico in the Mexican-American war of 1846-1848, because the US wanted territory. Guess what... they GOT it.)

Given that the United States hasn't stopped its unprovoked military action (though it has, for the most part, stopped annexing other countries), it's not out of the question to suggest this sort of behaviour might continue.

Goodbye BeOS, You Shall Be Missed
[ Parent ]

yes, moron, i know that (1.50 / 2) (#85)
by circletimessquare on Mon Nov 22, 2004 at 03:18:04 AM EST

and like i said before:

you see in the us what exists in all of human nature

did you see that comment of mine above there einstein?

your essay challenge today, dear sixth grader, is to look at human nature and warfare and nationalism, and to castigate all of that according to your obvious disgust for them

but to castigate the us alone for those things?

kinda dumb, no?

wake up, fruit loop

durrr...

lol


The tigers of wrath are wiser than the horses of instruction.

[ Parent ]

Really? (none / 0) (#88)
by Kwil on Mon Nov 22, 2004 at 03:57:41 AM EST

So you're saying the US is already below Canada, Cuba, and Mexico?
And you say that I've got a bad attitude toward the States.. sheesh.

Ah well.

By the way, how's that "not commenting on politics" thing going?

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


[ Parent ]
"below"? what mean? (nt) (none / 0) (#90)
by circletimessquare on Mon Nov 22, 2004 at 04:20:24 AM EST



The tigers of wrath are wiser than the horses of instruction.

[ Parent ]
Is invading Canada worth it? (none / 0) (#287)
by BuddasEvilTwin on Tue Nov 23, 2004 at 11:03:12 AM EST

and if what you said was really true, canada, cuba, and mexico would be invaded as of yesterday

they are not

  No offense to Canada, Cuba, or Mexico but I don't think the land grab would be worth it, despite Canada's natural resources (which we already get pretty cheap as is) invading these countries would be tantamount to invading a money pit.

  If anything, I think the US has demonstrated that propping up dictators and democracies in resource rich countries is a much better/cheaper solution these days.


[ Parent ]

to flex my american arrogance to its maximum: (none / 0) (#298)
by circletimessquare on Tue Nov 23, 2004 at 02:21:25 PM EST

canadians are nothing more than a lost tribe of americans who don't know it, living on unincorporated us territory

there's no reason to invade them: had quebec separated in the mid-1990s, there were serious rumors the western provinces with merge with all that is evil to the south

i mean canada exists on paper, but culturally? economically? they are a satellite about as tightly tethered to the american teat as you can get: molson and hockey do not make a unique culture, eh?

i think they recently reelected a PM up there... did anyone to south care or notice? no, because it doesn't fucking matter what goes on up there!

i think gw bush's election (not re-election, the first was stolen for him by scalia) was more closely followed than that of their own up in the tundra

BWAHAHAHAHAHAHA


The tigers of wrath are wiser than the horses of instruction.

[ Parent ]

Or as Robin Williams would have it... (none / 1) (#315)
by cr8dle2grave on Tue Nov 23, 2004 at 06:19:28 PM EST

Canada, it's like that lonely studio apartment above the hippest nightclub in town.

---
Unity of mankind means: No escape for anyone anywhere. - Milan Kundera


[ Parent ]
BWAHAHAHA ;-) nt (none / 0) (#316)
by circletimessquare on Tue Nov 23, 2004 at 06:30:40 PM EST



The tigers of wrath are wiser than the horses of instruction.

[ Parent ]
yeah, Canada sucks (none / 0) (#353)
by Battle Troll on Wed Nov 24, 2004 at 02:55:58 PM EST

Culture of mediocrity, corrupt as fuck.
--
Skarphedinn was carrying the axe with which he had killed Thrainn Sigfusson and which he called 'Battle Troll.'
Njal's Saga, ca 1280 AD
[ Parent ]
Re:what doesn't kill you... (none / 0) (#125)
by NoMoreNicksLeft on Mon Nov 22, 2004 at 10:23:33 AM EST

<em>
makes you stronger

i don't see anything in the rise of india and china that will kill the us</em>

Unfortunately for most of us, it's not whether our country will survive as a whole, but whether we will ourselves survive. So, great, the USA is out of danger. That will make me feel better when my own country let's me starve so that we can all move on to this one world government utopia.

--
Do not look directly into laser with remaining good eye.
[ Parent ]

man you are dumb (none / 1) (#169)
by circletimessquare on Mon Nov 22, 2004 at 02:14:36 PM EST

in so many ways- hysterical, paranoid, negative...

The tigers of wrath are wiser than the horses of instruction.

[ Parent ]
Man, you are so psychic... (none / 0) (#222)
by NoMoreNicksLeft on Mon Nov 22, 2004 at 08:47:44 PM EST

I mean, you can sense supernaturally that I'm hysterical, or even negative (as opposed to being sarcastic just for the hell of it).

Or maybe you are WATCHING ME even now, and there is no ESP involved at all!

Ok, ok, so you nailed the paranoid call, still, that's only 1 out of 3.

--
Do not look directly into laser with remaining good eye.
[ Parent ]

quote (none / 0) (#243)
by circletimessquare on Tue Nov 23, 2004 at 12:22:36 AM EST

"That will make me feel better when my own country let's me starve"

meets my definition of hysterical, paranoid, and negative

The tigers of wrath are wiser than the horses of instruction.

[ Parent ]

Assuming that... (none / 0) (#244)
by NoMoreNicksLeft on Tue Nov 23, 2004 at 12:45:56 AM EST

Every statement posted to k5 is A) truthful B) serious and C) a somber description of how I feel in real life for any significant amount of time meets my definition of

utterly fucking retarded.

By your own definition, you are therefor stupid. But yeh, let's argue semantics in a language with 20 synonyms for every word, 30 different meanings for each of those, grammar rules that stump geniuses, a body of literature so large that no one grows to adulthood without being saturated with a million cliches, idioms, metaphors and other associated poetry. That's *really* productive.

Bwhahaha. LOL

--
Do not look directly into laser with remaining good eye.
[ Parent ]

wtf?! lol (none / 0) (#246)
by circletimessquare on Tue Nov 23, 2004 at 01:34:59 AM EST

dude

your hysteria, is indeed, quite palpable

this is nice street theater, please continue with your hysterics

signed, the k5 audience

psst... you over there, get me some popcorn, he's about to cry and talk about his mother

BWAHAHAHAHAHAHA


The tigers of wrath are wiser than the horses of instruction.

[ Parent ]

Doing nothing and addressing modern slavery. (none / 0) (#66)
by BuddasEvilTwin on Sun Nov 21, 2004 at 11:56:34 PM EST

  While I agree with your general sentiment I'd like you to elaborate on what you really mean by "doing nothing", especially in the context slavery and working conditions.

[ Parent ]
slavery? wtf r u talking about? (nt) (none / 1) (#70)
by circletimessquare on Mon Nov 22, 2004 at 12:08:37 AM EST



The tigers of wrath are wiser than the horses of instruction.

[ Parent ]
You were unaware (2.00 / 2) (#134)
by Kasreyn on Mon Nov 22, 2004 at 11:13:30 AM EST

that China uses slave labor in its oh-so-efficient model economy? Well, technically it's "convict labor", but since the laborers are unpaid, cannot decline the honor of laboring for the glory of China, and are often convicted falsely of imaginary crimes. I don't know what YOU call that; I call it slavery.

You should read a newspaper once in a while to relieve your ignorance. In particular, get your head out of your ass and quit being such a giddy cheerleader for China just because they're anti-US. Scolding U.S. nationalists and praising the rise of China is doubly silly, since China is one of the most rabidly nationalist countries on Earth. If China becomes the world leader, they certainly won't reward globalizationists for their unwitting support. They'll line them up against a wall along with everyone else who doesn't toe the party line.


"Extenuating circumstance to be mentioned on Judgement Day:
We never asked to be born in the first place."

R.I.P. Kurt. You will be missed.
[ Parent ]
oh my god (none / 1) (#184)
by circletimessquare on Mon Nov 22, 2004 at 02:58:26 PM EST

i'm being accused of being blindly anti-us

yesterday i was a rabid us neocon

it's like riding a surfboard on the waves of prejudice on this website

tomorrow i suppose i'll be chewed out and castigated by some other retarded fuck for being a racist libertarian communist or something lol

whatever dude, at least it's interesting what i'm accused being day after day

meanwhile, you are, and always will remain, just another dumb fuck

lol


The tigers of wrath are wiser than the horses of instruction.

[ Parent ]

Forget the accusations, get back to the point. (none / 0) (#278)
by BuddasEvilTwin on Tue Nov 23, 2004 at 09:53:29 AM EST

  How do you incorporate modern slavery and poor working conditions into your "doing nothing" solution?  

  It's a simple question that accuses you of nothing and there is no reason why you shouldn't answer it.

  Lastly, there's no shame in admitting you used the wrong language ("doing nothing") to express your ideas.

[ Parent ]

there's no shame in anything i have said (none / 0) (#292)
by circletimessquare on Tue Nov 23, 2004 at 02:01:16 PM EST

and there certainly is no responsibility on my part about chinese prison slavery

the issue of prison slavery does not add to nor detract from my arguments about the rise of china, it's completely unrelated about to the points i was making

it has no bearing

just another reason why i ignored the person's point and went straight to the hysterical accusations, because i see no point to the grandparent post about chinese prison slavery, i see a theme: dimwitted hyperbole that leads someone to accuse me of being someone i am not, and being unable to see that chinese prison slavery has no bearing on the subject matter at hand, DUH!

but of course, your next step, or someone else is to shout at me: "chinese prison slavery has everything to do with your point about the rise of china!"

no, it simply, and clearly, does not...

why must i respect that straw man? i simply don't, i ignore it, it's beneath me

snore...

do i need to educate someone on the FUCKING obvious? is it somehow my responsibility to respond to someone who presents to me an "issue" that isn't really an "issue" and only leads me to disrespect them with their obvious dimwittedness?

so rather than engage in intellectual charity, i'll entertain myself instead

lol


The tigers of wrath are wiser than the horses of instruction.

[ Parent ]

I'm sorry, I was under the impression you cared... (none / 0) (#327)
by BuddasEvilTwin on Tue Nov 23, 2004 at 11:15:52 PM EST

...about the Chinese and 3rd world people.  That's what I picked up when I read:

the point is stability and prosperity and peace in as many places as possible, which is good for you wherever you are, and a rich India and China makes enormous strides towards that

  ...amongst other things I've read from you.

  Lastly, I haven't made half of the points you accuse me of making (BTW, who's creating strawmen?), and I was actually subtly trying to lead you towards a 3rd and 4th conclusion that would incorporate the values you hold dear and address modern slavery.  

  If it wasn't for the fact that you present many ideas I hold dear as a raving lunatic, I wouldn't bother.  I doubt you have a clue as to how much you obstruct the propagation of the ideas you (and unfortunately some of us) hold dearest.

  I still doubt you understand how much you have in common with the author of this article despite your correspondence with him.

  I'm not going to bother you anymore.

[ Parent ]

Education (none / 0) (#365)
by Kasreyn on Fri Nov 26, 2004 at 12:26:15 AM EST

Actually, I was explaining Chinese slavery because the statement, "slavery? wtf r u talking about?" would tend to indicate an ignoramus who did not know (or care) that China used slave labor.

You babble about moral imperatives so often at this site, for some odd reason I figured enlightening you about such a thing - which your comment seemed to indicate you knew nothing about - would spur your overactive sense of moral outrage into action. No such luck - it seems to kick in totally at random.


"Extenuating circumstance to be mentioned on Judgement Day:
We never asked to be born in the first place."

R.I.P. Kurt. You will be missed.
[ Parent ]
Who is enslaving who? (none / 1) (#102)
by porkchop_d_clown on Mon Nov 22, 2004 at 08:24:52 AM EST

As other people have said - look at Korea, Japan, Taiwan. Each went from 3rd world to 1st world over a generation or two, riding that low wage wave across the economic ocean.

In 50 years, China will be lamenting how all the good jobs have gone to Sudan.

Now where did I leave that clue? I know I had one just a minute ago! - PDC
[ Parent ]

Eurotrashtastic! (1.60 / 5) (#67)
by NoMoreNicksLeft on Sun Nov 21, 2004 at 11:58:15 PM EST

I'm sure that the starving children whose parents were laid off will be comforted knowing that the average chinese wage increases a penny every month. Why, it's actually quite selfish to think about their grumbling tummies, when the real issue is whether 2 billion people on the other side of the planet can pull themselves out of economic hell so that the elitist 1% of their respective nations can own 99% of *their* wealth. Thanks for putting it all into perspective. Besides, it only shows how lazy and unimaginitive the average american is. Just as we were to become a service industry in the 90s as Slick Willy told us, we should be moving on to the next best thing, which is a litigation/daytrading industry. Why, if those people wouldn't have spent their $250 net a week on macaroni and cheese for the brats, they could have invested it in 10,000 shares of google when it was hot, or landed a nice fat retainer fee for some corporate bigshot.

--
Do not look directly into laser with remaining good eye.
[ Parent ]
so many words (none / 1) (#69)
by circletimessquare on Mon Nov 22, 2004 at 12:08:06 AM EST

so little sense


The tigers of wrath are wiser than the horses of instruction.

[ Parent ]
I'm sure the starving chinese children (2.25 / 4) (#101)
by porkchop_d_clown on Mon Nov 22, 2004 at 08:23:02 AM EST

will be heartened to hear of your concern for their American brothers.

So, American lives are now more important than Chinese lives?

Now where did I leave that clue? I know I had one just a minute ago! - PDC
[ Parent ]

Not at all. (none / 0) (#114)
by NoMoreNicksLeft on Mon Nov 22, 2004 at 09:44:39 AM EST

But I do get sick of this shit where we're supposed to starve for our sake. How is it selfish to want a solution where we don't have to become a third world country just so they can stop being one?

And why is so fashionable to assume that such a solution can't exist and jump straight to the "we'll have to suffer for their sake" ?

--
Do not look directly into laser with remaining good eye.
[ Parent ]

not enough cows (2.50 / 2) (#128)
by Nursie on Mon Nov 22, 2004 at 10:33:07 AM EST

I don't think the world can support enough cows to keep everyone in the amount of beef that the richer (american and european) populations currently indulge in. It's a question of world population versus resources.

Meta Sigs suck.

[ Parent ]
yeah well (none / 1) (#158)
by speek on Mon Nov 22, 2004 at 01:35:11 PM EST

That's why you should always encourage the "vegetarianism is good for you" and "meat is unhealthy" memes. Makes things easier for us carnivores.

--
al queda is kicking themsleves for not knowing about the levees
[ Parent ]

Definately with you there! (none / 1) (#267)
by Nursie on Tue Nov 23, 2004 at 06:18:35 AM EST

Let us wholeheartedly support the vegan agenda. More beefs for me!

Meta Sigs suck.

[ Parent ]
the chinese are as vegan friendly as my ass ;-P (none / 0) (#296)
by circletimessquare on Tue Nov 23, 2004 at 02:14:13 PM EST

there's a saying in guangdong, where it is supposed SARS got started because people ate civet cats there...

"we eat everything with four legs except the table"

i'm not making that up!

lol

want to give a peta member a heart attack?

send them to the philippines, korea, china, japan... where any four legged critter is food

i've had dog in the philippines... i want to try whale blubber in japan next...

or even better, send the peta members to russia's far east where the chukchi and others of siberia basically live off of animal products, no veggies! every town up there is basically dripping and drying and stripped and hanging frozen animal carcasses everywhere you look

LOL

peta are basically western children far removed from the slaughter houses that made their mcchicken sandwich, so they don't develop any common sense and acceptance of animal products that a child of a more traditional society would... so, without any common sense or experience, when they are on the highway at age 13, and they look over at the pigs looking at them through the peep holes on the 18 wheeler in the semidarkness they think they are dealing with something like auschwitz and their little teenage bleeding hearts go aflutter

BWAHAHAHAHAHA

stupid children of the west


The tigers of wrath are wiser than the horses of instruction.

[ Parent ]

it's not a zero sum game (none / 0) (#293)
by circletimessquare on Tue Nov 23, 2004 at 02:04:17 PM EST

and no one ever said it was!

you're like arguing with phantoms of fear in your own mind and believing level headed people here somehow speak for and defend the demons in YOUR mind

pretty hysterical and pathetic


The tigers of wrath are wiser than the horses of instruction.

[ Parent ]

Excessive outsourcing is risky... (3.00 / 2) (#312)
by skyknight on Tue Nov 23, 2004 at 04:46:42 PM EST

if you gut various sectors of your economy to the point that you can't function in the case of an embargo. In a perfectly peaceful and benign world, I'm with you, in that we'd never need trade barriers or to worry about outsourcing, as it'd just be the market working its magic. However, I am concerned about the strategic military value of the economics of globalization. The US is increasingly becoming a producer of technology, and outsourcing much of its manufacturing, while China is becoming a manufacturing juggernaut. The problem with this is that while technology is stealable, manufacturing capacity is not. At the very least, we'd better make sure that we have enough of a buffer to absorb an embargo whilst we bring our own capacities back up to speed.

This is a very complex issue. Simple libertarianism is great in the world markets insofar as we're all just one global community, but malevolent national interests can really throw a wrench in the deal.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
The War on Drugs and the Economy....Conspiracy? (2.30 / 13) (#65)
by Psycho Dave on Sun Nov 21, 2004 at 11:56:34 PM EST

Here's a thought I've been having after reading Reefer Madness, and this thread seems like the best place to discuss it. Follow me for a sec...

Flocko the Crackhead doesn't take AMEX. The drug market, indeed every black market, are primarily run on cash. The US dollar is a favorite of the black market as it's a stable currency, and could be easily smuggled in large quantities (ie the 100 dollar bill). Black markets mean there will always be large amounts dollars in circulation and is a part of propping up it's value.

The Euro is the next obvious competitor for being the currency of the black market, and may be better than the dollar as there are 500 Euro notes being printed that would make smuggling easier. They are also banned in many European countries for this same reason.

Oil is primarily traded in dollars, but the Euro is a threat to that as well. Some would say that is at the heart of everything from the Oil For Food scandal to the Iraq occupation...the battle between the dollar and the Euro to be the fiat currency of the oil market.

Before the invasion of Afghanistan, we were paying the Taliban millions to supress their poppy crop. Now that we pretty much have free reign over that country, poppy production is sky high. Could the US be angling to be the fiat currency of the black market as a way of propping up it's currency?

The implications become even more sinister when you look at "The War on Terror" and what black markets typically fund. Remember, the only true winners in the "War on Drugs" were the drug lords themselves.

500 euro notes banned?! (none / 0) (#94)
by ataltane on Mon Nov 22, 2004 at 05:58:20 AM EST

Flocko the Crackhead takes the local currency in whatever country he's in (ok, in very poor economies dollars might be the only hard cash). I don't see a US drugdealer taking euros from his clients anytime soon, anymore than his european counterpart would accept dollars (he wouldn't).

But it might be good for dealing with importers, etc., as you imply.

[500 euro notes] are also banned in many European countries...

They're not.

Remember, the only true winners in the "War on Drugs" were the drug lords themselves.

True enough. I think that can be put down to the wrongheadness of most Governments' policies, thought. I don't think a conspiracy theory is really necessary (may have an element of truth, though, and it's certainly fun :))

[ Parent ]

"Conspiracy" is probably overblown. (3.00 / 2) (#99)
by Psycho Dave on Mon Nov 22, 2004 at 07:07:33 AM EST

I was just thinking, "Why don't we legalize marijuana?" It is clearly not an extremely hard drug (though it can be abused, just like liquor). There is not a huge cultural taboo about it; admitting to smoking pot barely raises an eyebrow anymore. Plus, with legalization there lies the incentive of reducing the cost of law enforcement, prosecution, and incarceration, as well as leaving it open for significant taxation since buyers are already accustomed to paying the inflated black market prices. It would also cut off a potential source of income for drug lords and terrorists. No, I don't think that Al Qaeda or the Medillin cartel are traffiking significant amounts of bulky, low profit margin marijuana, but anything that is sold on the black market is a source of income that cannot be traced.

Why, with all these factors taken into consideration, does marijuana remain illegal?

My first thought was that it was so government agencies can justify their budgets for combating the drug trade. Marijuana, being the most widely used illegal drug, makes for easy pickings. But this isn't the late eighties. John Q. Voter isn't as scared of the pothead at the Phish show as he is of the Jihadist with a boxcutter. Most federal law enforcement tax money is going towards anti-terrorism efforts.

So I wondered if drugs are kept illegal to ensure that dollars are always circulating. And with the Euro starting to become a dominant currency, especially the 500 note, could be more attractive to black marketers.

Of course, I'm not saying that Flocko is taking Euros, just as you're not paying for petroleum with US dollars when you go to the gas station. I'm talking on a more worldwide traffiking level.

I truly believe we are headed towards an economic cold war between the US and the European Union. I'll even go out on a limb and say that that is the root cause of the Iraq occupation, just as Vietnam was a symptom of the cold war with the USSR.

[ Parent ]

+1 Encourage (none / 0) (#145)
by zantispam on Mon Nov 22, 2004 at 12:22:48 PM EST



Free Duxup!
[ Parent ]
Afghanistan. (2.50 / 2) (#141)
by Run4YourLives on Mon Nov 22, 2004 at 12:04:23 PM EST

Poppy production is sky because although FOX new might tell you otherwise, you don't control shit over there outside of Kabul.

And they don't grow poppies in Kabul.

It's slightly Japanese, but without all of that fanatical devotion to the workplace. - CheeseburgerBrown
[ Parent ]

Who wins? (none / 1) (#150)
by fyngyrz on Mon Nov 22, 2004 at 12:52:29 PM EST

Remember, the only true winners in the "War on Drugs" were the drug lords themselves.

No, there are other winners, and they are directly complicit in the instantiation and prosecution of the war.

The primary winners are politicians. Politicians "win" because they have something to deal with that that average Joe or Jane doesn't understand, and has been made to fear - so they can be a "good" politician by "protecting" people, children, communities from the "evils of drugs."

These protections are almost entirely illusory. There are other evils that come as a result of the war itself which are far worse, but this is not generally understood by the public.

One extremely bad side-effect of the "war on drugs" is that the government's prosecution of it with totally over-the-top scare tactics and lies intimidates the average citizen (remember, the IQ center is 100) into accepting lawmaking that is "to protect us from ourselves", which I argue is bad law no matter what it is. When you say to an adult things like they have to wear a seatbelt, they must not smoke pot, they must have windows in their homes, they must not drive a car in bare feet... all these things are completely, utterly over the line - government acting as our mommy, a role they were never given and have wrongly usurped. It may well be appropriate for the government to warn on personal choice behaviour; but definitely not to make rules. There is a huge difference between some fellow who gets drunk in his own home and one who operates a vehicle while drunk. The problem is that the government can't seem to understand the difference; the benefit to the government is the ability and motivation to legislate over trivia, while true national level difficult problems (health care, transport infrastructure, education, digital viri, etc.) are safely shuffled off to be dealt with later, or not at all.

As a distraction, the drug war shares the stage with censorship and sexual repression, all subjects dear to your average politicians heart, and all subjects that get a sound bite quickly and easily - while real issues, such as the fact that your average Joe can't afford health care, quietly slide into oblivion.

So the politicians definitely win, big time. It's not just those involved in direct commerce that benefit.

Dealers win, as the parent post stated, because the drug war is the only thing that makes dealing profitable. If these drugs were over the counter, they would no more support a black market than does alchohol. Legitimate producers would arise and sell quality product at prices black marketers could not meet, just as happened with alchohol, and the entire violent underbelly of the drug user economy would almost certainly collapse and go away - to most citizen's relief, I am fairly sure.

It is also worth noting that the war on drugs is responsible for huge infusions of cash into police agencies and associated businesses such as drug labs, special task forces, even dog breeders. In the most basic economic sense, that makes the drug war a win for these entities as well.

---

And no, I don't use drugs, or drink. I think both behaviours are self-destructive, and that they detract and degrade both the inherent natural beauty of the world and the fascinating state of being a thinking human being. I simply support your right to craft those opinions for yourself, and to make your choices based on your opinions, rather than mine.


Blog, Photos.
[ Parent ]

Deficits matter? (1.00 / 16) (#71)
by Dreamaster on Mon Nov 22, 2004 at 12:14:27 AM EST

I guess they do when people want to scare other people. We were in a freaking recession - anyone who understands economics would not of posted an article like this. I wish folks would do some research on keynesian theory and it's detractors before posting stuff like this. Unfortunately, it's the sound bite that matters in society nowadays. Gosh, we're making our children pay for the past - What a load of bullshit.
____________________
Mostly Harmless
Deficits can matter (2.90 / 10) (#74)
by Coryoth on Mon Nov 22, 2004 at 12:44:22 AM EST

We were in a freaking recession - anyone who understands economics would not of posted an article like this.

I agree, a deficit can indeed be a necessary evil.  Especially in the face of recession.  Please note that I place no blame for the existence of the deficit, I am merely noting its existence.  The US successfully carried massive budget deficits through the 80s with no ill effect, so certainly it need not be a crisis.  The issue is not the budget deficit per se, but rather how that interacts with the current account deficit, and household debt, given the current weak position of the US Dollar and the improving economies in Asia.  It is the treble of factors that is disconcerting.  And even with all three, as I say, it is not portent of doom - it is, however, something that should be watched.

Gosh, we're making our children pay for the past - What a load of bullshit.

Never stated nor implied in the article.  The issue with the deficit is to do with the potential rise of the Japanese and Chinese economies, which may recall the debt, combined with an unsustainable current account deficit, and a weakening US Dollar.  The budget deficit is only really a problem if it exacerbates the other issues - in and of itself it is merely an unhealthy thing (as all debts are) that can be worked through in due course with potentially no ill effects.

You seem to have read a great many things that I never wrote.

Jedidiah.

[ Parent ]

we are NOT in a freaking recesion you twit. (2.66 / 3) (#82)
by modmans2ndcoming on Mon Nov 22, 2004 at 02:29:46 AM EST

the recession lasted all of 2 quarters back in 2001.

we have been in a slow climb since, and just recently have begun to take off slightly.

this is bad news period. we will end up with an economy like zimbabwe if we are not careful.

I have a feeling that president Bush's Legacy will be as the man who killed the US economic power, the US Diplomatic Power, and due to those two factors, the US hard power.

[ Parent ]

You have a point and you shouldn't be zeroed (2.66 / 3) (#100)
by porkchop_d_clown on Mon Nov 22, 2004 at 08:19:23 AM EST

but just because running up a deficit is the text book response to a recession doesn't mean it isn't time to balance the budget now.

And, yeah, we are making our children pay for our sins - just as countries like Brazil and Argentina are still paying for the mistakes they made at the dawn of the 20th century.

Now where did I leave that clue? I know I had one just a minute ago! - PDC
[ Parent ]

You seem to be forgetting (2.40 / 5) (#131)
by soros on Mon Nov 22, 2004 at 10:55:45 AM EST

that working keynesian economics can only hold true if surpluses exist in the 5 and 7 year projections. That isn't the case. Our country is facing projected deficits of 300+ billion dollars for the next 12 years. Even the most die-hard supply siders aren't expecting under the most favorable conditions for economics growth in the u.s. will wipe away the federal budget deficit in the next decade.

It'll be fine though, as long as we keep building massive new aircraft carriers, smart bombs, star wars projects and expanding our military presence in the world. Or maybe it wont ?

[ Parent ]
The broken window fallacy (3.00 / 2) (#198)
by cafeman on Mon Nov 22, 2004 at 04:27:39 PM EST

Militaristic investment only works if there's an output gap in production. Otherwise, it crowds out private investment and diverts resources into unproductive activities. If you build a bomb, you employ someone, but you destroy resources when you blow it up. You then employ someone to rebuild the building you blew up. It's like saying that the recent US hurricane added billions to the US economy. Sure, it employed people, but using that logic, shouldn't we completely destroy all of New York? After all, if the hurricane was good for the US economy, destroying one of the largest cities in the world would be even better, wouldn't it? Great for employing people, but those resources could have been diverted into something that actually provided growth in the long-run rather than allocating resources to destroying capital and rebuilding it. The theoretical upside is that in theory, military investment leads to technological advancements, which trickle back down into the private sector. In practice? There's a lot of conflicting evidence. It's nowhere near as clean as people would like to believe. But, I think you probably already knew all that ...

--------------------
"No Silicon heaven? But where would all the calculators go?"


[ Parent ]
You know, (1.05 / 17) (#83)
by trhurler on Mon Nov 22, 2004 at 02:31:25 AM EST

Every five years or so, people have trotted out a standard list of reasons why the economy is about to collapse. Every single time, foriegn debt, the trade imbalance, poor savings habits of Americans, the rise of new world powers, and whatnot have been the mainstays of this list. As yet, the US economy has not collapsed.

Seriously. Lots of things are really fucked up and ought to be fixed, but the sky is not falling, even though your guy lost the election. Get over it.

--
'God dammit, your posts make me hard.' --LilDebbie

There is a reason (2.93 / 15) (#93)
by Coryoth on Mon Nov 22, 2004 at 05:14:37 AM EST

Every five years or so, people have trotted out a standard list of reasons why the economy is about to collapse. Every single time, foriegn debt, the trade imbalance, poor savings habits of Americans, the rise of new world powers, and whatnot have been the mainstays of this list. As yet, the US economy has not collapsed.

The reason people keep trotting out the current account deficit is because it is a risk.  It does not mean collapse is immiment.  Nor did I claim collapse was imminent.  A simple fact, however, is that the trajectory of the current account deficit is unsustainable.  Alan Greenspan says it is unsustainable.  Any credible economist will tell you it is unsustainable.

This means that at some point in the future the trajectory of the current account deficit will have to change, from growing to shrinking.  So far it has not, so most certainly the US economy has felt no ill effects.  The question is what will happen when it does change.  There are two possibilities: Either it will change gradually due to structural issues, allowing the economy to adjust gradually with it, or it will suffer a sharp correction, resulting in a similarly sharp correction for the economy.

If you are hurtling full speed toward a cliff, saying that, because you haven't fallen yet, then clearly the cliff doesn't exist, is not productive.  Arguing that the cliff doesn't matter because you have a parachute might get you somewhere.

Seriously. Lots of things are really fucked up and ought to be fixed, but the sky is not falling, even though your guy lost the election. Get over it.

That's a very random assumption.  I'll state it again in case you missed it:

I will gladly state for the record that had Kerry swept to victory, with a Democratic senate and house to boot, I don't believe the the US would be in any better position with respect to these issues.

What you have done is exactly what I was complaining about: reduce things to pointless partisan point scoring rather than dealing with the issues.

Jedidiah.

[ Parent ]

What issues? (none / 0) (#221)
by trhurler on Mon Nov 22, 2004 at 08:27:27 PM EST

In terms of inflation adjusted dollars, we're better off now than we were in the late 80s in a lot of ways. Only one or two metrics are worse. Notice that the late 80s were followed by a huge boom. Yes, government spending has gone way up, as it usually does(sadly) during recessions and wars. Yes, as we have for the last half century or so, we're importing more than we export. Sure, this is fucked up. It is also normal. Alarmist nonsense regarding it is not helpful.

--
'God dammit, your posts make me hard.' --LilDebbie

[ Parent ]
Business as usual? (none / 0) (#228)
by Coryoth on Mon Nov 22, 2004 at 09:32:38 PM EST

It would be nice to think that you can go on increasing the current account deficit indefinitely with no ill effects.  It would be nice to think that the US Dollar will always remain the de facto global currency, and that the Euro won't have any effect.  It would be nice to think that Asia's appetite for US debt will continue unabated till the end of time.

Interestingly the former chairman of US Federal reserve doesn't seem to believe this. And the well known alarmist, the current chairman of the US Federal Reserve, also thinks things may be about to turn.

Whether you care to admit it or not, the situation now is different to the situation 5,10, or 15 years ago.  Assuming that things must always go as they have so far is fraught with logical error.  Some time in the next 10 years it is likely that some manner of correction will occur.  The question is whether it will be swift and severe, or slow, gentle and able to be ridden out.

