pan6467

So, why if Bush believes in his economic policies so much is he so willing to borrow more money from foreign countries than ALL OTHER presidents combined?

And why is there not a Conservative movement against this? Eventually this debt along with the national debt and the trade deficit are all going to come due and these countries are going to expect payment.

And what exactly has Bush promised these countries to get the money?

Why if we are such a great self sufficient country are we borrowing money?

What countries have we borrowed from? (I'm sure my friend Host will have more info on this.)

I am beginning to see the partisanship is as a country in severe decline in every aspect and noone willing to bite the bullet and take control to stop it. Instead the fingers are being pointed at both sides as the cause and continuation of it.


Another reason for the Neo-Cons to show their loving support for Bush. I await their excuses.

Link: http://www.house.gov/apps/list/heari...ks_record.html

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

pan6467

And it has not helped us at all..... our budget is still way out of control, those tax cuts for the rich sure are working aren't they? Instead of raising taxes we'll just increase the debt limit and borrow money from foreign governments and banks..... that's a very great policy to support now isn't it?

But of course Blue Dog is a bunch of Democrat Reps. so what do they know, huh?

We citizens are expected to pay-as-we-go why won't GOP Reps. support this for our government?

Why is this great "conservative" President not supporting this action? OOOO That's right his solution is to keep cutting taxes for the rich and keep cutting social spending and to keep borrowing money from FOREIGN COUNTRIES AND BANKS....... what a great, great leader he is

Link:http://www.house.gov/cardoza/BlueDogs/11_18_04.htm

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

Willravel

Perhaps this would be an excelnt platform for the candidates in the next election. Instead of worrying about being attacked by unarmed, broke countries, maybe we can worry about acting like we're a kid who just got our first credit card.

Fiscal responsibility is as important as national defence in my book. I don't want to have to pay massive taxes later just to make up for complete financial incompetence now.

pan6467

The tax cuts were supposed to cut the deficit in half..... yet we're going to run $300 billion deficits for the next 10 years?

I thought Bush was coming into power with a nice surplus predicted, yet he leaves with record deficits? And the Conservative Right is ok with this?????? It takes a group of Dem. Reps. to push this?

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

stevo

Don't confuse the national debt and federal deficit with the trade deficit, as they are seperate. The accumulated federal deficits are just the spend-happy government spending more than they are raking in. Something I don't think anyone is happy with if it continues for a prolonged period of time. But bush's "tax cuts for the rich" have actually acted to INCREASE tax revenues. But on to the title of the post and what this post is all about - the trade deficit. The trade deficit is the most misunderstood aspect in economics. The most important economic truth to grasp about the U.S. trade deficit is that it has virtually nothing to do with trade policy. A nation's trade deficit is determined by the flow of investment funds into or out of the country. And those flows are determined by how much the people of a nation save and invest - two variables that are only marginally affected by trade policy. An understanding of the trade deficit begins with the balance of payments, the broadest accounting of a nation's international transactions. By definition, the balance of payments always equals zero - that is, what a country buys or gives away in the global market must equal what it sells or receives - because of the exchange nature of trade. People, whether trading across a street or across an ocean, will generally not give up something without receiving something of comparable value in return. The double-entry nature of international bookkeeping means that, for a nation as a whole, the value of what it gives to the rest of the world will be matched by the value of what it receives. There is no "selling out" to other nations.

One of the first things I learned in Macro101 and still remember is:

Savings - Investment = Exports - Imports

If a country runs a capital account surplus of $100 billion, it will run a current account deficit of $100 billion to balance its payments. What the trade deficit represents is that other countries are willing to invest their dollars in our country. It means we are an attractive country in which to invest. There is nothing wrong with running a trade deficit. Trade is good.

But if it was your policy to reduce the trade deficit one would only need to increase the domestic saving rate. Another way would be to reduce investment, but I don't think many people would advocate that, because investment is a good thing too.

In summation, the trade deficit is nothing to get worked up about.

__________________
"If I am such a genius why am I drunk, lost in the desert, with a bullet in my ass?" -Otto Mannkusser

stevo

Upon further inspection I see you were talking about the budget deficit and not the trade dficit. Thats good, because the trade deficit is nothing to get worked up about.

As far as the budget deficits go, congress should spend less money. And there is empirical evidence that shows that tax cuts do increase tax revenues. it is not a straight-line formula, but more like a curve. A quote I had in my earlier post shows that this deficit is still nothing to worry about. 1 trillion may seem high, but as a percentage of GDP, it is not the highest we have seen.

http://www.npr.org/templates/story/...storyId=4800924

__________________
"If I am such a genius why am I drunk, lost in the desert, with a bullet in my ass?" -Otto Mannkusser

jorgelito

But if trade deficits are not a big deal then why is George Bush overseas trying to reduce it? It seems like all the politicians and unions etc....are all getting worked up over the trade deficit. I think even Greenspan commented on it too (not sure please correct me on that).

It seems the govt. is always making China, Japan the bogeyman in trade deficit and how we must reduce it etc.

So which is it then? If it's not a bad thing, why make it a big deal?

samcol

It doesn't matter if tax cuts improve tax revenue. The government is still spending more than it is bringing in, hence the word 'deficit'. A deficit has the net effect of a tax hike because the government has to raise taxes, borrow money, or print more money to pay for it (all of which either lower the value of the dollar, or take more money out of your pocket).

Deficits = Future tax hikes.

Pan, the only thing I disagree with you about is that you think we need to increase taxes to secure a balanced budget. Increasing taxes will do nothing to help the deficit as long as we have politicians that have no regard for a budget. They already have an unlimited supply of money in their minds(borrow money, print money). Giving them more money is just huring you. You want to give more money that you could be spending responsibly to a government who has shown time and time again to spend it irresponsibly.

