[skiwi]

Breaking News from the Herald Sun From correspondents in Washington 14oct04
THE Commerce Department reported today that the United States recorded a $US54 billion ($74.55 billion) trade deficit in August, the second highest level on record. The politically sensitive deficit with China hit a new high as American retailers upped their orders for cell phones, toys and televisions. The Commerce Department said the August trade deficit in goods and services was 6.9 per cent higher than a $US50.5 billion ($69.72 billion) imbalance in July. A small 0.1 per cent rise in exports was dwarfed by a 2.5 per cent jump in imports.

For the year, the American trade deficit is running at a record annual rate of $US590 billion ($814.58 billion), 19 per cent higher than the previous record, last year's $US496.5 billion ($685.49 billion) imbalance. Imports climbed 2.5 per cent to a record $US150.1 billion ($207.23 billion) in August, reflecting a 12.2 per cent jump in petroleum shipments, which rose to a record $US15.6 billion ($21.54 billion)last month.

US exports edged up 0.1 per cent to $US96 billion ($132.54 billion) in August following an even larger three per cent gain in July.
Economists are hoping that an improving global economy will lift sales of American goods overseas. Sales of American cars and auto parts did hit a record, rising to $US7.8 billion ($10.77 billion) in August.

The US trade performance has become an issue in the presidential race with Democratic challenger John Kerry charging that President George W Bush has not done enough to protect American workers from unfair trade practices from low wage countries such as China.

In last night's final debate, Kerry criticised Bush for failing to pursue an unfair trade practice complaint against China on the grounds that it has rigged its currency system to keep the yuan undervalued by as much as 40 per cent against the US dollar, giving Chinese products a huge competitive advantage against American goods.

In a second economic report, the Labor Department said the number of Americans filing new claims for unemployment benefits rose by 15,000 last week to a seasonally adjusted level of 352,000. The four-week moving average of claims, which smooths out weekly changes, rose by 4000 to a seven-month high of 352,000.

The report on jobless claims reflects a labor market that is continuing to confound economists' expectations. The country added a lower-than-expected 96,000 jobs in September as the unemployment rate held steady at 5.4 per cent. In August, the trade deficit with China climbed to a record $US18.1 billion ($24.99 billion), pushed higher by a surge in demand for cell phones, toys and games, televisions and VCRs, reflecting efforts by US retailers to stock their shelves in advance of the holiday shopping season.

The administration accuses Kerry of being an "economic isolationist" and argues that its policy of pushing to open foreign markets by negotiating free-trade agreements with other nations represents the best approach to keeping America competitive in a global economy. However, the nation has lost 2.7 million manufacturing jobs over the past four years and some sectors vulnerable to foreign trade such as textiles have been particularly hard hit.

[Annatar]

Even without peak oil, there will eventually be a stockmarket crash if people do not get their debt under control. Too many people are living beyond their means.

[Permanently_Baffled]

I think Iron fist is right, and it could be a blessing in disguise, a world recesison caused by a US downturn could ease the oil situation for a few years. Although it only delays the inevitable , but might give me a few more years to clear the mortgage ....

[MonteQuest]

October 15 – Dow Jones (Steven Vames): “Whether they like it or not, some Federal Reserve policy makers are becoming de facto representatives for the dollar. It has been subtle. A comment here and there that involves the dollar, often stating obvious facts that could just as easily have come from an Economics 101 textbook. They have mostly been related to how the U.S. economy will address the giant current-account deficit. Some have been academic, others more tongue-in-cheek. A prime example came from Dallas Fed President Robert McTeer, who on Oct. 7 mischievously let a New York audience in on a not-so-secret economic theory, by whispering through cupped hands into a live microphone that ‘over time, [b]there’s only one direction for the dollar to go’ and that’s lower.â€

[MonteQuest]

Credit Bubble Bulletin, by Doug Noland


[quote]With massive U.S. Credit inflation manifesting predictably in a $600 billion annual trade deficit, there is little mystery surrounding the perpetually weak dollar. That the dollar has not been able to rally from a more than 2-year bear market despite strong financial markets, an expanding economy, and $500 billion of Asian central bank purchases over the past 12 months does not portend positive prospects for our currency or markets. Moreover, indications of Monetary Disorder are becoming more conspicuous by the week. Crude oil has spiked to $55, while wild volatility is wreaking increasing havoc in various commodity markets (copper!). Currency markets are becoming increasingly unstable, while the Treasury market is in the midst of a destabilizing “melt-up.â€

[MonteQuest]

It's a whole new ballgame, folks! Check out these charts:

$this->bbcode_second_pass_quote('', 'T')he world’s central banks are creating too much paper money to allow interest rates to rise. In this new age of fiat money, the rules have changed. From now on, the supply of money will be at least as important as the demand for it in determining interest rates.