If you want to call Alan Greenspan a paranoid alarmist, by all means do so.  As far as I can see  it is more a case of you having your head in the sand.  There is no reason to panic, but to deny that these issues are of any import is, I would suggest, extremely foolish.

Jedidiah.

[ Parent ]

you write as though only Democrats are saying this (none / 1) (#181)
by jbuck on Mon Nov 22, 2004 at 02:51:17 PM EST

Did you see Alan Greenspan's speech? The bankers (Republicans all) are very worried. Greenspan believes that the trade and budget deficits are unsustainable.

[ Parent ]
Yes... (none / 0) (#219)
by trhurler on Mon Nov 22, 2004 at 08:24:52 PM EST

And Greenspan believed that in the 80s with Reagan too. He was probably right, but I doubt he was or is stupid enough to think everything is just going to fall apart all of a sudden. When he says "not sustainable," he doesn't mean "imminent disaster."

--
'God dammit, your posts make me hard.' --LilDebbie

[ Parent ]
So wait (none / 1) (#233)
by xria on Mon Nov 22, 2004 at 10:15:54 PM EST

You think he is right to say what the US is doing is unsustainable. And has been for the last 25 years at least. But it is not time to actually start acting to move to a more sustainable system yet?

[ Parent ]
history (none / 1) (#330)
by binford2k on Wed Nov 24, 2004 at 02:56:55 AM EST

As yet, the US economy has not collapsed.
Nope. Never. Oh, unless you count that pesky "Great Depression" thing.

[ Parent ]
Household Debt (2.50 / 6) (#95)
by tid242 on Mon Nov 22, 2004 at 06:06:20 AM EST

Very nice piece should i say so myself...

However you forgot to incorporate the US housing bubble into the bit about household debt, not that this is exclusive to the US (in fact said bubble is much bigger in other parts of the world, such as London and Australia, for example), but it is thought to have played at least some part in the decline of Japan's economy in the 90's (which you did mention). If you recall, at the height of the Japanese property bubble in 1992 certain areas of Tokyo were selling for $300,000 per square meter, and the Imperial Gardens were theoretically worth more than Canada, or California.

The effect of cheap money on a population that saves close to 0% of its income is like giving 2-year olds as much candy as they want. The US is a nation of children, and the candy companies like it that way, but it is clearly not sustainable...

But i will agree somewhat with an earlier poster; the US has shown itself to be the most dynamic and robust economy on the planet over the past 50 years, the problems mentioned certainly will not be "solved" in the next few years, but i do expect workarounds by then, whether said workarounds will be good for everyone is debatable however. The US is a ruthless and cut-throat economy, unlike our European counterparts we are not steeped in traditions which sap our competitiveness; while the US may not be the best place to live on earth (those steeped European traditions are rather nice for the normal guy), overall it may be the best place to invest...

Again, nice bit, i enjoyed reading it thoroughly...

-tid242
information wants free beer.

traditions? (3.00 / 2) (#98)
by Nursie on Mon Nov 22, 2004 at 07:06:22 AM EST

"steeped in traditions which sap our competitiveness"??!?!?

Care to name them? The EU is doing very well thanks, despite frequent claims from americans that we are in decline because of socialism.

Firstly, we aren't socialist, just moderate compared to the US which is so far out on the capitalism with no safety net side that the rest of the world seems socialist when you look outwards.

Second - we're not in decline.

What exactly did you mean?

Meta Sigs suck.

[ Parent ]
dude he was complimenting you... (none / 0) (#140)
by Run4YourLives on Mon Nov 22, 2004 at 12:00:28 PM EST

try reading next time.

It's slightly Japanese, but without all of that fanatical devotion to the workplace. - CheeseburgerBrown
[ Parent ]
Possibly the problem (none / 0) (#192)
by xria on Mon Nov 22, 2004 at 03:42:18 PM EST

i.e. the assertion that the US is a great place to invest capital in, but a bad place to be a worker (as opposed to an entrepreneur).

This fact would seem to encourage a net influx of capital from countries seen as more worker friendly, and less entrepreneur friendly, somewhat regardless of the current short term depreciation of dollar based capital caused by the slide of the currency.

Of course the average stock market increase in the US has historically only been 2-3% higher than the european average at best (over any signficant period of time), so a slide in the dollar of 6% per year since Bush has been in charge compared to the Euro for example means that in real terms we could expect the situation to be reversed while this is happening. This doesnt seem to have happened yet, as you would expect the trade deficit for the US to be closing if this was so.

[ Parent ]

Oh yeah. (none / 0) (#268)
by Nursie on Tue Nov 23, 2004 at 06:19:41 AM EST

I probably ought to pay more attention.

Meta Sigs suck.

[ Parent ]
in response... (none / 0) (#247)
by tid242 on Tue Nov 23, 2004 at 02:09:55 AM EST

"Care to name them? The EU is doing very well thanks, despite frequent claims from americans that we are in decline because of socialism."

My comment was not judgemental (or at least not ment to be), personally i'm more of a believer in a strong socialist democracy than in "pure" capitalism, simply because of issues of equality.

Perhaps "traditions" was not the best word to use, but labor has a better track record of being protected in European countries, Germany for example. German companies are reluctant to hire workers because if their markets lag they have a hard time firing them. In the US this is not the case, people get hired and fired all of the time. Personally i am not an advocate of hiring people that you intend to fire 2 months later, or when their project is done, or whathaveyou, however, many people are.

Also Unemployment benefits are also typically greater in many European countries than it is in the US. Under our system if someone loses his/her job, well, too bad for them - should've worked harder, or started their .com in the boom years. It's their own fault; or so the mentality goes... In less barbaric places actually decent social nets exist for persons who are out of work for various reasons.

Social medicine is the mainstay of any respectible country, however in the US we have an abyssmal record of 45m americans (population-wise this is all of Spain, or all of S. Korea, 1.5 Canada's, 3 Netherlands... you get the picture) without any insurance at all, not to mention those who are underinsured, ie: have "insurance" but it does not actually pay for anything.

I can keep listing things off. Again, my arguement was not that one is better than the other, but simply that one arangement promotes the concentration of wealth and power, which over the past couple of decades or so has allowed US multinationals to do very well for themselves, while the other arrangement favors the average person in a country. Although i have been (more or less) non-partial thus far i will say this: the role of government, technology and society overall should be to make the lives of all who partake in these things better. It is often difficult to argue that the American "system" does this for anyone other than the top 1 or 2% of the top owners of wealth, and as such difficult to argue that America's ruthless economy serves the majority of its people. Personally i'd like to know that my job will be here tomorrow. If $15 buys me a shirt today it should also buy me a shirt 30 years from now - not because it'll be made in a sweatshop, but because my money doesn't depreciate while i save it...

The point is this: these are increadibly multifaceted and complex issues that cannot be surmised with a simple "Italy is better than Singapore" type statement. Every country and every society has its good and bad points, there isn't a day that goes by when i don't think about how my life would be different had i lived somewhere else...

Don't assume that Americans think Europe is backwords, or sucks - because i generally do not find this to be the consensus.

-tid242
information wants free beer.
[ Parent ]

Jumped to conclusions (1.50 / 2) (#269)
by Nursie on Tue Nov 23, 2004 at 06:21:58 AM EST

Sorry 'bout that, but I've seen it too many times, USians shouting about how Europe is in some sort of tailspin because we're perceived as socialist and 'socialism is evil'(TM).

I'll read more carefully next time.

Meta Sigs suck.

[ Parent ]
np, :) (none / 0) (#414)
by tid242 on Wed Dec 01, 2004 at 03:51:30 AM EST

No problem, friend, can't say i haven't done the same myself on varying occasions.

Good thing we all like each other on K5. :)

-tid242
information wants free beer.
[ Parent ]

You forgot an elephant. (2.28 / 7) (#97)
by porkchop_d_clown on Mon Nov 22, 2004 at 06:42:03 AM EST

Social Security. Unless Social Security is reformed we will not be able to solve the debt problem.

Interestingly, it appears that most western countries have a similar problem with their own pension plans.


Now where did I leave that clue? I know I had one just a minute ago! - PDC

I actualy like the semi privatization ideas (none / 0) (#103)
by modmans2ndcoming on Mon Nov 22, 2004 at 08:28:19 AM EST

making it like a 403b makes sense for those of us who are not in the system.

if everyone 30 and under agreed to add another 10 percent to their FICA that went to a private account that followed the S & P, and also agreed to not have claim to any money in the traditional SS system, then that would wipe out the SS trust fund debit almost instantly since congress cannot take money from a private account.... I have a feeling that is why they do not want to privatize the system :-)

[ Parent ]

I'm not sold, but all the alternatives suck. (none / 0) (#104)
by porkchop_d_clown on Mon Nov 22, 2004 at 08:39:32 AM EST

Social Security is a pyramid scheme pure and simple, and like all such schemes it must inevitably run out of suckers. But investing in the stock market is hardly a sure thing either.

Part of it, I guess, is that the whole idea of retirement seems like a bit of a pipe dream. Except that, of course, I wanna retire as much as anybody when my turn comes. :-P

Now where did I leave that clue? I know I had one just a minute ago! - PDC
[ Parent ]

the current SS system is a pyramid (none / 0) (#110)
by modmans2ndcoming on Mon Nov 22, 2004 at 08:58:13 AM EST

but it did not start out that way. it started out with 1 person paying for themselves. then the congress started expanding who had rights to what and inflation happened.. then the system fell apart.

the only way a long term investment in the S & P 500 will not be a sure thing is if our economy goes to crap, and in that case, SS funds will be worthless anyway.

[ Parent ]

That is untrue. (none / 0) (#112)
by porkchop_d_clown on Mon Nov 22, 2004 at 09:35:19 AM EST

The idea that people ever paid for themselves is a myth.

Social Security began in 1935 and the first benefits were issued within 5 years.

As for using index funds as a replacement for SS - I'm not sure you're taking into consideration how that much cash will distort the market. If SS savings start flooding into (for example) index funds then that puts huge pressures on companies to get on the indices and at the same time will push up valuations of those companies' stocks - I'm concerned that it could create another valuation bubble. Investing more aggresively creates the risk that through negligence or simple bad luck people could lose their retirement money.

Don't get me wrong, I agree that private investment of retirement savings is the "least awful" approach, I'm just still casting around for something better.

Now where did I leave that clue? I know I had one just a minute ago! - PDC
[ Parent ]

so you are saying that it is a good thing (none / 0) (#115)
by modmans2ndcoming on Mon Nov 22, 2004 at 09:51:43 AM EST

for out market system that everyone does not have to invest?

the initial shock will pass before any of those funds will get touched and the market will settle down. I mean you really think SS investment in the market is going to cause a 25-30 year disruption (the first people get get funds from the system would be retiring about then)?

[ Parent ]

I think it could cause a long term problem, yeah. (none / 0) (#119)
by porkchop_d_clown on Mon Nov 22, 2004 at 10:03:50 AM EST

Think about it - the biggest discipline on the market is that people might take their money out and go play somewhere else. If they are required by law to leave their money in the market (even if they can move it around) that means a permenent cash cow for the market to milk.

I'd be happier if such private accounts could be saved anywhere - money markets, CDs, bonds and so on. That would at least provide more discipline on the market.

Now where did I leave that clue? I know I had one just a minute ago! - PDC
[ Parent ]

Won't be just the stockmarket (none / 0) (#124)
by nlscb on Mon Nov 22, 2004 at 10:21:43 AM EST

SS privatization will work pretty much like 401ks. You will have to invest in some kind of security, but you could just as easily invest in bonds, which are safer though don't pay as well. Right now, I have money in Roth IRA CD (difference, you pay the taxes first on the income and then are exempt from capital gains)at my credit union. The interest sucks, but w/FDIC insurance, I'm not too worried about it.

Comment Search has returned - Like a beaten wife, I am pathetically grateful. - mr strange
[ Parent ]

Article on privatization (none / 0) (#148)
by porkchop_d_clown on Mon Nov 22, 2004 at 12:37:10 PM EST

http://www.techcentralstation.com/112204C.html

The author also supports privatization. I just thought it was interesting in light of our conversation.

A bird does not sing because it has an answer. It sings because it is insane. - Obscure Chinese Proverb
[ Parent ]

Well, technically... (none / 0) (#121)
by Pxtl on Mon Nov 22, 2004 at 10:06:40 AM EST

The economy can go up while the S&P tanks - after all, IIRC the S&P is the top 500... if something came along that turned a lot of large business on their faces, but allowed a lot of smaller, agile businesses to cut in, then the S&P would tank while the economy held steady.

[ Parent ]
then make it the russle 2000 (none / 0) (#155)
by modmans2ndcoming on Mon Nov 22, 2004 at 01:23:54 PM EST

or he vanguard total market fund.

the odds of the S & P doing what you say would be almost impossible since the S & P is not a static list of companies. if the top 500 fell on their face, another group would replace it.

though, I doubt that if the top 500 companies fell on their face like that, the smaller companies, or any company would really stand a chance to not fall on their face as  well because there would be more significant problems that would have caused the S & P to tank in the first place. and with problems that significant, I doubt 10 T bills would be worth the paper they were printed on.

so really you see, tying SS to the market is not a bad idea because if the market crumbles, the government is worthless as well.

[ Parent ]

Only if? (none / 0) (#214)
by Flippant Chicken on Mon Nov 22, 2004 at 07:39:44 PM EST

the market crumbles, the government is worthless as well.

I think the goverment has plenty of ability to be worthless on their own.

[ Parent ]
Don't be Foolish (none / 0) (#163)
by teece on Mon Nov 22, 2004 at 01:56:15 PM EST

Social Security. Unless Social Security is reformed we will not be able to solve the debt problem.

Don't be foolish.  Social Security does not need reform.  It needs minor tweeking to remain solvent after 2042.  (Reread that:  it is solvent until 2042.  We could ignore it until then, if we so (unwisely) chose).

How minor?  A small raise in the retirement age, a 2% increase in the payroll tax, means testing, or some combination would all fix it quite nicely.

Actually, one of the better ways to destroy it would be to start privatizing it.

-- Hello_World.c, 17 Errors, 31 Warnings...
[ Parent ]

You've been drinking the same kool aid (none / 1) (#179)
by porkchop_d_clown on Mon Nov 22, 2004 at 02:47:36 PM EST

Kerry was pushing.

Social Security is going to start redeeming all those Treasury Bonds it holds a lot sooner than 2042. When that happens, the US is going to feel a whole lot of economic hurt as it has to start using general funds to pay SS back all the money that SS gave it to "invest".

A bird does not sing because it has an answer. It sings because it is insane. - Obscure Chinese Proverb
[ Parent ]

Who's drinking Koolaid? (none / 0) (#206)
by teece on Mon Nov 22, 2004 at 06:16:05 PM EST

Social Security is going to start redeeming all those Treasury Bonds it holds a lot sooner than 2042. When that happens, the US is going to feel a whole lot of economic hurt as it has to start using general funds to pay SS back all the money that SS gave it to "invest".

So it's a problem with SS that one day it is going to start calling up the IOUs that it was written?

Give me a break.  They are bonds.  They will be redeemed.  What we have a problem with is reckless governmet tax cuts that spend money that shouldn't have been spent, not a problem with SS.

What a dishonest argument.  Pretend SS has a crisis that needs to be reformed so that an out-of-balance tax vs. spending situaiton can be shrugged off.

I thought we "fixed" social security back in 1983, with Reagan's biggest tax increase in history.  That our government has been using payroll taxes as general funds is not a problem with Social Security.  It is a problem with dishonest government spending.

The solution is quite simple:  raise payroll taxes by a small amount to cover the minor shortfall, and pay for other government services the way they should be: with taxes other than payroll.

-- Hello_World.c, 17 Errors, 31 Warnings...
[ Parent ]

ROTFL. (none / 0) (#240)
by porkchop_d_clown on Mon Nov 22, 2004 at 11:25:51 PM EST

They are bonds.  They will be redeemed.

Yeah, that's the point, isn't it? And when Social Security starts redeeming them, the US taxpayer is going to be in a world of hurt.

What we have a problem with is reckless governmet tax cuts that spend money that shouldn't have been spent, not a problem with SS.

Uh. No fooling, Sherlock. Except what you don't seem to realize is that having one branch of government "borrow" from another branch of government is a deception right from the get-go. It's no different than having my left pocket "invest" by putting money in my right pocket. When the bills come due, they come due.

Reagan's biggest tax increase in history.

Congress pushed back the day of reckoning by 20 years with that deal, but it didn't change the fundamental problem and it didn't correct the fundamental illusion. People keep talking about SS "investing" and "saving" as if it was buying real estate or gold bars instead of just giving it to Congress to spend. What do you think happens to bonds, anyway?

It is a problem with dishonest government spending... pay for other government services the way they should be: with taxes other than payroll

Again, no fooling. That would be my point - except that it isn't a "minor" shortfall.

A bird does not sing because it has an answer. It sings because it is insane. - Obscure Chinese Proverb
[ Parent ]

Social Security surplus (none / 0) (#242)
by xria on Tue Nov 23, 2004 at 12:20:26 AM EST

It makes a lot of sense for the government to borrow this money from the Social Security to cover the deficit/debt. After all if that money was kept locked up away from the government, the government would have to finance that $1.3 Trillion dollars from the private market, which would drive up the cost of borrowing, and mean that the national debt would cost even more to service.

It would also have to be paid back to those private holders of bonds/bills when they became due, and hence need extra taxes to pay for them. Basically you would just be blocking off the governments access to cheap capital that isnt doing anything, to force them to borrow more expensively. Although doing this would mean the social security fund would stay solvent for longer (given the same set of growth assumptions), a more than proportionate extra cost would go onto the national debt, meaning at some point tax payers would have to pay it off (or more likely to pay more interest on a high debt for perpetuity).

Of course the reason why taxes and the social security is such a mess projecting into the future is because the current generation isnt paying enough. Consider that for the larger part of the 'baby boomer' generation the larger proportion of the population that is of working age has been used as an excuse to lower tax rates etc. Things like the national debt should have been paid down during the last 20 years, as the government had a relatively large amount of active workers to tax.

At that point the social security burden could be taken up by extending the debt as needed and paying any excess to the fund without needing to tax, as the boomers would have already paid down the debt to allow it to happen.

[ Parent ]

Agreed. (none / 0) (#275)
by porkchop_d_clown on Tue Nov 23, 2004 at 08:52:51 AM EST

Unfortunately, we've never had the financial discipline to do what was needed. Even Clinton - for all the credit he deserves for balancing the budget, he couldn't have done it if we weren't riding a stock bubble.

I have visions of the US being the Argentina of the 21st century - begging for debt relief from who ever's top dog then (probably China and India).

A bird does not sing because it has an answer. It sings because it is insane. - Obscure Chinese Proverb
[ Parent ]

re: Don't be foolish (none / 0) (#216)
by Cazzi Salati on Mon Nov 22, 2004 at 08:22:08 PM EST

Actually, one of the better ways to destroy it would be to start privatizing it.

If that's true then I'm totally in favor of privatizing.

The sooner we get rid of it entirely the better.

If privatizing will kill it off faster, I'm all for it.

If doing nothing will kill it faster, I'm for that.

The Social Security program is a terrible terrible idea made worse by terrible execution.

Cazzi Salati

-- My cat's breath smells like cat food - ralph wiggum
[ Parent ]

wrong: Social Security reform makes it worse (2.50 / 2) (#180)
by jbuck on Mon Nov 22, 2004 at 02:48:37 PM EST

The proposals for Social Security reform make things far, far worse.

The problem is that those who want to privatize Social Security aren't speaking honestly about what Social Security is. It is not a savings or investment plan, and comparing it to one is misleading. Current Social Security taxes go largely towards paying benefits to current retirees, with some extra money to help cover the coming retirement of the boomers. Privatization would mean that there's a big gap: people who retire just after the "reform" would have no money to pay for their benefits. This financial gap could amount to 2 trillion dollars, and some advocates of privatization want to put this amount on the national credit card. This would mean that an attempt to privatize Social Security would add 2 trillion dollars to the national debt. Now, this figure is for the version of privatization that lets people divert 1/3 of their Social Security taxes into private accounts. For full privatization, you can triple the damages.

And that ignores the fact that the government has been partially financing its massive deficits by borrowing from the Social Security "surplus" (that is, the fact that Social Security takes in more than it pays out). Take that away, and we have to borrow the whole amount from the Chinese.

[ Parent ]

Kill the old people... (none / 0) (#311)
by skyknight on Tue Nov 23, 2004 at 04:38:53 PM EST

Use the SS money to pay down the debt.

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Lies, and the lying liars that tell them (1.33 / 3) (#328)
by felixrayman on Wed Nov 24, 2004 at 01:14:00 AM EST

Social Security. Unless Social Security is reformed we will not be able to solve the debt problem.

You are lying.

Suppose Social Security, and the payroll taxes that now fund it were abolished. The debt problem would then be far worse as Social Security collects more in taxes than it pays out.

Now in 15-20 years (if you assume that the politicians are lying when they say the taxes marked on your paycheck as "Soc. Sec.", and that are now being spent for such purposes as buying a 2 million dollar Presidential yacht will not be repaid to the Social Security fund) or 45 years (if you assume they will) Social Security will begin to spend more money than it takes in.

Oh whatever will we do! Shall we run around like a bunch of fucking pansies in skirts shrieking about  our imminent demise? Well...you will, apparently.

For the rest of us, saner minds will simply tell the public, look you have choices - either we slightly raise the "Soc. Sec." tax on your paycheck (by 1-2%), or raise the retirement age slightly, or means test Social Security, or do some combination of those three, or we get rid of Social Security. The people will make clear that they wish to keep Social Security and the problem will be quickly solved.

The real issue here is that liars like you talk deceitfully about Social Security because you have an ideological opposition to it, even though the system pays for itself, and with minor modifications can continue to do so even under very conservative assumptions.

So stop fucking lying, OK?

Call Donald Rumsfeld and tell him our sorry asses are ready to go home. Tell him to come spend a night in our building. - Pfc. Matthew C. O'Dell

[ Parent ]

Spot on. Some comments... (2.84 / 13) (#105)
by claes on Mon Nov 22, 2004 at 08:42:27 AM EST

One thing that scares me is that the consumer debt is largely underwritten by inflated real-estate values. As you say, the current trends are not sustainable. There have been housing boom/bust cycles in the past (new england in the 80s) and if the bust part happens now it will kick the legs out from under spending, and suck individual investments out of the stock market, and a bunch more bad things.

Another thing that worries me is overt currency manipulation by large asian countries. These governments can think very long term, and in many ways have a pretty good handle on US T-bill rates (by this I mean they can wield a lot of influence by buying more or less to drive the price down or up). Kind of scary. Get us addicted to cheap dollars, then start calling in favors, kind of like giving free doughnuts to the world's policemen. Ok, so this one is kind of out there, but it would make a good novel, right?

As others have said, very nice article about three things that scare the hell out of me.

-- claes (parent)

Not just asian blocks. (none / 1) (#120)
by Pxtl on Mon Nov 22, 2004 at 10:04:02 AM EST

Lots of people will be playing holy hell with the currency market if the shit starts hitting the fan.  Keep an eye on Soros - if he starts selling US bucks short, duck and cover.

[ Parent ]
The trade deficit. (2.66 / 6) (#109)
by wiredog on Mon Nov 22, 2004 at 08:53:32 AM EST

The trade deficit is being corrected via the falling dollar, which is upsetting countries (including Canada) that export to the US, while helping US exporters. If the dollar continues a slow drop (rather than falling the way the ruble, baht, and other currencies have) then the trade deficit will disappear without damage to the US economy. It would actually be good for the US economy.

Rough for other countries, as they would have to sell more domestically, or find other markets.

Wilford Brimley scares my chickens.
Phil the Canuck

the devaluation of the dollar.. (none / 1) (#118)
by Cornelius on Mon Nov 22, 2004 at 10:01:07 AM EST

is going to hurt the purchasing power of regular households and small companies. It is in effect a way of lowering the income of people since they are now going to be forced to buy imported goods for 1.1 USD instead of just 1 USD. If left unchecked this trend could lead to broader inflation which isn't any good.


Cornelius

"Your suffering will be legendary, even in Hell", Hellraiser
[ Parent ]
hurt the purchasing power (1.33 / 3) (#126)
by wiredog on Mon Nov 22, 2004 at 10:26:53 AM EST

But only for goods which must be imported, of which there aren't that many other than oil.

Wilford Brimley scares my chickens.
Phil the Canuck

[ Parent ]
The whole of Walmarts stock? (2.50 / 2) (#132)
by GenerationY on Mon Nov 22, 2004 at 10:59:40 AM EST

Bangladesh and Honduras aren't in the US for one thing.

Americans are addicted to cheap consumable items but they are only cheap (for the majority) because they are imported.

It would mean a radical change in lifestyle if everything you owned you had to pay another American the market rate for their labour to produce.

[ Parent ]

market rate for their labour? (none / 1) (#139)
by zenofchai on Mon Nov 22, 2004 at 11:59:25 AM EST

It would mean a radical change in lifestyle if everything you owned you had to pay another American the market rate for their labour to produce.

Indeed it would, but with minimum wage laws there isn't really a market rate for toy assembly.
--
The K5 Interactive Political Compass SVG Graph
[ Parent ]

Wal-Mart (none / 1) (#152)
by pb on Mon Nov 22, 2004 at 01:15:01 PM EST

Much of Wal-Mart's goods are made in China, (in fact, Wal-Mart constitutes fully 10% of the US's entire trade with China) and China's currency (the yuan) is indexed to the dollar. So until that changes (and it might sometime soon) expect to see the same extra-low prices at Wal-Mart.

It's an interesting cycle, really--China sells us goods, and then buys our debt, to keep their currency backed by dollars. And as the article mentions, if/when this changes, we could be in trouble... :)
---
"See what the drooling, ravening, flesh-eating hordes^W^W^W^WKuro5hin.org readers have to say."
-- pwhysall
[ Parent ]

I wonder... (none / 1) (#162)
by Pxtl on Mon Nov 22, 2004 at 01:56:13 PM EST

If the economy does collapse in a China-induced money-market bomb... would the Waltons be indicted for treason?

[ Parent ]
Only (none / 1) (#245)
by losthalo on Tue Nov 23, 2004 at 01:14:08 AM EST

if the Feds are faster than the lynch mobs. ;-)

[ Parent ]
huh!? (2.50 / 2) (#136)
by el_guapo on Mon Nov 22, 2004 at 11:52:29 AM EST

i'm not trolling here, but when *i* look around, all i see are imports. from my kid's toys, to the dell mouse i just looked at (china), to my clothes, my car, my motorcycle.
mas cerveza, por favor mirrors, manifestos, etc.
[ Parent ]
/must/ (none / 0) (#153)
by wiredog on Mon Nov 22, 2004 at 01:15:08 PM EST

All that stuff can be bought from manufacturers in the US.

Wilford Brimley scares my chickens.
Phil the Canuck

[ Parent ]
Like who? (none / 1) (#160)
by CanSpice on Mon Nov 22, 2004 at 01:48:46 PM EST

Who in the US is currently manufacturing computer mice?

[ Parent ]
You are arguing for a long term recovery (2.66 / 3) (#171)
by Coryoth on Mon Nov 22, 2004 at 02:20:58 PM EST

All that stuff can be bought from manufacturers in the US.

The US is running a large current account deficit, and that is in part driven by a massive tade imbalance in goods.  Please read the paper by Catherine Mann, which has figures and statistics on the particulars of this.  The US imports masses of foreign goods.  While US manufacturers can make the same goods, they certainly cannot currently make the same goods in the required volumes to satisfy US demands.  Nor are they likely to be able to manufacture the goods at the same relative inexpense as foreign manufacturers (no, not due to slave labour conditions, but simply due to the fact that things are cheap now because of the relative strength o the US Dollar).

The US would need to both rebuild its manufacturing sector to cover the volume, and at the same time accept increasing prices as they are no longer purchasing goods via favourable exchange rates.  Such a rise in prices will, of course, drive inflation, which could well turn into a problem.  Most importantly though, all of the changes required will take considerable time.  If the fall of the US Dollar continues to be slow and sedate, there will be time, and all will be well.  If the US Dollar suffers a sharp correction, as is entirely possible, then the US will suffer a depression before these changes can take effect and produce a recovery.

It is not the long term survival of the US economy that is in doubt here - that was never being argued.  It is the short term effects of a sudden correction that need to be considered.

Jedidiah.

[ Parent ]

But what can the US export? (3.00 / 2) (#129)
by jandev on Mon Nov 22, 2004 at 10:39:28 AM EST

while helping US exporters

I was thinking about this. What does the US really have to export these days? Most industrial production was off-shored, and more recently services are off-shored as well. So what's left?

The only thing I really see is defense/military. This is the only industry where the US has no global competition.

JdV!!

"ENGINEERS" IS NOT POSSESSIVE. IT'S A PLURAL. YOU DO NOT MOTHERFUCKING MARK A PLURAL WITH A COCKSUCKING APOSTROPHE. APOSTROPHES ARE FOR MARKING POSSESSIVES IN THIS CASE. IF YOU WEREN'T A TOTAL MORON, YOU WOULD BE SAYING SOMETHING LIKE "THE CIVIL ENGINEER'S SMALL PENIS". SEE THAT APOSTROPHE? IT'S A HAPPY APOSTROPHE. IT'S NOT BEING ABUSED BY SOME GODDAMN SHIT-FOR-BRAINS IDIOT WITH NO EDUCATION. - Nimey
[ Parent ]

Jobs? [NT] (none / 0) (#138)
by Altus on Mon Nov 22, 2004 at 11:57:00 AM EST



"In America, first you get the sugar, then you get the power, then you get the women..." -H. Simpson
[ Parent ]
If the dollar falls far enough (2.66 / 3) (#147)
by porkchop_d_clown on Mon Nov 22, 2004 at 12:34:22 PM EST

off-shore work will stop being cheaper than American labor. At that point, in-shoring begins.

A bird does not sing because it has an answer. It sings because it is insane. - Obscure Chinese Proverb
[ Parent ]
How far is "far enough"? (2.75 / 4) (#154)
by Heywood Jablome on Mon Nov 22, 2004 at 01:18:41 PM EST

What I think you're saying is that once we have fallen to the level of third world workers, we'll probably be able to find jobs.

Perhaps the affluent Chinese and Indians will outsource their menial work to us.

[ Parent ]

You're confusing exchange rates with working stds (none / 1) (#176)
by porkchop_d_clown on Mon Nov 22, 2004 at 02:45:00 PM EST

Although the two are related somewhat.

Do you think Chinese workers like working twice as many hours as American workers? Here's a related question: did the Japanese workers like it? How about the Korean workers?

As the Chinese workers gain clout they will follow the same path trod by Koreans, Japanese, Americans and Europeans before them - they will start flexing their collective muscles and demanding the same kinds of benefits their brothers in other countries enjoy.

Will Americans and Europeans see a decline in their standards of living? Yeah, probably somewhat, during the time when the Chinese are still working their way up the curve there will be pressure pushing us back down it. But the Chinese workers don't want to be at the bottom of the curve any more than you do. Their desire for the good life will drive the same sort of transformation we've seen over and over.

A bird does not sing because it has an answer. It sings because it is insane. - Obscure Chinese Proverb
[ Parent ]

You're right (none / 0) (#191)
by Heywood Jablome on Mon Nov 22, 2004 at 03:39:48 PM EST

I am connecting exchange rates and working standards. Because they are connected. For insourcing to be a viable option, the dollar will have to be cheaper than a back alley whore, and our standard of living will be about the same as said whore.

Keep in mind that when you combine India and China, you're talking about, umm, let's see ... that's a fuckload of people. Their rise to affluence will have a much greater effect on the world markets than, say, Japan's.

I agree with what you say here, and I feel the pain of the poor, downtrodden Chinese worker. But while their rise may well be inevitable, American economic policy shouldn't encourage it.

[ Parent ]

Chinese workers (none / 0) (#211)
by Big Sexxy Joe on Mon Nov 22, 2004 at 07:21:34 PM EST

If I were a Chinese worker, I'd keep my mouth shut.  They don't have rights we have and they can't demand more money or anything.