If you had a son or daughter who ran up the debt with your credit card, would you hand them another one, or even your checking account without teaching them a lesson first. It would seem pretty foolish to me.

I think the government should learn to spend what it has before we foolishly give them more.

shakran

It's all a question of balance. If I'm far in the hole financially, I am certainly not going to go to HR and ask them to reduce my salary. By the same token, if the government is in debt, it should not reduce its tax rates.

Now, let's go over what Republicans always say when someone points out the fact that Clinton improved the economy. You remember that old line don't you? "nonono he didn't! Because see it takes 8 or more years for a president's economic policies to effect the economy!"

OK. Let's draw logical conclusions from that. Bush has been in office for 5 years. 5. Not 8. Not more than 8. Therefore, according to that wonderful republican "logic" Bush and his tax cuts are NOT improving the economy. Clinton's policies are taking effect right about now and are improving the economy.

And now the Republicans will say "well no but we NEVER said 8 + years!" (because this is what they say when you point out that their own words are biting them in the ass - they deny reality by claiming to have never said it in the first place) at which point I will say OK, then Clinton WAS responsible for improving the economy during his administration.

Therefore, no matter what stand you take on how long it takes a president's economic policies to effect the economy, Clintons policies work perfectly. Either they work perfectly long term or they take a few years to work. Either way, it's clear that there is another way to improve the economy than reducing taxes on your rich friends while spending as much as possible.

pan6467

Of course........ just fuck it!!!!!! Great attitude. We'll borrow 1.05 TRILLION, pay some national debt offand be set because that 1.05 Trillion goes toward trade deficit and we don't have to worry about paying that.

Hey America, step up for some "fuck the debt" lemonade.

Bush is going to be running $300 BILLION deficits, at least. But it's ok, first we budgeted for him to spend $422 billion, then we just yearly add ontohow much total debt we can have, that allows us to spend without any regard whatsoever.

Then Bush will go overseas and borrow another $1.05 TRILLION to pay the deficit. Course he promises those countries they'll get their money back. So we'll invest that money into the rich corporations so that they can create jobs and we can have factories and a tax base again. This will eventually pay that debt off.

Wait a second.

That's right what was I thinking?

We ship the jobs overseas lower the company's overhead, lower the pay scales here in the US, tell people labor has it too good if they complain, and that's better. Don't know how but it is.

So now we owe this $1.05 TRILLION and we GIVE these countries our jobs too.

What a fucking bargain.

It's great to be a Bush fan and live knowing that our future is A-OK , "best president ever" they say!

And it is still all the Dems fault because they are in...... ooooo wait, the GOP is in charge of both houses and the Presidency...... but it's still the Dems fault, by God.

Better think of something fast before people see the truth...... WAR, Jesus in schools, Abortion, Terry Schiavo, CIA leak, 10 Commandments in the courthouse..... unpatriotic to question during war, you radicals......

How dare I be such a gloom and doomer, I will hold my head in shame now.

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

pan6467

I donot believe tax increases are the answer. At the rate we are going they will be the only answer and the rich will be paying a burden they will not be able to fathom.

No, the only way out of this is for government to invest in industry, create and keep decent waged jobs here.

By doing this you increase the amount of tax revenue coming in because of better wages and having factories again. And you never once had to increase tax rates.

You rollback the tax cuts on the rich (it's either roll them back now and invest in the country and jobs or eventually raise rates well beyond anything they ever paid before).

But of course that is not the GOP/Bush answer........... his and his followers answer.... borrow $1.05 TRILLION FROM FOREIGN COUNTRIES AND BANKS (we just add it to the trade deficit and laugh it off, Heaven help us if and when they ever decide to collect), send jobs overseas, and cut the taxes on the rich. Somehow that makes no sense.

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

stevo

The staggering 1.05 trillion isn't borrowed soley from international governments - it also says financial institutions. The bulk of the money borrowed to cover the deficit is owed to the American People. If you hold t-bills or t-bonds the government owes you. They issue the bonds to cover the debt. Foreign governments also buy US treasuries, but they do so because they see it as a good investment. No one would buy them if they thought they were going to be worthless.

When dealing with budget deficits, it does not matter if you pay them off by raising taxes now, or borrowing the money and raising taxes later. They expected value of future tax payments remains the same. See Ricardian Equivalence.

Clinton had a buget surplus, not because of his fiscal policies but because we were in the midst of a tech boom. Remember how the DJI went from under 5,000 to over 10,000 under Clinton? It had nothing to do with his fiscal policies. There were buget surpluses during the clinton admin because of a stock market boom, techinical advancements, the end of the soviet union, and no war. The best thing a president can do for the economy is to leave it alone. Bush came in and saw buget surpluses left by clinton as proof that the american tax-payer was being taxed too much. (I see it that way too, surpluses should belong to the tax payer, not the government) Bush was in office less than a year when the tech bubble burst and 9/11 happened, neither of which was bush's fault (I know some people think everything is bush's fault). Compared to our economic standing in Oct. '01, our economy is doing very well. Unemployment is down to 5.1%, the DJI is nearing 11,000. Bush's tax cuts early on are now proving to increase tax revenues.

There is just a lot of pessimism, and you can worry and fret all you want, but I just don't have the time.

__________________
"If I am such a genius why am I drunk, lost in the desert, with a bullet in my ass?" -Otto Mannkusser

Charlatan

Seems to me that this is the biggest money pit in the American economy... fighting a war that was truly uneccessary. Had the US just invaded Afghanistan and concentrated solely on Afghanistan (rather than getting distracted with Iraq) there would be a much lower debt and deficit.

Of course, everyone would be a lot less safe, right?

