Posted on 03/19/2006 2:10:39 PM PST by AZRepublican
The United States must borrow more than $2 billion per day from foreigners to finance its huge trade deficits. In 2005, for example, there was a record deficit of $805 billion in the current account, the broadest measure of trade.
Foreigners sell their televisions, cars and oil to Americans and hold dollars in return. Those dollars are invested in stocks, bonds and other assets, including real estate and factories.
Foreigners already own half of the U.S. government's publicly traded debt. As of January, some $2.19 trillion in Treasury securities were in the hands of central banks, including China and Japan, and private investors abroad.
At the end of 2004, the total foreign direct investment in this country — actual factories, office buildings and other tangible assets as opposed to stocks and bonds — came to $1.53 trillion, 8.2 percent more than in 2003.
That investment shows up in all of the 50 states.
In Oakland, Maine, it's a customer service center for T-Mobile USA Inc., which is a subsidiary of German-based Deutsche Telekom. In Glendale, Calif., it's the U.S. headquarters for Nestle, the Swiss-based food and beverage company.
Arab investment has gotten the most scrutiny of late because of the now-withdrawn bid by a Dubai-based company to buy operations at six major U.S. ports. But statistics show that Arab investments represent only a a fraction of the total direct investment in the U.S. by foreigners.
European nations accounted for $977 billion, or two-thirds, of the $1.53 trillion of foreign direct investment, according to figures compiled by the Commerce Department.
By contrast, Arab countries in the Middle East accounted for $9.3 billion, led by $4.7 billion in investment from Saudi Arabia. The United Arab Emirates was second among Middle East Arab countries with $1.8 billion in investments, according to the data.
(Excerpt) Read more at foxnews.com ...
Yes, good for the foreign "investors". When the shock "therapy"/fire sale rapid privatization was applied to the countries of former Soviet Block, the foreign "investors" also bought the national assets.
Problem was that they did not "invest" to create new things, they just grabbed the already existing assets at bargain price and now they are taking profits out.
This rhetorical game has been played dozens of times since at least the 1970s.
The trade deficit means less and less every year as companies are more interconnected globally. Walmart makes a lot of money as an American retailer selling goods produced in other countries. Walmart is one of the nation's largest employers and one of the greatest businesses on the planet.
It is emblematic of how trade deficits are probably good-- if they mean anything. How many times do we have to observe recessions reducing trade deficits before we conceed this point?
Lower trade deficits mean consumers dont have the money to buy their cheap chinese vcrs. That's it. That's all it means.
No.
There is no net loss to our economy. Having American workers make expensive VCRs does not do us a bit of economic good. Havaing American workers make various other products out of component foreign products is smart business. The overall US economy continues to grow 3-5% each year. This is a massive global engine of growth that is roughly 13 trillion dollars in size.
The bigger our trade deficit, the more active and powerful our economy.
Do you really feel like you and our economy took a loss when you bought that chinese VCR for $25? You got a piece of technology that should cost $200 in American effort for 1/8 the cost. The economy and you were improved by this purchase.
>At the end of 2004, the total foreign direct investment in this country came to $1.53 trillion, 8.2 percent more than in 2003.
Does anyone know if this is an increase in the fraction of total investment? IOW, did total investment increase by more or less than 8.2%?
So, if we shut down large exporters like Boeing and Hollywood then our economy would be even more active and powerful than it is today?
http://www.bea.gov/
Good point.
But if "we shut down" by manner of economic choice -- yes that would in substantial respects be true.
If for example, the Europeans continue to subsidize their airline industry massively, it might be better to take a free ride on European taxpayers and get cheap airplanes. The saved money can be spent expanding our economy in more efficient ways.
The Europeans certainly do that with their security.
I do not recommend shutting down Boeing. Shutting down Hollywood would be fine with me but probably will not happen.
I have not seen any evidence in these articles that businesses are being "shut down" in order to increase the trade deficit.
That would bother me. The only intervention I can see is the Dubai port deal-- which I think should have been allowed.
If you think this is worrisome, wait till the Chinese revalue the Yuan, stop selling things to us, and start buying us out for dimes on the dollar.
In what ways exactly? We don't build factories anymore - we build houses. We don't provide steady employment to the middle class - we are turning them into a transient society. What are those expansions you are talking about?
I actually do not disagree with you potentially refusing to buy Chinese products because they are produced by slave labor and such. In fact, I think consumers should be more aware of this possibility.
I would even support more specific labelling of foreign products to indicate if they came from certain rather despotic locales within China.
I do not think free trade reduces our security. I think it tends to improve it even in the case of China. Sadly, our best chance of overcoming China is the potential collapse of their emerging economy if they tried to cut us off as many on threads such as these suggests.
Ironically, I do support the trade embargo with Cuba which is an inconsistency in my position which supports your viewpoint.
I would rather news sources print stories about the inhumanity involved in such product productions rather than deceiving the public about the dangers of a trade deficit. The more consumers resist chinese products perceived as inhumane in their source, the more pressure we put on China.
The most obvious expansion is the housing market which you seem to not like.
Real estate sales is an immediately contingent part of that economy which is also growing.
It is difficult to say what happens with the $175 you save on a VCR. You might spend it on home improvements. You might save the money. The GDP continues to increase 3-5%-- this is a legit statistic and suggests that wise choices for that $175 continue to be made.
The U.S. continues to grow at a strong rate in comparison to other robust mature economies in Europe. The US continues to be the largest global economy.
It really does seem like free trade has a long empirical record of success.
Where do the protectionist arguments ever prove true?
"This rhetorical game has been played dozens of times since at least the 1970s."
That would be great if two things were happening. One, if we were the ones getting the profits. Two, if were the ones producing. We ain't, and that has been changing for the negative since the 70's, and it is getting harder and harder for the US to make profit.
You are less well off financially than your parents?
And you think this would be observably true for most Americans?
Consider this.
If there were any truth to your suggestion, people would be flocking out of America by the millions to seek a better life in the capital infused alternatives.
This is not happening. In fact, quite the reverse is happening. For some reason, every person on the earth is desperate to get here for a chance at the impossible circumstances you describe. We are not talking small numbers here. Torrential numbers of people pour into this country each year-- more than all nations combined.
For some reason-- and this has been going on for quite some time-- no one seems to be getting the message that life in America is becoming increasingly economically unsustainable.
It doesn't produce anything more than the house. It's a one time thing. Who will live in the houses that have been built once the baby-boomers die off? It's not that far off.
Real estate sales is an immediately contingent part of that economy which is also growing.
That doesn't represent a growing economy. Simply shifting money from one person to another does not constitute a productive economy. In fact, it can be argued that the real estate agent's cut is a slowing factor to that section of the economy.
It is difficult to say what happens with the $175 you save on a VCR. You might spend it on home improvements. You might save the money. The GDP continues to increase 3-5%-- this is a legit statistic and suggests that wise choices for that $175 continue to be made.
Where do you get the $200 vs. $25 figure for VCR's? I don't see VCR's for $25. They average about $40 and since none are made in the U.S. your number is made up.
It really does seem like free trade has a long empirical record of success.
There is no such thing as free trade. If there were, there would not be people such as yourself clamoring for it. All trade on this planet, is regulated in some way.
I have yet to be shown where free trade has worked and lived up to the claims of free traders.
NAFTA is a prime example. It may have benefited the mexicans in some way but for us our trade deficit has increased ten fold since it's ratification.
Leaving the dirt poor countries of Latin America is a natural choice. Any time they come here their standard of living increases ten-fold. That's why they come.
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