I'm like Jesus, only better.
Democracy Now! - your daily, uncensored, corporate-free grassroots news hour
[ Parent ]
Yeah, but... (none / 0) (#156)
by jandev on Mon Nov 22, 2004 at 01:27:17 PM EST

At that point imported goods will be so expensive that those cheap American resources can't buy their necessities of life anymore (which are mostly imported). So while true, that argument only holds once the US economy has flipped itself to the point that people die of poverty. I assume your powers that be would like to prevent that situation.

Again, I don't see anything the US could export *right now*. (Lawyers? Cars (giggle)?, agricultural products (subsidized abroad as well)? So that leaves F16s and cruise missiles.

JdV!!

"ENGINEERS" IS NOT POSSESSIVE. IT'S A PLURAL. YOU DO NOT MOTHERFUCKING MARK A PLURAL WITH A COCKSUCKING APOSTROPHE. APOSTROPHES ARE FOR MARKING POSSESSIVES IN THIS CASE. IF YOU WEREN'T A TOTAL MORON, YOU WOULD BE SAYING SOMETHING LIKE "THE CIVIL ENGINEER'S SMALL PENIS". SEE THAT APOSTROPHE? IT'S A HAPPY APOSTROPHE. IT'S NOT BEING ABUSED BY SOME GODDAMN SHIT-FOR-BRAINS IDIOT WITH NO EDUCATION. - Nimey
[ Parent ]

necessities of life (2.66 / 3) (#157)
by wiredog on Mon Nov 22, 2004 at 01:29:50 PM EST

Since the US does export food, I don't see people in the US dying from lack of imported food. Clothing is manufactured in the US. So is housing.

Wilford Brimley scares my chickens.
Phil the Canuck

[ Parent ]
Well, maybe not *die* (3.00 / 2) (#159)
by jandev on Mon Nov 22, 2004 at 01:47:47 PM EST

So maybe people won't straight up die, but the "domestic situation" in the US would change drastically before American labour costs can compete with those in the "not first world".

And BTW, housing and food I can see the US deal with themselves, but clothing? I don't think you guys would be able to produce the same quantity of clothing for the same price that you now import from China.

Finally, I still don't have an answer to the question as to how the lower dollar now would be helping US export, since there's so little to export?

JdV!!

"ENGINEERS" IS NOT POSSESSIVE. IT'S A PLURAL. YOU DO NOT MOTHERFUCKING MARK A PLURAL WITH A COCKSUCKING APOSTROPHE. APOSTROPHES ARE FOR MARKING POSSESSIVES IN THIS CASE. IF YOU WEREN'T A TOTAL MORON, YOU WOULD BE SAYING SOMETHING LIKE "THE CIVIL ENGINEER'S SMALL PENIS". SEE THAT APOSTROPHE? IT'S A HAPPY APOSTROPHE. IT'S NOT BEING ABUSED BY SOME GODDAMN SHIT-FOR-BRAINS IDIOT WITH NO EDUCATION. - Nimey
[ Parent ]

US Exports (none / 1) (#168)
by xria on Mon Nov 22, 2004 at 02:12:40 PM EST

Well I imagine, to take one example, that US based film, tv, computer games, software etc will all gain in sales outside the US as they cost less on average for non-US buyers than they used to. Consider people playing on-line games from outside the US now pay less of their native currency for the same dollar cost, so are more likely to pay for more accounts/games.

Of course a lot of these take time to cycle through, and in some cases the overseas retailers will just take the difference in profit rather than passing it along to the consumer.

If you want to call US exports 'small' consider a couple of examples: Hollywood (et al), which can make $100 million per film outside the US in some cases, and Microsoft (et al) which isn't exactly a minor player outside the US.

[ Parent ]

so... music, movies, microcode? (none / 1) (#259)
by Russell Dovey on Tue Nov 23, 2004 at 05:41:44 AM EST

I think I see where this is going.

Of course, no government would be so stupid as to privatise its own militar... oh. Right.

Time to learn kendo, people! Essential skill!

"Blessed are the cracked, for they let in the light." - Spike Milligan
[ Parent ]

US exports (2.50 / 2) (#170)
by Sgt York on Mon Nov 22, 2004 at 02:20:39 PM EST

What do you consider "necessities of life"? I'd classify health care, food, shelter, clothing, and transpotation. The US pays farmers to not grow crops, so we have a nice reserve there. Food is quite cheap in the US anyway, and represents an area where the US is in a trade surplus (exports>imports). Shelter is built with services (necessarily) here, and the materials are more than ample within our borders. There is actually an overall balance (exports=imports, roughly) in the trade of building supplies. US health care, with all its problems, is exceptionally advanced and self-sufficient. Medicines are a significant export of the US. No problem there.

Transportation could be an issue; but a crisis might be a good thing. Get that huge US research machin up and working on alternatives to oil with a fervor.

As far as what the US does export, we have positive trade balances in services, food, and capital goods (whatever that means). This is out of 9 catagories. Interestingly, the vast majority of the deficit are in merchandise & consumer goods. Either one of these is double the deficit in cars or industrial supplies.

source.

There is a reason for everything. Sometimes, that reason just sucks.
[ Parent ]

As other have said (1.50 / 1) (#173)
by Coryoth on Mon Nov 22, 2004 at 02:37:03 PM EST

The necessities of life: food, and shelter; are mostly manageable - in those areas the US maintains a favourable trade balance.  The issue is not the loss of ncessities: people won't be starving to death in such a crisis.  The issue will be a severe and dramatic drop in lifestyle - the US consumer will have to do without all their toys, gadgets, cheap clothing, and all manner of other luxuries.  We are talking about a severe depression, and it won't be fun for those in the middle of it.

Jedidiah.

[ Parent ]

What, you'll die if you can't get a $40 DVD player (2.50 / 4) (#175)
by porkchop_d_clown on Mon Nov 22, 2004 at 02:39:22 PM EST

yeesh.

Look at it this way - the differential in labor costs has gotten so extreme that it is actually cheaper for us to ship our trash to china and have it recycled there and have the resulting cardboard shipped back.

We need the dollar to keep falling. The only reason it hasn't fallen faster is because China has been buying dollars as fast as they can because expensive dollars help fuel China's domestic labor market.

This isn't a one way street. China is trying to move a billion people from an agrarian, labor intensive lifestyle to something more like how Europeans and Americans live. To do this they are taking advantage of a completely artificial difference in the value of the dollar versus the yuan. In the US a loaf of bread costs $1.50 USD. That's about 15 Yuan. Chinese factory workers can make 300 Yuan a month. Do you really think a chinese worker is supporting his family on the equivalent of 20 loaves of bread per month?

No. What's happening is that the "true" relative worth of the yuan is much more than twelve cents - and as more and more economic growth occurs in China, the dollar will fall and the yuan will rise until the two find their true equilibrium.

Meanwhile, Chinese workers will start demanding working standards more like those in the US and Europe - further eroding the difference between them.

Still, there is one wild card in all of this: automation. There is an ugly truth that the total number of manufacturing jobs is shrinking. If tomorrow China were to close its borders to further investment the US would still lose manufacturing jobs and so would Europe. Between this and the end of cheap oil, China may not be able to pull off the same trick Japan and Korea did.

A bird does not sing because it has an answer. It sings because it is insane. - Obscure Chinese Proverb
[ Parent ]

wow. (none / 1) (#288)
by the ghost of rmg on Tue Nov 23, 2004 at 11:16:21 AM EST

it's amazing the direction right wing apologetics are taking these days.


rmg: comments better than yours.
[ Parent ]
I'm only right wing by k5 standards. (none / 0) (#317)
by porkchop_d_clown on Tue Nov 23, 2004 at 07:04:55 PM EST

By anyone else's I'm a moderate.

But, keep trying, maybe one day I'll take the bait.

A bird does not sing because it has an answer. It sings because it is insane. - Obscure Chinese Proverb
[ Parent ]

i don't care what anyone else calls you. (none / 0) (#320)
by the ghost of rmg on Tue Nov 23, 2004 at 08:08:44 PM EST

all i know is that your argument is clearly intended to excuse a right wing administration and has little other merit. that's right wing apologetics, if you ask me.


rmg: comments better than yours.
[ Parent ]
Wow. Impressive. (none / 0) (#322)
by porkchop_d_clown on Tue Nov 23, 2004 at 09:09:25 PM EST

I didn't realize that standard macroeconomic theory counted as right wing apologetics these days.


A bird does not sing because it has an answer. It sings because it is insane. - Obscure Chinese Proverb
[ Parent ]
well, about half it certainly does, (none / 0) (#326)
by the ghost of rmg on Tue Nov 23, 2004 at 11:04:34 PM EST

but what we have in this particular instance is an argument that the dollar losing value compared to the yuan (and of course the euro as well -- something you studiously avoid mentioning) somehow amounts to little more than higher prices for personal electronics is so obviously specious it could only be intended to whitewash a state of affairs brought about by our republican overlords. it certainly could not be taken for any sort of serious analysis.


rmg: comments better than yours.
[ Parent ]
I see. (none / 0) (#329)
by porkchop_d_clown on Wed Nov 24, 2004 at 02:23:03 AM EST

So, which daily essentials will rise in price if the dollar falls against the yuan? I hadn't realized we were importing food from China.

As for the Euro - ditto. Who, exactly, is hurt if BMWs become more expensive?


A bird does not sing because it has an answer. It sings because it is insane. - Obscure Chinese Proverb
[ Parent ]

There's more than one way to get screwed here (3.00 / 2) (#331)
by Coryoth on Wed Nov 24, 2004 at 03:16:10 AM EST

You mentioned Argentina elsewhere in comments, so surely you know all of what follows already - I'll explain for anyone else following this thread that hasn't seen the potential problems in continued depreciation of the US Dollar.

So what if the US Dollar depreciates against all world currencies?  The US imports an awful lot of goods.  Yes, they also manufacture a lot of their own goods but, as a percentage of US GDP in traded goods (we're excluding non-tradables, which makes up a large part of US GDP), the current account deficit is a whopping 25%.  That's an awful lot of imports, and all of those getting more expensive will be a problem.

The US is fine for food production, yes, but there are plenty of other things that are important that the US does import.  The US wouldn't be mucking with steel tariffs if it wasn't importing cheap steel from overseas.  That means steel will get more expensive - whether you use more expensive US steel, or the now equally expensive imported steel.  That means everything that uses steel (US built cars for instance) just got more expensive.  This sort of flow on effect will occur in any number of areas, so all manner of goods - even many of those manufactured in the US - will become more expensive.  We're not just talking Walmart junk from China anymore.  We're talking about very broad price increases across the board - which will raise the cost of living, force pay for service jobs to go up to compensate, and cause all your services to be more expensive.

In other words, the depreciating dollar is going to cause across the board inflation.

But then there's the real kicker.  Suppose for a minute that, with the ever falling Dollar representing a worse and worse currency to be caught holding, a number of major oil suppliers start pricing oil in Euros.  For the rest of the world this doesn't really matter.  It means, however, that even if the price of oil holds steady for everyone else in the world it will steadily continue to rise for everyone in the US.  The price of oil going up drives up the price of everything in the US. There are plenty of reasons for that, but here's a simple one to give you sme idea: Much of US shipping is by truck, so when oil prices rise, shipping prices rise, so the costs of getting the goods to the stores rise, the costs of the goods in the stores rise. That means the price of food will go up.

In other words, the depreciating dollar could easily lead to rampant inflation across the board.

Jedidiah.

[ Parent ]

Well, it all goes back to how sudden the fall is. (3.00 / 2) (#348)
by porkchop_d_clown on Wed Nov 24, 2004 at 02:13:30 PM EST

As you've mentioned before. If the transition is gradual - over 5 or 10 years, rather than seeing high inflation we'll just see an end to off-shoring.

But, you're right - if the transition is sudden then we'll see the sort of stagflation we had in the 1970's - high inflation coupled with high unemployment.

For food costs - while oil prices are only indirectly related to the topic at hand (dollar versus yuan) you're right that cheap oil has triggered a transition to more global food trade and more centralized farming within the US, so I have to agree that oil prices are going to increase food prices.


A bird does not sing because it has an answer. It sings because it is insane. - Obscure Chinese Proverb
[ Parent ]

And that will be the source of any recovery (2.75 / 4) (#167)
by Coryoth on Mon Nov 22, 2004 at 02:12:00 PM EST

As long as the US Dollar continues its slow decline, this transition can happen slowly and steadily, and all will be well.  Should the US Dollar suffer a sharp correction - for any of the reasons laid out in the article - it will result in a depression in the US.  In-shoring of jobs will begin, and a recovery will occur (again, I said as much in the article), but such a change will take some time, and in the meantime many people will be suffering.

Jedidiah.

[ Parent ]

US Goods Exports (none / 1) (#190)
by cr8dle2grave on Mon Nov 22, 2004 at 03:30:02 PM EST

available in pdf and xls from http://www.bea.doc.gov/bea/newsrel/tradannnewsrelease.html (numbers in millions of dollars)

Foods, feeds, and beverages                           55,026
Soybeans                                              8,047
Meat, poultry, etc.                                   7,873
Other foods                                           4,907
Fruits,  frozen juices                                4,295
Rice                                                  1,078
Bakery products                                       2,256
Nuts                                                  1,891
Wheat                                                 4,002
Nonagricultural foods, etc.                           959
Fish and shellfish                                    3,363
Oilseeds, food oils                                   1,419
Wine and related products                             818
Vegetables                                            2,966
Alcoholic beverages, excluding wine                   681
Dairy products and eggs                               744
Sorghum, barley, oats                                 677
Animal feeds, n.e.c.                                  3,298
Corn                                                  5,751

Industrial supplies and materials                     173,043
Chemicals-organic                                     17,633
Petroleum products, other                             8,633
Nonmonetary gold                                      4,790
Cotton, raw                                           3,389
Plastic materials                                     17,881
Chemicals-other                                       14,443
Iron and steel mill products                          4,177
Steelmaking materials                                 2,607
Other industrial supplies                             12,554
Fuel oil                                              3,117
Electric energy                                       756
Gas-natural                                           1,400
Copper                                                1,511
Newsprint                                             8,554
Nonferrous metals, other                              2,464
Finished metal shapes                                 8,948
Mineral supplies-manufactured                         3,307
Pulpwood and woodpulp                                 4,259
Agric. farming-unmanufactured                         1,731
Chemicals-fertilizers                                 4,105
Synthetic rubber-primary                              1,853
Manmade cloth                                         5,049
Tapes, audio and visual                               1,347
Iron and steel products, other                        2,905
Natural gas liquids                                   814
Logs and lumber                                       3,676
Aluminum and alumina                                  3,032
Agric. industry-unmanufactured                        1,256
Shingles, molding, wallboard                          1,962
Cotton fiber cloth                                    2,788
Nuclear fuel materials                                1,571
Hides and skins                                       1,794
Crude oil                                             128
Wood supplies, manufactured                           911
Leather and furs                                      867
Hair, waste materials                                 447
Nonmetallic minerals                                  427
Industrial rubber products                            2,199
Nontextile floor tiles                                301
Glass-plate, sheet, etc.                              980
Chemicals-inorganic                                   3,930
Metallurgical grade coal                              1,014
Tobacco, unmanufactured                               1,026
Finished textile supplies                             2,197
Coal and fuels, other                                 788
Agriculture-manufactured, other                       1,377
Precious metals, other                                2,145

Capital goods, except automotive                      293,621
Semiconductors                                        46,137
Computer accessories                                  31,260
Medicinal equipment                                   15,743
Measuring, testing, control instruments               13,936
Railway transportation equipment                      1,642
Excavating machinery                                  5,285
Laboratory testing instruments                        5,119
Photo, service industry machinery                     5,714
Agricultural machinery, equipment                     3,794
Materials handling equipment                          4,656
Generators, accessories                               6,287
Nonfarm tractors and parts                            1,063
Pulp and paper machinery                              2,373
Industrial engines                                    11,691
Metalworking machine tools                            5,253
Specialized mining                                    419
Marine engines, parts                                 794
Spacecraft, excluding military                        37
Industrial machines, other                            21,718
Textile, sewing machines                              1,020
Commercial vessels, other                             139
Food, tobacco machinery                               1,689
Parts-civilian aircraft                               12,079
Wood, glass, plastic                                  2,503
Business machines and equipment                       1,927
Vessels, excluding scrap                              67
Electric apparatus                                    21,158
Engines-civilian aircraft                             11,339
Drilling & oilfield equipment                         6,067
Computers                                             8,664
Telecommunications equipment                          20,743
Civilian aircraft                                     23,305

Automotive vehicles, parts, and engines               80,686

Consumer goods                                        89,908
Pharmaceutical preparations                           20,529
Other household goods                                 9,390
Gem diamonds                                          5,477
Toiletries and cosmetics                              4,581
Household appliances                                  4,830
Furniture, household goods, etc.                      2,416
Pleasure boats and motors                             1,368
Toys/games/sporting goods                             5,692
Books, printed matter                                 4,175
Artwork, antiques, stamps, etc.                       3,036
Jewelry, etc                                          3,049
Apparel,household goods-nontextile                    1,350
Nursery stock, etc.                                   289
Stereo equipment, etc.                                1,561
Numismatic coins                                      63
Writing and art supplies                              4,695
Rugs                                                  693
Cookware, cutlery, tools                              688
Sports apparel and gear                               421
Records, tapes, and disks                             3,192
Tobacco, manufactured                                 1,882
Glassware, chinaware                                  349
Musical instruments                                   863
Apparel, household goods - textile                    5,936
TV's, VCR's, etc.                                     3,382
Other goods                                           32,488

---
Unity of mankind means: No escape for anyone anywhere. - Milan Kundera


[ Parent ]
Very interesting... (3.00 / 2) (#195)
by jandev on Mon Nov 22, 2004 at 04:09:41 PM EST

But it still doesn't answer the question: where is the US' niche where it can capitalize on that lower dollar? It even shows me that the one I thought had some promise (pharma), is actually quite small, with little possibility for expansion, since you already have the market sewn up.

The biggest chunk of this are industrial supplies and capital goods, which wouldn't help, since they typically take raw materials, which mostly need to be imported, negating most of the potential gain.

Gain is possible from industries where the main input is either grown or otherwise generated in the US, or labour. IMHO the dollar has to fall pretty far before US labour can compete with other "non-first world" labour, and the amount of American raw materials in the above list is pretty small (mostly agriculture, where you have to compete with EU agro subsidies, and I don't see many other markets).

But then again, IANAME, and it probably shows :)

JdV!!

"ENGINEERS" IS NOT POSSESSIVE. IT'S A PLURAL. YOU DO NOT MOTHERFUCKING MARK A PLURAL WITH A COCKSUCKING APOSTROPHE. APOSTROPHES ARE FOR MARKING POSSESSIVES IN THIS CASE. IF YOU WEREN'T A TOTAL MORON, YOU WOULD BE SAYING SOMETHING LIKE "THE CIVIL ENGINEER'S SMALL PENIS". SEE THAT APOSTROPHE? IT'S A HAPPY APOSTROPHE. IT'S NOT BEING ABUSED BY SOME GODDAMN SHIT-FOR-BRAINS IDIOT WITH NO EDUCATION. - Nimey
[ Parent ]

Food (none / 1) (#202)
by mrcsparker on Mon Nov 22, 2004 at 04:58:05 PM EST

The US subsudizes all of its own food production, and is able to compete more than fairly on the world market in terms of quality and quantity. Other than that, we still do have resources down south of the border that we can (and do) use to produce goods for dirt cheap.

[ Parent ]
Perhaps I misunderstood you... (none / 1) (#204)
by cr8dle2grave on Mon Nov 22, 2004 at 05:07:09 PM EST

I was just hoping to give you an idea of the breadth of the current US export market.

If I understand you, you're looking an assessment of the US's comparative advantage in light of a declining dollar, correct?

Labor is a comparative advantage which the US most definitely doesn't want. The fact that the cost of raw labor is astronomically higher in the US than it is in the developing world represents a significant success, not a failure. Thankfully, it seems extremely unlikely that the dollar will ever fall to the point where the US can be competitive with Taiwan, much less Bangladesh, in the labor market.

My very inexpert opinion is that the US stands to benefit most from a declining dollar in the export categories of capital goods as well as services generally. One distinct advantage the US economy has is a steadily rising productivity rate, which means that we get more output for every labor input. In effect, the US has remained competitive with other countries in the market of capital goods by pitting it's ability to work smarter against other countries' ability work harder.

Productivity can be seen a kind of force multiplier for labor, which has historically been linked to capital investment in R&D. Thankfully, US investment in R&D remains greater than anywhere else in both relative and absolute measures. Of course, there is always the possibility that productivity growth is unsustainable and will eventually stagnate, although in that eventuality its not just the US that will suffer, but capitalist economies in general.

Now, you raise the point that capital goods are dependent upon raw materials for inputs and are therefore sensitive to a decline in the dollar. This is certainly true, but again US competitiveness is achieved by high productivity. Also, I think you underestimate the amount of raw materials available domestically within the US and in North America generally. I don't know what the account balance currently is for raw materials, but I don't think it is quite as lopsided as you suggest. Also, as the dollar declines, domestic sources, many of which remain unexploited as it is currently cheaper to import them, become relatively more affordable.

---
Unity of mankind means: No escape for anyone anywhere. - Milan Kundera


[ Parent ]
Thanks. (none / 0) (#205)
by jandev on Mon Nov 22, 2004 at 05:25:04 PM EST

If I understand you, you're looking an assessment of the US's comparative advantage in light of a declining dollar, correct?

Indeed I was, on a short-term, tactical level, as a response to the short-term effect of widgets being imported from Outer Waziristan all of a sudden being 10% (or more) more expensive then they were last year. This has to hurt, and the only mitigating factor would be that it can be compesated with more export.

Thankfully, it seems extremely unlikely that the dollar will ever fall to the point where the US can be competitive with Taiwan, much less Bangladesh, in the labor market.

Indeed. Not before a major reconfiguration of your domestic market, as I tried to point out below (I was misunderstood *g*).

...Snipped bit about working smarter, not harder...

I understand that this is how the US manages to be a major (the major?) economic power, but this does not give you that tactical edge I was looking for. It's more the basic underpinning for your success.

I don't know what the account balance currently is for raw materials, but I don't think it is quite as lopsided as you suggest. Also, as the dollar declines, domestic sources, many of which remain unexploited as it is currently cheaper to import them, become relatively more affordable.

The only problem there is that your raw materials will always be more expensive, since e.g. your miners will always be more expensive than China's slaves miners (I assume the US will actually treat them as a non-renewable resource, as opposed to the Chinese).

JdV!!

"ENGINEERS" IS NOT POSSESSIVE. IT'S A PLURAL. YOU DO NOT MOTHERFUCKING MARK A PLURAL WITH A COCKSUCKING APOSTROPHE. APOSTROPHES ARE FOR MARKING POSSESSIVES IN THIS CASE. IF YOU WEREN'T A TOTAL MORON, YOU WOULD BE SAYING SOMETHING LIKE "THE CIVIL ENGINEER'S SMALL PENIS". SEE THAT APOSTROPHE? IT'S A HAPPY APOSTROPHE. IT'S NOT BEING ABUSED BY SOME GODDAMN SHIT-FOR-BRAINS IDIOT WITH NO EDUCATION. - Nimey
[ Parent ]

easy (none / 0) (#212)
by bankind on Mon Nov 22, 2004 at 07:27:06 PM EST

producers of non-tradeable goods, which range from haircuts to shoe shines. Polish up that barber's pole and get your fucking shine box.

"Insurgents are blowing up pipelines and police stations, geysers of sewage are erupting from the streets, and the electricity is off most of the time -- but we've given Iraq the gift of supply-side economics." -Krugman
[ Parent ]

Industrial supplies and capital goods (none / 0) (#297)
by doconnor on Tue Nov 23, 2004 at 02:16:12 PM EST

A few years ago when the Canadian Dollar started to go up the warned that our economy would be hurt because we have lower productivity, making our exports will be more expensive. However, the lower dollar would help increase productivity because it makes it cheaper to import the specialized equipment (capital goods) needed from the US.

Specialized equipment requires specialized labour to develop and build, not the cheap labour available in developing coutries. I don't think the rew materials much up a sigificant amount of the cost of equipment like that, and the US does have quite a bit of raw materials around.

[ Parent ]

Unfortunately, you're wrong. (none / 0) (#258)
by Russell Dovey on Tue Nov 23, 2004 at 05:24:33 AM EST

Many countries are big arms exporters, and there's some very interesting stuff coming out of places like Israel, or even Australia (Metal Storm=coolest idea ever). The main competitors are Russia and Germany, but there are quite a few niche players.

"Blessed are the cracked, for they let in the light." - Spike Milligan
[ Parent ]

Forgot one thing (1.50 / 2) (#295)
by mrcsparker on Tue Nov 23, 2004 at 02:10:10 PM EST

Military.  It is a large part of our budget and, while watching the War in the 21st Century conference on C-SPAN, I pretty much got the idea from the speakers that the US military will be a sort of commodity in the world.  Trading with the US would ensure security.

Really, I do not see the EU picking up the huge burden that the US currently has militarily.  I wonder if the EU had such a military if their economies would be as strong as they currently are.  Germany, for example, is able to grow their economy without much investment in their own military operations.

If the US does fall (or even become isolationist), it would be interesting to see who would be able to pick up the slack.  I personally predict a huge clusterfuck, as the EU and the surrounding countries try desperatly to get their shit together militarily.  

Isolationism, at least, could easily happen in a Democracy that feels too much of its money and jobs are leaving the country.  If not complete, at least partial trade isolationism brought on by tariffs.

[ Parent ]

ROFL (3.00 / 2) (#332)
by Nursie on Wed Nov 24, 2004 at 05:03:31 AM EST

"I do not see the EU picking up the huge burden that the US currently has militarily"
That's because we don't want to invade places like Iraq and as a result don't need to maintain such enormously expensive military sectors. Europe doesn't have a well oiled war machine like the US does because we largely don't believe war to be valid. Peacekeeping is certainly valid, but operations the size Iraq are generally just thought unnecessary.

Meta Sigs suck.

[ Parent ]
I agree (2.75 / 4) (#166)
by Coryoth on Mon Nov 22, 2004 at 02:08:19 PM EST

The trade deficit is being corrected via the falling dollar, which is upsetting countries (including Canada) that export to the US, while helping US exporters.

The US Dollar is falling, and as long as the fall is slow it will indeed gently correct the current account deficit.  I am merely asking "What guarantees are there that any depreciation in the US Dollar will remain slow?"

The first point to note is that even with the falling Dollar, the current account deficit not only continues to increase, but the rate at which it has been increasing has been getting larger - the US is accelerating into debt, despite the falling dollar.  The required turnaround has not yet begun.

The second point is that, again, despite the falling US Dollar, exports are not, in fact, on the rise as one would expect.  Certainly that must be considered a worrying sign - an indicator, perhaps, that some of the arguments about inflated GDP and hollow economies may carry some weight.

The third point is the Euro.  As discussed in the article, a switch to the Euro could trigger a sudden massive depreciation of the US Dollar.  The Dollar falling slowly but steadily, while not a problem necessarily, does make the Euro and increasingly attractive currency due to its comparative stability.

So yes, this need not be a crisis - I said as much in the article: structural effects causing slow change may well see things right - but I think it is worth considering how certain you are that things will remain slow and controlled.

Jedidiah.

[ Parent ]

Sort of true (3.00 / 5) (#249)
by JanneM on Tue Nov 23, 2004 at 02:51:27 AM EST

True, sort of. Sweden did this for many years - overspent, then devalued the currency to get away from the consequences. Of course, longer term people wise up - you get high inflation and high interest rates.

What effectively happens is that the value of your money is reduced. What you have, as an individual or company, in dollar assets, loses value. Specifically, the value of your work - your salary - is being reduced. You are taking an effective pay cut. Worse, your savings - and especially your retirement savings - lose value. That nest egg won't take you nearly as fas as you planned it to do.

You are reducing the price of your economy (effectively saying that you can't compete on added value, so must compete on price), and the effects are at least partially the same as if people took a real pay cut, lost savings or reduced the value of their inventory. People living on the margin may find themselves suddenly below it. People that had some extra margins may no longer have them. This may improve the outlook for exporters (though not fully, as all exporters are also dependent on imports), but it will also tend to depress domestic economic activity.

In short, it is good for those companies that live mainly by exports, and it can mitigate (though not remove) the effects of large deficits, but at the cost of making the country poorer. And if the trend grows out of control (very unlikely, but possible), you risk the kind of result you got for several south american countries a century ago, where they similarily went from wealthy to paupers due to similar effects.

---
Trust the Computer. The Computer is your friend.
[ Parent ]

another detail. (none / 1) (#253)
by caridon20 on Tue Nov 23, 2004 at 03:28:18 AM EST

One thing Janne M missed is that a stedily sinking currency also acts as a extra tax. when the currency falls you normaly get inflation. this requires more cash money in circulation to keep the system flowing. the state normaly prints this money and uses it to pay saleries (or pay of loans) asume thatyour currency depreciates with 30% and each 1% drop creates .5% inflation. and that the amount of cash in circulation is 50% of the total value of all thins in the counry. to keep the amout of cash steady the goucerment (or state bank) have to increase the amount of cash with 15% (0.5*30%) this means that the gouverment has just "taken" about 7% of all value in the country. 15%*50% chash penetration. This means that a slowly sinking currency is a good way for the state to keep overspending. (an economist can probably explain this better and more accurate) Now the dollar is a different thing. There is alreade a large amount of dollars tied upp around the world. if the dollar keeps sinking these dollars will enter the market. so the state cannot increase the amounts of dollars and wont get a "free" ride of the inflation. the opposite is if the Euro takes the dollars place as the dominant "Hoarding" currency. if that happens then there will be a shortage of euros coresponding to the surpluss of dollars and the states printing euros can increase their spending without creating inflation. Note that this is one of the ways that the USA could spend as much money as it has. /C
Dissent is NOT Treason Quis custodiet ipsos custodes
[ Parent ]
More than FUD (2.88 / 18) (#116)
by Flippant Chicken on Mon Nov 22, 2004 at 09:52:40 AM EST

For those claiming that a crisis is unlikely, and those claiming that this is partisan FUD by some who know nothing of economics, consider that Paul A. Volcker, former head of the Federal Reserve, recently said he sees a 75% chance of a currency crisis in the United States within five years.

Now he could be wrong. But I would say that a man nominated to Chairman of the Federal Reserve by both Carter and Reagan is probably not overly partisan, and probably knows a thing or two about economics.

This administration largely ignored the advice of top military leaders (people with actual military experience) when planning the occupation of Iraq. Does anyone expect them to listen to economists they don't agree with? Reading the bios on the PNAC site, I see a whole lot of political exerience, a good bit of media experience, but not a lot in the way of actual military experience or economic credentials. If our economic policy proves as well founded as our Iraq policy, a good outcome seems like a long shot.

"Faith-based" policy may have emotional appeal, but it seems like wishful thinking to me.

Here we go again. (1.00 / 13) (#117)
by dxh on Mon Nov 22, 2004 at 10:00:56 AM EST

Everytime a replublican wins the presidency all we hear about is:
  1. How the economy is on the brink of disaster
  2. How the homeless rate is going up
  3. How the environment is being destroyed
  4. How the earth is threatend by an asteroid
I have noticed this everytime since I have been watching poilitics in the 80s.  Its like clockwork that the liberals bring out these old standbys during every republican administration.

Funny though, during the democratic administration we never seem to hear about any of these things in the press even though many of them actually get worse.

Very curious.

Non partisan article. (3.00 / 2) (#127)
by Nursie on Mon Nov 22, 2004 at 10:28:19 AM EST

The author is keen to point out that these things were not mentioned by either party, and are almost completely ignored. In fact that's the whole point of the article! there are elephants in the living room and everyone is pretending they aren't there.

Feeling a bit defensive about our politics were we?

Meta Sigs suck.