__________________
"My hands are on fire. Hands are on fire. Ain't got no more time for all you charlatans and liars."
- Old Man Luedecke

samcol

The talk of budget surpluses is just rhetoric so long as the national debt goes up each year. Clinton and Congress managed to spend more than they brought in every year of his administration. There was no Surplus.

pan6467

Amazing, the Right who claim the government taxes too much and supposedly worries how government spends money comes up with excuses to say that the borrowing of the 1.05 TRILLION and the deficit spending of 300 Billion for the next 10 years and the constant raising of the debt limit is "ok".

Which I have serious problems with borrowing any money from foreign countries, yet Bush and his followers believe there is nothing wrong at all.

The bonds still have to be paid and T-Bills come due and people whoi buy them expect the money to be there and that it is worth something more than what they paid. The borrowing of the money from the banks and the foreign governments will come due, and they will expect payment of more than what they gave.

So basically, the argument from the right so far is, don';t worry about the debt because it will never come due.

This expectation of tax revenue to be the same is very optimistic considering downsizing, layoffs, huge companies filing bankruptcy and maybe gone, shipping jobs overseas and less pay. So with those coming and here, how is this tax base growing?

Ah, but the Bushy's still clasp to the "it's getting better", unemployment claims are down, the DJI are going up.

Yeah, you ever watch the market, the stocks go up when unemployment goes up not down.

As for the unemployment rates, they base those on new filings and after you have expended your allotment employed or not you are no longer in that count. Plus, if you get a job with lower pay, you are no longer listed, however that tax base you were supposed to be paying into is now lower and that means lower income for the government and you.

BTW, what happens when these countries and banks do not like what our country is doing and decide to collect their debts?????????

I know according to Bushy's we just print up all the money we need. Thereby inflating the whole damned economy to the point of destroying it.

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

Charlatan

The big question is what happens if the oil producing nations begin to trade oil in Euros rather than US Dollars?

Most western currency is pegged to oil in a similar way to how it used to be pegged to gold. As international powers choose to do less business in US dollars in favour of other currencies, this will have a real impact on the US economy.

__________________
"My hands are on fire. Hands are on fire. Ain't got no more time for all you charlatans and liars."
- Old Man Luedecke

stevo

I never said it was OK. I said that it doesn't matter if we raise taxes now or later, the expected value of those tax payments remains the same. Obviously it is best to only spend what you have, but if you do spend more the sky will not fall.
If another country wants to buy US treasuries and invest in this country that is good for us. That means their $$ are helping you and me obtain a higher standard of living. They could invest in any country, but they chose the US. wonder why.

Thats the whole point of investing.

not really. Treasuries come due everyday.

You watch too much lou dobbs. I have a secret for you...lou dobbs is full of shit. One thing that you can use to look at the state of the economy and how much value people place on businesses is the stock market. When the stock market goes up, people see value and strong companies and choose to invest in those companies. The stock market is generally a good indicator of how companies are doing. With the picture you paint, the stock market should be swirreling around in a toilet about to go under.

You can't be serious? Where did you study economics? Since this isn't the best forum to do regression analysis, and I don't really have the time right now to run one to prove it to you I'll just post a few graphs for you to look at, then tell me there is a positive relationship between the stock market and unemployment. note that the unemployment rate graph starts in 90, while the sp500 graph starts in 96. If anything there is an NEGATIVE relationship between the stock market and unemployment.





So are you telling me that the unemployment rate is a bogus indicator and should not be used for anything? I know how they calculate unemployment, and its a relatively accurate measure. Do you have a better one? Data is collected on new filings, and that is what they report every month. They also calculate the unemployment rate based on the percentage of unemployed in the work force, and yes, you have to be actively seeking a job to be counted as unemployed. If you have given up and thrown in the towel, you aren't counted, but that doesn't make the unemployment rate a bogus number.



Take a look at per capita income. Contrary to your belief it is growing and has continued to grow through out 2005. IF I had more time I would find the latest release from BEA, but I've spent too much here already today. I'm sure if you want you could look it up.


They try to sell their treasuries to another party. But they can't sell them back to the US treasury until they come due or until the US treasury calls them in.

Thats exactly what the "bushys" are saying.

I don't think I've heard that from anyone.
==========

There is mixed data, sometimes employment growth is not as good as expected, other times it is better. Inflation appears to be moderatly on the rise due to higher fuel costs. But, honestly, the sky is not falling.

__________________
"If I am such a genius why am I drunk, lost in the desert, with a bullet in my ass?" -Otto Mannkusser

Willravel

That's true, but you should actively seek out ways to stop or reduce spending as much as necessary to begin to get your credit back and keep yourself from becoming bankrupt. With the money you save by cutting back, you pay off your debts. Once you have reached 0 again, then you plan better so it doesn't happen again.

stevo

Cutting spending is definatly an approach that will go toward reducing budget deficits. Raising tax revenues is the other. There are many ways to raise tax revenues without raising taxes themselves. An increase in investment and increasing economic output both act to raise tax revenues. Both are done without raising taxes. Actually, lowering taxes helps to increase both investment and economic output. More money goes toward things like investing in new compaines, reinvesting profits back into the company, spending money on R&D. From there we get innovation and companies become more profitable than before. New technologies and innovations spread throughout the industry helping to increase economic output overall. Not only is one company more profitable, but many companies become more profitable. When a company is more profitable it can pay its employees more. These are all things that increase income both for the business and for the individual. When income rises across the board the government collects more in tax revenues than it did previously. All this is done by lowering taxes.

If raising taxes were the answer, do you think a 75% tax rate would help or hurt the economy? thus, would a 75% tax rate raise tax revenues or decrease. I can garuntee you tax revenues would fall in the years following a 75% tax rate.

__________________
"If I am such a genius why am I drunk, lost in the desert, with a bullet in my ass?" -Otto Mannkusser

pan6467

Show me where I said raise taxes?

