Thank Goodness for Trade Deficits

TCS ^ | 3 DECEMBER 2004 | John Tamny

[sixmil]

That and many others. I should save these lists so that we can go back one day and track the twisty evolution of the free trade argument.

[Toddsterpatriot]

Americans' net worth is almost totally their houses, so you can only continue to quote this while housing is still in a bubble. Should that bubble pop, this same figure will really start to work against you. You may want to think up another defense so that you have something when this canard falls off.

Home equity (the value of the home minus the mortgage amounts) constituted the largest share of household net worth, accounting for 32.3% of total net worth in 2000.

I guess it depends on your definition of almost totally.

Net Worth and Asset Ownership of Households: 1998 and 2000

Page four, middle column.

[sixmil]

That's exactly what I am talking about. You guys take a report from 2000 when stocks are at their peak, and the low interest rate housing boom has not started. So now, the end of 2004, the number 2 component (equities) have shruken big time in value while housing has been pumped up. I'd love to concede your point if you had some fresher data showing the same numbers.

[Toddsterpatriot]

I'd love to concede your point if you had some fresher data showing the same numbers.

Concede my point? You said "Americans' net worth is almost totally their houses,"

Why don't you find more recent data that says home equity accounts for more than 50% of total net worth in 2003?

[maui_hawaii]

I think it all depends on the details. Devil is in the details.

How we end up with deficits or surpluses matters a lot more than the mere notion of one or the other.

[Southack]

"We're not quite there yet, however. The Dollar still isn't fairly valued. For one thing, the Chinese Yuan to Dollar peg has to be broken first."

Bump to post #18.

[Toddsterpatriot]

That's exactly what I am talking about. You guys take a report from 2000 when stocks are at their peak, and the low interest rate housing boom has not started. So now, the end of 2004, the number 2 component (equities) have shruken big time in value while housing has been pumped up. I'd love to concede your point if you had some fresher data showing the same numbers.

Looky here. Page 112, Household Real Estate, $17.7136 trillion. Home Mortgages $7.7341 trillion. That means home equity is $9.9795 trillion divided by household net worth of $48.7945 trillion means home equity is only about 20% of American's net worth.

Federal Reserve

So you were just a little off (okay, a lot) when you said " Americans' net worth is almost totally their houses"

Southack, thanks for the memories!

[AdamSelene235]

I wouldn't pop the champagne yet.

Some theses are about to be tested.

[dead]

They get our money, but we get their stuff.

[LeGrande]

Let me help you out here by ignoring your straw-man arguments.

Lets say I make two widgets that cost me one dollar each to make and I sell them for two dollars and I export one of them. That means I add 2 dollars to the trade balance and I made a profit of two dollars

Now lets say that I have the widgets made in Mexico for fifty cents each. I import one of them back to the States and sell the other to my overseas client. Now I have affected the balance of trade to the negative by 4 dollars, but my profit has gone up to 3 dollars.

That dramatically alters the balance of trade, but the reality is that I (and America) am richer by a dollar. Of course someone in Mexico is richer by a dollar too, but that is a good thing. All I have to do is sell a widget to someone in Mexico and the greenback gets even stronger : ) And I get richer.