Trade Deficit at 2nd Highest Level Ever

http://apnews.myway.com/article/20050311/D88OT5C00.html ^ | 3-11-05 | AP News

[soccer_linux_mozilla]

WASHINGTON (AP) - The U.S. trade deficit climbed to $58.3 billion in January, the second-highest level in history, as Americans' appetite for foreign consumer products and automobiles hit record highs. The deficit with China was pushed higher by a surge in textile shipments, reflecting the end of global quotas.

The Commerce Department reported Friday that the January trade gap was 4.5 percent higher than December's $55.7 billion deficit and was just below the all-time high monthly deficit of $59.4 billion, recorded in November.

For all of last year, the U.S. trade gap surged by 24.3 percent to $617.1 billion, setting a record for the third straight year. Analysts believe that 2005 will also set a record, reflecting higher prices for imported oil and continued heavy demand by U.S. consumers for all things foreign.

[snowsislander]

Trade deficits are great!!!

Hmmm. I can see where an occasional small deficit is harmless; however, large, prolonged trade deficits look something like this:

Paying the interest, especially as interest rates rise, requires an increasing portion of the pie.

[skip_intro]

They SEEM to be happy with this arrangement, since they haven't raised their prices or tried substituting a barter system

Interesting. Every grocery store in my area has raised many prices in the last six months.

Must be a California thing.

[lizma]

bump for later

[Jaysun]

Exports are a symbol of virility to most people, and having a trade surplus indicates that we are successful at penetrating foreign markets.

Our exports have been increasing. We have been successful at penetrating foreign markets. In 2004, for example, our exports increased by nearly 13% over the previous year. I think it's very easy for most people to see the trade deficit backwards because it's seems logical that way. However, none of the common concerns about the trade deficit holds up in light of the facts. Trade deficits can't be blamed for unemployment or slower growth, nor are they a sign of unfair trade practices abroad or declining industrial competitiveness at home.

Trade deficits signify growing consumer demand and expanding investment opportunities, both of which are good.

[John Lenin]

Do you realize some of the best known 'U.S.' companies are not incorporated in the United States at all? American icons like Costco, American Airlines, Federal Express, and Sears are all incorporated outside the United States! Do you know why? Because the absolute best method of sheltering income from excessive taxation and simultaneously protecting accumulated wealth from lawsuits is to create and use international business structures.

[soccer_linux_mozilla]

Can you back up your claim?

[John Lenin]

The info is from an investment newsletter, I would think they do their homework before they publish these letters.

[pfony1]

Good point!

California's grocery workers' "unions" are WAAAY too strong...

[snowsislander]

The info is from an investment newsletter, I would think they do their homework before they publish these letters.

I checked Costco's last 10K, and it says:

Costco Wholesale Corporation (“Costco” or the “Company”) began operations in 1983 in Seattle, Washington. In October 1993, Costco merged with The Price Company, which had pioneered the membership warehouse concept in 1976, to form Price/Costco, Inc., a Delaware corporation. In January 1997, after the spin-off of most of its non-warehouse assets to Price Enterprises, Inc., the Company changed its name to Costco Companies, Inc. On August 30, 1999, the Company reincorporated from Delaware to Washington and changed its name to Costco Wholesale Corporation, which trades on the NASDAQ under the symbol “COST”.

American Airlines, Inc and AMR, Inc are incorporated in Delaware.

Federal Express is a Delaware corporation:

Federal Express Corporation ("FedEx Express") invented express distribution in 1973 and remains the industry leader, providing rapid, reliable, time-definite delivery of packages, documents and freight to 215 countries. FedEx Express is a wholly owned subsidiary of FedEx Corporation ("FedEx"), which was incorporated in Delaware on October 2, 1997 to serve as the parent holding company of FedEx Express. We offer time-certain delivery within one to three business days, serving markets that comprise more than 90% of the world's gross domestic product through door-to-door, customs-cleared service, with a money-back guarantee. Our extensive air route authorities and transportation infrastructure, combined with our leading-edge information technologies, make us the world's largest express transportation company. We employ more than 133,500 employees and operate approximately 52,000 drop-off locations, 645 aircraft and 47,000 vehicles and trailers in our integrated global network.