I said take the tax cuts Bush has made back, but as everyone else has stated tax cuts when heavily indebted and spending like a drunken sailor make no sense.

Below is a very well written article written by Michael Hodges, it explains and goes into great detail of our financial problem today.

The Bushy's keep ignoring blowing it off and giving excuses while they ship jobs overseas, the National debt alone now stands at $26,699.64 per person and continually growing.

The National debt right at this second stands at $8,066,143,318,410.41
and is growing. (info at http://www.publicdebt.treas.gov/opd/opdpenny.htm)
As you can see on the chart between Clinton's years 1993-2001 the debt increased roughly 1.4 Trillion (Less than .5 Trillion/year).

In 8 years, high but compare to Bush.

In Bush's years 2001-present it has gone up $2.2 Trillion in 4 years. ( more than .55 Trillion/ year), yet social programs like education, healthcare, small business loans, and so on spending has gone down.

But we need more tax cuts, we need to send more jobs overseas, we need to keep cutting wages for the worker but increase the wages for the CEO's.


Link: http://www.financialsense.com/editor...2005/0412.html

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

stevo

So this thread is about the trade deficit? I'm confused are we talking about the trade deficit or the budget deficit? Its important not to confuse the two.

Well on to the trade deficit... I don't like to argue by discrediting an author, but after 30 min of searching for michael hodges this is all I could find on the fellow. So the man has "been educated in" physics and was a business executive. He has no formal education in economics as far as I can tell. I don't know how much stock I would put on a man I'm not sure knows what he's talking about. He says: Not exactly true, We are not borrowing from the world. We are buying imports. It is also not a governmental issue, it is a private one. Private companies are importing foreign goods to sell to americans. The americans are buying the goods and the money makes its way to the producer. There is no borrowing, The government does not go in debt because of a current account deficit. We just buy more than we sell overseas. This also does not mean we are less competitive in an overall sense. As you can see from the graph below industrial production has contiued to climb even during times of historically high trade deficits. High trade deficits do not mean we are losing "industrial might" or "competativeness"


A current account deficit (trade deficit) means we have a capital account surplus - we are investing more capital than we are saving.
One of the biggest factors in the trade deficit is importing foreign sources of energy, i.e. oil. More domestic production of oil would go a long way to help the trade deficit. Relaxing the regulations on domestic exploration and extraction of oil is a place to start. So is alternative fuel sources, alcohol (ethanol) for one, and I'm an advocate of it. There are plenty of farmers on subsidy that wouldn't have to be if we switched from gasoline to alcohol. But thats for another thread I suppose.

The point I'm trying to make is that running a trade deficit may sound bad, but in actuality it is not the end of the world. You have a better standard of living because of it.

__________________
"If I am such a genius why am I drunk, lost in the desert, with a bullet in my ass?" -Otto Mannkusser

Charlatan

Stevo... biodeisel would make more sense than alcohol... but you're right it belongs in another thread.

The trade deficit just shows that the global economy is strong.

__________________
"My hands are on fire. Hands are on fire. Ain't got no more time for all you charlatans and liars."
- Old Man Luedecke

pan6467

The thread is about both, trade and national debt.

As far as Michael goes, and your argument is legitimate, he was a close friend of and his work endorsed by Dr. Milton Friedman, Dr. Friedman (born July 15, 1912), a 1976 Nobel Prize winner for excellence in economics, is one of the most effective advocates of economic freedoms and free enterprise. A Senior Research Fellow at the Hoover Institution.

Hodges work consists of "The Grandfather Economic Report". found here: http://mwhodges.home.att.net/#tribute, which consists of a well researched, well recognized report on the financial disaster we are headed for. Including many charts and graphs that have been used by prominent financial experts.

Another good site ( http://www.wealthmoney.org/debt2.html) includes this:

Let's make this simple. I'm the government I contract you to build a bridge for $240 Million. Now as you build that bridge I pay you, but I don't have enough money, so I print more money to pay you, I thereby create inflation, and decrease the buying power of that dollar I just paid you. So in the end that $240 million is only worth $200 million, yet you still have $240 million worth of bills, so you lose $40 million but I paid you the whole amount. (That is because you bidded based on prices being at a certain level, however with inflation the product you had to buy went up, but your contract value went down so you take a loss.)

The only other solutions are to increase taxes to pay you or to keep borrowing more money.

So either I keep printing more and more money and deflating the economy with skyrocketing inflation or I raise taxes or I keep borrowing money and create the same atmosphere, because in the end people's money just will not go as far.

Inflation hasn't gotten to that point yet, but it is coming. As long as inflation stays betwee -1 and 4% we are ok and can adjust quite fast, however, when the need for the money starts coming due, inflation will go up.

We have done well (figuratively speaking, because he has just postponed the inevitable) by having Greenspan and perhaps Bernanke can work numbers like him, but as deficit spending reaches new heights and the tax base keeps decreasing, it will get harder and harder.

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

samcol

The Grandfather Economic report has been the best website I have found for understanding the macro economics of the United States. Especially in learning how the national debt really does hurt americans citizens every single day and not just in the future. It's a great website to spend an afternoon reading.

martinguerre

Let me guess. You don't support surgery as a treatment for disease, because cutting people in two is a bad idea.

Nobody disputes that there is a point of diminishing returns on tax revenue. We just despute the bullshit that it's under our current rates. Raising taxes to somewhere south of your hyperbolic numbers is not going to have that effect.

__________________
For God so loved creation, that God sent God's only Son that whosoever believed should not perish, but have everlasting life.

-John 3:16

pan6467

A trade deficit against another country means that you rely heavily on the other country continuing to loan you product and not asking for payment.