[ Parent ]
Actually it IS partisan (2.00 / 7) (#133)
by Imma Troll on Mon Nov 22, 2004 at 11:00:19 AM EST

If they mention the Elephants in the living room, it's only fair to mention the Donkeys in the kitchen.
Will somebody light my sig?
[ Parent ]
Not really (3.00 / 2) (#161)
by Sgt York on Mon Nov 22, 2004 at 01:53:42 PM EST

I don't see this as a partisan article, the points are valid, and the problems are so enormous you couldn't possibly blame one administration or party for the whole thing. You can't even simply blame the governement, the general population is at fault.

On thing I noticed about the graph on personal debt, however, is that the bulk of the debt is tied up in mortgage, not consumer debt. Furthermore, mortgage debt makes up most of the increase; consumer debt was ona steady rise and continues. Mortgage debt is skyrocketing.

The question is, what does this mean? Is the US headed for a real esate bubble-burstig, or does the fact that most of the debt is in non-depreciable assets encouraging?

There is a reason for everything. Sometimes, that reason just sucks.
[ Parent ]

Frighteningly like Japan (none / 0) (#172)
by Coryoth on Mon Nov 22, 2004 at 02:28:30 PM EST

Unfortunately the skyrocketing mortgage debt is frighteningly similar to the Japanese property bubble, and is thus of serious concern.

Please note, however, that consumer debt actually is skyrocketing, it is merely the case that in comparison to mortgage debt it isn't skyrocketing as fast.  If you can find a plot of just consumer/credit card debt you'll see what I mean - sorry that I don't have any on hand.

Jedidiah.

[ Parent ]

Japanese property bubble vs US one (none / 0) (#411)
by kamil on Mon Nov 29, 2004 at 12:34:02 PM EST

>Unfortunately the skyrocketing mortgage debt is frighteningly similar to the Japanese property bubble, and is thus of serious concern.

No it is not. The Japanese property bubble which devastated the Japanese economy happened because large companies held Tokyo real-estate as collateral they inflated the value of the land together and colluded to keep it high. Japanese companies made a bunch of low interest loans that they could not pay of as the companies were nonperforming and the loans, bad debts. The collusion between government, industry, banks, and society will not let the banks call these bad loans and these companies go bankrupt, so they stager on as zombies, dragging down the whole country.

In the US the housing market is consumer debt not industry, the banks if they have to will take away peoples homes, the value of housing will drop and someone will buy the houses at the reduced rate and live in them. The banks lose some money and since they are partly foreign owned the rest of the world takes some of the pain.

It's a short term housing bubble crash, not a Japanese depression.

[ Parent ]

Let me be clear (3.00 / 7) (#164)
by Coryoth on Mon Nov 22, 2004 at 01:58:09 PM EST

I will say this again to make sure it is clear:

"I will gladly state for the record that had Kerry swept to victory, with a Democratic senate and house to boot, I don't believe the the US would be in any better position with respect to these issues."

I would have written this article no matter ho was elected, as neither party is offering comment or solutions for these issues.  I'll go one step further for you:

"Had Bush never been elected, and instead Gore had swept to victory, I doubt it would have had a very significant impact on these issues."

I question your need to see everything in terms of Republicans versus Democrats.  Nothing in the article laid blame, nor suggested either side had any solutions, and yet you still feel the need to cast the article to one side of the artificial divide.  This is exactly the partisan bickering that I took issue with in the article.  All it does it avoid actally discussing the problems.

Jedidiah.

[ Parent ]

American Apparel (1.08 / 12) (#146)
by thoennes on Mon Nov 22, 2004 at 12:32:12 PM EST

http://www.americanapparel.net recently opened a store in S.F. on Union Street.

Nice enough stuff. Same price range as GAP. Cut is more Euro (narrow) so they're not going for (the big around the) Middle America.

Store has nice photo art display.

All in all, I like it.

Plus, I get a nice moral high ground from which to be arrogant as all hell...

Neoliberalism is killing the USA (1.66 / 6) (#149)
by cryon on Mon Nov 22, 2004 at 12:42:57 PM EST

we need to start taxing the rich more. Taxing the rich makes them less powerful, less able to influence our govt through money. Also start taxing corporations more. Same logic applies. Use that extra revenue to give to citizens in form of social services: universal healthcare, longterm unemployment, tuition free education, etc. THis makes the citizen more powerful. Use trade barriers to bring back advanced manufacturing from Asia. I am not talking about assembly manufacturing, but fabrication manufacturing. THat is where the real value is, the high capital investment. And we need to do this soon, while we still have the world's best consumer market, which is what gives is the power to do it. Kill off neoliberalism. Growth rate is not the end-all, be-all. Limit corporation growth and reach in areas of commerce where high amounts of capital are not necessary. For example, there is no need for corporations to be involved in the restaurant business. When you disempower capital aggregations,, you empower the citizen. America is a partnership, and our Constitution directs our representatives to "promote the general welfare." They aint doing it. And we need to make them do it.
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Sweet Death (1.75 / 4) (#177)
by bobbuck on Mon Nov 22, 2004 at 02:46:11 PM EST

I like rich people. They buy stuff, employ people, make philanthropic donations, and throw awesome parties. I like corporations. They make the food that I eat, the car that I drive, the medicine I take, and the keyboard I'm typing on. Punishing rich people and corporations doesn't solve anything because the taxes don't go to poor people, they go to government and the last time I checked the government doesn't grow food (it actually pays people not to), manufacture products, or cure the sick. Any money you get from Uncle Sam to help purchase such things could have already been paid five times over if taxes were lower. I don't want to offend you, but your views seem Marxist.

The USA is probably the least liberal country financially and we have the most stuff, the highest incomes, and the best medicine. The area we really fall behind is in education, which the government dominates. Look at the history of Marxism/Communism (which seems the direction you're heading.) Over the last 100 years over 100,000,000 have died from communism through starvation and political executions. That doesn't count the horrible suffering of the gulags or having to pick which kids to feed (or eat).

[ Parent ]

Doh. (3.00 / 2) (#193)
by GenerationY on Mon Nov 22, 2004 at 03:46:30 PM EST

The USA is probably the least liberal country financially and we have the most stuff, the highest incomes, and the best medicine.

WTF-on-a-fugging-broomstick?
Who is more liberal financially than the US? Monaco? Lichtenstein possibly?

I agree that the US government shouldn't tax rich people or corporations. After all, as a European I'm quite happy to see my investments in these multi-nationals grow at a cost to the American taxpayer, the American soldier and the unemployed American worker (sorry, but I demand a return on my money, the board must outsource or get fired).

More charitably: please try to understand there is no such thing as an "American Corporation" anymore outside what they try to suggest in advertising campaigns. Its kind of heartbreaking to see this flag waving defence of the American dream when I know full well that the people profitting (like me) have nothing to do with you.

[ Parent ]

Keep in mind... (none / 0) (#196)
by cr8dle2grave on Mon Nov 22, 2004 at 04:13:22 PM EST

...liberal has a meaning in the American vernacular nearly opposite what it means around the rest of the world.

---
Unity of mankind means: No escape for anyone anywhere. - Milan Kundera


[ Parent ]
US meanings? (2.00 / 3) (#197)
by xria on Mon Nov 22, 2004 at 04:24:59 PM EST

From recent experience I have decided that the US meanings of the following words are:

liberal: evil baby killer
conservative: warmongering wastrel
muslim: evil baby killer
poor: lazy
terrorist: anyone Bush doesnt like
insurgent: anyone killed by US forces
democracy: plutocracy
free market capitalism: monopolies/oligopolies
socialism: communism


[ Parent ]

OT: on language (none / 0) (#201)
by GenerationY on Mon Nov 22, 2004 at 04:54:22 PM EST

I saw a programme the other day and they were saying that these days the consumer is (relatively speaking) quite resistant to advertising and even older children are becoming quite savvy (hence the fact they are concerntrating their fire on ever younger kids -- the "tweens" -- and the smart money is say they will only be nieve for so long...).

With this in mind, I kind of wonder if the next thing the man in the street stars to become resistant to is the political manipulation of language. Certainly "terrorist" seems to be on its way out as a useful term given the Bush doctrine that everyone (including the US if you follow the "logic") are terrorists. I think the bloom is wearing off of "insurgent" at the moment as well.

[ Parent ]

Possible (none / 0) (#203)
by xria on Mon Nov 22, 2004 at 05:04:51 PM EST

Consider how serious an accusation of a rogue state having "WMD" would be four or five years ago, now it is so associated with political lies and spin I doubt you would get much more than a raised eyebrow from many (most?) people.

[ Parent ]
All true (none / 0) (#314)
by Dyolf Knip on Tue Nov 23, 2004 at 05:09:01 PM EST

But it doesn't address the fact that people are letting themselves get suckered into believing the lies in the first place.  All that is happening is that they become more immune to that particular breed of bullshit.  When the terrorism threat goes the way of the communist threat the drug-using-hippie threat and becomes old & busted, will people actually be less inclined to buy into the new hotness threat?  (top two contenders for the next Big Enemy of America: gays and atheists)

Now, take this to its logical conclusion.  An American government that wants to maintain power will find it necessary to come up with as much new bullshit as it could, and to deliver it faster and with greater fanfare so as to convince the viewer that This Is The New Real Threat And It's Absolutely Vital For Your Own Safety That You Believe Us About It.  Making up an enemy and then lambasting your opponent for not being tough on it is a tried and true method, but I've never seen it conceived of, planned, applied, and, as you suggest, start falling by the wayside this quickly.

I'm thinking a cross between the Soviet-style news services that were such an obvious sham and modern marketing and PR techniques.  You end up with politicians that actually compete to see who can deliver the most outlandish story imaginable and publicize it with the best visuals and scripts possible.

I mean, look at the issues that apparently decided the presidential election; Iraq, terrorism, and gay marriage.  Interesting and real topics, for the most part, but massively hyped and spun so much the edges blurred with relativistic effects.

The alternative, of course, would be much better.  I.e., that I am wrong and people are becoming inured to wild, fantastic claims in general.  But sadly, I'm not seeing it.

---
If you can't learn to do something well, learn to enjoy doing it poorly.

Dyolf Knip
[ Parent ]

Excellent (none / 0) (#225)
by CookTing on Mon Nov 22, 2004 at 09:03:10 PM EST

That's the most honest and plain refutation of Marxist-Socialism I've ever heard.  Now, I still think socialism could work with an adequately restrained Government.  But, I thank you for that excellent argumentation.

PS. I know argumentation isn't a word.

PPS. The US once had the most restrained Government in the world, but you took your eyes off the prize: Liberty and Justice for all.


[ Parent ]

you are well trained (3.00 / 2) (#238)
by cryon on Mon Nov 22, 2004 at 10:43:50 PM EST

bobbuck wrote:

I like rich people.

You are well trained! You should like rich people. They are at the top of this human animal hierarchy. Even as the alpha male nips the ears of the lesser males, the lesser males, in their heart of hearts, LIKE that alpha male.

They buy stuff, employ people, make philanthropic donations, and throw awesome parties. I like corporations. They make the food that I eat, the car that I drive, the medicine I take, and the keyboard I'm typing on.

So if all the rich people and corporations were to vanish via some instantiation of a worker's paradise, then if you needed a meal, or clothing, then you would have to go hungry and naked? Imagine....there's no Rich, and no Corporations, too.

If the corporations were to be restricted to only certain areas of commerce, and kept out of others, say restaurants, then you or I would find it much easier to compete in that field. You and I would have only to compete against each other and other individuals. It would be a lot harder for you to drive me out of the restaurant business, than it would be for MegaFoodCorp to drive me out of the restaurant business.

Punishing rich people and corporations doesn't solve anything because the taxes don't go to poor people, they go to government and the last time I checked the government doesn't grow food (it actually pays people not to), manufacture products, or cure the sick. Any money you get from Uncle Sam to help purchase such things could have already been paid five times over if taxes were lower. There is already a working model for my type of politics: Scandanavian social democracies. Time after time after time, studies show that their forms of government provide higher standards of living than ours--for MOST citizens. Proof is in the pudding. Taste it.

I don't want to offend you, but your views seem Marxist.

Oh, I am NOT offended (I broke out of my programming some time ago!). Although my personal preferences run more to social democracy, a la Scandanavia. But there is nothing wrong with marxism. But there has never been a government that really comes close to adhering to marxist tenets, or those of socialism or communism. But give it time. Governments are machines, and machines can be incrementally improved. BTW, just because a government calls itself socialist does not mean it is one. I could put a feather in my hat and call it Yankee Doodle Dandy, but that does not mean it is.

The USA is probably the least liberal country financially and we have the most stuff, the highest incomes, and the best medicine. The area we really fall behind is in education, which the government dominates.

What is the word I am looking for? Not illiterate, but innumerate, i.e., incapable of applying mathematics to the real world.

Here is an explication of your fallacious thought patterns:

Country A:

total income: $10,000 million

total population: 1 million and 1 persons

income/population==~10,000/person

actual income of Citizen X == $5,000 million

actual income of every other citizen == $5,000 million/1 million == $5,000

Country B:

total income: $7,000 million

total population: 1 million

income/population==7,000/person

actual income of every citizen == $7,000 million/1 million == $7,000

Which country is richer?

Look at the history of Marxism/Communism (which seems the direction you're heading.) Over the last 100 years over 100,000,000 have died from communism through starvation and political executions. That doesn't count the horrible suffering of the gulags or having to pick which kids to feed (or eat).

Did you really get the truth of what went on with what happened in those "communist" countries? Did your country lie to you? Did the media lie to you? Look at what happened during and after the Iraq war. Were you lied to? Did it happen before? Will it happen again?

Did you factor in the rich and powerful of Europe and America doing all they could to hamper and harm these efforts? Just look into history from the leftist point of view. That's all. Take a long look at it from their perspective. It will take some time. I used to take the same stance as you, not too long ago, either. Live and learn....

Also, governments are machines. They are built to a purpose. They can be improved. Neoliberalism is a machine for placing ever increasing amounts of wealth in an ever-decreasing number of hands.

Social democracy is a machine for placing small amounts of wealth (still increasing, but at a slower rate) in an even increasing number of hands. I know where I want to be. I never was much of a gambler. Especially when the house always wins.
HTGS75OBEY21IRTYG54564ACCEPT64AUTHORITY41V KKJWQKHD23CONSUME78GJHGYTMNQYRTY74SLEEP38H TYTR32CONFORM12GNIYIPWG64VOTER4APATHY42JLQ TYFGB64MONEY3IS4YOUR7GOD62MGTSB21CONFORM34 SDF53MARRY6AND2REPRODUCE534TYWHJZKJ34OBEY6

[ Parent ]

death by communism (2.00 / 3) (#318)
by YelM3 on Tue Nov 23, 2004 at 07:32:32 PM EST

...died from communism...

And how many have died from capitalism? (See: Iraq, Nicaragua, Panama, Afghanistan, Korea, Vietnam, Indochina, ...) Seriously, try adding them up. You may also, at your discretion, factor in the poor and homeless in this country. Do you know how many Americans die each year of hunger?

True, some of us "have the most stuff" (oh boy!) but at what cost to everyone else on the planet?

[ Parent ]

War != capitalism (none / 0) (#374)
by yndrd1984 on Sat Nov 27, 2004 at 01:55:11 AM EST

Iraq, Nicaragua, Panama, Afghanistan, Korea, Vietnam, Indochina

What they have to do with capitalism, I have no idea. Wars are fought by governments, and are that opposite of letting people make economic choices on their own. If you mean that US companies supported and made money off of the wars, I won't disagree, but that kind of thing conflicts one with the basic tenets of capitalism (free choice).

Do you know how many Americans die each year of hunger?

I don't know, more than zero and less than in most places. Would you like to hazard a guess? Also, without rich (or at least richer) people to give charity or tax money to the less fortunate, it would be a lot worse. Even socialistic countries have to have a capitalistic economic base to support themselves.

[ Parent ]

Yeah, or.... (none / 0) (#303)
by phraud on Tue Nov 23, 2004 at 03:39:12 PM EST

You could stop researching and manufacturing crazy amounts of weapons. All your fucking money goes to military research of one form or another. You guys can't even win a war! (this is not meant to troll up a bunch of "oh yeah, we're the USA, we can rock you any day bullshit. It's a simple fact... you guys can't win wars even with all your technology and wasted money... I'm sure you'll keep trying though!)
You create your own reality. Leave mine to me.
[ Parent ]
Good idea, but (none / 0) (#341)
by cassydd on Wed Nov 24, 2004 at 10:34:50 AM EST

Stopping the building of all of those frequently weapons would result in thousands of Americans being put out of work - whole towns of people in some cases. Production of weapons has been an economic tool for decades now. The arms race was economic warfare against Russia during the cold war, and now it's a prop for the economy.

[ Parent ]
So redirect it.. (none / 0) (#362)
by Kwil on Thu Nov 25, 2004 at 10:02:45 PM EST

..instead of building military weapons, lay fibre-optic cable and make the US the most wired/broadband enabled country in history.

Sink it into biotech research and into commercializing said research.

Subsidize alternative power development.. get off the mideast oil by building tidal, thermal, and nuclear plants where you can.

Hell.. increase federal grants to accredited institutions to lower tuition, hire more faculty, and encourage higher education and skilled-trades education.

This doesn't attack the problem as directly as just redirecting the money to addressing the debt, but it gives America a long term base to become not only the world leader in GDP, but also in actual production of value, and thus be in a better place to whether the economic storm.

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


[ Parent ]
Excellent! (2.90 / 10) (#165)
by cr8dle2grave on Mon Nov 22, 2004 at 02:00:37 PM EST

Fantastic article. Judging by your UID, I'd venture that you're new to K5? If so, please don't let the riff-raff get you down. We desperately need someone with a good grasp on economic theory around here. Since Simon departed, we've been without a regular poster possesed of both a solid grasp on macro-economics and the necessary temperment to carefully explain it to the rest of us in an impartial and careful manner (bankind seems to have the former, but is lacking the latter).

Welcome and much thanks!

---
Unity of mankind means: No escape for anyone anywhere. - Milan Kundera


Globalization and the WTO (1.25 / 4) (#178)
by cdguru on Mon Nov 22, 2004 at 02:47:16 PM EST

Sensible things that would help out the US economy have been sold out from under us by a previous administration. We're in the WTO now and should we desire to retain some kind of manufacturing capability, we would have to withdraw. Failure to withdraw puts us in the same position as when we decided to try to retain some steel production in the US - enacting tariffs on imported steel was going to be met with retailitory import tariffs by countries that aren't even involved in exporting steel to the US.

However, I'm not even sure we can withdraw from the WTO. We have joined into this race to the bottom (where the winner is the lowest-wage country with any infrastructure at all) and there may not be any good ways to get out of it.

We're seeing the effects of NAFTA and one of the "proposed" solutions to this mess is to expand the program to include all of Central and South America. I don't see the average Mexican citizen benefiting from this all that much, but I sure do see that it has changed the rules for manufacturing and assembly in the US.

One solution for this is for the US to become insular and isolationist. If the US retreated to a position as was held in the 1930's we could "write off" the foreign trade deficit overnight - who cares if nobody wants to deal with us after that. This would force rebuilding the manufacturing base in the US, probably shut off a good deal of illegal immigration (it wouldn't be possible to send money home anymore) and there would be lots of low-skill, high-pay jobs again.

Self inflicted injury (3.00 / 2) (#187)
by Coryoth on Mon Nov 22, 2004 at 03:13:02 PM EST

One solution for this is for the US to become insular and isolationist. If the US retreated to a position as was held in the 1930's we could "write off" the foreign trade deficit overnight - who cares if nobody wants to deal with us after that. This would force rebuilding the manufacturing base in the US, probably shut off a good deal of illegal immigration (it wouldn't be possible to send money home anymore) and there would be lots of low-skill, high-pay jobs again.

You're basically talking about a self inflicted depression.  The US is not self sufficient in consumables - far from it, that's what those massive current account deficits point to.  The US is self sufficient (or can be) in necessities, such as food, and shelter, but it runs a huge trade imbalance in almost everything else.  Write off the debt, lose the trade, and you can expect to see the average US standard of living crash in a manner that would make 1929 look gentle.

Besides, writing off that much debt is a surprisingly hard thing to do.  Ever read Interface by Neal Stephenson?  Sure, that's a black comedy, but the point is valid: when those holding the debt stand to lose literally hundreds of billions of dollars, spending a couple of hundred billion to buy the US election, or otherwise halt such a debt write off seems like a fairly prudent investment.  I wonder exactly how much of an election two hundred billion dollars can buy?

Jedidiah.

[ Parent ]

How much could 200 Billion buy? (none / 0) (#223)
by claes on Mon Nov 22, 2004 at 08:48:25 PM EST

I wonder exactly how much of an election two hundred billion dollars can buy?

Well, we do know it's enough to invade and mess up a small country. Iraq war costs are about 146 Billion right now, and rising.

-- claes

[ Parent ]

I wonder (none / 0) (#270)
by drsmithy on Tue Nov 23, 2004 at 07:37:20 AM EST

How much of that $146 billion is expenses that would have had to have been met *regardless* of whether any invasion took place (eg: food, wages, etc) ?

[ Parent ]
As I understand it, none. (none / 0) (#277)
by daani on Tue Nov 23, 2004 at 09:33:13 AM EST

That figure is probably the sum of the supplemental appropriations made for the Iraq war. First Bush asked for 75 billion, then 87 billion more, and just recently I think they gave him another 25 billion. When you subtract the "reconstruction costs", give or take a few billion, you end up with 143 billion so far.

About $500 for every man woman and child in the USA. Now that we know for sure that there were no WMD and the war is justified as a humanitarian mission to free the people of Iraq, doesn't really seem like money well spent. Could of gotten much better value elsewhere.

[ Parent ]

Australians would agree. (none / 0) (#261)
by Russell Dovey on Tue Nov 23, 2004 at 05:55:45 AM EST

Ask any Aussie about "the recession we had to have" and watch them flinch as the remembered pain of 18% mortgage rates floods into their mind, accompanied by the elongated visage of our former PM (one of our best, IMO, not only because he was an arrogant bastard) Paul Keating drawling those six fateful words.

"So, Paul, why have I lost my house and been forced to live in a fucking caravan park?"

"It was the recession we had to have."

"Yeah thanks, you pompous, arrogant,  Italian-suited, piggery-owning bastard."

Don't get me wrong, I loved the guy, just giving the views of the downtrodden man. He introduced vital financial reforms to this country, but stuffed up a little on the balancing.

"Blessed are the cracked, for they let in the light." - Spike Milligan
[ Parent ]

Hmm lets follow this scenario (2.40 / 5) (#188)
by xria on Mon Nov 22, 2004 at 03:27:46 PM EST

Firstly many US industries would be screwed causing large scale unemployment in the short term, consider that US exports were about $850 billion through september this year, so you are talking about closing off about 10% of the US economies sales, as well as 15% of its purchases. You would be talking a massive depression in the short term, and how long it would take to adjust and build up all the replacement industries is hard to say.

Next you are also likely to see large scale smuggling of US dollars held abroad into the US (as they are now worthless to anyone outside according to your scenario), and if this is successful on a large scale it will likely lead to significant inflationary pressures.

This will add to the lack of foreign capital available for investment which will make starting a new business more expensive and risky, since there is less capital lenders available, and hence less competition.

Add in the effect on US based multinationals which no doubt won't be happy when their foreign assets are lost (well as no trade can go on, its not like there is a reason for them to have them). Or as is likely when US owned copyrights and trademarks are no longer earning their owners anything outside the US.

Also consider that many US goods are based on the labour of people at a fraction of the cost of US workers - sounds great for getting people jobs, but not if you actually want to buy something. Consider say coffee, where the jar that you buy for $1.50 cost $0.01 to grow, now try and find someone to grow it that cheap in the US, or expect to see more inflation.

Add in the fact that the majority of the US budget deficit is currently funded from abroad - suddenly either the government will have to start paying a load more to borrow from US investors, or massively cut back spending or raise taxes.

All these changes are going to have a big effect on the US stock markets, considering these effects are probably significant enough to make 1929 look like a walk in the park.

[ Parent ]

Significant change for the better (none / 0) (#395)
by ucntcme on Sun Nov 28, 2004 at 07:43:36 AM EST

Add in the fact that the majority of the US budget deficit is currently funded from abroad - suddenly either the government will have to start paying a load more to borrow from US investors, or massively cut back spending or raise taxes.

All these changes are going to have a big effect on the US stock markets, considering these effects are probably significant enough to make 1929 look like a walk in the park.

Actually, we've already experienced financial upsets greater than the GD, The difference is our economy is better through diversification, and we are not tied into the same horrible international monetary scheme that existed then.

Finally, the option "massively cut back government spending" would be a tremendous boon to the economy, not a tanker.

[ Parent ]

Choice (none / 0) (#398)
by xria on Sun Nov 28, 2004 at 08:40:27 AM EST

A government choosing to cut back spending can be a good thing for an economy I agree, at least in certain areas. Being forced to cut back due to lack of any real options is not usually a good thing, as things tend to get cut that are a net benefit to people.

While there have been financial upsets with greater changes to, say, the stock market in a single day than any given day in 1929, the overall economic impact of the great depression has never even been close to matched.

bbc article about the depression and other bubbles bursting

[ Parent ]
Stupid argument .. (none / 0) (#254)
by Highlander on Tue Nov 23, 2004 at 04:07:26 AM EST

enacting tariffs on imported steel was going to be met with retailitory import tariffs

Yes, but you see, it is not the rule of the WTO, or GATT, that tariffs HAVE to be met by retaliatory tariffs, the rules and purpose of the WTO are that you MUST NOT be handed unfair tariffs.

Without the GATT, countries could mount tariffs against the US just for spite.

Of course, you could argue that the US could just withdraw from the WTO, raise import tariffs, and threaten to invade/nuke every country that retaliates with tariffs, but we don't want to go there, do we?

Moderation in moderation is a good thing.
[ Parent ]

Those steel tariffs (none / 0) (#276)
by GenerationY on Tue Nov 23, 2004 at 09:07:59 AM EST

were ruled illegal. End of story.

Its quite topical actually given that the US has slammed British specialiaty production with yet another illegal tariff.

Its pretty much the opinion of the Foreign Office (and by implication therefore the British Government), according to The Scotsman, that its not worth cooperating with the US from now on. I think the British people who follow such things are also increasingly livid with this disgusting behaviour. The only exception to this being Blair himself, at least publically. Its all eroding public support for the war anyway.

With friends like these....

Frankly I think its quite worrying and very short-sighted of Bush to behave like this, although there may be benefits for the UK in distancing itself away from the US for a time.

[ Parent ]

Interesting note (3.00 / 10) (#182)
by xria on Mon Nov 22, 2004 at 02:52:06 PM EST

I watched business breakfast this morning, they seem to be predicting the dollar to fall another 5-10% against most currencies in the next 6 months, which makes you wonder how many people are likely to move capital from the US markets - after all whats the point of holding a 6 month T-bill giving you 2.339% interest, when people are predicting the currency it is made in is expected to drop 4-8 times as fast in that time.

Although I guess currency value issues are often circular arguments - the dollar is expected to go down, so people move away from holding dollars, so the price goes down. Self fulfilling prophecy.

Still with the US National Debt at 68-75% of GDP (depending on which GDP measure you prefer) anything that could cause a need for a rise in interest rates to fund the debt could become fairly expensive for the US taxpayer.

Consider also that it's estimated that foreign central banks are expected to fund 60% of the 2004 US budget deficit. With the dollar slipping so fast, the return on these loans is likely to be significantly in the negative in real terms.

Basically the US government seems to be playing chicken with the other governments of the world, daring them not to keep taking on more and more US debt because the impact of them not doing so could be very bad for the world economy (although no doubt the US would suffer most). Not necessarily a smart move with anti-US sentiment on the rise in many places I would think.

Dangerous game (3.00 / 2) (#213)
by svampa on Mon Nov 22, 2004 at 07:31:29 PM EST

Basically the US government seems to be playing chicken with the other governments of the world, daring them not to keep taking on more and more US debt because the impact of them not doing so could be very bad for the world economy (although no doubt the US would suffer most).

Saddam decided, for political reasons, to sell oil in euros instead of dollars, and to change the reserves of dollars for reserves of Euros (It's said that it was one of the causes of war). Saddam did it for political reasons, but Arabia Saudi, USA ally, has begun to think that looses money when trades with dollars or has reserves of dollars, so it is moving into Euro, not too much, but a few.

Forget anything about anti-US feelings, from an economic point of view, it's inteligent to swap dollars by Euros now, before the others countries do so. Well, it's a smart movement if the current low value of dollar is the future. If it's a temporal circunstance, it's a good time to buy dollars.

USA is pushing down the dollar to rise exports, it may cross the line where countries begin to think that the trend for the future is low dollar, then we could have a nice domino effect.

I'm afraid that experts say that has crosed the line yet. Now everybody is watting, like in stocks, the first one that sells takes risks, the last one that sells is a the looser.



[ Parent ]
You do get the impression (none / 1) (#229)
by xria on Mon Nov 22, 2004 at 09:43:13 PM EST

That everyone is just waiting for a sign to abandon the dollar though, last values I found suggested that the dollar was down from 66% of all national currency reserves, to 63% (and the Euro rising by 3% overall) over the last few years.

Consider that those governments that moved have effectively gained about 25% in value on the funds it moved, if they did so when GWB was elected. Spread over 4 years that offsets a drop of 6% in the return, so theorectically interest rates on the US currency assets would have had to be 6% higher (or about 10% for long term bonds) to have made it worthwhile to hold them, let alone holding pure currency which was just literally 6% per year worse.

With the US statements amounting to 'we intend to cut the trade deficit in half' and 'we believe in a strong dollar policy' but no actual actions to keep the dollar strong (such as raise interest rates on bills/bonds), it would seem like the second statement is basically a poor attempt to talk up a market, and they intend to let the trade deficit fall via devaluation of the dollar essentially.

Which is to say expect the dollar to drop further, as the US government seems as little bothered by its fall as it does to racking up lots of debt both home and foreign. I wouldn't be surprised to see the dollar trading at €1:$1.40, $1:Y95, $2:£1, and maybe even ending close to one to one with Canadian. I seem to remember reading somewhere today that 60% of the US hard currency is on foreign soil due to its use as a reserve currency. If people decide this isn't such a hot idea the dumping of so much currency could see a tailspin of dollar value.

[ Parent ]

Y'see.. (none / 1) (#232)
by Kwil on Mon Nov 22, 2004 at 10:09:00 PM EST

..them numbers are hard things fer a plain speaking man.

It's.. it's fuzzy math.

We don't need fuzzy math to fight terrorists. We need the same things the American people have always had. A willingness to get out there and just do what's right. We need a country that's united in the fight. And that's just what this White House is gonna give you. We don't have room for naysayers. 9-11 changed the game plan, and the people of America have responded by givin' this White House a new mandate of purpose.

And that's just what they're going to get.

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


[ Parent ]
Yes, you do need them (none / 0) (#323)
by svampa on Tue Nov 23, 2004 at 09:10:57 PM EST

We don't need fuzzy math to fight terrorists.

Weather those maths are wrong or right, you must be aware of them, or you can go into a banckrupcy, and no more weapons, no more Apaches... no more resources to fight against what ever you want. Even the most patriotic soldier needs a fee because must eat.

If they are wrong, good for you. But experts must keep watching, or things may go to hell.

Let's suppose you are in a warship, and there is a hole. You can't say (well, you shouldn't) "I don't care holes, and fuzzy math about water flow, we must face the enemy.". What we are discussing in this article is if the how big is the hole, if it's posible to wait, and how long.

The sensible attitude is to ask experts what's the risk. Say "naysayers" without checking "fuzzy math" is stupid and an unnecesary risk.



[ Parent ]
Sarcasm (none / 1) (#345)
by ethereal on Wed Nov 24, 2004 at 12:21:22 PM EST

...is lost on you, my friend.

--

Stand up for your right to not believe: Americans United for Separation of Church and State
[ Parent ]

You should mark it (none / 0) (#351)
by svampa on Wed Nov 24, 2004 at 02:52:14 PM EST

something like

<sarcasm>You, terrorist lovers</sarcasm>

Usually, in another environment, I would thing that your post is a sarcasm. But I've seen many posts in the same line, like this one. They as incredible as yours , so the first idea is "A Troll" and "A Sarcasm", and they are not. So I have begun to doubt of my perceptions.

