Posted on 05/08/2006 9:33:24 AM PDT by A. Pole
"Look. No wires. What holds it up?" the magician's sideshow barkers used to say. They could have been talking about the U.S. economy. Telling ourselves that "America will always win in any free market," we let free trade flow in and out from a world where many workers – and not just assembly-line screw tighteners but computer programmers and call-center salesmen – make less in a day than even the poorest among us has gotten used to earning in an hour. Somehow we manage to keep sending all our money and factory jobs overseas, but still – so far – we also have managed to keep unemployment at 4.7 percent and the price of Tom Cruise action figures at less than $5.
In all of 2005, we bought $723.6 billion more worth of stuff and services from the rest of the world than they bought from us. It's as if every DAY you put $7 for every man, woman and child in your family and mailed it to Shanghai or Riyadh. A net of $8 per day for your family of four went to China, which makes just about everything you see at any Toys R Us, Wal-Mart or Best Buy. Another $10 per day per family of four went to the friendly foreigners who sell us crude oil.
Of course, this year is a little different. So far in 2006, we have been importing 13 percent more per day over what we exported than in 2005.
If people in the Fox Valley bought $17 per person worth of goods and services from companies outside the valley every day while our factories sold only $10 per person worth of stuff to outsiders, our banks would go dry and we'd spin into a horrendous local depression. So how can this work on a national level? Because the Communist Chinese and the Saudis and all those other good friends we're buying things from turn right around every night and use that $7 per man, woman and child two ways: 1) They loan our tax-shy government the money it needs to cover an unbelievably huge, very un-Republican budget deficit. 2) They buy stock in American companies.
Thus the greenbacks keep getting recycled. Our only cost, for now, is that more and more of our businesses are owned by foreigners and that foreigners have the ability to dump literally half our government bonds onto the market any time they feel like it, which would make the dollar worth about the price of a threepenny nail.
A recent analysis by an Associated Press writer notes that "the record flow of foreign goods into this country has given consumers a wide array of choices at low prices." How nice. We get to forget that the Chinese and the Saudis are buying the country out from underneath us while we play with our very affordable iPods and bikinis and Acuras. But the mouse thinks that bite of cheddar he just found under the kitchen sink came very cheap too, right before he bites into it and the trap springs.
[...] Decades ago, a chairman of General Motors said that "what's good for General Motors is good for America." But that was when GM made its cars in Detroit out of steel made in Gary using iron ore mined in Minnesota. All the paychecks involved and all the stock dividends went to Americans. And if the outside world turned unfriendly, all those factories and mines and mills were right there in our backyard, ready to start turning out Sherman tanks instead of Chevies.
But in this strange new "one world," with every contract going to the lowest bidder, our government only makes sure our businesses can cut expenses to the bone and push profits to the max. If that leaves the bulk of each company's cash flow going to Shanghai factory workers and Saudi oil sheiks, who cares, so long as the CEO makes his $32 million a year and the Dow goes up another 5 percent and the rich beneficiaries donate to the next election campaign?
So far, it all somehow keeps hanging together. Most of us still have jobs and we can buy shoes for $19.95 at Wal-Mart. Maybe the real reward for being the lone superpower in the world is that everyone else wants to invest in you. But it's hard to imagine that some day historians won't be looking over the collapse of the American empire and shaking their heads and clucking, "What WERE those people thinking?"
Economic ludditism.
Well said comrade!
"Let London manufacture those fine fabrics of hers to her heart's content; let Holland her chambrays; Florence her cloth; the Indies their beaver and vicuna; Milan her brocade, Italy and Flanders their linens...so long as our capital can enjoy them; the only thing it proves is that all nations train their journeymen for Madrid, and that Madrid is the queen of Parliaments, for all the world serves her and she serves nobody."
(Prominent Spanish official - Alfonso Nunez de Castro in 1675)
This thread is going to be a goldbuggering, housing-bubbling perfect storm.
scotch tape? :)
One-world globalism.
No one can be an American patriot and believe in globalism.
Yep. The US GDP is $11,750,000,000,000.
The so-called trade-deficit is leakage we produce so much.
Ahhhhh...pessimism, it's not just for breakfast.
Duct Tape.....it'll fix anything....ask the policy makers.
paper money?
The consecutive quarters of positive GDP growth, the stock market recovery and growth in wealth are just straw men.
Somebody help me out here. Everyone wants to invest in the US, and the US is collapsing.
What am I missing here?
So Buffett is smart for selling treasuries and investing overseas? I guess those foreigners are stupid for buying treasuries and investing in America?
Absolutely...there's no, no, no real growth driving the current economy, the 4.7% unemployment rate reflects shadow jobs, and the current stock market level is purely smoke...come on...get real...
tired of the same ole tripe.
By Gold! Housing Bubble! Outsourcing! Globalism is evil! yeah, yeah, yeah...whine, whine, whine...
No joke. Good tax rates, huge consumer and business spending, reasonably open markets, pro business administration....
But we have to keep overpaid factory workers employed. I think some people on this thread are AFL/CIO/Teamster members.
...and the borrower becomes the lender's slave.
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