When the debts come due, and they have to, or what is the purpose of even keeping track, the country holding the debt expects payment.

How are we going to pay?

The National debt and the fact that Bush has sold us out to other Foreign countries and banks, means that if we default on T-Bills, (which we won't do we'll just print up the money to pay thereby destroying our economy, most likely), those countries and banks will start collecting in other ways.

Right now a vast portion of our taxes goes to pay INTEREST, not for any programs to help us.

So we pay all this money in interest, and we end up short and borrowing more to cover the programs we need.

By cutting taxes and shipping jobs overseas, closing factories that paid taxes, closing private businesses that paid taxes, people working for less so less taxes can be collected from them, you are essentially destroying your tax base.

But the Bushys are more interested in company profit, they don't care that every job shipped overseas takes away our tax base. They don't care that cutting education and thereby falling behind in the world, cuts our children's futures to find a good paying job, thereby cutting the tax base.

They don't see that a country that does not make anything and is totally service oriented (as we are headed for) cuts good paying factory jobs, cuts wages, creates the need for these places to keep slashing prices so that people can afford to buy the products, however, manufacturing those products eventually will cost more than what they sell for as the cheaper labor has been decimated. (I can almost guarantee we have wiped exploited all the cheap labor we can find in Asia and we're going to be looking at Africa next for even cheaper labor soon.)

They don't see if the government doesn't have the money to invest in the small businesses (which were our greatest assets) and instead cuts those benefits and keeps subsidizing big companies with corporate welfare, you are cutting deep into the tax base, way too deep and not building any new tax base.

What happens when the labor and costs exceed the selling price? How long do you think it will take for the CEO's to close shop and use their golden parachutes, while workers are left to foot the bill?

Point is, the National debt and the trade deficit are intermingled and one may hurt us severely and take awhile to recover but together they will destroy us.

Look at GM, they go bankrupt, we're toast. They cut wages, we lose tax base. They move overseas, we lose tax base.

We cut their taxes (Or give them more corporate welfare) to keep them in business, we cut our tax base.

It's all about creating new tax bases so that you do not deplete your current tax base. But we haven't been doing that for quite a few years. We have been shipping jobs and factories overseas for cheaper labor and driving a death knell into our tax base.

Eventually it catches up and people want their money.

But what do I know? Tax base obviously means nothing when Bush keeps wanting to cut the rich's taxes.

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

scout

After reading the title I'm somewhat relieved. I thought that Mr. Bush had sold missile technology to the Chinese or something equally as traitorous.

I would think the "War on Terror" or "the Oil War" whichever you prefer is having a huge impact on the budget deficit. It seems every time we get into a skirmish the budget deficit goes bonkers. We also had a tremendous debt after wwII, Korea and Vietnam so I guess this isn't much difference other than the numbers are inflated to reflect todays dollars.

Pan, what would you propose we cut to decrease the deficit? Yes it's out of control but noone on either side of the aisle wants their cash cow cut. Neither side wants to stop the flow of illegal immigrants that are sucking the life blood out of us, cheap labor is to important to big business. Hell you can go on and on about what plagues this country but neither side is willing to step up, bite the bullet and fix the problems. Both sides know they are doing a terrible job that's why laws are enacted to protect themselves and their positions from a third party. When are we as taxpayers and voters going to say enough is enough?

This just isn't a Republican or Democrat problem, this is a Government problem but we continue year in and year out to reelect the same idiots, so who or what is really to blame?

pan6467

Personally, I would rollback the tax cuts Bush gave, pass laws that companies that do business in America no matter where their factories are must meet US labor standards and that includes minimum wage, 40 hour weeks and overtime.

Then I would reopen small business loans, cut pork like bridges to nowhere in Alaska and add all I could to education. Furthermore, I would work with the U.N. and any country willing to help us resolve the mess in Iraq so that we are no longer bogged down by it.

I would find ways to work with the manufacturing sector to find ways to get them to stay while paying employees fair wages and benefits.

I would hold accountable big oil and have them fund programs for the poor and elderly not just for heating and electric but for transportation. I would also have them set aside a %age to research and development of reuseable, renewable, cheaper fuels within 10 years. If they refused or held up progress, I would find companies that would take on the challenge whether in America or not and work with them on loans and grants.

I would hold accountable the healthcare and pharmaceutical companies and work with them for ways to lower prices. This is a HUGE problem that will bankrupt us if it is not fixed. The baby boom generation is aging and their health slowly going downhill with age.

I would surround myself with the best people in their fields (Economy, healthcare, manufacturing, technology and so on), and I would ask them how can we make America better, I could not do it nor want to do it by myself. What can we work on together, (Government, People and them) to ensure we move forward and realize our potential and not stay stagnant or regress like we have been doing.

I'd regulate mergers and buyouts of companies. If bank, oil company, cable company, computer company etc. "A" wants to buy or merge with company "B" then they need to show that job loss is minimal, there is a true need, there won't be a monopoly and the new company will not be heavily leveraged.

Then I'd work to unite the country.

Some of those are radical, some of those would change the way things are done, but if we do nothing and keep partisan fighting and ignore the problems thinking they will go away, they will continue to only get worse.

We are slicing our own throats in the name of greed, stupidity and refusing to work together as a country.

It is OUR tax money it should go to HELP the people not go to foreign countries and investors buying our T-Bills and holding our mortgages.

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

stevo

Wrong. I have bills for $240 million. The government prints up my $240million and pays me with it. That money may have less purchasing power than it did before I was paid, but I still have $240 million in cash. My bills are for $240million, I can pay them with the newly printed $240million just fine, no matter what it is worth. Inflation hits all of us. The debtor and the creditor. My $240 million today may just be worth $200 million yesterday, but my $240 million bill is now a $200 million bill. Understand? Cash is Cash. I'm not saying inflation doesn't matter, I'm saying that as long as the bill says I owe $240million, that doesn't change according to inflation. If I have $240 million in cash I can still pay that bill. Inflation hurts when I pay my creditor the $240 million and he can only go out and buy (yesterday's)$200million worth of goods and services with that money. He can't adjust his bill based on inflation after the fact.

