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.
The GOP started winning elections in 1994, "Contract with America". Before that the GOP was a perminate minority party. We did OK winning the presidency, Ike, Nixon, Reagan, (Bush 1 was really Reagan term 3). But to claim the GOP has a long history of winning is absurd.
The democrats with high IQs are making a hard right turn on issues that should belong to the GOP. Issues like immigration, spending, out-soucing, free trade. If the democrats are to the right of the GOP on these issues I might even vote democrat for the first time in my life. If I vote democrat then the Democrats will win bigger then anyone has ever won before. It will be a 94 on spheroids.
It's true. No doubt Southack doesn't have to compete with SLAVE labor. He's got his, so the rest of you can just sod off.
Since the UE is not an exporting economy its products are consumed domestically. I am surprised to learn that Europeans live in poverty, last I heard Western Europe was doing well. I have family in Germany and they tell me they are doing well. So I think you must be mistaken.
Wrong-o.
I greatly admire President Bush and I'm reading this article.
Let's not forget that the Schulze family from Stuttgart can now finally afford to take their five kids to Disney World for a week...laughing at the weakness of the American dollar as they trade lots and lots of their Euros for a handful of pictures, some trinkets adorned with the countenance of an imaginary rodent, and memories.
Yeah...
That's a bad thing.
The hell with JFK...sie sind Berliners.
Yea, and let's not forget the Smith family from Texas City that loses their home when the bank calls in the mortage to cover the loses it took on the falling dollar.
German car prices (in relation to content) are rising and becoming less competitive. and without the US market, they are toast, they cannot sustain it internally. Porsche makes 50% of their profit in the US, as an example. and the new Corvette has them shaking in their boots right now.
You nasty conservative capitalist you, ohhh, that's me too.
Well Germany has what? 5 German auto makers? Porsche, BMW, Mercedes, Volkswagan and one other who's name escapes me. We in the USA have two American auto makers Ford and GM. I'd say that the Germans must be doing something right. They have kept their auto makers in business. Not an expert in autos, but I would think five producers is much better then two.
I'm not saying that the Financial Community thinks he is weak. I mean those less informed about these matters. My logic says they think: Bush's strong $ policy means the $ ought to stop falling by now but he's ineffectual in stopping it.
I support him...you know that. You seem defensive. I am not attacking him. I'm thinking aloud about John Q. Public's Perception, but you'll hear no more from me about this.
And you do realize that as the Dollar continues its gradual decline that our trade deficit will fall towards parity, yes?!
That raises an interesting question. I believe that the 30% is in reference to the Euro (it was at .9895 on November 27, 2002) and to the yen (which has been as cheap as 124.99 on December 5, 2002).
Yet our trade balance with each has not yet declined; in fact, we are at higher imbalances with each.
In fact, for Germany, the worst months on record (at over 4 billion dollars in the red each) are March, April, and July of 2004, and December of 2003.
For the European 15, 2004 is the first year that we have had five months where the imbalance went over $9 billion; in 2003 we had two, and 2002 also had two. There had been none prior.
For Japan, our trade imbalance has been significantly worse in 2004 than 2003 (though the last few months of 2002 were equivalent to what we are seeing in 2004.)
How far down do you think the dollar needs to go before we see some solid movement on the trade imbalance?
[I am using the New York Fed's numbers for exchange rates, and the Census Bureau's numbers for trade numbers.]
Unless roe is overturned, I will NOT vote Republican in the next presidential election. Period. I don't care whatever else is happening.
good post.
>>> In a truly free market, the correct valuation of your currency is achieved when your imports and exports precisely balance. <<<
Southack,
Can you give a source for this statement? It's not a Keynesian argument, since they don't believe in truly free markets. Is it a supply side or a classical doctrine?
Thanks.
>>> Do not hold cash. Cash is for trading, not for storing your wealth.<<<
Every textbook discussion of currency that I've ever seen always lists "a store of wealth" as one of 3 primary functions of currency.
When did this change?
Thanks.
A rational person might conclude that there are other factors besides currency that affect trade balances. Of course the government loves to force square pegs into round holes (at great expense), and GWB will probably knock the dollar down until there is a loss of confidence in it, with a some sort of financial crises such as the 1987 stock market crash.
There will be a government investigation with a budget of $300 million headed by Jamie Gorelick. The whole mess will be blamed on Martha Stewart and she'll be sent back to prison. End of story.
The EU actually is an exporting economy. Look it up.
Europeans do not think they are "poor" because such terms are relative. When everyone around you is one the same economic rung as you are, you are not "poor". I grew up piss-poor by American standards, but didn't know it until we moved to somewhere better. If you compare the average European to the average American, they are without a question "poor". I've done a lot of business with Europe (France and the UK primarily), and the mainland of Western Europe simply does not live that well by American standards -- the UK is kind of a separate case if similar. When France Telecom would send its senior executives over to the US, they would double the wages so that it wouldn't be an embarrassment (some senior execs at one of the 100 largest companies in the world were making US equivalent wages in France that were slightly above average US wages at the time), but the executives loved it because their money went twice as far in the US. It was like a 4x pay raise, and they hated it when they got called back.
I have many friends in Europe, and none of the ones that have lived and worked in the US for any length of time (and many have) are under any kind of mistaken notion that they live better in Europe. There is actually a lot of unrest in the younger generations in Europe because they feel the burden of economic policies and do not see any way out of the slow downward spiral of the European economy that they are forced to support.
Most of the big countries in Europe have a per capita GDP of 50-70% that of the US, a gap that gets bigger every year. That is the economic reality. And it is not like they make a dollar stretch further because they are so efficient either. You cannot squeeze blood from a stone -- they are economically limited and that translates into standard of living. And this is ignoring the overtly anti-competitiveness of the economies there, where they do their level best to make sure excellence and competence is not economically rewarded.
The high-end Asian economies have better standards of living, generally speaking, than Europe.
Money should be nothing more than a unit of account. Only commodity money has value in and of itself.
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