Please, use a <sarcasm> tag to help confused poor boys like me to see the difference between sarcasm comment and amazing right-wing comment. ;-)



[ Parent ]
One sticking point ... history (none / 0) (#396)
by ucntcme on Sun Nov 28, 2004 at 07:46:04 AM EST

Still with the US National Debt at 68-75% of GDP (depending on which GDP measure you prefer) anything that could cause a need for a rise in interest rates to fund the debt could become fairly expensive for the US taxpayer.

Yet history shows no link between government debt or defecit and interest rate hikes. I tried that line for years. Until I was called on it and did the research myself.

[ Parent ]

In other news... (2.54 / 24) (#208)
by asciiwhite on Mon Nov 22, 2004 at 06:28:37 PM EST

To the citizens of the United States of America,

In the light of your failure to elect a suitable President of the USA
and thus to govern yourselves, we hereby give notice of the revocation of
your independence, effective today. Her Sovereign Majesty Queen Elizabeth
II will resume monarchical duties over all states, commonwealths and
other territories. Except Utah, which she does not fancy. Your new prime
minister (The Right Honourable Tony Blair, MP for the 97.85% of you
who have until now been unaware that there is a world outside your
borders) will appoint a minister for America without the need for further
elections. Congress and the Senate will be disbanded.

A questionnaire will be circulated next year to determine whether any
of you noticed. To aid in the transition to a British Crown Dependency,
the following rules are introduced with immediate effect:

1. You should look up revocation in the Oxford English Dictionary.
Then look up aluminium. Check the pronunciation guide. You will be amazed
at just how wrongly you have been pronouncing it. The letter U will be
reinstated in words such as favour and neighbour; skipping the letter
U is nothing more than laziness on your part. Likewise, you will learn to
spell doughnut without skipping half the letters. You will end your love
affair with the letter Z (pronounced zed not zee) and the suffix ize will be
replaced by the suffix ise. You will learn that the suffix burgh is
pronounced burra (e.g. Edinburgh). You are welcome to respell
Pittsburgh as Pittsberg if you can't cope with correct pronunciation.
Generally, you
should raise your vocabulary to acceptable levels. Look up vocabulary.
Using the same twenty seven words interspersed with filler noises
such as like and you know is an unacceptable and inefficient form of
communication. Look up interspersed. There will be no more bleeps in
the Jerry Springer show. If you're not old enough to cope with bad
language, then you shouldn't have chat shows. When you learn to develop your
vocabulary then you won't have to use bad language as often.

2. There is no such thing as US English. We will let Microsoft know on
your behalf. The Microsoft spell-checker will be adjusted to take
account of the reinstated letter u and the elimination of -ize.

3. You should learn to distinguish between the English and Australian
accents. It really isn't that hard. English accents are not limited to
Cockney, upper-class twit, or Mancunian (Daphne in Frasier). You will
also have to learn how to understand regional accents - Scottish dramas
such as Taggart will no longer be broadcast with subtitles. While we're
talking about regions, you must learn that there is no such place as
Devonshire in England. The name of the county is Devon. If you persist in
calling it
Devonshire, all American States will become shires (e.g. Texasshire,
Floridashire, Louisianashire).

4. Hollywood will be required to occasionally cast English actors as
the good guys. Hollywood will be required to cast English actors to play
English characters. British sit-coms such as Men Behaving Badly or Red
Dwarf will not be re-cast and watered down for a wishy-washy American
audience who can't cope with the humour of occasional political
incorrectness.

5. You should relearn your original national anthem, God Save The
Queen, but only after fully carrying out task 1. We would not want you to
get
confused and give up half way through.

6. You should stop playing American football. There is only one kind
of football. What you refer to as American football is not a very good
game. The 2.15% of you who are aware that there is a world outside your
borders may have noticed that no one else plays American football. You will
no
longer be allowed to play it, and should instead play proper football.
Initially, it would be best if you played with the girls. It is a
difficult game. Those of you brave enough will, in time, be allowed to
play rugby (which is similar to American football but does not involve
stopping for a rest every twenty seconds or wearing full Kevlar body
armour like nancies). We are hoping to get together at least a US
rugby sevens side by 2005. You should stop playing baseball. It is not
reasonable to host an event called the World Series for a game which
is not played outside of America. Since only 2.15% of you are aware that
there is a world beyond your borders, your error is understandable.
Instead of baseball, you will be allowed to play a girls game called
Rounders which is baseball without fancy team strip, oversized gloves,
collector cards or hotdogs.

7. You should declare war on Quebec and France, using nuclear weapons
if they give you any merde. (Merde is French for Shit.) The 97.85% of
you who were not aware that there is a world outside your borders should
count
yourselves lucky. The Russians have never been the bad guys. You will
no longer be allowed to own or carry guns. You will no longer be allowed
to own or carry anything more dangerous in public than a vegetable
peeler. Because we don't believe you are sensible enough to handle
potentially
dangerous items, you will require a permit if you wish to carry a
vegetable peeler in public.

8. July 4th is no longer a public holiday. November 2 nd will be a new
national holiday, but only in England. It will be called Indecisive
Day.

9. All American cars are hereby banned. They are crap and it is for
your own good. When we show you German cars, you will understand what we
mean. All road intersections will be replaced with roundabouts. You will
start driving on the left with immediate effect. At the same time, you will
go metric with immediate effect and without the benefit of conversion
tables. Roundabouts and metrication will help you understand the British
sense of humour.

10. You will learn to make real chips. Those things you call French
fries are not real chips. Fries aren't even French, they are Belgian though
97.85% of you (including the guy who discovered fries while in
Europe) are not aware of a country called Belgium. Those things you insist
on
calling potato chips are properly called crisps. Real chips are thick cut
and
fried in animal fat. The traditional accompaniment to chips is beer,
which should be served warm and flat. Waitresses will be trained to be more
aggressive with customers.

11. As a sign of penance, 5 grams of sea salt per cup will be added
to all tea made within the Commonwealth of Massachusetts, this quantity to
be
doubled for tea made within the city of Boston itself.

12. The cold tasteless stuff you insist on calling beer is not
actually beer at all, it is lager. From November 1st, only proper British
Bitter will be referred to as beer, and European brews of known and accepted
provenance will be referred to as Lager. The substances formerly
known as American Beer will henceforth be referred to as Near-Frozen Gnat's
Urine, with the exception of the product of the American Budweiser Company,
whose product will be referred to as Weak Near-Frozen Gnat's Urine. This
will allow true Budweiser (as manufactured for the last 1000 years in
Pilsen, Czech Republic) to be sold without risk of confusion.

13. From December 1st, the UK will harmonise petrol (or Gasoline, as
you will be permitted to keep calling it until April 1st, 2005) prices
with the former USA. The UK will harmonise its prices to those of the
former USA and the former USA will, in return, adopt UK petrol prices
(roughly $6/US gallon - get used to it).

14. You will learn to resolve personal issues without using guns,
lawyers, or therapists. The fact that you need so many lawyers and
therapists
shows that you're not adult enough to be independent. Guns should be handled
only by adults. If you're not adult enough to sort things out without
suing someone or speaking to a therapist, then you're not grown up
enough to handle a gun.

15. Please tell us who killed JFK. It's been driving us crazy.

Tax collectors from Her Majesty's Government will be with you shortly
to ensure the acquisition of all revenues due (backdated to 1776).

Thank you for your cooperation


I'd give you a 3 but (3.00 / 4) (#210)
by Big Sexxy Joe on Mon Nov 22, 2004 at 07:11:25 PM EST

I can't because you try to make it sound like soccer is a real sport in your post.

I'm like Jesus, only better.
Democracy Now! - your daily, uncensored, corporate-free grassroots news hour
[ Parent ]
You're right... (3.00 / 5) (#241)
by Pingveno on Mon Nov 22, 2004 at 11:51:05 PM EST

...soccer isn't a sport. It's called football.
------
In other news, more than 98 percent of convicted felons are bread users.
[ Parent ]
I agree (none / 1) (#363)
by Big Sexxy Joe on Thu Nov 25, 2004 at 11:17:49 PM EST

That football is a sport.  It's a sport because you use your hands.  That gay little thing that Europeans call football is pretty weak though.

What you have to understand is that Soccer was invented by European women so they'd have something to do while their husbands cooked dinner.

I'm like Jesus, only better.
Democracy Now! - your daily, uncensored, corporate-free grassroots news hour
[ Parent ]

Har Har Har. (none / 0) (#366)
by Nursie on Fri Nov 26, 2004 at 05:20:17 AM EST

Even for a troll you sound ridiculous, you realise how stupid it is to have a game called football where the important bit is that you use your hands?

Bunch of pussies anyway, American "Football" players, shoulder pads and helmets? c'mon!

Meta Sigs suck.

[ Parent ]
That's what I love (none / 0) (#367)
by Big Sexxy Joe on Fri Nov 26, 2004 at 12:10:55 PM EST

is when you call me a troll and respond anyway.  If you respond to a ridiculous troll, does that mean that you are ridiculously stupid?

Anyway, the name football implies that you use your feet.  It doesn't imply that you can't use other parts of your body.

I'm like Jesus, only better.
Democracy Now! - your daily, uncensored, corporate-free grassroots news hour
[ Parent ]

Not only that, but... (none / 0) (#262)
by Russell Dovey on Tue Nov 23, 2004 at 06:07:01 AM EST

Baseball is just a US-local adaptation of cricket, so you Americans have been playing it wrong all this time.

Don't worry, you'll soon... get... <yawn> used to Test matches. And you'll get... so much more sleep... <thump>

"Blessed are the cracked, for they let in the light." - Spike Milligan
[ Parent ]

Bah (none / 0) (#364)
by Big Sexxy Joe on Thu Nov 25, 2004 at 11:20:37 PM EST

Our version is better.  

By the way, why don't the British learn to speak English correctly?  Any linguist will tell you that what is spoken in Minnesotta is closer to Victorian English than what's spoken in modern England.

I'm like Jesus, only better.
Democracy Now! - your daily, uncensored, corporate-free grassroots news hour
[ Parent ]

Correction: (none / 0) (#272)
by Pxtl on Tue Nov 23, 2004 at 08:49:31 AM EST

British colonies are ruled by a Governor-General, not a Minister.

[ Parent ]
Depends (none / 0) (#299)
by GenerationY on Tue Nov 23, 2004 at 02:37:06 PM EST

The Governor Generals answer, to some extent, to the Foreign Secretary. When the Empire still existed there was a Secretary of State for the Colonies, but the job was folded into the Foreign Office when the Commonwealth Office merged with it.

All that said I think (the occasionaly used alternative terminology) "Viceroy of America" is a bit catchier and would look better on my business cards.

Maybe even do a Cromwell; perhaps "Lord Protector of America" would go down better with those easy-impressed-by-history-and-silly-hats colonials?

Decisions, decisions, decisions...

[ Parent ]

Hm. (none / 1) (#300)
by Pxtl on Tue Nov 23, 2004 at 02:41:01 PM EST

I'm just going by how it works here in Canada, where legally the Governor General is the ruler, technically wielding with all of the power of the Queen.

[ Parent ]
Question: (none / 0) (#273)
by Pxtl on Tue Nov 23, 2004 at 08:51:31 AM EST

I've been wondering - the British spelling/pronounciation of Aluminum is Aliminium... but what of Platinum?

[ Parent ]
Platinum is Platinum (none / 0) (#279)
by Nursie on Tue Nov 23, 2004 at 10:00:27 AM EST

Just the same, but aluminum is aluminium. Don't know why. I guess a lot of metal elements end in 'ium' (chromium, iridium, paladium, uranium). Platinium sounds silly though.



Meta Sigs suck.

[ Parent ]
WTF??? (none / 0) (#280)
by Pxtl on Tue Nov 23, 2004 at 10:06:34 AM EST

What I saw:
Just the same, but aluminum is aluminium. Don't know why. I guess a lot of metal elements end in 'ium' (chromium, iridium, paladium, uranium). Platinium sounds silly though.

Meta Sigs suck. ־‮־

[ Parent | Reply to This |

and now my computer is typing backwards.  WTF is going on?

[ Parent ]

huh???? (none / 0) (#281)
by Pxtl on Tue Nov 23, 2004 at 10:07:49 AM EST

But....but.... the text was backwards!  It was backwards "reply to this" and everything afterwards.... am I going crazy?

[ Parent ]
Yes (none / 0) (#282)
by Cro Magnon on Tue Nov 23, 2004 at 10:09:02 AM EST

You're going crazy.
Information wants to be beer.
[ Parent ]
Erm, my sig (none / 1) (#284)
by Nursie on Tue Nov 23, 2004 at 10:23:04 AM EST

has a couple of unicode characters in it that reverse everything after it. K5 catches this only after the "Reply to This" and "Parent" links.

It's childish I know, but I like it.

Meta Sigs suck.

[ Parent ]
Well it confused the ever loving crap out of me... (none / 0) (#285)
by Pxtl on Tue Nov 23, 2004 at 10:36:02 AM EST

I'd copied/pasted your sig, oso I got the chars... so I was editing sdrawkcab.

[ Parent ]
Not all it does.. (none / 1) (#308)
by Kwil on Tue Nov 23, 2004 at 04:25:09 PM EST

It also does a massive page widening in Opera.

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


[ Parent ]
Finally someone tells me!!! (none / 0) (#333)
by Nursie on Wed Nov 24, 2004 at 05:13:47 AM EST

I've had complaints from several people about my "deliberate page widening terrorism" and people have even 0'd my comments because of page widening accusations.

They have not ever, not even once, told me what the problem was or what browser was affected. Too busy spitting out hatred and venom to even tell me what was wrong.

Thankyou. I shall now remove the unicode from my sig.

Meta Sigs suck.

[ Parent ]
congrats (none / 1) (#294)
by speek on Tue Nov 23, 2004 at 02:08:27 PM EST

You couldn't have made it more clear why American English is superior to British English. Here's to dropping more useless letters in the future.

--
al queda is kicking themsleves for not knowing about the levees
[ Parent ]

Reunification (none / 0) (#347)
by bindlestiff on Wed Nov 24, 2004 at 01:37:19 PM EST

Red Dwarf every night? Real Beer, from Real Surly waitresses? People won't be allowed to laugh when I write something is of a 'grey colour' having read too much Dickens as a child? All that, and immediate all-out bloody war with Quebec too? I'm with you so far! But wait... about that Tony Blair... we already have a wall-eyed witless jackass steering the ship of state thank you. How about 2 Red Dwarf episodes a night, 4 on weekends, and Budweiser gets nationalized and their facilities handed over to Guiness? We can work this out, but I'm not eating jellied eels for anyone. Alright, bring back the Young Ones and we'll take the gobsmacked tallywhacker off your hands, and you make George Bush ambassador to Gofuckistan so that we don't have to carry them both. A'ight?

[ Parent ]
Good grief! (3.00 / 2) (#217)
by GenerationY on Mon Nov 22, 2004 at 08:23:33 PM EST

I was doing some googling around on these issues and found this article...
Senate votes to let US borrow up to $8.18 trillion.

I guess this isn't news to most of you, but hells bells:
Administration officials urged lawmakers to act quickly. The government reached its $7.38 trillion borrowing cap last month, and since then the Treasury Department has paid federal bills by taking cash from a civil service retirement account, which it plans to repay.

George Bush isn't the new Hitler (or whoever), turns out he's the new Robert Maxwell. I guess that sort of thing isn't illegal if the Government does it?

Small potatoes (none / 0) (#230)
by xria on Mon Nov 22, 2004 at 09:56:10 PM EST

Something like 40% ($2.9 trillion or so) of the US National Debt is now owned as the surpluses of various government trust funds, such as Social Security ($1.3T alone). Instead of reducing the payments to Social Security to avoid a surplus, or saving it against the retirement of the baby boomers in the next 5 years or so, it is given IOUs from the US Treasury while the government budget is in deficit, or in a couple of Clinton's years it was used to pay down the National Debt a little.

Of course technically this is a rational thing for the government to do - as there is surplus cash in one arm of the government, and a deficit in another, it makes sense to offset them, rather than keep a large chunk of cash in an account doing nothing, and then having to raise lots more money to cover the deficit elsewhere, likely to raise interest rates on the national debt. Basically it gets a cheap loan off of social security, which has no other mechanism to invest the surplus anyway, and now actually gets a return on the surplus funds.

[ Parent ]

Lending limit (none / 0) (#235)
by xria on Mon Nov 22, 2004 at 10:34:56 PM EST

I still don't see the point of the lending limit cap on the Treasury - after all the same people that set the limit, also approve all the tax cuts/rises and spending changes.

So for example they had increased Homeland Security funding by $3.1 billion, but none of it could be assigned from the Treasury because they also then needed to up the lending cap to actually have the money to spend. Odd way to organise it.

[ Parent ]

Good way to punish deficit spending, though. (none / 0) (#264)
by Russell Dovey on Tue Nov 23, 2004 at 06:09:46 AM EST

I guess it's just one of those organic mechanisms which has evolved to deal with the imperfect human players in otherwise flawless political systems such as that in the US.

No, really, I mean that.

"Blessed are the cracked, for they let in the light." - Spike Milligan
[ Parent ]

The new Robert Maxwell? (none / 1) (#263)
by Russell Dovey on Tue Nov 23, 2004 at 06:08:11 AM EST

He makes coffee?

"Blessed are the cracked, for they let in the light." - Spike Milligan
[ Parent ]

Interesting notion (none / 0) (#271)
by GenerationY on Tue Nov 23, 2004 at 08:47:42 AM EST

I was thinking more along the lines of the guy who died at sea having stolen 440 million pounds out of the pension funds of his employees (which they'd paid into).

[ Parent ]
Sounds like a Skase wannabe. (none / 0) (#274)
by Russell Dovey on Tue Nov 23, 2004 at 08:52:32 AM EST

440 million pounds, eh? Well, at least he stole them, instead of losing them through stupidity and greed like our Skasey. Must have had a bit of fun with that much money.

"Blessed are the cracked, for they let in the light." - Spike Milligan
[ Parent ]

Well Maxwell didn't really keep it (3.00 / 2) (#283)
by GenerationY on Tue Nov 23, 2004 at 10:13:25 AM EST

he was under pressure from Goldman-Sachs to repay a loan. They were beginning (or threatening, I don't know) to sell the stock offered as security against it. So he embezzled the pension fund to keep the wolf from the door and artificially inflate his share price. There is some speculation that his death (he fell over the side of his yacht) was suicide. Together with this mis-selling scandal (people being sold high-risk plans that didn't work out thinking they would be safe), the Maxwell affair put back the cause of saving for retirement years in the UK.

He was originally of Czechoslovacian extraction, hence the subriquet "The bouncing Czech"

[Hmm, yachts, embezzlement...if I were a troll what fun I would have!]

[ Parent ]

Hard.... to.... read.... (none / 1) (#218)
by Theoretical User on Mon Nov 22, 2004 at 08:23:39 PM EST

I wish I had caught this in editing. Mistakes in a technical paper make me want to quit reading it.

These bonds can, and often are, sold overseas.

Currently, the two largest owners of US Government debt are Japan and China.

Two in a row where you left out words:

"These bonds can be, and often are, sold overseas."

"Currently, the largest foreign owners of US Government debt are Japan and China."

Obviously, the largest owners of US Government debt are US citizens, unless the situation has changed drastically since my last perusal.

Otherwise, skimming the rest of the article, it's pretty great.

Argument points:
* debt: We all know debt has its downsides, but at the same time, most of the money, even that spent in Iraq, is going to American citizens in America.

Uhmmmm.... I think my house is on fire.  More points later, maybe?

___
Your Wife Gives Bad Head. -- CheeseburgerBrown

Largest owners of US debt (none / 0) (#226)
by xria on Mon Nov 22, 2004 at 09:21:08 PM EST

While individuals in the US hold a large proportion of the US debt, it is still accurate to say the largest owners of the US debt is the Chinese and Japanese governments.

Of course you could say there is a larger owner of the US national debt, and that is the US social security system which has something like $1.3 trillion of the debt (and another $1.4 trillion of the debt is in other trust funds, but each is a seperate entity).

However in essence you can read what he is saying as the Chinese and Japanese governments are the single entities with the highest proportion of the US National Debt. Considering they own about 7% of it each, it certainly isn't trivial.

[ Parent ]

For those still unconcerned (3.00 / 6) (#220)
by Coryoth on Mon Nov 22, 2004 at 08:25:08 PM EST

There is a nice article in today's BBC news online which discusses some of these issues.  You can find it here.

Key points include:


  • Global sharemarkets are reacting negatively to the ever depreciating US Dollar

  • The US Dollar just struck a new all time low against the Euro

  • Oil prices are being pushed up by this concern in the global market.

  • Alan Greenspan is now warning that Asian economies, particularly Japan and China are now increasingly unlikely to continue to fund the US deficit

  • The last auction of US debt in August had surprisingly few takers

It's well worth the read.

Jedidiah


You forgot oil (none / 1) (#224)
by scareduck on Mon Nov 22, 2004 at 09:01:12 PM EST

If oil stays at $50/bbl or so -- and that's likely, given the absolute dearth of spare capacity -- look out below.

Oil schmoil (none / 1) (#335)
by ucntcme on Wed Nov 24, 2004 at 07:44:59 AM EST

Oil is at it's current 50-55/bbl rate primarily due to speculative trading. Secondly the hurricanes halted supply short term. Our capacity limitation is actually in refineries, not oil.

I actually hope it stays here for quite a while. E85 is cheaper. My wife gets 100+ octane 100% US fuel for her Suburban for about 20 cents less than I pay for my E10 at 93 octane.

If oil stays at current levels, the number of people enjoying that advantage will swell. And oil's days are numbered.

Which means so are the terrorists.

[ Parent ]

Terrorists arent oil powered (none / 0) (#392)
by xria on Sun Nov 28, 2004 at 07:14:08 AM EST

But you are right about most of the rest, oil futures are more about short term supply outages, such as the intermittent losses of Iraqi production, the problems in SE US, the fact that in the short term supply is only above demand by about 1%, and no new refineries have been built in the US for 25 years.

Still long term oil futures have started to rise from the long term $20 that it had levelled off at, and certainly it is useful to see some movement in various places to look more seriously for other renewable hydrocarbon sources that can be made in an energy efficient manner.

[ Parent ]
So what should we do? (none / 1) (#227)
by claes on Mon Nov 22, 2004 at 09:26:40 PM EST

I guess fixed-rate debt is ok, since the rate is fixed and dollars will go down in value. We should refinance one last time for the full 30 years out.

Expect high-cost housing markets to go down. It may be a good time to move to cash out and move to something smaller. Gas will go up, so public transportation will be important.

Cash or dollar-valued securities are not that good an idea, except for enough to ride out an income interruption. I guess a few kruggerands wouldn't hurt.

Shares of multi-nationals should do better than shares of US companies. Invest in these.

Learn a non-offshorable skill.

Anything else? How do you short the dollar?

-- claes

Short the dollar (3.00 / 3) (#231)
by xria on Mon Nov 22, 2004 at 10:08:50 PM EST

Invest any excess wealth you have in non-US currency and assets, as the dollar falls everything else in the world held in other currencies intrisincally becomes worth more dollars, once the dollar bottoms out, switch back when it is rebounding (it is likely to overcorrect initially, if it goes off a lot).

Probably avoid tieing everything into any single currency. The Euro has already risen quite sharply against the dollar in recent times, so that might not be an ideal choice, unless you expect the dollar to be significantly curtailed as a world reserve currency, as happened to Stirling in the 20s and 30s.

The BoJ seems to be intent on buying dollars in the short term, so the Yen probably isnt a great choice, neither is the Yuan as it is linked to the dollar. In fact any economy strongly linked to the US isn't too good a choice, so Canadian dollar and Mexican Peso (?) are likely to not grow as much as most other currencies.

Of course there lies the dilemma - finding a modern/modernising economy to invest in, that is likely to be not too seriously affected by dollar fluctuations. India might make a decent bet, at least for some. Europe for a more safer store, and finally the multinationals - as they can just keep dollars earned in the US, and use them in the US, and possibly even can pull in foreign currency earnings to swap for dollars once its lower to take advantage of the low price, and invest capital inwardly, building up the US infrastructure of the company, and then exporting finished goods/services on the cheap.

[ Parent ]

Which multinational? (none / 1) (#265)
by Russell Dovey on Tue Nov 23, 2004 at 06:15:27 AM EST

Specifically, which multinationals are:
  • large enough to serve as a reliable investment;
  • mostly uninvolved (directly) in the US economy;
  • free of other obvious baggage (my first thought was Shell, oops.)

"Blessed are the cracked, for they let in the light." - Spike Milligan
[ Parent ]

US involvement isnt too critical (none / 1) (#289)
by xria on Tue Nov 23, 2004 at 12:53:50 PM EST

Just that they arent a US listed company should be fine for this purpose, as they can play around with the way their company earns and spends dollars to minimize the impact. Something like Sony or the like, if you want a tech stock maybe.

[ Parent ]
buy gold (nt) (none / 0) (#302)
by tjw on Tue Nov 23, 2004 at 03:01:28 PM EST



[ Parent ]
Shorting the dollar (none / 0) (#305)
by Captain Segfault on Tue Nov 23, 2004 at 03:55:33 PM EST

How do you short the dollar?

I'd do it by borrowing a bunch of dollars and using them to buy Euros or gold or foreign capital.

[ Parent ]

If shorting the dollar is such a great idea... (none / 0) (#310)
by skyknight on Tue Nov 23, 2004 at 04:32:41 PM EST

shouldn't someone have already done it and exploited said value?

It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Buy intl bond fundsm - don't speculate (none / 0) (#355)
by Cazzi Salati on Wed Nov 24, 2004 at 04:11:13 PM EST

Unless you are an expert, don't play currency speculation.  Just diversify your assets by allocating some portion to an international bond fund or intl equity fund.  If the dollar goes down you make money just by treading water with those investments.

I'd stick with European focused funds but do your own research.

cazzi sala

-- My cat's breath smells like cat food - ralph wiggum
[ Parent ]

You mean well, but this is a bit silly (3.00 / 4) (#236)
by epepke on Mon Nov 22, 2004 at 10:40:39 PM EST

The deficit isn't the debt. The deficit is the change in the debt over one fiscal year. Essentially, it's the first derivative of the debt. You can get figures for the debt from the government here: http://www.publicdebt.treas.gov/opd/opdpenny.htm Put them into Excel or whatever program you have that's better than Excel and plot them as a graph. You can see the level of debt (the height of the graph), the deficit (the slope of the graph), and the rate of change of the deficit (the curvature). The alarming thing is that, not only has the increase in the debt been significant since Bush, but the curvature shows that it's accelerating.

The truth may be out there, but lies are inside your head.--Terry Pratchett


In the short term (3.00 / 2) (#239)
by xria on Mon Nov 22, 2004 at 11:15:09 PM EST

The deficit is more important than the debt - it is the amount of new debt that has to be funded that year, the markets are already adjusted for the existing debt so that is unlikely to have any short term impact.

The scale of the debt compared to GDP is starting to become an issue as well of course, after all the US would be kicked out of the Euro for having such a high level of debt and deficit - it is limited to 70% of GDP, and a deficit of 3% of GDP (US is 75% and 4-5%). Of course Germany has broken the 3% limit the last 2 years, but is still inside the total debt limit.

[ Parent ]

Heh... (none / 0) (#356)
by beergut on Wed Nov 24, 2004 at 06:09:24 PM EST

The deficit is more important than the debt - it is the amount of new debt that has to be funded that year, the markets are already adjusted for the existing debt so that is unlikely to have any short term impact.
For some reason, this statement put me in mind of the chamber orchestra on the Titanic.

i don't see any nanorobots or jet engines or laser holography or orbiting death satellites.
i just see some orangutan throwing code-feces at a computer screen.

-- indubitable
[ Parent ]

Titanic analogy (none / 0) (#357)
by xria on Wed Nov 24, 2004 at 06:21:26 PM EST

Whats more important, how much water is in the ship, or whether the water level is going up or down?

[ Parent ]
Um, no. (none / 1) (#250)
by The Real Lord Kano on Tue Nov 23, 2004 at 02:53:47 AM EST

The deficit isn't the debt. The deficit is the change in the debt over one fiscal year. Essentially, it's the first derivative of the debt.

No. The debt is derived from all of the years of the deficit and the interest. Not the other way around.

A portion of the deficir consists of interest payments on the debt.

LK

[ Parent ]

I understand your confusion. (none / 1) (#286)
by jmzero on Tue Nov 23, 2004 at 10:42:11 AM EST

In this case, "derivative" refers to a mathematical relationship rather than a cause-and-effect one.  You're both right on what debt and deficit are.
.
"Let's not stir that bag of worms." - my lovely wife
[ Parent ]
Apologies for any lack of clarity (none / 1) (#306)
by Coryoth on Tue Nov 23, 2004 at 03:56:20 PM EST

The deficit isn't the debt. The deficit is the change in the debt over one fiscal year.

I was aware of this - you'll note I cite the deficit as being for a given fiscal year, and likewise with the current account deficit, it is cited for fiscal years, or quarters.  In terms of National debt and Foreign debt it is the deficits that are important at this stage rather than the total debt, and thus it was the deficits that I cited rather than the total debt.

In the case of Household debt, again the rate of change year to year is more important, but figures on that are harder to come by, so I instead quoted the total debt, and referenced charts of the history of the debt showing the change.

If the discussion of debt somehow gave the wrong impression, or lacked clarity in exactly what I meant, I do apologise - any suggestions for edits (as I may publish the essay on other boards at a later date) that would add clarity would be appreciated.

Thanks.

Jedidiah.

[ Parent ]

No offence taken (none / 0) (#418)
by epepke on Thu Dec 02, 2004 at 11:44:55 PM EST

I just see "debt" and "deficit" considered interchangeable all the time, and I like to point out that they aren't.

The truth may be out there, but lies are inside your head.--Terry Pratchett


[ Parent ]
Debt and dollars. (1.12 / 8) (#237)
by Sen on Mon Nov 22, 2004 at 10:42:28 PM EST

The debt will mean nothing post-singularity. If these are the elephants in the living room, the cyberthalamus/singularity is the sun crashing into the Earth. Bigger things may be happening here.

Shut up. (none / 0) (#260)
by Nursie on Tue Nov 23, 2004 at 05:53:55 AM EST



Meta Sigs suck.

[ Parent ]
Think of it like this. (none / 0) (#266)
by Russell Dovey on Tue Nov 23, 2004 at 06:18:25 AM EST

Rich people will be more likely to control the seed technology that immediately precedes the singularity.

Therefore, you should worry about economic conditions, even if only for entirely selfish reasons.

"Blessed are the cracked, for they let in the light." - Spike Milligan
[ Parent ]

And one might finance the whole thing (none / 0) (#290)
by Sen on Tue Nov 23, 2004 at 01:47:55 PM EST

Howard Hughes that is. Meanwhile Gates is paying for libraries in ghettos.

[ Parent ]
paying for libraries in ghettos? (none / 0) (#325)
by Russell Dovey on Tue Nov 23, 2004 at 10:25:33 PM EST

The bastard!

"Blessed are the cracked, for they let in the light." - Spike Milligan
[ Parent ]

Personally speaking (2.42 / 7) (#252)
by A Bore on Tue Nov 23, 2004 at 03:15:23 AM EST

I can't wait for the US economy to go down the pan. Then, when my holiday comes up, I'll be able to buy so many more US dollars for my pound, and have a lot more to spend and so do when I arrive on your shores. I remember fondly a family holiday to Yugoslavia a year or two before the breakup.

On the plus side... (2.33 / 3) (#319)
by waxmop on Tue Nov 23, 2004 at 07:39:15 PM EST

When the world financial community loses faith and the US dollar hits the floor like a cheap dress on prom night, all those irritating "Just a dollar" stores will finally go away.
--
Limberger is the angeldust of cheese.
The 4th Elephant: Guest Worker Visas/Immigration (1.50 / 2) (#321)
by nomoreh1b on Tue Nov 23, 2004 at 08:56:11 PM EST

Michelle Malkin and Joe Guzzardi of Vdare have also compared US immigration policy to an elephant in the living room. Whatever your stand is, Bush's guest worker policy promises to be the most radical change in immigration policy the last 40 years.