[big_rc]

Monte,

Please explain the significance of the post for us economically challenged folks here at PO.com.

Thanks

[Theo]

Wait, I'm confused! We don't have enough debt? We need to spend more money to increase our debt so that our trade partners can reinvest their dollars in our debt? I don't get it.

[chris-h]

I just talked to a friend of mine (that has lots more money than i do) and advised him to sell dollars and buy euro.

[MrBean]

$this->bbcode_second_pass_quote('Theo', 'W')ait, I'm confused! We don't have enough debt? We need to spend more money to increase our debt so that our trade partners can reinvest their dollars in our debt? I don't get it.

[Kingcoal]

I'm skeptical that the euro will become the new international currency because the Europeans will have to be willing to service the world market with euros (to finance oil purchases for instance) which means they will have to buy A LOT more from other countries than they do now. Unlike the US, which adjusted to being a service economy years ago, there would be huge shocks for European manufacturers, who are used to having the upper hand. Somehow I just can't imagine a German autoworker being told that he's being downsized!

The way I look at it, expensive oil is a currency killer, no matter what currency it might be. Gold is the way to go in my opinion:

http://www.zealllc.com/2004/goldoil4.htm

[Theo]

Wait, I'm still trying to understand bonds. So what does the yield mean? How is that different from the interest rate? Just taking a stab here, the US Treasury sells $1000.00 T-bills at 4% interest meaning you get $40.00 each year. But if demand for those bonds goes up you buy one for $1100.00 but you're still getting $40.00 so now the yield on them is (using my calculator): 3.64%. So if my model is correct, that would mean demand for bonds is high which would explain the whole not-enough-debt thingy. Now what does this mean again?

[nero]

$this->bbcode_second_pass_quote('Kingcoal', 'S')omehow I just can't imagine a German autoworker being told that he's being downsized!

[Theo]

Okay, I'm going to just keep thinking out loud here.

So if there is high demand for bonds then I guess that means there isn't high confidence in the stock market (US economy) and people would rather put there money into fix income low yield bonds. But if all that says is we have a weak economy, big deal. Isn't the time to worry when they don't want to put their money into the stock market or the bonds and simply try and dump our currency?

[MrBean]

$this->bbcode_second_pass_quote('nero', '
')
I got this vision of greenbacks being transformed into the worlds ugliest paper mache jewelry. (My point being that the dollars don't "end" up in any of those things they get exchanged for them)

[MrBean]

$this->bbcode_second_pass_quote('Theo', '
')Isn't the time to worry when they don't want to put their money into the stock market or the bonds and simply try and dump our currency?

[MonteQuest]

$this->bbcode_second_pass_quote('big_rc', 'M')onte,

Please explain the significance of the post for us economically challenged folks here at PO.com.

Thanks

[frankthetank]

link $this->bbcode_second_pass_quote('', ' ')Agriculture may add to trade deficit By Tim Linden, 11/17/2004:
On Nov. 22, the U.S. Department of Agriculture is scheduled to revise its agricultural trade figures for fiscal 2005, and for the first time in 45 years, it could be a net deficit.

[lawnchair]

Impressive indeed.

The US is still 'feeding the world'. We export huge amount of wheat, rice, maize, and derivatives (corn sweetener). These are not things that we get a big $/kCal bang out of, though.

The refusal of many nations to buy US beef is probably helping this trend. Still, I've been very suprised in the last year. More of the fresh produce in North America is from Mexico and South America... a long-running trend. But, in the last year, the cheapest canned fruits (pears, pinapples, strawberries) and even a few vegetables in the 'dollar store' range have been coming from China.

Holy cow... someone's picking a pineapple in China, getting diced and canned and crated, shipped to N.Am (16 ounces of mostly water), distributed and sold for 50cents. (And the can is probably an old Soviet tank, dismantled by Chinese scrap metal vultures). The fossil fuel age is amazing.

[savethehumans]

Looks like there's no chance for the NON-lunatics to take over the asylum, huh?