It also appears you don't read anything I type. You still claim people are working for less and less, yet per capita personal income is up in all but 2 MSA's in the United States. per capita personal income is UP, people are not working for less and less money. Thats just misinformation you get from watching lou dobbs. What have I told you about lou? He's full of shit.

You also keep going on about how bushys are only concerned with company profit and don't care about the tax base going overseas, you do know that when a US company profits, it is taxed here in the US? When company profits are huge, tax revenues are also huge. A US company is based in the United States, but it can still do work overseas.

You are making my hair fall out! Where did you read this? This is 100% WRONG. like I said before a trade deficit is only where you import more than you export. It is also not a Government phenomenon, but a private one. Private businesses import and export every day all day 365. They also pay for the goods with every transaction. There is NO borrowing. I cant do this anymore, obviously you don't read anything I type. Start here and maybe we'll finish this discussion another day:

__________________
"If I am such a genius why am I drunk, lost in the desert, with a bullet in my ass?" -Otto Mannkusser

pan6467

Sorry, to disagree, but OUR trade deficit is more than just importing more goods than we export. Name 1 major manufacturing industry we have here that isn't on the verge of bankruptcy...... name 1.

Steel..... all but dead
Auto.... dying
Aerodynamics.... dying and very close to death
Heavy equipment...... dying, the Japanese and Chinese own anything that is left here....
Clothing..... DEAD
Electronics..... DEAD
Textile....... on it's death bed

And what we do manufacture is of poor quality and below the standards of our parents and grandparents when they were our age.

We OWE these companies money. Mitsubishi, Toyota, Sanyo, Sony, Daewoo, you name it.

We are in extreme debt to these people and countries. When Wal*Mart purchases say 50,000 Mitsubishi DVD players that money goes to Japan. Wal*Mart keeps their profit but the rest is gone.

If GM buys steel from AK the money is gone, AK pays their workers in Mansfield or whatever plant, but the rest is gone overseas.

When we buy oil from Saudi the money is gone to Saudi.

When we buy shoes made in Malayasia the money is gone from our market UNLESS the purchases are equal and we have the same amount of their currency coming in. We don't therefore they OWN us.

Why do you think Daimler was able to buy Chrysler, or AK Steel is owned by Japan, and so on?

We are selling away everything because we have no choice anymore, we are far too indebted because of the trade imbalances.

If you are GM and I am Japanese AK Steel and you buy $2 million worth of steel from me, the money goes to Japan. I buy $100,000 worth of you cars and say, I don't want anymore cars I want my cash, pay me.

(And before you say.... oh well AK Steel has factories here, little story from a steel town in Ohio and my hometown, Mansfield. AK was told they were violating EPA and had some true health hazards around their land they needed to clean up. AK said "Fuck you, we're not a US company, we'll pack up and just go overseas." Guess who won? AK was told to negotiate with the labor in good faith, they said "Fuck you we're not a US company..... we'll go overseas." Yet, they collect $10,000" in US corporate welfare that is supposed to be to save our steel industry.)

China does not make steel any cheaper than we do.... their government subsidzes their steel because they know they will and are destroying our steel industry here.

In the 60's the Japanese said we'll build your transistor radios and your toys and they were able to get US dollars in and destroyed those industries here, but noone cared. Then they came in with their cars and took over the whole electronics business. Now, they and other countries call the shots and we manufacture hardly any electronics here.

The car industry is coming to a head also. The Right wants to blame the union. But the truth of the matter is the money IS GONE OVERSEAS. Trade deficits like we are running are suicidal.

Makle all the excuses you want, or need to live with. But the reality is the trade deficits are killing us with a double edge. First by taking OUR money out of the country and it's gone. Secondly, by destroying our industries.

The rate we are going we will be a country where the citizens own none of the land nor any of the businesses, because at the rate our money is leaving us that is what is happening. Look at how much of America our great ally China owns, or the UK or Japan, then look how much interest they own in our businesses, how much land they own or how much of our national deficit they own in the form of T-bills and if they ever decide to pull out...... we're done.

That is what the trade deficit has done. That is the reality of it.

Now for inflation.

I speak from the experience my father taught me.

I contract you to build a building for $1,500,000. You go and buy goods to work on it as you go, pay your labor and so on. Now, as you buy your goods you notice the prices have gone up, so you are paying more for the materials and maybe to even to rent or run your equipment.

So a year goes by your done (if you made it that far). You figure out your costs and whoa.... you spent $2 million, you lost $500,000. You come to me and you tell me you lost money..... I laugh and say sorry I am contracted to pay only this.

That is what was happening in the late 70's and early 80's in the construction business. My father worked for one of the biggest contractors in the nation at the time and they went bankrupt (along with many others) because of this. Interest rates went up so fast and without warning that many businesses went bankrupt and whole industries never truly recovered.

It's not a question of "IF", it's a question of when is inflation going to hit.

We can sit there and accept defeat and come up with a 1000 reasons why the trade deficit is good and the national debt is truly nothing..... and we can watch as we lose everything we own, and inflation destroying us. The leaders who are in power want us to believe that all these are ok, because they can stay in power that way.

OR we can start looking for leaders to change things and get our asses in gear and rebuild.

I choose finding solutions and not following pipe dreams and fairy tales. Ichoose wanting a country that is financially free of other countries and is in good economic shape.

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

pan6467

BTW China, Japan, Taiwan, Europe can destroy our economy in a matter of hours because of the trade deficits we have with them.

