Posted on 02/18/2005 9:55:18 AM PST by Willie Green
It's called supply and demand.
Interest is going up? When?
Dollar sinking? GOOD!!!!
Go yell at the UN to force China to put their yen on the floating market, in the mean time, low dollar makes life easier as far as competing with foriegn markets goes.
Look at the Euro, over inflated and KILLING the Euro-peons, who incidently are on their knees begging for the Yen to re valued.
Gold? Yipppee! I love gold, even more so when I bought lots of it years ago when it was $237 an once.
(Psst! Silver payed off much better dollar for dollar.)
Your reading too much into the doom and gloom sayers stuff.
The reason gold shot up is because of places like Japan buying up all they could to prop up their currancy or dump it rather. Plus some other problems abroad.
Interest needs to go up, but so far it's not budging much.
It makes cash holdings hard to make money on.
Sorry, Willie...
Uganda, with GDP growth of 5.2% and inflation of 4.8% does NOT seem to be on the "...brink of financial collapse..." You'll have to "try harder".
On the other hand, I have found two countries with BOP SURPLUSES that just might be on the "brink":
Country "A" has GDP growth of 1.1%, public debt of 102% of GDP and unemployment at 8.1%.
Country "B" has GDP growth of 2.7%, public debt at 155% of GDP and unemployment at 5.3%.
Does this prove that trade surpluses are a sign of economic WEAKNESS?
No need to answer...
I've concluded that the fact that your data mining has become biased and selective is sufficient proof that you have lost the argument -- although you will be the last to admit it.
P.S.:
"A" is Belgium
"B" is Japan
And YOU DO understand what the numbers mean, eh?
It means IOU's in Japan and China--the two countries who link their currency to the USD.
Not a coincidence.
The Yen is not linked to the dollar. It trades freely in the market.
Not at all. It was excessive government deficit spending that placed both Japan and Belgium in such a precarious position.
The are indeed fortunate to be running trade surpluses. That, and the high personal savings rates practiced by their citizens are what have kept their economies bolstered. We do not have such high personal savings rates and would not be able to sustain government debt at that level.
I couldn't finish reading the article once I got to this untrue statement in the sixth paragraph.
There is always enough to go around and the scarcity is alwasys allocated efficiently by the price mechanism.
That is what the "trade deficit" is: a price mechanism.
All of the countries that are getting dollars from their sales to the U.S. will now have increased their wealth.
Because of the large amount of dollars in foreign countries this will make US goods "cheap," and subsequently demand for US goods will rise.
That demand then will be satisfied by increasing production in the US. More jobs; greater wealth will result in the US.
So, just calm down. The inevitable laws of supply and demand will bring the trade deficit/surplus into equilibrium.
And "scarcity" contradicts your premise that "there is always enough to go around."
But it was a nice try.
If it is bad then why not put a tariff on exports?
If it is neither then why does the government and Greenspan bother keeping up with it and why refer to it as a deficit?
Deficit = An excess of liabilities over assets (usually over a certain period).
Actually, that would be Japan's gross debt; their net debt is considerably less since Japan's government has considerable assets, including some $697 billion of our Treasury debt.
To be accurate, their current gross public debt is 731 trillion yen. Netting out $841 billion of international reserves with 105 yen/dollar = 88.3 trillion yen, that comes to 643 trillion yen; the last figure published for nominal GDP was 505 trillion yen. The ratio of gross debt minus foreign reserves (Japan has some other assets on the books that could also be netted out) to GDP would be 128%.
However, Japan pays far less for debt than we do, so its actual interest burden is far lighter than our own. If I remember the figures for last year, they paid only about 5 or 6 trillion yen in interest -- and they received some 3 trillion yen in interest on their foreign reserves. In fact, had they continued to buy Treasuries at the same rate, in another two years or so, they would be paying no net interest (assuming that interest rates and exchange rates stay the same.)
As to Japan's unemployment rate, it is officially 4.4% currently. However, that number also suffers from a bit of the same sort of engineering that our own unemployment rate does. The number of Japanese employed is 66 million, which is just a bit over 50% of the population (the U.S. is at about 44% currently.)
When you owe the bank $1000 and can't pay, you are in trouble.
When you owe the bank $1,000,000,000,000 and can't pay, the bank in trouble.
So their ratio is 128%, what's our ratio?
well perhaps you are dripping in italian clothing and Burberry. excuse me!
textiles - your towels and sheets and linens, your rugs, etc. go to bed bath and beyond and check the tags.
hey, I try to buy USA products myself when I can - especially power tools. but the point is, whether its your clothes or my power tools, the "norm" is that most americans are buying foreign made products in these areas.
not the yen, it floats. but the bank of japan aggressively buys dollars to keep the yen from rising - they have no choice, its the only way for them to keep their export driven economy afloat.
the yuan peg is really killing the japanese and europe - because as the dollar goes lower, chinese products get even cheaper there because of the peg. its a death spiral. we should be actively engaged in a trade war with china right now to get them to float their currency. we should be doing this now, while we still have more economic muscle then they do, to try and break them. the longer it goes, the weaker we become.
do you understand what the chinese currency peg means? as the dollar devalues, the market forces you speak off don't get a chance to occur - because chinese goods become cheaper in those same markets. the forces that might move the US trade deficit towards equilibrium don't work so long as china maintains the peg, the export gains we should be making, are in part taken by chinese products.
It looks like our current debt is at $7.6 trillion (which is actually quite close to Japan's public debt), and our GDP was $12 trillion if we annualize the 2004q4 data, so that would be 63%.
However, we pay a good bit more in interest for roughly the same amount of gross debt as Japan since our interest rates are much higher.
Still, I'd rather be in our situation than their's.
Our additional debt last year was what, 4% or so of GDP?
What was their additional debt as a % of GDP?
But, I am old enough to remember these same arguments concerning the Japanese protection of their currency in the 1970's and 80's.
As we all know, in the long run, the Japs could not beat the market forces of supply and demand. They lost big time.
The same will happen to the Chinese. It is only a matter of time.
japan really didn't lose - they made some miscalculations regarding where they targetted their dollar outflows to - Pebble Beach, Rockefeller Center. But alot of it was put to productive use, for both Japanese companies, and the USA - Toyota employs 200,000 americans in the auto industry for example.
the other thing that hurt japan was the fact that china was able to undercut their costs. who is below china in the race to the bottom? africa? no one is going to be able to undercut china if they retain their current system - $120 a month for a manufacturing worker, a subsistence level wage isn't too bad when the alternative is being at the other end of a chicom gun or chained to a manufacturing machine in a prison.
Miscalculations that cost them, let's see: In September 1989, David Rockefeller and his associates sold 80% of RGI to the Mitsubishi Estate Corporation of Japan for $1.373 billion.
To date, how much have the partnerships lost on the property? In March of 1995, the cumulative shortfall was $623 million.
Yeah, I'd call that a miscalculation and a loss.
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