The budget deficit is actually much larger... (3.00 / 7) (#324)
by dachshund on Tue Nov 23, 2004 at 09:44:55 PM EST

The current US budget deficit stands at $413,000,000,000 in the 2004 fiscal year. This is a record deficit. To put it in perspective, that's 3.6% of the Gross Domestic Product

Actually, this is only the deficit that's officially borrowed from non-government sources. In fact, we're also borrowing an additional $153 billion from the "Social Security Trust Fund", to arrive at a total debt of approximately $568 billion or 4.5% of the Gross Domestic Product.

That extra money comes from the Social Security taxes each and every one of us pays on top of regular income taxes. It's supposed to be saved as a buffer for when Social Security begins to take in less money than it pays out, but it's not being saved at all. Instead, it's being "borrowed" by the government as it comes in, and spent on all of the wonderful things that this government spends its money on.

But no matter how you look at it, it's money we're borrowing, and will have to pay back if Social Security is going to survive the next thirty years. However, because we're essentially borrowing money from ourselves (that is, the government is borrowing money from you and me), politicians don't have to include this in the deficit. Thus, reports of the real deficit are lower than they should be, and this is used to disguise the magnitude of the deficit we're really running, so people don't object when Congress or the President propose new spending or tax cuts.

Alternatives (none / 0) (#361)
by nomoreh1b on Thu Nov 25, 2004 at 06:52:37 PM EST

The US government could simply default on its debt. No government that has ever done that has survived-but what is the point of sacrificing so guys like Bush have a government do use for crap like the latest crusade.

[ Parent ]
Social insecurity has one solution (none / 0) (#382)
by ucntcme on Sun Nov 28, 2004 at 03:49:45 AM EST

Phase it out. it can not survive; it is a government run Ponzi scheme. And there isn't any borrowing money from Social inSecurity; that money goes the same place other tax revenue goes. The idea it is seperate is a fraud perpetrated on you to think it is sacred.

At least if they borrow money through publicly offered and traded securities they are letting people choose to do it. By taxing they are forcing you to pay for it. A minor but significant difference.

[ Parent ]

Nothing fundamentally wrong with SS (none / 0) (#384)
by xria on Sun Nov 28, 2004 at 04:28:43 AM EST

Using conservative figures SS doesnt go bust until something like 2070, and if you believe that you can predict the economy 65 years ahead accurately then you are a fool. All that needs to be done is to tinker with it a little bit so the rate can be changed small amounts ahead of predicted problems, for example the rate could have been raised 0.25% or something over the last few years to build up sufficient surpluses to deal with the baby boomers retiring. Medicare is something else, with the US health spending spiralling out of control due to its structure, you won't get any argument from me it is fundamentally unsecure.

[ Parent ]
Self contradiction ... (none / 0) (#393)
by ucntcme on Sun Nov 28, 2004 at 07:25:44 AM EST

Describes your first statement:
Using conservative figures SS doesnt go bust until something like 2070, and if you believe that you can predict the economy 65 years ahead accurately then you are a fool.

In order to say it will last that long requires the ability to predict that far out. No can do.

One does not need to predict the economy to see the inherent problems with it. It was never designed to pay out. Look at the original implementation. Payout age was knowingly and deliberately set well above life expectancy. Ask yourself why.

Further, it has been modified to allow people to take out that never put in. When my neighbor is a guy who lived in the country less than a year (as a legal immigrant; I've got not problems with that) and is pulling social security to the tune of several hundred dollars a month, I don't need to predict a future economy to see SS has serious, fundamental flaws.

If I may indulge in a bit of word-play, "liberal" estimates place it at 70 years. "Conservative" ones far sooner. And those of us in neither category, even sooner.

Currently, the SS is scheduled to run a defecit as early as 2018.  That's when it must begin redeeming the bonds in the "trust account" for SS. See, the misnomer is that it is all the retiring of the baby boomers. Yes, it is a big effect, but what goes unmentioned is even bigger. By the time you mention, they currently estimate the SS deficit to top 11 trillion dollars. Just when do you consider it going bust?

And no, a .25% increase in the tax rate would not have "saved" it. At a minimum you need a permanent 4.47% payroll tax rate increase. In other words, from 12.4 to 16.87%. Even that may not do it. It would certainly not cover any cost of living increases over the retirement years. Social Security's rate of return is under 2 percent and falling. In other words, it doesn't even keep up with inflation. This is true with or without increasing the tax you have to pay in going up.

Consider this piece:
http://www.socialsecurity.org/pubs/articles/tanner-040429.html

With some snips for the link-unfriendly. ;) :


The Trustees confirm that Social Security will begin to run a deficit by 2018, just 14 years from now, and the same date as in last year's report. Thus, while politicians dithered and tried to pretend the issue would go away, we moved another year closer to disaster. But the truly frightening numbers are found further into the report, and make clear the magnitude of the fiscal train wreck awaiting us.

The figure most cited in the media is the "present value" of Social Security's unfounded liabilities, $3.7 trillion, which represents the amount needed to cover shortfalls after the Trust Fund is exhausted in 2042. An additional $1.5 trillion would be needed to redeem the bonds in the trust fund, for a total unfounded liability of $5.2 trillion, on a present value basis. Present value calculations are an important number for economists and actuaries-they show the amount the government would have to set aside today (assuming it earned standard interest rates) to pay all promised benefits in the future. But, of course, the government cannot set aside $5.2 trillion today. That would be nearly half of our Gross Domestic Product.

So we see the government can not set aside enough money to cover it to 2042. That staggering figure also tells us we can't tax our way out of it either.

So let us continue:


Therefore, a better measure of Social Security's financial crisis is its actual cash deficit: the total amount that its expenditures will exceed its revenue from 2018 on. Measured in constant 2004 dollars, that shortfall is an astounding $26 trillion-$26,000,000,000,000.00.

To put this in context, in 2018, the first year that Social Security will run a cash deficit, that shortfall will be approximately $16 billion, or roughly the equivalent of the current budgets for Head Start and the WIC nutritional program. In another two years, Social Security's shortfalls will nearly exceed those two programs, plus the Departments of Education, Commerce, Interior, and the Environmental Protection Agency. By 2030 or so, you can throw in the Departments of Energy, Housing and Urban Development, and Veterans Affairs. And the biggest deficits would be still to come.

So, will they get rid of headstart and WIC to cover the first year of shortfall? In 2020 will they also cut the Depts. of Education, Commerce, and the EPA (and then some)?  I have my doubts. How then, can they possibly say it will survive another 50 years from that date? How about some perspective.


... in terms of taxes, in the first year after Social Security starts running a deficit, the government must acquire revenues equivalent to nearly $200 per worker. By 2042, the additional tax burden increases to almost $2,000 per worker,

So, I am to believe that me paying an extra 200/year in taxes for the next say 30 years is better than putting that money into an account I own, or paying down my personal debt, or both? I remain unconvinced. So does my financial planner.

<uch of SS's problems do not lie in baby boomer retirement. They lie in a flawed idea. The payout age was deliberately set above life expectancy to minimize payouts. Our extended life expectancy is one of the cheif problems. Not only do we have the baby boomers, but they are going to live longer and thus over time draw out a lot more than was originally conceived. They will be a burden to the system for longer. On top of that, the inflation costs have wreaked havoc with the system.<p> Without major privatization, we have but 13 years before it starts running a defecit. Since the Supreme Court has said (1960) that the government can decide to not give you "your" social security payout (it is prohibited from doing the insurance thing and SS is an insurance if you have a contractual right to getting it) I am under no illusion that somewhere around 30 years after it has started running a deficit, I'm getting anything out of it.

Care to show me, rather than just tell me, I'm wrong? BTW those bonds in the "trust account", are held by the federal government. DOH!

[ Parent ]

CBO outlook (none / 0) (#397)
by xria on Sun Nov 28, 2004 at 08:30:40 AM EST

CBO view of Social Security

Note how they dont really see social security being any fundamental problem, by 2030 they only expect Social security to reach 6% of GDP, whereas they see medicare growing far faster, as well as the national debt repayment if current spending policies are projected into the future.

Social security has relatively easy solutions, either accept the growing portion of GDP as the population ages, or mitigate it by slowly increasing the age of eligibility as life expentancy grows. This approach has already been taken in the UK, and although its not going to be a popular policy, it is accepted as a realistic action to solve the problem.

The fact that the federal government owes money via bonds to the Social Security system for its surpluses is entirely irrelevant, as if they hadnt then they would have had to borrow that money from the private sector, no doubt at higher interest rates. Complain at the government for having high deficits sure, but borrowing from the Social Security surplus before private lenders is an entirely rational choice.

So in the future people will have to pay taxes to pay back the national debt - and hence social security when/if it moves into deficit - well umm, duh, what else do you think has to happen when a government runs up deficits at a faster rate than inflation. Someone has to pay for it.

Note that according to the original way social security was set up it doesnt require any rate of return at all to work, so whether its 2% or 0% is irrelevant - it isnt particularly supposed to hold funds for any period of time, the money that comes in during a year is paid out in the same year. That overall expansion of GDP (and hence revenues) and population creates the increase in funds.

If the amount of population over 65 is growing, then either a greater rate of payment, or a movement of the retirement age becomes necessary, but it doesnt create any fundamental problem. After all if at some point in the future average life expentancies rise to 200, would everyone still expect to retire at 65 unless the way the economy worked changed fundamentally to allow that to be sustained?

An ideal reform would be to create a mathematical model for retirement age - set it at say 80%, 100%, 120% of average life expentancy (whatever is desired) or maybe base it on a percentage of the population that can be retired at any one time (30% or 40%, whatever), and calculate the percentage of average wage to be paid to retirees (40%, 50% or whatever), you should be able to find a % of GDP that needs to be taken to fund, and hence the rate of social security payments that needs to be set to fund that.

[ Parent ]
Elephant or Boogeyman? (2.50 / 2) (#334)
by ucntcme on Wed Nov 24, 2004 at 07:38:05 AM EST

First, a difference in trade is not a debt. A debt is something owed. A trade difference is simply that: a trade difference.

And there are advantages as well as disadvantages to trade "imbalances". Much of the trade differences exist due to causes beyond the borders of the US. Primarily fixed and quasi-fixed exchange rates. A trade deficit essentially means that capital is flowing toward the US. Has been for a long time. Always does when a country is doing well. The better it does, the wider the gap will become.

Fundamentally, the trade deficit is due to everyday America citizens buying more foreign goods than foreign citizens buying our goods. To ask the government to have a hand in changing that is asking for trouble. What could they do?

Well, for one they could place import tarrifs to raise the proce of imported goods. Not a good idea on the whole, but it would curtail import spending. Or would it?

The US is becoming more and more a service exporter. but you don't see fearmongers talking about the surplus in exports of services, no sir. Why? Well despite the tempest in a teacup about offshoring, we maintain a growing surplus in that area. At current growth rates it should offset entirely the goods import in about a decade. The numbers you refer to in the trade deficit only mention goods, they exclude services.

Also, a certain amount of economic power comes with having such a trade imbalance. Woe to countries that offend the American buying public when the buying public realizes what they have.

Further, this goods trade imbalance is a funding the development of higher order economies elsewhere. Even in the failing economies of Europe. As foreign economies develop, they will they will require additional service industries. As it always is, they will largely import these services. And the US is placed in prime position as it is currently and forseeably stands to provide those services. Indeed, it is the US trade imbalance that is supportign the world economy. That's why countries in Asia are desirous of keeping the exchange rates the way they are. They are not competitive in a free flowing exchange rate.

This is why the single largest thing the US FedGov could due to alter the imbalance is to make the foreign goods more expensive by enacting higher and higher tarrifs or other cost increasing mandates. Of course, I am opposed to that.

This is also why any "fall" would be a boon for America, and a problem for the rest of the world. Americans would turn that voracious appetite inward when the costs are similar or better. This would cause a massive "influx" of investment, new companies, and job growth. Keep in mind that Americas productivity is much, much higher than that of Europe, China, and even Japan. We can move quickly.

On the subject of who holds the debt:
Currently, the two largest owners of US Government debt are Japan and China is quite false, and demonstrably so. Perhaps you could show some sources?

The US Public debt is held in two categories. One is public holdings, the other is government holdings. Yes, US government; I don't mean foreign governments (or even state/local).

Of the two the ratio is about 4.4/3.1 public(inlcuding foreign government)/domestic government. This tells us immediately that the largest single holder would be US government --though that should cause concern to stir in people as well. Yes, the government owes itself; nearly half of the debt in fact. I'll let you all stew on that for a moment or two.

Next comes everyone else. Of that 4.4, only 3.9 is marketable. Of that 3.9 the largest share is 2.1 held as notes. Notes can and do change hands frequently and have maximum terms of 10 years (2,5, and 10 IIRC). The idea that a given country holds a substantial part of that is often claimed, bit rarely if ever substantitated. It also begs the question of what difference it'd make.

So what if Japan or China, or even Iran held say half of the t-notes? What can they do with them? They can sell them. They can hold them until they are redeemed and then either cash out or reinvest. Where's the problem? Sell off of bonds? Another so what is coming.

First, some perspective. Only about 551 Billion dollars of the public debt is through federal bonds. Out of 7.7 trillion that is what about 6.5%? We get bond sell-offs quite frequently. last year long bonds saw, IIRC, a roughly 25% above norm selloff rate. It was taken in stride w/o any rises in interest rates.

So of that 551 Billion (As of Nov 22) in bonds, just how much do you think is held by Japan and China? Much of bond investment is actually done in bond mutual funds, and as such is institutionalized and spreads risk over the various bond types. This minimizes selloff effects. And remember, if someone sold a bond, someone else bought it. And nobody is going to buy it at a loss, even if the seller is taking a loss to sell it.

But what if a rise in interest rates as a result? Bear in mind that four years ago (federal funds rate) interest rates were at 6.5%, compared to 1% last year and 2% this year. If rates doubled next year ans then doubled AGAIN the year after we'd be above where we were 4 years ago. How likely is that? Not very.

So in effect, your Japan/China owns and would sell off bonds causing inflation elephant is in fact, a boogeyman.

Now let us talk about the debt as a "record high". Is this a problem? In a way, yes but not the way you and most pundits talk about. It is a problem solely in that it is a representation of lost productivity due to government expenditures over private ones. Each dollar taxed is about $1.60 removed from the economy after conservative cascade effects are calculated.

Now, let us return to the record numbers claim. Again here it is a matter of scaremongering. First, let me state that as a libertarian, I'd like to see the government carry no debt other than times of full-scale war.

That said, the debt is not as bad as it is made out to be. I'll illustrate simply. Let us say I carry a personal debt of 100K. Is this a problem? Maybe. It is if I make 20K/year and this is non-collateralized debt (i.e. credit cards, etc.).

However, if I make 200K/year, this debt is certaily not an issue, especially if it is a loan on my 175K house.

The point? Perspective, again. How much is the budget defecit (indeed the budget) as relates to the GDP/GNP? your figure states 3.6%. Let's go with that. Nah, lets round it to 4%.

Now, is that a problem? We can look to history to see prior rates. Looking at history we see deficit rates upwards of 10, 15, even 20%. Thus taken in that perspective we are not at record highs.

The claim of bigger and bigger as raw numbers is without merit in a growing system. As it is not a zero sum game, numbers must be made relative to have any potential comparison merit.

So the budget deficit is itself perhaps not an elephant. It is an issue, but only due to excessive government spending. Sadly, it is found easier to raise taxes than to lower spending. An elephant? Maybe a baby one at best. Is it one that will cause massive problems? Sadly, no.

As to the US Dollar as an elephant, you pretty much eliminated it as being one yourself. The fact is, as you stated, changes in global currency domination are very slow to occur. IIRC, each time it has happened it happened at a time that the dominating country was weaker than any opposing currencies.

On the oil front, there is a somewhat silent move underway. The transportation industry is already moving to an alternate fuel source, though the one it is may suprise many: Ethanol/Gasoline.

This combination is the single most powerful move being made in the US right now. While we are the alrgest oil consumer, we are also one of the largest oil producers, let us not forget. Why does that matter? For many reasons, only a few of which I'll talk about here.

First, as the largest consumer (by far), small shifts downward in consumption can have far reaching effects. Argentina has shown this on a smaller scale. They've switch to an average 20% ethanol use, and IIRC, cut their oil use by more than half.

Since E85 blends (85% ethanol, 15% gasoline) displace imported oil at a rate of 7 to 1 (i.e. one gallon of ethanol displaces 7 gallons of gasoline), you can begin to see the effects are truly dramatic.

E85 is a technology alredy in place in nearly 4 million cars and trucks on the road in the US today. Unlike dreaming of a mythical hydrogen replacement, E85 is working today. I run it in my Suburban. With the MPG I get of fuel, I (well my wife actually, I drive my Vette most of the time, and she drives the burb) am less dependent on foreign oil than a Prius. My Suburban is fueled 100% by "native" fuel. Why? Do the math. I burn through gasoline at a rate of about 90+MPG. And it is cheaper than the gas I run in the Vette.

That little sidebar is important. It represents one half of the change that will make oil importation actually turn into a declining rate. Ford, DC, and GM are making these engines standard on an increasing amount of vehicles. (And they are better for the air to.) This is important for a couple reasons. One, it will erode the "danger" of a switch to Euros in the oil market. Two, it will lower importation of oil, thus lowering the trade defecit. With the move to E85 usage and the next technology I'll mention we could be fully independent oil-wise inside of 15 years.

The second half of that equation is TCP, and I don't mean Transmission Control Protocol. We have the capability to make oil. With the current prices, we can make it cost competitive even on the low startup scale. Extremely conservative estimates put our capcity to produce light crude at a rate exceeding our current demand by about a factor of 3. Using half of our agricultural waste we can produce our current demand w/o pumping a drop from the ground or importing a single barrel.

Turning this tech on urban refuse would supply another 1.5X our current demand. Couple this with E85's spreading use and it is not hard to see a real transition  not only in our lifetimes, but in the next two decades (if not sooner).

Right now, the government sits on this bit of information. Let Russia, Saudi Arabia, etc. actually start trading in Euros, and watch the government start pushing this tech combination. First by requiring it as new vehicle standards, and second as a product of the EPA and cleanup fields.

This technology has a fast ramp-up time as it is stable, well tested and rather simple.

With the US capable of withdrawing from the oil market as a major demand source, what oil is traded in is less and less important. Thus the Dollars is a boogeyman as well.

Most of what you talk about that could be a genuine issue, is not in the hands of the US government. Foreign governments using fixed/quasi-fixed exchange rates. Consumer spending. These are the greatest opportunities to prevent the probability you mention. Neither of which are in the purview of the US government.

In closing, I find it odd for someone to say that the speculation they just provided is unlikely, and then say that it "won't go away" if ignored. Indeed, I posit that just the opposite is the case. If the government tries to meddle more than it already does, it will precipitate a failure. The high price of oil (which is purely speculation driven at this point) is providing the means to eliminate many of the (unlikely) potentials you list.

When the government gets involved, debt goes up. So if you beleive it a problem, keep the government out of it. That will solve the rest of it. The mentality of "the government can fix it" is the source of at least two of your so-called elephants.

Cheers,
Bill

couldn't get past this... (none / 1) (#336)
by reductionist on Wed Nov 24, 2004 at 08:44:25 AM EST

A trade deficit essentially means that capital is flowing toward the US.

Fundamentally, the trade deficit is due to everyday America citizens buying more foreign goods than foreign citizens buying our goods.

Doesn't the second statement contradict the first?

[ Parent ]

Depends how you look at it (none / 1) (#337)
by xria on Wed Nov 24, 2004 at 09:08:11 AM EST

One way of looking at a trade deficit is that it is a net inflow of capital investment into the country, because it allows companies to invest more in business growth than is saved in the country considered.

http://www.newyorkfed.org/research/current_issues/ci4-13.pdf

You can also look at is as companies being forced to look overseas for investment because people in the country are not saving enough to provide the funds for companies to use to invest.

The trade deficit can be really both things, both an inflow of capital, and/or a net inflow of goods. In both cases it is also a net export of debt, however if it is allowing more investment to take place then this may well be a good thing as the increase in growth may be more than proportionate to cover the interest accrued on the debt.

[ Parent ]

No, it is valid (none / 0) (#343)
by Coryoth on Wed Nov 24, 2004 at 10:44:11 AM EST

The current account deficit an be seen as both consumers buying imported goods and services, or an inflow of foreign capital.  The two are not necessarily contradictory and can overlap. In some ways the differing views of the current account can be useful.  read the start of the Catherine Mann article linked in the article.  She explains it quite well - better than I would manage right now.

Jedidiah.

[ Parent ]

Ethanol (3.00 / 2) (#340)
by xria on Wed Nov 24, 2004 at 10:24:17 AM EST

It will be interesting to see how many people can convert to this - I believe current Ethanol production, while expanding relatively quickly isn't quite going to be able to match the volumes needed if people were to change over wholesale.

http://www.ethanolrfa.org/eth_prod_fac.html

So currently there are 3.5 billion gallons of production, and plans for 4.2 billion.

Compare that to the approx 150 billion gallons of gasoline used, and which is growing approximately 1.6% a year, or faster than the total growth of ethanol production.

It certainly is an industry that could help offset the growing demand for oil, but it isn't really doing a huge amount yet, and it will be interesting to see if it catches on, and if so whether the raw materials can be grow in sufficient quantity to satisfy demand.

[ Parent ]

Two techs; remeber this (none / 0) (#380)
by ucntcme on Sat Nov 27, 2004 at 10:57:13 PM EST

First, you may not realize it but you raised a strawman. I do not claim that ethanol would supplant oil/gasoline entirely. Not yet anyway. To do so would be folly and bad mojo.

First, ethanol displaced gasoline. You mix it. Until we are ready for ethanol fuel cells the ICE (Internal Combustion Engine) will still use gasoline, just less.

Second, to compare todays; production against a full industry using it is also folly. It is still in it's early growth phase, still doubling. Yet it is doubling.

1.6% of 150 billion gpy is 2.4B gpy. Current ethanol production is about 3.9 billion gpy (the link you posted is actually incomplete. I know of several plants that are not listed yet crank out tens of millions of gallons/year).

Currently there is about 755 Mgpy in construction/planning phases, or about half of the demand growth for next year. But again, due to mixing, it is not a one to one comparison. A gallon of ethanol dispalces 7 gallons of gasoline in E85 mixture.

As far as it catching on, it is. California is even getting into it. Every week I get at least 2 notifications that another E85 station has opened. Also, as noted, there are about 4 million vehicles on the road in the US that are capable of using it. In other words, there is already a latent market unlike other "alternatives".

Raw materials-wise we produce enough to do it already. But that is better in use on an alternate technology that I mentioned: TCP.

The first commercial TCP plant is currently (since May actually) producing 100-200 barrels of lt. crude per day (bpd) using turkey offal from a Butterball Turkey plant. Doesn't sound like much, I know.

Yet it also sells a lot of other products as a result of the process, and we are talking about only a single plant.

Further, if you convert that to gasoline at a rate of 22 gallons/barrel that comes out to an increase of domestic gasoline production of about .8 to 1.6 million gallons/year; or about 1.2mgpy on average.

One plant. Now, let us mix it into E85 or E10. If combined with enough ethanol to make E10 (which nearly all of us can run in our cars), then we have produced ~13.3 mgpy E10. One small plant. A plant that is not yet at full capacity. At peak production it wil produce about 500 barrels per day. That will be about 4mgpy of gasoline. From one small plant processing a few hundred tons per day.

It only gets better with E85, or anywhere in between. And the kicker is, for me E85 is cheaper per gallon.

This is why I combine the two technologies. Alone, ethanol is almost a non-starter. Alone, TCP is powerful, but perhaps not enough.

But combine the two....

As I said, our agricultural waste alone would completely supply our oil needs if used at half-capacity. Combine this with ethanol mixing (which in many places could be done on site) and you can actually displace imported oil at a rapid pace.

Also, the TCP technology recycles carbon (as does ethanol) thus, IIRC, not leading to a net increase in atmospheric CO2 (for what it's worth).

It is specifically the combination of these two existing technologies that could eliminate in less than 15 years any importation of oil into the US. Even a reduction of US importation of oil by 10 percent, let alone 25 would send massive shockwaves through the global oil economy.

I'll digress a little more on TCP as it is truly world changing. TCP can all but eliminate the risk of Mad Cow. It allows the resuse of dead cows to supply feed for live cows. The process fully eliminates the prions that cause the disease.

Further, it can be used to process urban waste as well as sewage. In essence, we turn our waste into a power supply and in so doing turn waste collection into a profit making, economy building enterprise. TCP eliminates waste from anything short of radioactive and outputs various forms of products. It even solves the used tire problem. Imagine instead of paying to have your trash hauled away, you got paid for it.

The changes to society are very hard to know, but we can speculate.

These two means of fuel production are very local. That is, they are best utilized local to their production. At most, regional distribution would be ideal. This spreads things out as far as risk and geographical changes. As an area grows, if we use waste as a resource, it's energy needs grow with it (generally speaking) to a significant extent.

If each state was responsible for producing 25-100% of it's transportation+ energy needs, how would the economy shift? How would the government shift? Let me suggest some things.

US Foreign policy

How much different would our foreign policy be if we were energy independent? It depends. it certainly removes oil from the equation. Then, if the government wanted to get involved in say Saudi Arabia, we couldn't say it was for oil. Maybe they woud still do it, maybe they wouldn't. But at least that equation is gone.

Further, it pulls the legs out of many a terrorist sponsoring state. Sure, you can say that China will need and buy the oil instead. But think about the domino effect. What makes you think China will allow itself to be dependent on a resource the US is not dependent on?

The US pulling this off will trigger an export of this technology to other countries. China is already working on drop-in nuclear fission reactors to supply their energy needs. They would see our work and duplicate it. This removes China from the massive oil demand market. Great Britian would follow suit. Probably Canada as well. Europe would probably drag it's feet but eventually follow suit. Third world countries would probably also be early adopters.

This eliminates oil, and to a large extent energy, as an international commodity of high value.

However, if the US acted quickly enough we could be double our export of crude in as little as 6 years to become the world largest crude exporter in the world by far. This would dramatically reverse the trade goods imbalance. indeed, I suspect it'd do so to such an extent as to boost the US economy to record highs in preparation for the loss of oil market dollar prop-up. IOW, by the time the oil market was no longer traded in USD, the dollar would not be poised to drop precipitously, if at all.

The problem is that "big ticket" items like hydrogen cars that are in reality far from feasibility get the attention. On the other hand, while there is all this talk about Hydrogen (which we have to manufacture in unknown but massive quantities[1]), ethanol and TCP are already starting to make real, positive differences today.

So remember, you can't just use current ethanol production as a strawman. When the number of E85 fuelign stations is growing at a rate of 2+ per week, and the rate is accellerating; when the number of E85 capable vehicles on the road is already 4 million and increasing with almost every domestic large SUV sale, the demand for E85 is on a very sharp upward slope. And the supply will follow suit. I estimate we'll double E85 prodcution in less than say 4 years. If you look beyond the snapshot facts, you'll find that the capacity is known to be currently double; it merely awaits the demand to trickle through.

TCP use to produce oil should double probably every 18 months for the next 3 years, and then increase to annual doublings for several years, followed by doublings and triplings in 12-18 month timeframes. This is a very conservative underground movement estimation. With appropriate news and information dispersion, accomanied by a few "big wins" this would be dwarfed by adoption rates that would result from that. But I don't count on those. ;)

[ Parent ]

You are very confused about ethanol/E85 (none / 0) (#383)
by xria on Sun Nov 28, 2004 at 04:12:43 AM EST

Currently there is about 755 Mgpy in construction/planning phases, or about half of the demand growth for next year. But again, due to mixing, it is not a one to one comparison. A gallon of ethanol dispalces 7 gallons of gasoline in E85 mixture.

In an E85 mixture 7 gallons of ethanol replace 7 gallons of gasoline in each 8 gallons of final product (approximately). Ethanol is not a 7 times more effective fuel than gasoline, so it wont be displacing gasoline at a rate much outside 1:1.

Ethanol production

Ethanol, even at the limited amount of use it has seen so far already accounts for 10% of US crop - or over 1 Trillion bushels, so you already have a question of how far it can expand.

Consider in the link above it took 10% of the current US crop to produce 2.81 bg of ethanol, so for ethanol to make, say 20% of the total fuel usage at current usage levels 100% of all current grain production would be used. Does the US really have the spare agricultural capacity for 9 Trillion more bushels of grain to be grown?

Add in the speed isnt all that fast in comparison - according to the Renewable Fuels Association ethanol growth is about 400 million gallons per year per year, where total gasoline usage is up 2500 million gallons per year per year.

Sure its helpful to take the edge off of the increase, but the US is still becoming more and more reliant on foreign oil imports every year, both through increased demand and decreased internal supply.

TCP looks like a very promising technology, however I would imagine it wont really kick off as a major factor until about 2020 as it is still at a relatively early stage of commercialisation, and still under patent, which will slow down takeup of the technology.

Im not sure why you suggest Europe would drag its feet over this technology, after all many European governments have been pushing the incineration of waste instead of landfilling for a while, which is just a less effective version of the same sort of technology as TCP.

[ Parent ]
I think we agree more than you think (3.00 / 2) (#342)
by Coryoth on Wed Nov 24, 2004 at 10:36:28 AM EST

First of all, thank you for your very detailed post, it is greatly appreciated.  Let me deal with some of the points.

First, a difference in trade is not a debt. A debt is something owed. A trade difference is simply that: a trade difference.

It is still often referred to as debt however - I can point you at various respected sources where the term is used if you like.  You are quite correct that it is not strictly debt - I apologise for any lack of clarity.

The numbers you refer to in the trade deficit only mention goods, they exclude services.

I have to contradict you here, the current account deficit covers goods and services.  If you check the numbers at the very bottom, the current account summarises lines 73, 74, and 75, which are  "Balance on goods and services","Balance on income", and "Unilateral current transfers, net".  Services are accounted for.

Well despite the tempest in a teacup about offshoring, we maintain a growing surplus in that area. At current growth rates it should offset entirely the goods import in about a decade.

Again, I'm goig to have to dispute this.  Referencing US Bureau of Economic Analysis releases here and here we see that there is indeed a surplus in services, with figures for the last 10 quarters of (in millions of US dollars):

15,976   16,398   16,332   16,125   12,557    12,153   12,385   13,947   12,166   13,294

Which I would describe as steady, but not growing.  And when compared to the same figures for goods:

-106,033  -121,286  -123,312  -132,241  -137,943  -135,533  -134,635  -139,441  -150,768  -163,580

I struggle to see how the fairly steady service figures an order of magnitude smaller are going to cover the growing goods figures inside a decade.  It might happen, but I can't see any reason to assume that it will.  The trends would seem to point to the opposite.

To ask the government to have a hand in changing that is asking for trouble. What could they do?

Nothing good I assure you.  I'd like to point out that nowhere in the article did I say that it was the governments responsibility to fix things.  If you try this comment of mine, you'll see that I probably agree with you to some extent.  I think the solution is for individuals to take responsibility themselves.

This is why the single largest thing the US FedGov could due to alter the imbalance is to make the foreign goods more expensive by enacting higher and higher tarrifs or other cost increasing mandates. Of course, I am opposed to that.

I'm also opposed to that, as you'll find if you read many of my replies in the threads.  I'm glad we have some agreement.  Tariffs, and other trade barriers will only make things worse, and faster.

This is also why any "fall" would be a boon for America, and a problem for the rest of the world. Americans would turn that voracious appetite inward when the costs are similar or better. This would cause a massive "influx" of investment, new companies, and job growth. Keep in mind that Americas productivity is much, much higher than that of Europe, China, and even Japan. We can move quickly.