Sears is New York corporation:

Sears, Roebuck and Co. (“Sears”, and together with its consolidated subsidiaries, the “Company”) originated from an enterprise established in 1886 and incorporated under the laws of New York in 1906. Its principal executive offices are located at 3333 Beverly Road, Hoffman Estates, Illinois. The Company is a multi-line retailer that offers a wide array of merchandise and related services and is among the largest retailers in North America. In addition, through its Credit and Financial Products businesses, the Company had offered its customers various credit, financial and related insurance products.

[1rudeboy]

A foreign corporation pays our Treasury the corporate rate (less offsets) on all income that is "effectively connected" (a legal term of art) to its operations in the U.S. Quit your BS.

[oceanview]

easy. china pegs their currency to the dollar, so when the dollar goes down, chinese products become cheaper in the same markets we are trying to export into.

[pfony1]

Good point!

California's grocery workers' "unions" are WAAAY too strong...

[cp124]

We have more credit cards and debt than any other country. Get ready for the big crash free traders. Can you say Wang Mart?

[cp124]

They will - where do you think they'll need to spend those dollars we're sending them...

China

[John Lenin]

The distinction between Cyprus local companies and Cyprus non-resident (i.e. offshore) companies will not exist any more. All Cyprus companies will be taxed at the profit tax rate of 10%. Non-resident Cyprus companies which started their activities before 31 December 2001 can choose between the old advantageous rate of 4,25% and the new 10% rate. The 4,25% tax rate may be used latest until the end of 2005.

• Dividend income both from Cyprus and from abroad is wholly exempt from the profit tax.

• The dividends, interest payments and royalties paid to non-residents of Cyprus are free from withholding tax.

• Profits earned from the foreign branches of Cyprus companies are wholly exempt from profit tax.

This is not a problem, because all our clients will use a Delaware offshore company to minimize the taxable profit of the Cyprus company.

Mode of Payment: The fees will have to be paid prior to initiating the registration procedure.

Bank Accounts. We will act on the client's behalf to open the required Bank Accounts at Barclays Bank PLC Cyprus.

Computerized Accounting System. Our Firm provides a Computerized Accounting System exclusively for the use of our International Clients where we keep their accounts. This service is chargeable and depends on the volume of work.

ORDER your Cyprus Company

[Jaysun]

That's not a problem because GDP, debt, tax receipts, and interest payments have grown together, in tandem. In fact, tax revenues have more than doubled since 1988. Per capita income has nearly doubled since 1988, while total interest on national debt has grown by about 50% during that same time period.

We're wealthier than we'd otherwise be and the increased tax revenues more than cover the increased interest on the debt. Also, American citizens or agencies of the US government own most of the debt. We're just paying interest to ourselves.

I look at it in the same way that I look at my real estate business. My debt and interest on that debt have increased over the years (to scary proportions some might say) but so has my wealth and income from those investments. As long as my income stays ahead of my debt and interest I'm creating wealth. My interest payments may grow to consume a larger piece of the pie, but I prefer that situation to not having pie at all. ;o)

(income figures) http://www.census.gov/hhes/income/histinc/p01ar.html
(interest figures) http://www.publicdebt.treas.gov/opd/opdint.htm
(tax revenues) http://www.irs.gov/pub/irs-soi/04tc18fy.xls

[1rudeboy]

U.S. corporations are taxed on their world-wide income. When a U.S. corporation executes a corporate inversion and incorporates in, say, Bermuda it does so to avoid paying U.S. taxes on income it earns overseas. It still pays income tax on income effectively connected to the U.S. In other words, corporate inversions are a method to avoid paying tax on money that never "belonged" to the U.S. Treasury in the first place.

[John Lenin]

It's from an investment house, they do their homework, they are paid to be right.

[Jaysun]

We have more credit cards and debt than any other country. Get ready for the big crash free traders. Can you say Wang Mart?

The idea of a big crash caused by consumer debt conspicuously ignores the value of the assets that underpin the debt, changes in population, and changes in income. The majority of people have refinanced their homes to lower their interest expenses, making them wealthier.

Credit is a way to finance investment. Sure, that isn't always true, but if you reduce the consumer debt to "frivolous" spending on dining out bowling you're not left with much to fret about.