All they have to do is sell all their US currency and debt for fifty cents on the dollar and start demanding payment of the trade debts...... and the dollar would valueless in hours.

Gates, Buffett, Soros, the world's richest men and top economists know this..... They feared in FEB. this year that Asia and these guys were going to do it.

To prevent them from doing it our country has to kiss their asses or face financial ruin...... IT'S A FACT.

LINK:http://www.swissamerica.com/article....n.txt#anchor15

Just a year ago Japan threatened to do it to us because they didn't like our policy.....

These people are just making sure the market for their goods will be ready in other places. Once their new markets are set ........... bye bye.

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

djtestudo

Maybe I'm missing something Pan, but if those nations did what you suggest, our economy might be completely destroyed, but there's would as well as they would eliminate the world's largest market. So they lose far more then by keeping the deficits.

That is why they don't do that.

I'm not an economics guy, so I could be completely wrong, but that is how I understand the situation.

__________________
"Final thought: I just rented Michael Moore's Bowling for Columbine. Frankly, it was the worst sports movie I've ever seen."
--Peter Schmuck, The (Baltimore) Sun

pan6467

Good point, right NOW. That's why my last sentence stated they are biding their time, waiting for China, Eastern Europe, Russia, and so on to open up and consume a little more.

As the article said China is the the fastest growing consumer nation, once they see that yeah there may be an intial hit, but they have stockpiled enough and they can handle it..... bam, the money is dumped.

Then they come in and just take what they want legally, as we have collateralized everything. They are just collecting debt, no war, no muss, no fuss....... the best part for them is it is all legal. Just like a bank foreclosing on your house, they will be foreclosing on our country.

I pray to God I am wrong, and I hope in 10 years you are laughing at me for having ever believed that this could happen...... I truly wish and pray for that.

However, IMHO the reality says it is just a matter of time before it happens.... unless we can get off our asses and get our leaders to fight back and stop this before it can happen. But it maybe too late to do anything.

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

djtestudo

I still can't see them eliminating a market of 300M people and calling it a good idea.

In fact, I could see that kind of thing causing the next world war.

Those nations doing that here could have a similar effect to what happened in Germany in the 1920s, causing a leader/party to rise (not necessarally fascist; keeping the democracy intact) that would make all the liberals' worst delusions of the present administration look like nothing.

I hate to use that particular comparison, based on the topics discussed here the past week , but I think this is a very valid one (as opposed to the rest )

__________________
"Final thought: I just rented Michael Moore's Bowling for Columbine. Frankly, it was the worst sports movie I've ever seen."
--Peter Schmuck, The (Baltimore) Sun

stevo

Pan, I'm sorry, but to anyone with any training in economics, it is obvious you do not know what you are talking about. I'm done trying to teach you what the trade deficit is all about, its obvious you aren't going to understand. But I would like to point out that aside from clothing/textile and aerospace, industries you claim are dead and dying in the US are just fine. I don't know where you get your information, but if I were you I'd try to find some data to back up my claims.

Take a look at Industrial Production Index numbers for the following industries:
Construction Steel:


Consumer Durable Steel:


Motor Vehicles:


Machinery:


Electrical equipment, appliance, and component:


Electical equipment except appliances:


Other electrical equipment and components:


^Some examples of industies you say are all but dead.

But manufactuing is dead you say. Well, lets take a look at the numbers.

Manufacturing:


Durable Manufacturing:


Nondurable Manufacturing:


Lets look at business equipment, thats a good one. If businesses are growing and new businesses are starting they're going to need to buy equipment and someone is going to have to make it. What do the numbers say? Lets look.

Business Equipment:


And finally, a look at the overall production of our economy...

Total Industrial Production:




So as you can see, industrial production is up. Clothing and textiles are down because it is cheaper to make them overseas, but we still hold comparative advantage in many industries in the US, we still employ millions in industry in the US. Overall, our economy is good, and getting better. I would even venture to say its the strongest its been in 5 years. Doom and gloom is no way to go through life, pan. The picture is rosier than you think.

__________________
"If I am such a genius why am I drunk, lost in the desert, with a bullet in my ass?" -Otto Mannkusser

Willravel

This is above my head. I need to find my old micro and macro economics textbooks. I have to say that this worries me, though:

pan6467

First Stevo, keep the debate civil there is no need to insult, as I have shown you respect. And no I have never taken a course in economics, but I can read, talk to professors on campus and research. And the fact that I was a stockbroker for a few years in the early 90's means I know absolutely nothing about financial news or reading company reports.

Secondly, how much of that is from foreign owned companies? AK Steel is producing more than ever, but it is a Japanese owned company and the money is going overseas.

Your charts truly show me nothing, like I said are those solely American companies, or do they include foreign owned companies, is that production solely in the US or is that production by US companies but around the world factories? Some commenting I guess for a dunce like me, would have been appreciated.

Thirdly, I guess that just because your charts show I guess manufacturing to be up that GM close to filing bankruptcy, and it was questionable as to whether they would or not until today when the CEO said "No"..... still questionable.


DJ,

If you open markets in Eastern Europe, Asia, Australia, Russia and so on and you are able to increase your profit margin and actually have real money and not IOUs coming in it makes a huge difference.

Plus, not all countries are in this economic war for just greed. The US is weak economically and coming apart, foreign countries and companies whether they like us or not aren't going to carry or debt forever.

There's 4.7 Billion other people in the world, there are great markets that once opened will provide more profit and stable economies.

I'm sorry every indication is that the dollar is riding on very thin ice and all it would take is for the Chinese to start dumping and everyone else following suit. Then foreclosing.

Yes, it could lead to backlash, but really what are we going to do, what can we do? What we're going to go to war because we refuse to pay our debts?