I mostly agree here, I think we differ in our beliefs about how quickly the US economy can completely regear itself to deal with the needs and demands of the US public.  I'm guessing at least a year, possibly as many as 5, or, if the government gets involved, 10 or 20.  I think that intervening 1 to 5 years is going to very, very painful. And even when things are reconfigured, it will still take time for that new economy to kick into gear.  Add another 1 to 5 years of "not exactly comfortable".  I think an outlook of  2 to 10 years of rather uncomfortable conditions, with a short period of severe depression is worth worrying about.  Yes the US economy will reconfigure, and sort itself out - that is precisely the "the US would rebound, and may well come back stronger than ever." in the conclusion.  I'm glad we agree on that point.  I wish we could agree on how bad things might be in between.

On the subject of who holds the debt:
Currently, the two largest owners of US Government debt are Japan and China is quite false, and demonstrably so. Perhaps you could show some sources?

Yes it is false, as someone in the comments pointed out, too late for editing unfortunately, it should read "the two largest foreign owners of ..."  Apologies for the confusion.

First, some perspective. Only about 551 Billion dollars of the public debt is through federal bonds. Out of 7.7 trillion that is what about 6.5%?

My error again, if I said securities rather than just bonds, does that help?  In that sense we're talking about $1,380,000,000,000 in securities held in Asia.  That's almost a fifth of  the $7.5 trillion in total US debt.  For a breakdown on that try here - that's $740 billion held by Japan alone, and a further $400 billion in China.  If they decide to move their investment away from the US (and the more the US Dollar declines, the better an option that looks), that's a significant amount of money.

But what if a rise in interest rates as a result?

That is always an option at the disposal of the Federal reserve to deal with possible inflation.  At the moment rates are as low as they are because the US is supposed to be coming out of a recession.  Pushing them back up quickly may strangle the economies budding growth.  I don't pretend to understand the intricacies of balancing that - that's Alan Greenspan's job.  This is still a tender issue.

Now, is that a problem? We can look to history to see prior rates. Looking at history we see deficit rates upwards of 10, 15, even 20%. Thus taken in that perspective we are not at record highs.

Could you provide me some references for when it did actually run that high - the best I can find is this  with figures going back to 1946, and it shows nothing larger than 4.6% of GDP during the Reagan years - the 1946-2002 average is only 1.6%, so I don't see how you could slip any 10% or 20% figures in there.  Are we talking the Great Depression, or prior?

So the budget deficit is itself perhaps not an elephant.

It is large, and in recent history is is even large as a percentage of GDP.  Mostly though the budget deficit is a problem as it effects the current account deficit.  Here's a speech by Alan Greenspan that covers the current account deficit, and points out how the budget deficit is a problem.  If you want more, try reading the Catherine Mann paper linked to in the article, she has a very good explanation.

As to the US Dollar as an elephant, you pretty much eliminated it as being one yourself. The fact is, as you stated, changes in global currency domination are very slow to occur.

That's disingenuous.  I said it has occurred slowly, so that is a possibility.  Yes, in the entire history of modern industrial economies every change in global currency has occurred slowly.  That is, the one time that it occurred, it occurred slowly.  Look for the prior changes and you're heading well back before the industrial revolution when there weren't really any real global currencies, and certainly not fiat currencies.

Take the time to read the linked speech by Greenspan.  He is not saying a change will occur slowly.  On the contrary, he is hopeful, because it is possible that any changes will be slow.  There are absolutely zero guarantees that any transition will be slow, and I have no idea what gave you that impression.

Take a look at the US Dollar - it is not fairing well, and the further it falls, the more likely it is to fall.   What will it take to convince you that the US Dollar might be an issue?  How about the former chairman of the Federal Reserve saying there is a 75% chance of the US having a currency crisis in the next 5 years.  That same article has the former head of research of the IMF predicting the US dollar will fall a further 20%-40%.  Don't like former IMF economists?  How about current IMF economists saying that the US Dollar is in trouble, and the current account deficit is unsustainable.  The Dollar hit a new low today, and the Russians want to convert their reserves to Euros.

On the oil front, there is a somewhat silent move underway. The transportation industry is already moving to an alternate fuel source, though the one it is may suprise many: Ethanol/Gasoline.

I was not aware of this one, and found it to be very interesting reading indeed.  Thank you.  As you say, this has been kept under the hat - all other indicators on US oil dependence were not exactly promising.

Most of what you talk about that could be a genuine issue, is not in the hands of the US government. Foreign governments using fixed/quasi-fixed exchange rates. Consumer spending. These are the greatest opportunities to prevent the probability you mention. Neither of which are in the purview of the US government.

I am glad you recognise that these all can be issues - that was my point: not that doom was nigh, but that we should be aware of in which directions it might lie.  These are issues of concern.  As to the US government - as I said above, I have no expectation for the government to do much of anything.  A large part of the change needs to come from individuals - individuals consuming less, having greater enthusiasm for education and the sciences, reducing their personal debt etc.  The point is that it is unlikely individuals will ever do this if they don't know about the issues.  The biggest thing the US government can do is reduce the budget deficit, thus relieving pressure from the current account deficit.  The best way to do that is to reduce the size of government.  Somehow I don't think you'll be disagreeing with me that that will be a good thing.

When the government gets involved, debt goes up. So if you beleive it a problem, keep the government out of it. That will solve the rest of it. The mentality of "the government can fix it" is the source of at least two of your so-called elephants.

No arguments here.  My aim with this article is to try and get people informed, because that starts o empower individuals to each do what they can in their own way.  I believe the greatest problem is a cultural one, and yes, belief that "the government will fix it" is a part of that cultural problem.

I think it is unfortunate that you read an implied suggested course of action into the article - I had tried to keep things as neutral as possible, and I would suggest that my own views of the right solutions are probably far closer to your own than you might imagine.

Again, thanks for the detailed post.

Jedidiah.

[ Parent ]

Well (none / 0) (#350)
by jolly st nick on Wed Nov 24, 2004 at 02:44:41 PM EST

I'd like to point out that nowhere in the article did I say that it was the governments responsibility to fix things.

I don't know if they could fix things, but they could reign in deficit spending. At the very least this would restore international confidence in the dollar's stability.

[ Parent ]

Ahh a good discussion :) (none / 0) (#381)
by ucntcme on Sun Nov 28, 2004 at 01:54:36 AM EST

Thanks for your detailed reply. Of course I'll have to disagree with some of your numbers. ;)
But before that; thanks for clarifying the use of the term debt. Most readers are unaware of the difference and assume debt as in "something owed". ;)

First, as you are likely aware, the services export numbers include travel expenditures. If I go overseas for a couple weeks, my trip and anything I buy overseas is counted as a service export ("tourism"). Naturally, variations in travel caused by any number of things from fear to hurricanes can have major impacts upon this number.

Also in the services category is transportation of goods. Naturally, as services that do not require material transportation of accompanying goods increases, there will be a levelling effect in appearance as the non-goods related services account for higher percentages of the total factor.

Indeed, as the percentage of "services" that is "intellectual property" increases we will likewise see a similar effect, as these (royalties, license fees, etc.) are considered services.

There may be a disconnect as well. You appear to be talking about the entire BoP (Balance of Payments), whilst I am talking about goods and services. There is a not insignificant difference.

Lemme take a moment to rant about the data. It sucks. They make it difficult to compare years over year when they continually change what they include in each category, and do not retro-apply the changes. They only make retroactive changes no more than a year in the past.

This means that in order to make a comparison of the last 10 quarters as you do above an accurate one, you would have to have access to the data and retroactively apply any changes. For example, at one point goods included royalties.

As if that isn't enough, the BEA often makes odd distinctions as to a given company's domestic vs. foreign status. To put it simply, there are times where goods and services that never leave our shores, or never came from foreign shores are counted as exports or imports.

Again this makes it difficult to compare from time period to time period where the diffrence is more than 9 months. Add to this whether you talk BoP basis, or Census basis. The difference on that alone can be over 20B.

However, if you consider services exported as in "entity not in the US pays entity in the US for services rendered such as programming or royalties", that has been on the rise, and that is what I was talking about. Sorry for lack of specificity there.

Indeed, from 2001 to 2003 the decreases in the services category are wholly accounted for by decreased military service exports (!), US government service exports, travel and transportation. The remaining categories of "private services" and royalties saw increases of about 16 and 19% respectively over that time period. Incidentailly, non-tourism related transportation saw a 12% increase over that time as well.

Overall on the services export, there is a clear shift from tourism based export to private services/royalty type services over the last decade. Indeed, the PS/IP sectors of the services exports went from a little over a third to nearly two thirds. The shift from goods related services is seen in the drop of non-tourism transportation from about 12 percent to around 5-6 percent. Tourism related travel exports likewise dropped from their state of dominance (nearly a third) to barely over a fifth.

The "private services" sector has consistently grown year over year as a percentage of export services.

The growth of that combined non-goods related sector is showing no signs of decreasing, and plenty of signs of increasing. Clearly, the tourism and transportation related sectors have very little left to give. As a result, we will see over the next decade the growth in those sectors appear to explode. I'll bet that analysts/pundits will say it is a "new thing" when in reality it's been going on for the last 12 years. It's just "hidden" because not many people will carry out the deeper anlysis. Including "analysts".

Over the last for years, the rate of increase in the PS sector has doubled. During the recession included indeed in 2001 it was the best performing export services, and one of only two to see growth year over year the other being government services.. The combined rate of increase for the combined PS/IP sector is currently at about 17% year over year. From 1992 to 2003 year over year, the combined sector saw no negative growth. Indeed only the IP half even saw an individual negative growth. Between 92 and 2003 they saw 57 and 62% increases respectively (IP/PS).

That's why I say it is growing. ;)

Over that same period, let us examine the goods portion. Most of the increase in the 2001-2003 period is due to petroleum increases (listed under "inustrial supplies" ... crude and natural gas account for about 60%iirc of the increase) and Automotives. As mentioned earlier, far too often if you buy a Honda made in the US, it is counted as an import, so the automotive figures are very suspect anyway.

Our capital goods import is basically static, but our export has fallen dramatically. In fact, it outweighs the significant increases in exports. This is due to the fact that our capital goods is the largest portion of our goods exports, with "industrial supplies" a distant second.

What this means is that once you take out the petroleum imports and the decrease in exports, the imbalance is not as much of an increase in imports as we are led to believe.

This plays a crucial part in regearing for a more domestically oriented production. The capacity is there, but is becoming less used. This makes ramping up easier should we need to alter our import/export purchasing habits.

Regarding the defecit/debt and Greenspan/IMF. No I trust neither Greenspan nor the IMF. Far to often they make claims not borne out by the data. For example, in the speech you linked, he talks about the defict passing 4% in 2000 as a turning point. Surely he is aware that it was higher than that in previous years. He claims that "home bias" changed as a result of productivity gains. I say BS. It changed because trading in foreign markets became easier and more available to the indidivual or family investor. Furthermore, as a percentage, more people have their money in funds managed by other people who invest in what they feel is best for making money. Thus, the "home bias" never truly existed in the mind of the consumer.

That said, I don't think he said what you think he said in that speech. I took from it that he expects the market will mostly fix itself. He points out how it (going from current account defecit to neutral/surplus) has happened in developed countries since 1980 w/o incident. He points out that the American economy has shown in recent history a resiliency and flexibility not seen before in any economy.

On exchange rates:
"The inability to anticipate changes in supply and demand for a currency is at the root of the statistically robust finding that forecasting exchange rates has a success rate no better than that of forecasting the outcome of a coin toss"

In that he and I are in agreement. Exchange rates have far too much going on to be reliably predicted.

As far as the defecit as % of GDP. Sorry, I can't find/remmebr where I saw the 10% number. Honestly have no recollection. So I'll drop it and go with the 6.x % of the not so distant past.

As much as it pains me as a libertarian to admit, the federal budget, tax revenue, deficit, and debt as percentage of GDP has decreased over the last 5 decades or so. http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2004/01/27/MNG VK4IMQB1.DTL

That is why I don't buy into it being a problem of large scale concern. A historical anlysis shows absolutely zero correlation between defecit and interest rates. Why is that important? Well Greenspan and the IMF believe that the defecit cramps private investment. If that were the case, There would be a clear correlation between the two. Yet there is not. As I said, my problem is the government spending itself. It'd make no difference to me of they had a penny for penny revenue/outlay situation. The high government spending itself is the problem.

Greenspan and IMF have problems inherent in their position and intent (excluding political intents). They are trying to look at too big a picture. They lose the details, and in those details are the things they fail to see. The coming "under the radar" change in the transportation fuel industry; the "cloaked" US Service industry growth; and many others. They suffer from a variant of what I call "Singlenumberitis". They look at too small a number of data points at too high a level.

With regards to getting the government invovled. It was your statement that said US politicans should be talking about it that made me (and apparently others) think that you were appealign to a government solution. On that note, IMF people as well as Greenspan call for government solutions to most things. Indeed, his position is an attempt at a government solution.

Further, during the so-called 'surplus' years, the budget still grew significantly. It has since 1956; the last time it saw any negative growth (and minor at that). When inflation is accounted for, the current debt is not as much higher as they say. Another reason I don't trust IMF/Fed: they are not exactly honest in their comparisons. Of course, if it finally got out that we don't need them they may be out of work themselves. The market is starting to realize this. It will be interesting to watch what happens.

A large part of the change needs to come from individuals - individuals consuming less, having greater enthusiasm for education and the sciences, reducing their personal debt etc.

Consuming less will not solve it, and may only exacerbate it. A small suggestion from one who talks to a lot of people about it, if you don't mind. Don't put it in terms of national or global. Put it in personal terms.

Tell someone to consume less and you get told off.
"It's my money". Tell them to save more and you need to tell them why. National oriented answers don't solve it. Tell them, for example, that a higher savings rate pushes income higher. Don't worry, it does. The more you have in the bank, the more likely you are to switch jobs to a higher paying one. Also the more likely if you are involuntarily unemployed you will wait for a better paying or equal paying one as opposed to the first one that puts money in your account.

I've found that to be effective at getting people to save more.

IMO, and physics is finally backing this up, people should not "think globally act locally' they should "think locally act locally". Granted, the net makes "local" a bit larger of an area. ;)

Yes, we clearly disagree as to how bad the correction will be. I make it part of my life to explore the economy to see the things that are not talked about on TV and by people in positions of Ivory hallness. I predicted the recession successfully and put myself in a position to take advantage of it. I have. I'm better off by far than I was before it as a result. This took years of work.

I look at the things that bigwhigs ignore. I see the shift in services they don't mention. I see the new products being created, the new services, and the likely changes these technologies will have on society and economy. So naturally, I have a more optimistic outlook. The Greenspans, the FRBs, the IMFs, all ignore these things if they even acknowledge or are aware of them.

Of note, if we Americans are spending less overseas we have more to save/invest/spend here. This is where a dramatic shift comes into play. The more sudden and dramtic, the faster the recovery will be.

Well, I have to act locally and go put some food in my belly. This has been good, informative and fun. Hopefully, Ill be able to check back in after dinner.

Cheers

[ Parent ]

Some further comments ... (none / 0) (#386)
by ucntcme on Sun Nov 28, 2004 at 05:51:08 AM EST

OK, belly satiated, brain more functional. ;)

http://www.wsws.org/articles/2000/apr2000/def-a01_prn.shtml

Is an interesting read. It is interesting because today seems to be an echo of it; and it is four years old.

Some salient quotes for the non-link readers:


The latest statistics show that the current account deficit reached an all-time high of $339 billion last year, a more than 50 percent increase over 1998, followed by a record trade deficit of $28 billion for January this year.

This growing trade gap is being funded by the inflow of funds from the rest of the world, sending the US deeper into debt. Net obligations to foreign creditors were 18 percent of Gross Domestic Product (GDP) at the end of 1998 and are now estimated to be more than 20 percent of GDP. In 1997 they amounted to 13 percent of GDP and stood at zero a decade ago.


and


McDonough said the Fed wanted to reduce "excessive demand" while ensuring that consumer confidence was "strong" but not "euphoric". "Therefore, we are tightening monetary policy, with interest rates going slowly up, and we have made it very clear that we will continue that policy until we are successful in achieving our goals," McDonough said.

While offering the scenario of "soft landing" for the US economy on the one hand, this prospect was contradicted on the other by McDonough's assertion that the Fed's goal was to reduce the trade deficit from its current level of 4 percent of GDP to around 2 percent.

This is one reason I don't trust the Fed. The Fed believes it is their job to control how much we import vs export.


Such a turnaround would have major implications for the US economy and according to one recent report would mean a recession. Calculations by the London-based Lombard Street Research show that a cut in the current account deficit from 4 percent of GDP to 2 percent over two years would require that domestic demand grow by only 0.5 percent. Given that for the past three years it has been expanding at around 5.5 percent per annum, such an outcome would mean the US economy "hitting a brick wall".

It goes on to state that the rate hikes they had already implemented didn't deter things.

Again, they were wrong, and on a fairly major issue. The economy did have a recovery, we did go into a recession, we didn't hit a brick wall economically, and the imbalance marches on to this day.

I'll give some reasons why the old world global economics guys have been getting it wrong. They are not realizing the incredible flexibility of today's economies.

The main reason the Great Depression was such a big deal is due to the small variety of industry combined with the somewhat high entry barriers.

Today's world has practically countless products and possibly more importantly, services. As what was yesterday a big ticket becomes a commodity, the barrier to entry lowers. This means flexibility unparalled in known human history.

This is also why China will be the last to stop propping the USD. They are very heavily in an industrial explosion but due to their current regime policies it is of limited scope; much like the US 70 years ago. They do not yet have a broad base of skilled entrepreneurs and high degree of flexibility. Thus, they will do whatever they can to keep the ride going until they do, or at least believe they do. Let us not forget, China is running a trade deficit as well.

But the underlying question is: is a trade defcit bad? History does not say it is.


The trade deficit is not the cause of bad things, but the result of good things in our economy. It reflects an economy ripe with investment opportunities and flush with consumer confidence.

For this reason, trade deficits tend to be pro-cyclical, growing along with the economy, and shrinking during times of recession. It is no coincidence that America's smallest current account deficit in the last 17 years occurred in the midst of the 1990-91 recession.


http://www.cato.org/dailys/09-01-99.html

A good read for more information. Also check out:


Another unfounded worry about the trade deficit is that it will saddle future generations with an unsustainable "foreign debt." It is true that foreign investors own about $1.5 trillion more in U.S.-based assets than Americans own in foreign assets abroad. But about half of foreign-owned assets in the United States are not debt but equity--direct investment in factories and real estate and portfolio investment in corporate stock. And the $1.5 trillion in net foreign investment in the United States is only about 16 percent of Gross Domestic Product, and 4 percent of the net wealth of all U.S. households and non-profit organizations. Net payments to finance our foreign "debt" were less than $20 billion in 1999, about one-fifth of one percent of GDP.

This is also an example of why my prior statement about capital inflow does not necessarily conflict with buying more imported goods. A prime example of this is Toyota building an auto manufacturing plant here in the US. It is counted as an import because the money to build it came from abroad. But it is clearly not a "debt", not something owed. Indeed, it is an asset we did not have before. Foreign automakers employ literally millions here in the US. In plants and buildings counted as imports.

That is one reason why we must get out of this crap mentality that imports are things you buy. Many are, yes. But not all. Sometimes they are places you work, or live (which is reflected in the capital and financial account surplus). And yet another reason to look beyond the publically bandied "figures".

Also, check out this from the CBO:


Although the United States may have the largest negative NIIP in the world, it also has the largest economy against which that investment position must be compared when analyzing the NIIP's effect on economic stability. Furthermore, as of 1998, about half of investment included in the NIIP was equity, not debt. Although a substantial buildup of debt decreases the stability of GNP in the same way that leveraging a corporation decreases the stability of its profits, a buildup of equity has the opposite effect. As a result of foreign equity investment in the United States, part of the increase in profits during economic booms and part of the decrease in profits during recessions fall on foreigners rather than Americans, and that tends to moderate swings in the business cycle.

Some people worry about a more extreme version of instability in which investors suddenly attempt to pull their funds out. That happened recently in a number of East Asian countries and earlier in several Latin American countries. The risk of such capital flight for the United States is very low, for at least two reasons. First, the U.S. capital market is much larger relative to the world market than are the markets of countries that have experienced such capital flight. Consequently, the scale of capital flight required to cause the same level of disruption to the U.S. economy would be much larger relative to the world capital market and less likely to occur. Second, capital flight usually results from investors' fears of losing their money. Those fears usually arise either because the country is highly leveraged and having difficulty paying its debt as a result of slower-than-expected growth or because the country is trying to maintain an overvalued exchange rate for its currency that investors fear cannot be sustained. Neither condition applies to the United States.

Restricting trade to reduce the current-account deficit (with the intention of preserving economic stability) might itself decrease the stability of the economy. As a result of the free-trade policies that allow the deficits to develop, part of the increase in demand for goods and services during economic booms and part of the reduction in demand during recessions falls on the foreign suppliers of U.S. imports and their employees rather than on their U.S. counterparts. Other effects can go in the opposite direction; for example, part of the drop in income during recessions in other countries will fall on U.S. exporters to the countries in question. Nonetheless, the net effect of free trade on average is likely to be more stable GDP, GNP, and employment. The reason is that the total sales of a firm to several countries tend to be more stable than the sales to any one country--a benefit of diversification.

It also speaks to the lack of instability or "elephant" of the current account defecit. Remember that along with the trade deficit a financial surplus exists. It pretty much balances itself out.

http://www.stlouisfed.org/news/releases/2001/04_10_01.html
http://www.newyorkfed.org/aboutthefed/fedpoint/fed40.html

Given that current imports are about 15% of GDP and exports 10%, the picture is a little clearer, IMO. Given our current rate of crude importation, you can see a tremendous opportunity to balance the equation by decreasing import of crude.

http://www.freetrade.org/pubs/pas/tpa-002.html
is a good primer for the vagaries of the trade imbalance wars. Also you'll find there:
"...every recent U.S. economic expansion has been accompanied by an expanding trade deficit."

Note that the recent recent saw a decrease in the annual trade defecit. Thus the assertions about trade deficits, recessions, and growth still hold.

On the strength or weakness of the USD.

Much of the weakening of the USD is due to reserves of Euros being purchased by other countries. Why is this happening? Some say it is due to the trade imbalance. I say bollocks. And I am not the only one. It happens because of fixed Euro exchange rates making it attractive. Astute students of history will recognize a distinct familiarity with the late Bretton Woods system (long may it rest in peace). The US government can in fact make a change to counter any significant move in that direction.

Tax cuts.

Tax cuts increase the attractiveness of the US as an investment place. For example, eliminating capital gains would likely cause a significant increase in foreign investment, and thus demand for USD. Likewise letting the AMT expire and die it's natural death would likewise strengthen the dollar. So, too, would making the tax cuts permanent. I am hopefull and somewhat expectant that one or both of these will happen in the next couple years. If so, watch for the resulting increase in strength of the dollar (Ceteris paribus).

[ Parent ]

This may get long... (none / 1) (#407)
by Coryoth on Sun Nov 28, 2004 at 10:49:16 PM EST

Well you've certainly provided a lot of information (though a few links to some sources would have been nice).  Given the sheer volume, before trying to answer points, I thought it would be prudent to attempt to summarise the general thrust of your arguments.  Please correct me if I have misinterpreted you.

(1) Growing services exports, particularly in the areas of intellectual property (Royalties) and Private Services, will rapidly close the current account deficit.
(2) The trade imbalance of goods is primarily oil imports and a decrease in goods exports.
(3) Economists claiming that there may be issues ahead are simply not analysing the data correctly.
(4) Budget deficits don't really matter, and we've carried current account deficits before too, so they aren't as important as I make out.
(5) The current slide of the US Dollar is not for any of the commonly cited reasons, but rather because the currently stable Euro offers the opportunity to make gains.

I'll try to discuss these points as best I can, dealing with specific points you raise where possible.  If you feel I've left something out, please let me know.

(1) Service Exports.

Exports in services are indeed increasing.  I was unable to get data going back to 1992 as you quote, but instead managed data from US Bureau of Economic Analysis going back to 1995.  You've claimed this data is innaccurate and unreliable, but if you can't cite a more authoritative source then any speculation as to how much the data is out by is just that: speculation.  Be that as it may, I was curious about your point, so I put together all of the data that seemed relevant and did some quick charts.  You can find the results here.  I apologise for the primitive quality, but I'm not much of a spreadsheet user (I prefer Mathematica of Matlab for most of my plotting needs - but have neither on this computer currently).  It should suffice to give the idea.

As you said, exports of services are increasing, and particularly exports of private services are increasing, as can be seen in the first chart.  There is a reason I have figures for the balance on services however.  The second chart shows the trend on imported services, which is also increasing.  That is to say, the increase in exporting services is a global trend.  It matters little if the US increases its service exports if the rest of the world increases their service exports to the US faster.  If we then look at the fourth chart we can see the balance on services to see how the US compares to the rest of the world.  Aside from a few anomalous points, the general trend in total services is down.  That is, while US service exports are increasing, the US is importing more and more foreign services at a faster rate.  It is worth noting the rise of private services - particularly ovr 1998 and 1999 with the tech bubble.  Sinch then, however, on balance private services have remained static.  This is representative of the US getting into the new service economy faster than the rest of the world, but everyone else now beginning to catch up.  Royalties do show an increase, but it is marginal.

A look at the third chart show how marginal all of these increases are in relative terms.  Yes, service exports are increasing, but so are goods exports (albeit slowly).  In comparison to the rate of increase of goods imports these increases are simply dwarfed.  A look at the fifth chart, showing the balances of goods and services, shows that relative to the imbalance in goods, any gains in services are completely negligible.

I fail to see how, without a change in consumption of imported goods, services are going to have any significant impact on the current account deficit.  If goods imports halted their current increase, and service imports likewise remained completely static, both of which are ridiculous assumptions, the current rate of increase in service exports would still take over 5 years to close the current gap. That's 5 years completely ignoring the fact that imports of services are increasing at a faster rate than exports - following those trends the US will soon be running a net exports deficit in services as well as goods.

(2) Oil, and decreasing goods exports.

First of all, as the charts linked to show, exports of goods are increasing, they are simply not increasing at anywhere near the same rate as imports of goods.  More specifically you state

Our capital goods import is basically static, but our export has fallen dramatically.

Yet I'm failing to see that born out by this US Census Bureau report which very clearly shows that capital goods exports are increasing.  If you could cite the source which shows a decrease in capital goods exports I would be appreciative.

With regard to oil, you point out that

Most of the increase in the 2001-2003 period is due to petroleum increases (listed under "inustrial supplies" ... crude and natural gas account for about 60%iirc of the increase) and Automotives.

Yet referencing Import by Category and Oil Imports both from the US Census Bureau, it can be quickly seen that oil accounts for 31% of Industrial Goods imports by value, and accounts for only 36% of the increase in Industrial Goods imports - which is to say, the increase is roughly proportional, and accounts for a small proportion of the total increase.

You go on to say:

As mentioned earlier, far too often if you buy a Honda made in the US, it is counted as an import, so the automotive figures are very suspect anyway.

Now I'll be the first to admit that there are limits on the accuracy of such statistics.  However, unless you can provide an authoritative source than can provide verification, and give an idea of the maginitude of the error, such claims of inaccuracy are idle speculation, and certainly can't be used to altogether dismiss valid points of concern.

That is, I fail to see how oil is having the impact here that you describe (your recalled statictics would seem very inaccurate).  Instead it would seem that oil is simply another contributor amongst many to the growing goods imbalance.

(3) Economists are just wrong

This is a hefty assertion to be making.  I am not, in any way casting doubt on your own qualifications - which are probably far better than mine (I am in fact a math Ph.D. rather than economics).  However, you are claiming Alan Greenspan, the IMF, Paul Krugman, Paul Volcker,  Maurice Obstfeld, Kenneth Rogoff, Catherine Mann and many others are all wrong in their analysis.  These people are all eminent economists, and in the case of Greenspan and the IMF they have a small army of people to do the deep analysis into all the dark corners.  Claiming that they have all missed the boat is a hefty assertion that requires significant justification before I will readily swallow it.

To back up your point you cite some points that you claim are errors in Greenspan's speech:

For example, in the speech you linked, he talks about the defict passing 4% in 2000 as a turning point. Surely he is aware that it was higher than that in previous years.

Yes, it has been slightly higher (though not much) in the past, but i you would take the time to read this paper, you'll find it hasa a very reasonable explanation for why the previous deficits were able to be carried, yet the current one may well be unsustainable.  I would suggest that Greenspan is well aware of previous deficits, but is also aware of the differing factors bearing on the current one.

He claims that "home bias" changed as a result of productivity gains. I say BS. It changed because trading in foreign markets became easier and more available to the indidivual or family investor.

Is purely subjective.  I see no reason, on facce alue, to believe one explanation over the other.  You provide nothing to back up your assertion however.

You then go on to agree with those aspects on Greenspan's speech that support your own line of reasnoning.  I, however, forward to you the possibility that, by necessity, Greenspan is very cautious in any predictions.  Were he to state, in a speech, that serious trouble is highly likely, markets would panic.  Instead, he tempers his speeches.  Yes, it is quite possible that the situation may be self correcting in manner that causes only a very small amount of trouble.  The fact that this is possible does not alleviate the need for concern over these issues.  I've never claimed that trouble was unavoidable, merely that it is a distinct possibility.  To refute so many respected economists and claim that trouble is all but impossible - I really do think you need some remarkable evidence to back that.

(4) Budget deficits don't matter

You claim the budget deficit is unimportant, and that we've had previous current account deficits of almost the same magnitude in the past, and so none of the current issues are any significance: we survived in the past, so we will again.  First, I would say that that is faulty logic.  Second, I would ask you to read the articles and papers cited.  Several of them have good explanations of the effects of budget deficits on the current account deficit: it greatly exacerbates the issue, and without shortening the budget deficit the current account will only get worse.

Further, some of the cited articles have good explanations of reasons why previous current account deficits may have been carried successfully, but why the current gap may prove unsustainable.  Unless you care to actually address those issues directly, you're just using faulty logic to arrive at an invalid conclusion.

The fall of the US Dollar

Again, you make an assertion running counter to almost every quoted economist on this issue, but provide little more than rough opinion to back this.  The current account deficit is large.  There are obvious reasons why that puts downward pressure on the Dollar.  Historically large current account deficits almost always cause a fall in the home currency of the country carrying the deficit.  Yes it is possible to carry a deficit without such ill effects (the US has for some time) but there are usually other factors propping up the home currency when this happens (such as the US as the global reserve currency, and China and Japan buying up massive amounts of US securities in an attempt to keep the Dollar up).  Once the current account gets too large these props snap and the local currency falls.  The US current account deficit has reached almost 6% of GDP.  That is huge.  The fact that China is slashing its holdings of T-Bills, and that Japan is now considering it is a pretty clear sign that the props are not holding.  Everything is, so far, following the expected pattern of a currency losing value as a result of carrying to large a current account deficit.  If you have reasons why all these factors are irrelevant, and why all major commentators are wrong, please give them, I'll be happy to listen.

Miscellaneous points

Let me, finally, address a few miscellaneous points that didn't fit into the general arguments above.

With regards to getting the government invovled. It was your statement that said US politicans should be talking about it that made me (and apparently others) think that you were appealign to a government solution.

Sorry if you misinterpret me, but this is a political issue, and I don't believe people will be informed of it unless it is discussed in political circles.  I am merely calling for wider discussion of these issues.  At the same time, I was trying to make a side point that so much of US politics has been reduced to pointless partisan bickering over non-issues that real issues are getting ignored.  There are some aspects of this that government can effect - the budget deficit, which is putting massive pressure of the current account, is at least one.  I would have thought that you would be responsive to a call to end the false dichotomy of Repubican/Democrat and instead discuss the issues, as this would help open the floor to third parties, particularly the Libertarians.

This plays a crucial part in regearing for a more domestically oriented production. The capacity is there, but is becoming less used. This makes ramping up easier should we need to alter our import/export purchasing habits.

