Posted on 11/27/2004 10:24:13 AM PST by soccer_linux_mozilla
The United States’ trade deficit is soaring and the once high-flying dollar has sunk to record lows against Europe’s common currency.
The dollar’s record low against the euro coincided with the government’s report that the United States was running a trade deficit through September at annual rate of 592 billion dollars. That compares with last year’s record 496 dollars billion. As a result, the country is having to borrow almost 600 billion dollars from overseas this year to pay for the imported cars, televisions and other items Americans are buying.
One thing I have noticed the cost of beef is getting quite high. I am eating alot fewers steaks these days, but in the 70's I had steaks all the time.
"Our standard of living bit the dust in the 30s, and has been flat or in decline since Nixon's second term."
That is horseshit. My parents had one car. One TV. One of everything.... they didn't go on week long vacations. They didn't buy $5.00 coffees at Starbucks. My family has 2 cars, 2 TV's, Xbox, PC's, and Starbucks Cards. And I am typical of most Americans. Maybe you ought to come down off that mountaintop in Montana where you've been waiting for the balloon to go up.....
declining my ass....
Outsourcing of skilled labor is only rarely profitable as it is. The direct costs seem so low, but the indirect costs are killers. Fortunately, this is producing a common culture in business of "been there, done that, got burned". So few people have had a good experience doing it that the only people who think it is a good idea are clueless MBAs with no experience actually doing it, or people in one of the few industries where it really made any sense.
Outsourcing at many companies in Silicon Valley has been reduced to the anglosphere i.e. to the UK or Ireland, and Australia or New Zealand. And you don't save much money by doing that so there has to be other compelling reasons (e.g. 24x7 world-wide operations).
ping. Good thread.
agreed
No, it isn't wrong. On the contrary, it is *precisely* accurate.
You can't hedge for infinite possibilities into the infinite future. The only people to come close to that sort of thing are full time hedge funds.
So the mom and pop software shop in Bombay, India can't hedge two years into the future when they land some enormous U.S. coding project. Instead, if they ever land such a deal, they will then have to deal with currency fluctuations at that time (which is far too late to adjust for the decline of the U.S. Dollar this year and next).
In other words, both service providers and manufacturing companies are going to see decreased profitability in using offshore development as the U.S. Dollar falls.
Oh sure, a company can put in play a currency hedge during that brief time when a sale has already taken place and the goods or services are being delivered, but that tiny time window is far too small a part of the overall trading picture.
Thus, the more that the Dollar declines, the more expensive foreign labor becomes. You'd have to hedge an entire economy to make up for that fact...and even very *large* governments can only hedge that much for a minute amount of time.
c#124 & #126
Homes have more than doubled in their average number of square feet from 1930 until today. Plus, more Americans own their own homes today than at any other time. Likewise, more Americans own stocks today than in 1970. Americans own more cars, too.
Thus, our standard of living is higher today than in the past. That may be due to greed, but I'm not debating *why* so much as reminding you that it is higher today than in the past.
Maybe in a free market, with all things being equal. But not in the real world, in the real world nations (with the noteable exception of the GOP led USA) protect their manurfactoring base one way or another. And the USA is getting it's clock cleaned by nations that do.
Do you think China is going let cheap USA labor put it's labor out of busness? No freakin way, do you think Europe is going to import cheap goods from the USA and put it's worker out of a job? No freakin way. Nope the free trade experiment is over and it was a miserable failure. The free traders do not yet realize this, but in the next election the democrats are going to cream the GOP on issues like free trade, open borders and out of control spending. The Rats are already begining to hammer the GOP on these issues.
There was no free trade. There was no "experiment."
Foreign governments have kept the U.S. Dollar artificially propped up for decades in order to subsidize their exports to the U.S.
Pretty soon, they won't have a choice. You can never win against fundamental economic forces, but only borrow with interest for a short time to make it look like you are. The Europeans are rapidly running out of things they can hock in support of counter-economic policies like the ludicrous protectionism of inefficient domestic industries.
Oh, stop it. I've been on FR since 1998 and *every* year there is some numbskull claiming that the GOP is about to lose the "next" election. That sort of nonsense is getting old. The modern GOP doesn't lose elections, no matter how crazy that might make people like you.
We control the House, the Senate, the Presidency, most state governorships (29 out of 50), and most state legislatures.
We'll be winning elections and making Americans more prosperous long after you've been buried and gone, too.
We win. It's what we do. I know that you hate that fact, but you'll just have to keep slamming your head into that same brick wall for as long as you can't accept that fact.
I disagree, the UE can (and does) place tariffs on Chinese and US goods and keep its domestically produced goods price competitive. They have been (and we used to) doing that for a long long time. There is no reason to believe that the EU will drop their tariffs and watch their manufacturing base move to China like the US did.
The EU (like the USA once) can maintain a healthy manufacturing base on domestic consumption and high end (think Mercedes) exports
It means that American-made goods are now more competitive in the European market.
That's the point I am making. A company can hedge its international payroll by shorting dollars well into the future. I would. The company is assuring its profits for a certain time period. But a cheaper dollar would be good wouldn't it? They are paying with cheaper and cheaper dollars.
A weaker dollar makes American-made goods more competitive in the world market.
A weaker dollar means that there will be an increase in the world demand for (now more affordable) US manufactured goods...increased manufacturing without decreased wages.
Increased manufacturing as a result of more demand for US made goods, because they are now more affordable=more jobs in manufacturing.
Imagine that!
That Bush a$$hole ruining the economy!
/sarcasm.
OK, now we can let all these people re-insert their heads in anal cavities and resume their doom and gloom mode.
It is not healthy for the EU where the average worker can no longer afford to buy domestic production because 1) the average prices are much higher than in the US, and 2) the average income is much lower in the US. And this gap has been increasing with time. By most American standards, the EU folks live in near poverty, while at one time they use to have genuine parity with Americans.
So no, the Europeans have not maintained the health of their economies at all. They've managed to destroy them and make the reasonably well-off in their countries the equivalent of the lower-middle class in the US. And they did this by "protecting" their economy, as you would have us do. If that is the kind of "prosperity" you want, you can keep it. Nobody has ever done well by doing what the Europeans do, including the Europeans.
Protectionism of that kind is playing with a weak hand that eventually sucks the life out of a country. The US has a robust hand and we should be playing an offensive economic game -- we can afford it.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.