Some may come out chasing pipe dreams and having fantasies that these trade deficits and national debts and the fact that countries like Japan, China, UK own the debt is all ok fine, just shows our economy is strong..... to me and the articles and proof I have shown it shows we are becoming severely and dangerously in a position of being on the losing end soon.

It all comes down to economic freedom for our country and where our money is going, we have no economic freedom other outside entities hold our debts. As shown, Japan can say "we'll devalue your dollar, if you don't change policy"..... China is in far better position to do it also. So even if they do not foreclose, they are in position to dictate our policy to us.

I'm sorry, nothing Stevo has shown has even come close to refuting the evidence I have shown. When you have the richest Americans leaving dollars for Euros and Yuan.... it should not be a joyous event, it should scare the living Hell out of us, wake us up and get us off our asses and working to correct the situation.

Instead we have people saying it is all good and means nothing and they are chasing pipe dreams and not facing reality.

We're cutting education, we're cutting social programs, we're being strangled by our healthcare industry, we have other countries holding more of the US debt than it's citizens and we have proof that countries if they do not like policy will threaten to devalue the dollar.

Is that how you want to live? Under the thumb of an outside entity? Not me. This country can do better. It is time for us to either fight back and regain what we had, or kiss it all goodbye.

I predict we have 5 (maybe 10 years if we are lucky), to change this. I don't see us doing it. The Bushy's obviously are chasing pipedreams and fantasies and not reality. That reality is foreign entities own our debt and can devalue our money at their leisure and have threatened to do so.

Unless things change, these entities will own the GM's , the Ford's, the US Steels, and so on. We'll be their Malaysia, their Phillipines, their cheap labor.

Don't you think the US can do better? Chase pipe dreams if you want, chase the fantasies that foreign entities owning our debts is a good thing if you want..... and watch as we lose everything our forefathers worked for. Watch as the next generation has it worse than we did, and their children worse than them. Watch these other entities blackmail our policies to us.

As long as all these debts pile up, we are paying for those countries to be better educated, have better healthcare, have better standard of livings......

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

roachboy

a question (i am pressed for time so can only pose it directly)

given that stock has traded internationally since the early 1970s--which means that ownership of public companies/corporations is transnational-and given how the transnational style corporation has developed since then as well (organizations spread over any number of countries, changes in structure prompted by supply pool ideas/technologies, etc.) i am really not sure what a national balance of trade actually measures.
i wonder if the statistical frame used by nation-states to get an index of relative performance is not obsolete...

__________________
a gramophone its corrugated trumpet silver handle
spinning dog. such faithfulness it hear

it make you sick.

-kamau brathwaite

stevo

I'm not trying to insult you, pan. But your arguements are based on emotion and fear, not fact or data. I understand you are a very passionate person, an thats great, but a little bit of realism goes a long way. Economics is not about passion and emotion, its about rational decisions and arguements backed up by numbers. How is it rational for countries holding US treasuries to devaluate their own wealth? Its not. The only reason china, japan, or anyone else would sell their holdings US currency and for 50 cents on the dollar is if that currency was going to be worth 49 cents on the dollar the next day. Do you really see that happening? No one is going to artificially devalue the dollar out of spite or for the hell of it. Would you sell your investments at half price if you didn't have to?
I know you aren't a bush fan, but your worrying about the economy seems to be driven by your dislike of bush rather than the other way around. You cite reports on the economy from people who aren't economists. Your arguements sound like a Lou Dobbs episode. I actually had an assignment back in college to watch lou dobbs and point out where he was wrong and why. It was a long paper.

Will pointed out something that worries him But if we look at the value of the dollar vs. the euro since 2001, we don't see a sharp depreciation. We see a mild depreciation (during a recession), but no bank-busting, depression-era devaluation of the dollar.


I agree that budget deficits year after year are bad, after all, that is our hard earned money we get taxed every week on paying for pork-barrel projects and interest on the national debt. Thats not something to be proud of. If we didn't have such a huge national debt the money going to pay the interest could go to a more productive use.

But when you think rationally about the current account deficit you see that the trade imbalance is not going to be the end of the US or her economic might. And thats not fantasy or wishful thinking, its pragmatism. When we have a current account deficit (read: trade deficit) we also have a capital account surplus, which means we have investments coming into the country. A capital account surplus does point to debtor status, but when someone invests in you, of course you owe them. But that is not inherntly bad. Investment is a good thing. Would you rather we didn't have investments coming into the country? Foreigners could invest anywhere, but they chose the US. Obviously, they must have faith they will get a good return, or else they would have invested elsewhere.

When you look at the state of the economy overall, the data doesn't point to us not being able to pay for these investments. We are a dynamic nation. We are inventors and innovators. Our economy is doing well and growing. Maybe I'm too bullish, but nothing I see points to another depression.

__________________
"If I am such a genius why am I drunk, lost in the desert, with a bullet in my ass?" -Otto Mannkusser

pan6467

Well, Stevo, I guess we agree to disagree and see things sharply differently. (Of course by doing this and not carrying on this debate till we call each other names, insult each other's intelligence more, and spew true hatred at each other, I guess I am guilty of "surrender" as that is all we left seem to do.... according to another thread.)

But I have listed my facts and data and I feel the need to not justify myself or my beliefs any further. I am sure as you have posted you feel deep down the same.

We have shown those who are reading a good debate, they can ask questions and we can answer and refer them to more sources for which we have gotten our info, but I see from this point forward us just going in circles.

No offense to you, because my friend, for the vast majority you showed more respect than many posters on the right do. You took up my views and showed very culpable and extremely good points, as did I. It is up to those on the fence to decide whom they chose to believe.

And it is for time and history to determine which of us.... or perhaps somewhere in the middle to be right about the future.

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"