You're going to need to convince people trained in  IT to go and work on shop floors.  You're going to need to get the economy moving in the right direction to reopen old factories and build new ones.  Economies tend to move somewhat slowly in those respects - particularly in giving enough financial incentive to convince people to go back to what had previously been a failing enterprise.  I'm not saying it won't happen, I just don't see how it can happen on the timeframe required.  The US Dollar is falling right now.  The Chinese seem to be getting out, the Japanese may follow.  Serious consequences may be 6 months away.  Are you telling me that the entire economy can be sufficiently regeared and refitted to cope with the suddenly changing demands in a mere 6 months?  Especially when few are facing up to these issues in the US yet?  I applaud your optimism, and hope it isn't misplaced.

Conclusions

And now lets turn the issue around, and let me present the main thrust of my argument.  The current account deficit is large, and growing.  Despite the fall of the Dollar over the last 2 years the ballance in goods has blown out, and the balance in services is certainly not growing significantly, and isn't going to have any impact on the total deficit even if it were.  At the moment the current account deficit is almost 6% of GDP - for almost any country in the world that would cause the onset of crippling depreciation of the local currency, and rampant inflation at home.  Certainly it looks very unlikely that the current account deficit can continue to grow.  Therefore it must change direction.  That change in direction is either going to come from structural change, or a rapid correcton.  I am claiming that the possibility of a rapid correction is worth considering, and trying to protect against via whatever means are available.  You seem to be claiming that a rapid correction is all but impossible - yet you haven't said why it cannot happen.

Jedidiah.

[ Parent ]

Deficit (none / 0) (#373)
by nomoreh1b on Fri Nov 26, 2004 at 08:00:38 PM EST

What matters is the _net_ trade deficit. Even with the surplus in services, the US trade deficit is grossly unsustainable-particularly when you figure in that stuff like heroin and cocaine figure prominently among US consumer imports.

[ Parent ]
Government spending does not take from economy (none / 1) (#412)
by Karl Rove OBrien on Mon Nov 29, 2004 at 05:49:58 PM EST

Tax money or bond money, either way the money is spent, and goes into the pockets of people who in turn spend the money again. The money does not disappear into some vault outside of the economy. The money goes right back into the economy. The myth that taxes somehow "take" something from the economy is just that -- a myth. Whether the money is used to pay off bonds, or spent, or banked (and invested by the bank), the money still goes into the economy either directly or indirectly. While it is possible for taxes to be so high as to discourage productivity, taxes in the U.S. are a long way away from that point.

Your numbers are wonked also. The 7.5 trillion dollar deficit is, according to tbe Bureau of the Public Debt, divided between approximately 3.1 trillion in debt owned by the Social Security Trust Fund, and approximately 4.4 trillion in debt owned by the public in the form of bonds and treasury notes. Of that, the Chinese hold approximately $180 billion, and the Japanese own approximately $720 billion. I.e., between the two of them they own approximately 25% of the outstanding federal debt held by the public.

The Chinese dropping their Treasuries would hurt, but would be recoverable. The Japanese dropping their Treasuries... now THAT would hurt. My rough estimate is that the U.S. Treasury would need to raise bond yields to 15% or more or risk defaulting on payment of current bonds (bonds come due almost every day, what the Treasury does is sell new bonds to pay off the old ones), which in turn would quadruple debt service costs -- indeed, would make debt service costs be unservicable by current government revenue.

So indeed there is an elephant in the living room, but it is Japanese, not Chinese.

Orwellianly Yours,
Karl R. O'Brien, Ministry of Truth
(On detached duty from Ministry of Love)
If you want a picture of the future, imagine a boot stamping on a human face -- forever
[ Parent ]

Russia (3.00 / 2) (#338)
by xria on Wed Nov 24, 2004 at 09:26:55 AM EST

The Russian central bank is looking at moving away from the dollar more apparently:

http://www.nytimes.com/2004/11/23/business/worldbusiness/23cnd-dollar.html

I've heard speculation (none / 0) (#349)
by jolly st nick on Wed Nov 24, 2004 at 02:41:25 PM EST

this was a bit of tough talk meant to restrain the US administration from taking on Moscow over Ukraine by threatening to become the straw that broke the camel's back with respect to dollar valuation.

I don't know how credible this is, but we are in a very precarious position.

[ Parent ]

Russia has been (none / 0) (#352)
by iasius on Wed Nov 24, 2004 at 02:52:43 PM EST

shifting its reserves from dollars to euros for two years now. Back in 2002 more than 90% of Russian reserves were dollars, now it's down to 70% with a corresponding increase in euros.
The statement may have been meant as a way of influencing the USA, but it's really a 'threat' of Russia continuing to do what it has been doing for some time now.


the internet troll is the pinnacle of human evolution - circletimessquare
[ Parent ]
Makes sense anyway (none / 0) (#354)
by xria on Wed Nov 24, 2004 at 03:01:18 PM EST

After all much of Russias oil sales are to Eurozone countries, and is a fair part of their exports, so holding Euros that they are getting anyway is just a reasonable course of action with the dollar not being so strong.

[ Parent ]
US Net investment profile (3.00 / 2) (#339)
by xria on Wed Nov 24, 2004 at 09:43:54 AM EST

Interesting graph in the following article, showing how the US is attracting net investment.

http://www.epinet.org/content.cfm?id=1825

You might think this is a good thing, and it can be in certain instances such as emerging economies, but mostly it is being caused by countries such as China and Japan having their government try to resist their currencies rising against the dollar, they buy large amounts of dollars and US treasury bills and bonds to inflate the price of the dollar.

Of course doing this opens them to the risk of what is currently happening - the dollar falls anyway despite their actions, which devalues the stock of dollars they are holding in real terms. With it being suggested that the dollar needs to drop 40% in real terms (from the article), this effectively would mean a $200 billion loss in assets for both Japan and China. It could well see China unpegging itself from the dollar (no doubt a good thing in the long run).

Damning against Bush (none / 0) (#360)
by nomoreh1b on Thu Nov 25, 2004 at 06:42:33 PM EST

What struck me was how the rate changed rather dramatically after Bush's election.

[ Parent ]
And that means what, exactly? (none / 0) (#387)
by ucntcme on Sun Nov 28, 2004 at 05:53:53 AM EST

If you look at all the numbers, you'll see that the economy was starting to change dramatically as early as 1998. The clues that we were bound for a needed recovery were there for those who saw it.

For example, Americans travelling abroad decreased year over year from 96 to 99 and picked back up in 200 to tank again in 2001. Travel abroad is often the result of people having money to spare. In my experience most people do not charge a European vacation (not even if it's a National Lampoon movie ;) ) for example. The rate of change in goods import decreased during the same time. 97-98 saw a drop in goods exported. 95-96 saw a drop in the rate of export increase (goods).

One of the indicators of a correction, IMO, was the sudden surge in trade deficit. This is because it was financed by a tremendous influx of investment; primarily in stocks. Reason tells me that when a significant jump based on speculation (i.e. the stock market) occurs, a correction is imminent. Turns out I was right. Now I need to perhaps do some historical anlysis to see if this holds true in prior corrections/recessions.


[ Parent ]

Bush's role (none / 0) (#402)
by nomoreh1b on Sun Nov 28, 2004 at 01:07:55 PM EST

You can argue that things started changing before Bush assumed office. However, Bush's policies have done nothing to improve the situation.

[ Parent ]
Dollar weakness, Euro strength (3.00 / 2) (#344)
by xria on Wed Nov 24, 2004 at 11:04:18 AM EST

One possible outcome of the dollar continuing to weaken, is that it could lose its place as the global reserve currency:

http://www.globalpolicy.org/socecon/crisis/2003/10almightyeuro.htm

Although the Euro has some weaknesses structurally as mentioned in the article, it is growing fairly rapidly at the expense of the dollar. The economist tends to agree:

http://www.economist.com/agenda/displayStory.cfm?story_id=3421877

Basically one solution they propose is for americans to stop spending so much, and to save more. Consider that US savings have fallen from 12.5% in 1981, to a measly 0.2% this September. Of course consumer spending has been the thing keeping the US economy afloat, so the government probably doesnt want to interfere.

It is certainly interesting when the Economist is able to compare the finances of the US Government to that of a Banana republic anyway.

Not looking good (none / 0) (#346)
by Coryoth on Wed Nov 24, 2004 at 12:32:38 PM EST

I was hoping to publish this article at this, and a few other message boards (it went up on Free Republic this morning) and see if I could rally some concern for the possible dangers.  I didn't really expect much to be happening for a while.

In the days since this article was published here the US Dollar has dropped to a new record low pretty much every day.  Alan Greenspan has given a speech citing real concern over the current account deficit and the state of the Dollar. China has pretty much bluntly refused any revaluation of the yuan.  Russia has said it wants to move its reserves to the Euro.  And George Bush has had something to say about the state of the US Dollar (mostly just that he wants a strong one) - something this article specifically said was unlikely.

At least as far as the British press go, we've seen articles about the dollar and or the US current account deficit pretty much daily on BBC Online, and a number of articles in the Economist specifically on these issues.

But don't worry, there's nothing to worry about.  The economists and the press are just scaremongering alarmists.  Nothing bad could ever happen to the US.

[ Parent ]

Would it be so bad? (none / 0) (#358)
by JanneM on Wed Nov 24, 2004 at 10:23:02 PM EST

Longer term, would a shift of "reserve currency of choice" to euro - or to a basket of the largest currencies - really be all that bad? From the poiunt of needing a reserve currency, you want something that is very stable, and it is quite possible that the euro (backed by a larger economy) could give actors more stability than the dollar currently does. Not mentioned here, but the dollar has a bit of a crisis of confidence on the small scale in many parts of the world, due to the large circulation of counterfeit bills.

And for the US as well, a shift may be beneficial in the longer term. It would make it a lot harder to outspend your resources, aqnd while that can become more or less painful in the shorter term (depending on how rapid the adjustment becomes), it would lay groundwork for a more stable economic situation longer term. A major reason Sweden has a fairly good economic outlook (including stuff like  a revamped, long-term sustainable pension system) is because the deteriorating monetary situation finally forced everybody's hand and caused some real - but painful, and otherwise politically impossible - changes.

A neat idea longer term would be a "synthetic" currency, defined as a basket of the largest traded currencies - the dollar, euro, yuan and the yen. The proportions in the basket would be proportional to the economic activity taking place using each of the currencies. That would insulate people needing a reserve currency from the vagaries of a single economy, and would isolate each currency from some of the drawbacks of being the hoarded one. Just an idea, and perhaps not very workable.

---
Trust the Computer. The Computer is your friend.
[ Parent ]

In the long term its almost required (none / 0) (#359)
by Coryoth on Thu Nov 25, 2004 at 02:26:56 PM EST

The whole thing has been like a big gme to see who is willing to pull out first and bring the whole thing down on themselves.  This has been to US benefit, but really, the whole thing is hollow and is going to have to burst eventually.  

The US has abused the Dollar as a global currency, to the point where without it their economy would collapse.  Which is not to say that fundamentally the US economy is rotten - quite the reverse, one would have every reason to believe they could have an extremely strong economy.  The US most likely will have a very strong economy after any collapse.  It's just the transition that will be painful, and transitions take time.

The longer things go without it all collapsing, the more painful and swift any collapse will be.  The issue is not preventing it from ever happening, it's getting started on the transitions early, before the pain kicks in, trying to make sure the actual fall is as slow and measured as it can be,  and trying to set up some padding near the bottom for when you get there.

Jedidiah.

[ Parent ]

It's happened before (none / 0) (#390)
by ucntcme on Sun Nov 28, 2004 at 06:32:40 AM EST

We've seen the articles about a weak dollar and large US trade deficits before. For over two decades that bogeyman has been picked up and waved at us. Why is this time any different?

It isn't.

[ Parent ]

Sigh. (none / 0) (#415)
by Coryoth on Wed Dec 01, 2004 at 06:04:21 PM EST

If you had actually read the links and considered the discussion you might see why it is different.  I did not claim that a current account deficit is a fundamentally bad thing - in fact I gave reasons why it may be a good sign.  I then tried to explain the issues with the current situation.  Most particularly I cited this paper which very reasonably explains why previous fears proved unwarranted, and how the current situation differs from those previous situations.

From another perspective though, the attitude of "its been alright before, so it must be alright this time too" when dealing with something that has steadily gotten worse since previosu warnings is far from sensible.  I tried to deal with this is previous posts.

Jedidiah.

[ Parent ]

Not a zero sum game (none / 0) (#388)
by ucntcme on Sun Nov 28, 2004 at 06:27:08 AM EST

The USD vs. Euro argument is missing several key components. Namely, that the European economy simply isn't that attractive. High unemployment, low ROI, stagnant/flat "growth" of the economy, and the fact that as percentages of their GDP, most (significant) European nations have higher budget defecits, higher budgets, and so on.

This is one reason I've stated that the Euro fad is mainly due to being able to buy USD at one rate and through Euro conversion sell them for a profit, a la gold during the ending years of the Brent Woods system.

It is certainly interesting when the Economist is able to compare the finances of the US Government to that of a Banana republic anyway.

It'd be informative if they did it accurately. it is interesting that they are seeing the comparison to Bretton Woods as well. Not that I'd consider Japan and or China to be economic "banana republics".  For your edification here is what a "banana republic" is:


A small country that is economically dependent on a single export commodity, such as bananas, and is typically governed by a dictator or the armed forces.

Neither Japan nor China qualify for that.

The linked article from the Economist gets so many things wrong it is laughable.

Regarding the globalpolicy.org article, yes it points out some structural weakenesses, but there are other weaknesses of the Euro that are far more fundamental.

First, the USD became the currency of trade because of the economic strength of the US, not because of the dollar, or because the dollar  itself was better than gold or the Sterling Pound. As the article mentions, one of the requirements to be the global currency is a strong economy capable of bailing out wholesale other countries. Remember that America bankrolled the reconstruction of Europe and Japan after WWII, as well as England. Europe is having a crapper of a time trying to bankroll itself.

Without massive new-cloth changes to the EU and it's member countries, the Euro will not be able to do that, as the EU is and will otherwise be incapable of performing the likely bailout of China. As I mentioned above, the US economy is much stronger (even with a weakend dollar!) than the EU is. Without that crucial piece, the EU can not become the dominant currency.

Secondly, as the article noted the dominant currency needs a timeline of the backing nation's stability for the currency. Here, the EU and the Euro suffer from still being infants. The new-cloth changes needed in EU governance and EU member nation governments and economies needed to provide the aforementioned economic might will introduce a lot of instability. This would have the effect of pushing adoption of the Euro as the dominant currency.

Couple these with the ease of the US government's ability to strengthen the dollar, and Asia's dependence on the dollar being strong, and the Euro will not become the dominant currency for many years to come, if at all.

However, the article has many flaws related to trade imbalances, and they show a lack of understanding of trade accounts, and capital and financial accounts. For details, see my other replies. Their fundamental mistakes in this regard tarnish the entire article and nearly discredit it. Enough so that even though they got some things right with regard to the problems the Euro faces, I'd still not use it a credible source, personally.

Cheers

[ Parent ]

Point being (none / 0) (#391)
by xria on Sun Nov 28, 2004 at 07:04:05 AM EST

That the wholesale replace of the dollar by the Euro as the defacto global currency is unlikely, but the current move away from the dollar regardless of this fact show how strong the sentiment to get out of dollars in the long term is.

It seems likely to me that over the near term a lot of countries are likely to change their reserves from 60% Dollars, 30% Euro, to a much broader range of major currencies, especially as China and India grow economically more powerful and hence stable. Yen, Sterling, Yuan, and on local levels maybe even Australian and Canadian dollars, plus Brazilian Real, South African Rand, maybe the Saudi Riyal, and others might become more used for reserves.

If each country did something like this, so maybe 25% of their reserves matched their import/export profile, 25% in the strongest local currency, and 50% in a mix of major world currencies in varying proportions, it would seem to make everyones reserve holdings much more stable that relying on the strength of a single currency, or even two, however large the economies they represent.

Of course the effect of this would be to significantly reduce the demand for dollars around the world, by around 50% as an estimate, which would lead to a large surplus of dollars in the US, likely causing inflation, partly caused by a drop in the dollars real weighted value.

By the way if you didnt understand why the economist was comparing the US to a banana republic, the rational is the US economy is being propped up largely by the export of debt to other countries, the US is the banana republic, not China or Japan in their rhetoric.

Whether or not you agree on the analogy, the level of debt both internal and external the US is accruing is hard to parallel in historical terms, or sustain in even the medium term. Remember the US debt has grown 50% in size since 2001 when Bush took charge, even though inflation is only running at a bit over 2% in that time, which means the vast majority of that increase was in real terms.

Asian dollar prop at an end seems to be growing consensus

[ Parent ]
deserving of reiteration-the 4th element (none / 1) (#368)
by nomoreh1b on Fri Nov 26, 2004 at 12:25:15 PM EST

The demise of the New Deal reforms--combined with a cheap labor immigration policy has wammied the American middle class. Issues like the rise of India and China, trade and governmental deficits, and the demise of the various trade arrangements are important here. However, it is US immigration policy that profoundly affects the bargaining position of US workers--particularly less skilled workers(who complete directly against Mexican illegal immigrants) and technical workers who have been affected by specific programs of corporate sponsored immigration(H-1b and L-1).

Mass immigration as it has been practiced the last 40 years in the US is similar to the other elephants in that they all involve liquidation or dilution of major collective assets of the United States--and the application of these collective assets for purposes of concentration of private wealth.



You're dead wrong about immigration (3.00 / 2) (#378)
by theboz on Sat Nov 27, 2004 at 07:47:13 PM EST

Your xenophobic stance is completely ignorant because you fail to take the upcoming crisis due to the baby boomers retiring/dying off that will shake America worse than any cheap labor could. The truth of the matter is that people like you whine and cry about immigrants who come here and work harder than you are willing to and are competitive for the same jobs, so companies get sick of people like you and just send the jobs overseas to where it doesn't benefit Americans at all other than the rich. The fact is, if someone competes with you for a job, that is not a bad thing. They will also be a consumer, which creates more jobs in the U.S. People like you completely ignore the fact that immigration creates more jobs than it takes due to these people needing places to live, groceries, and all the other things that drive the economy. Also, illegal immigration is a problem, but it's 1) because the government restricts immigration way too much, and 2) because rich business owners don't want to pay legal employment. So lobby the politicians to let people who would otherwise be forced to come here illegally to come here legally, pay social security, and make minimum wage. Lobby to have business owners who hire or encourage the use of illegal immigration in jail and fine them to pay for unemployed workers in the U.S. It is wrong to blame people who simply want to take care of their families. What laws would you be willing to break if you had to buy medicine for your mom that you can't afford, or if you had kids and lost your job so you needed to find another way to feed them? The illegal immigrants are just as much victims of rich bastards as the natural born American who got laid off so his job could go to China.

Stuff.
[ Parent ]

Blame the rich-not the workers (none / 0) (#401)
by nomoreh1b on Sun Nov 28, 2004 at 01:05:28 PM EST

Nafta was largely an mechanism to break the hold of trade unions and the PRI in Mexico. The net effect was to send millions of "willing workers" driven by economic coercion into the US. Fixing that problem doesn't mean just dumping them back into Mexico. The folks that profited from this atrocity should be the people that pay to fix it--that means the VERY wealthy. Personally, what I would favor are incentives for repatriation. The current fine for hiring an illegal alien in the US is $30,000. I would offer than money to any illegal alien who would turn in his emplorer and prove repatriation over a period of 5 years. Now, since many of the employers don't have those kinds of assets, it would be niecessary to go after the assets of lendors and investors involved in that crime.

What you are fundamentally missing: the folks that benefit from recent immigration are typically the very rich-who benefit more from rising property values than decreasing wages.

You can make a case that immigration wasn't such a bad thing long ago when the US was developing economically. At this point, the US is developing less rapidly in terms of GDP per capita than countries like Japan that have more restrictive immigration policies. In fact, recent immigration practices is transforming the US into a 3rd world country with a class of wealthy property owners and impoverished workers-even those that are highly skilled.

[ Parent ]

Decimation of the Boomers and immigration (none / 0) (#403)
by nomoreh1b on Sun Nov 28, 2004 at 01:12:01 PM EST

What you need to look at here is the economic conditions the boomers faced-and ask youself if the changes in immigration laws that started under JFK/LBJ made the situation better or worse. Personally, I think the changes in immigration laws collapsed the wage structure so badly it made things much more difficult for boomers-particularly the later boomers to have families. The spoiled rich of earlier generations were the ones that benefited.

[ Parent ]
Umm h1-b is a nonimmigrant visa isnt it? (none / 1) (#385)
by xria on Sun Nov 28, 2004 at 04:45:10 AM EST

Why are you talking about immigration in relation to a visa that is made available to bring in specialists such as doctors/nurses and so on for a maximum of 6 years? H1-b and L-1 are both temporary US work permits, not immigration tools, even if in some cases they might lead to immigration via LPR or whatever. These visas overall are a significant boon to any country that can attract high skilled workers that they didnt have to spend the resources to train up, and won't have to pay towards their pension/social security when they retire. Immigration of low skilled workers is a different kettle of fish, but still can be beneficial overall. Probably the most problematic aspect is that immigration in the US is geographically uneven, so it causes local problems where if it was more evenly spread it could be much more easily absorbed.

[ Parent ]
"non-immigrant" aspect of H-1b is a con (none / 0) (#400)
by nomoreh1b on Sun Nov 28, 2004 at 12:56:29 PM EST

Historically about 50% of all folks that ever get an H-1b visa eventually get a "green card".

[ Parent ]
Even if true (none / 0) (#404)
by xria on Sun Nov 28, 2004 at 01:53:21 PM EST

It still is a relatively limited amount of people per year, and they are coming in with a guaranteed job and desirable skillset that the US hasnt had to pay for, and who have no right to stay if unemployed on that visa. Consider it the equivalent of a company that can get contractors in at the same price as its permanent employees, its a pretty sweet deal for the company as they have no real downside, seeing as they have no obligation to offer a permanent job even if the employee wants one.

I would have thought people would be more incredulous that their are skilled people that desperate to work in the US that they will take such a bad deal, being against it if you are in the US is like wanting to shoot yourself in the foot.

[ Parent ]

wrong dynamic (none / 0) (#406)
by nomoreh1b on Sun Nov 28, 2004 at 06:11:39 PM EST

A big part of the compensation of a H-1b worker is the chance to get a US green card. The H-1b program is the moral equivalent of US granting people a share of other people's houses for taking their jobs. Now this may be a great deal for the companies-at least in short term until the general pool of US workers figure out what the scam is.

In IT, H-1b(and its companion L-1) is not a small part of the work force-we are talking the majority of new hires in IT the last 4-5 years.

Even if you are right, there are all kinds of security issues around hiring workers to work in export oriented businesses and sometimes manage sensitive data. When Walmart first moves into a town, the introductory prices are usually good-then after the competition is gone, the prices get raised. Likewise, we have defense oriented businesses-or companies like Amex that manage potentially sensitive data that have employees on which no security check can be done.

[ Parent ]

OT: Don't forget the 5th elephant... (none / 0) (#420)
by bwcbwc on Sun Dec 05, 2004 at 10:13:13 PM EST

It's responsible for the Fat deposits in the Uberwald.

[ Parent ]
One more domino toppling? (3.00 / 2) (#369)
by xria on Fri Nov 26, 2004 at 02:10:23 PM EST

Seems like China are getting nervous about holding so many dollars, and are diversifying their reserves. Be interesting to see if they will now consider unpegging the Yuan, as effectively it is propping up the dollar by being tied to it. http://news.bbc.co.uk/1/hi/business/4044133.stm

Thanks (none / 0) (#370)
by Coryoth on Fri Nov 26, 2004 at 03:24:33 PM EST

I'd seen some unconfirmed reports of this but hadn't checked BBC news yet.  This really isn't a good sign.  As I said before, I really was not expecting so much of what I laid out to happen quite so quickly.

Jedidiah.

[ Parent ]

Why now? (none / 0) (#371)
by xria on Fri Nov 26, 2004 at 04:01:35 PM EST

I wonder if a large part of this kicking off now is Bush taking a firmer hand, and putting his yes men (and women) into more prominent positions, getting rid of the moderates for the second term. At least thats what seems to be the consensus of the recent changes. With any chance of a challenge gone I think a lot of global powers are looking at the last 4 years of US economics, what is being said by the administration - i.e. lip service to a strong dollar, but no real movement bar the Fed slowly jacking up interest rates by minimal amounts each time they meet, but not much else. They are probably coming to the conclusion rapidly that there is no reason to expect any rapid change in fiscal or monetary policy from the US administration to halt the growing debts, or the slide of the dollar, so with problems looming its better to start getting out of dollars as a precautionary measure, which is an action that can snowball with such a large chunk of US debts and currency held by foreigners.

[ Parent ]
Consider who _REALLY_ matters to China (none / 0) (#372)
by nomoreh1b on Fri Nov 26, 2004 at 07:57:40 PM EST

China needs oil. US markets are nice, but China's industrial production can found markets elsewhere in the world besides the US. Personally, I look to see a shakeup in the middle east with some of the countries there getting _REAL_ cozy with China.

[ Parent ]
Umm like Iran? (none / 0) (#375)
by xria on Sat Nov 27, 2004 at 05:16:16 AM EST

Who have a 2 billion trade deal with China already, say?

[ Parent ]
right direction-small part (3.00 / 2) (#377)
by nomoreh1b on Sat Nov 27, 2004 at 12:03:39 PM EST

Iran is a small part of the picture here. There is a big islamic world in Southwest Asia. The area is oil rich and is in desparate need of industrialization/economic development. If the Islamic world starts to politically unify, that is going to greatly alienate the US/Israel-which means China may be forced to pick a side. Given that we are talking about a country that 60 years ago was experiencing an opium epidemic(something like 40% of the adult population were strung out) courtesy of free trade, western capitalism(and the Jewish community and english speaking countries played an important role in the Chinese Opium trade I have the feeling the Chinese may edge towards a strategic alliance with Islamic nations. At this point, there isn't _that_ much western technology left to export-and the Islamics have oil.

[ Parent ]
Addendum (none / 0) (#399)
by xria on Sun Nov 28, 2004 at 08:52:16 AM EST

Apparently the Governor of the Bank of Japan has been talking along the same lines:

Fukui told the seminar that since its launch the importance of the euro had already increased considerably. More than 50 countries now linked their currencies to the euro, it comprised 20 percent of foreign currency reserves and nearly a third of cross-border bonds were denominated in euros. In a thinly veiled reference to the US, he pointed to the dangers associated with allowing any single currency to dominate global commerce.

source

[ Parent ]
That would actually be good for the U.S. (none / 0) (#408)
by cooldev on Mon Nov 29, 2004 at 02:41:09 AM EST

Chinese currency is undervalued, but this isn't really propping up the dollar. It's mainly exacerbating the trade imbalance between China and other countries (mainly the U.S.).

If the yuan was traded on the open market like it should be, Chinese exports would become more expensive and their citizens would be able to buy more foreign goods. Most people in both countries would consider this a good thing, but apparently China's government likes to manipulate the exchange rate to keep the yuan undervalued, as it's an effective way of subsidizing their exports and taxing imports. They're taking an increasing amount of heat for this internationally; it'll be interesting to see what happens.

Oh well, what can you do? Diversify your assets, plan for the future, keep your skills up to date, and vote. Don't get complacent in your current job, as it's not always going to be there.

Oh, and don't shop at Walmart.

[ Parent ]

Strong dollar policy? (none / 0) (#409)
by cooldev on Mon Nov 29, 2004 at 02:51:45 AM EST

I should add that while the United States keeps publicly reiterating its strong dollar policy, we haven't done anything to back it up lately.

Some financial experts suspect that we actually have an *unstated* weak dollar policy in order to help exports and boost our economy during the recession. As per the grandparent's news article, it's working when it comes to areas such as Europe, but not China because of how the yuan is artificially pegged to the dollar. So our weak dollar is helping Chinese exports to Europe in addition to our own -- a double whammy for European exporters.

[ Parent ]

The era of cheap labor is over, for China. (none / 1) (#376)
by porkchop_d_clown on Sat Nov 27, 2004 at 12:03:00 PM EST

So, I was feeling a bit pollyanna-ish for claiming that the imbalance between the US and China would end someday - but it seems that someday might be here sooner than even I expected:

In China, Workers Turn Tough

Unions are coming to China! Oh - and the article points out that US pressure over working standards has helped, too - which is not the result I would have expected - so both the pollyannas on the left and the evil capitalists on the right appear to have done some good in China.


A bird does not sing because it has an answer. It sings because it is insane. - Obscure Chinese Proverb

Cheap labor isn't the cause (none / 0) (#389)
by ucntcme on Sun Nov 28, 2004 at 06:29:24 AM EST

The cause for the imbalance is dominated by a fixed exchange rate between the USD and the Yuan. Cheap labor is only a small portion.

If you knew the history of trade deficits, you might not be calling for an end to them.

[ Parent ]

China may be buying up dollars (none / 0) (#410)
by porkchop_d_clown on Mon Nov 29, 2004 at 06:37:15 AM EST

to keep the exchange rate where it is, but sooner or later they will have to stop - and I disagree about the role cheap labor plays. The reason China is funding our trade deficit is to keep their export prices as cheap as possible, thereby boosting their employment rates.

A bird does not sing because it has an answer. It sings because it is insane. - Obscure Chinese Proverb
[ Parent ]
Dollar weakness will reduce trade deficit? (none / 1) (#394)
by xria on Sun Nov 28, 2004 at 07:36:19 AM EST

OTEA monthly stats

Although last months figures are an improvement, the trend over the last two years is still of significant growth, despite the dollar having fallen a lot over that time, in fact the area around March-June 2004 when the dollar had recovered a bit actual correlates to a period where the deficit stopped growing.

The question one could ask is whether the fact that unit costs of an imported item is more in dollars actually overrides the impact of local produce being more competitive, particularly in the short term as most businesses will have set up supply deals for goods for at least a year in advance in many industries, and spare capacity for production inside the US might take some time to get utilised.

You won't see the effects yet (none / 0) (#405)
by Coryoth on Sun Nov 28, 2004 at 02:29:22 PM EST

A lot of exporter in other countries buy hedging contracts as insurance against fluctuations in exchange rate.  You probably won't see much movement until those start running out... porbably around the end of the year.

Jedidiah.

[ Parent ]

Food for thought... (none / 1) (#416)
by skim123 on Thu Dec 02, 2004 at 12:01:05 AM EST

European small fry are feeling euro pain
To get a sense of how fast the falling dollar can ruin a European businessman's day, talk to Udo Pfeiffer, the chief executive of a small German machinery maker in the industrial Ruhr Valley.

Pfeiffer's company, SMS Elotherm, builds machines that forge crankshafts for cars. He exports many to the United States and Mexico, selling for dollars to companies like DaimlerChrysler.

In recent weeks, the euro rose so rapidly against the dollar that Pfeiffer lost $10,000 in profit in the three days between shaking hands on a $1.5 million deal for a machine and signing the final contract. The profit margin on these machines, he said, is no more than $30,000.

As the euro climbs into uncharted territory - it hit a record of slightly more than $1.33 Wednesday- European exporters are voicing more and more fears about how it will affect business.


Money is in some respects like fire; it is a very excellent servant but a terrible master.
PT Barnum


Interesting NYTimes Op Ed (none / 1) (#417)
by Coryoth on Thu Dec 02, 2004 at 03:39:46 PM EST

Coming to similar conclusions from a different angle:

http://www.nytimes.com/2004/12/02/opinion/02friedman.html?oref=login&oref=lo gin&oref=login&hp

Jedidiah/

Eliphants (none / 1) (#419)
by ShiftyStoner on Fri Dec 03, 2004 at 07:15:35 PM EST

 Pretty easy to spot. They keep trying to step on me.
( @ )'( @ ) The broad masses of a population are more amenable to the appeal of rhetoric than to any other force. - Adolf Hitler
Another Economist article (none / 1) (#421)
by Coryoth on Tue Dec 07, 2004 at 04:43:55 PM EST

Roughly the same srts of arguments, this time emphasising the effects of the US Dollar losing its status as the global reserve.

http://economist.com/opinion/displayStory.cfm?story_id=3446249

Jedidiah.

Elephants in the Living Room | 421 comments (370 topical, 51 editorial, 0 hidden)
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