Compared to the more imminent, and much more immense fiscal crises
that the U.S. faces, SS fiscal stability and a disingenuous and diversionary
Bush "plan" to "solve" it, is pathetically laughable.
SS surplus last year......revenue taken in to the system vs. payments to
recipients, was nearly $138 billion. That surplus was borrowed and was spent
on other federal government budgetary items. The total surplus now borrowed
from SS, at the end of the last fiscal year was $1,355 billion ($1.35 trillion).
Source: <a href="http://www.ssa.gov/OACT/TR/TR04/IV_SRest.html#wp167619">http://www.ssa.gov/OACT/TR/TR04/IV_SRest.html#wp167619</a>
Not to worry, though. In addition to the incompetent and anti-middle class policy of the Bush tax cuts<br> <a href="http://enews.tufts.edu/stories/031804MetcalfsTwoCents.htm">http://enews.tufts.edu/stories/031804MetcalfsTwoCents.htm</a> , there are runious "incentives", such as the expired Bush tax credit for
businesses that purchased oversized, fuel inefficient SUV's before 2004.
The U.S. consumes 20 million+ barrels of oil per day, and imports at least
12.3 million of those barrels. A recent $25 rise in the cost per barrel has
increased our national energy bill by $300 million per day, or $9 billion per
month......no wonder we had a record, $55.5 billion trade deficit in just the
past month. Since there is nothing to indicate that this bankrupting trend
will ease, we are on a $660 billion annual trade deficit pace. An example of
the consequences of this trend:
Quote:
<a href="http://www.busrep.co.za/index.php?fArticleId=2339482">China, Japan holdings key to dollar health</a>
December 9, 2004
New York - With hundreds of billions in dollar holdings, China and Japan could provoke a global financial crisis if they start to cash out, but experts see this as unlikely.
Recent US Treasury figures showed that Japan had some $720 billion in US bonds - or about one-third of the total $2.23 trillion outstanding - and China held $174-billion worth as of late September.
Experts point out that this accumulation of dollar holdings has kept the greenback from collapsing and has effectively subsidised US consumers by keeping interest rates low.
But a halt to US bond accumulation or a liquidation of these holdings could send shockwaves through financial markets and lead to a precipitous drop in the dollar that could result in a global calamity.
David Solin, a currency analyst at FX Analytics, is aware of the potential for disaster but sees the risk as remote.
"I think there is very little chance of it," he said.
Japan and China "are both well aware it is in their own interest" not to liquidate dollars, which could hurt the United States economy, "still the main world growth engine."
However, there are some signs of concern. Over the first nine months of the year, Chinese bond purchases were up 11.3 percent, only about half the rate of increase of 2003.
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Foreigners who hold U.S. debt are converting it into tangible assets, and the
dollar falls in value. Since summer 2001, gold has moved up from $250 per
ounce to $450, and the Euro that used to buy .83 of a dollar, now buys
1.30 dollars. China has purchased copper mines in South America and is
buying timber and oil properties in Canada. No one desires to be holding
dollar demoninated instruments that will keep falling in value.
Look around you......consumer items that can be manufactured by easterners
who are paid slave wages have never been cheaper. Walmart offers a
$27.00 DVD player. This lulls you into a false sense of confidence. The dollar
will buy less resource derived value.....plywood, oil, silver, if it must be
imported, or competes on the export market. Here is a link to the container
shipments in and out of LA and Long Beach ports:
<a href="http://www.portoflosangeles.org/statistics/detailmonth.htm">http://www.portoflosangeles.org/statistics/detailmonth.htm</a>
<a href="http://www.polb.com/html/1_about/ps_teusMonthly.html">http://www.polb.com/html/1_about/ps_teusMonthly.html</a>
U.S. currency valuation has been destroyed by mismanagement, greed, and
gluttony. Germans produce more than 1-1/2 times what we produce per
barrel of oil consumed nationally. I have made no points about the federal
deficit or the dramatic increases to the money supply by the fed, yet.
Quote:
<a href="http://www.morganstanley.com/GEFdata/digests/20041025-mon.html">
Global: Cracked Facade </a>
......................In the end, this is a losing game. Intervention cannot neutralize the deadweight of America’s massive current-account deficit. That’s the message to take from the recent fragility of the strong dollar. For what it’s worth, I suspect that the dollar’s slide will accelerate sharply in the aftermath of the US presidential election — probably more so in the event of a Kerry victory than would be the case in a Bush win. Senator Kerry’s focus on trade and jobs puts him more in the camp of embracing market-based resolutions to global imbalances. In either case, however, the dollar’s coming depreciation will pose a great challenge for an unbalanced global economy. The flip side of a weaker dollar spells currency appreciation elsewhere — forcing the export-led economies of Asia and Europe to embrace the reforms long needed to unshackle domestic demand. If Asia continues to resist, it faces a growing protectionist threat from both Europe and the United States. I remain convinced that the world’s unprecedented external pressures will be vented in one way or another — through markets or politics, or some combination of both........................
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