Glad you appreciated the link. It is an eyeopener to just look at some hard numbers now and then. Personally, I was surprised how much a debtor nation Spain is, second only to the US. You'll also notice Greece is towards the bottom too.
I guess this means we could look to Spain as a flashpoint for TSHTF in Europe.. that deficit for their size is out of sight.
Also.. is it just me, or am I just not seeing where the money is going to come from to fund $1 trillion US annual deficits? The balance sheets of the creditor nations aren't as large as I would have thought.
Go ahead, add the numbers up. Where's the money going to come from? Even if China puts its entire surplus in treasuries, that gets us to just half of the TARP package.
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THE US Trade Gap Thread (merged)
Re: US has larger trade deficit than all other nations combi
by Sixstrings » Sat 13 Dec 2008, 08:32:58
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Re: US has larger trade deficit than all other nations combi
by Daniel_Plainview » Sat 13 Dec 2008, 08:44:00
Kunstler would love that link, as it shows the extent to which our clusterfuck nation, with its ever-eroding manufacturing base, has become ridiculously reliant on foreign imports, both in absolute and relative terms. The USA has pissed away its future, and has rendered it impossible to emerge from a depression.
America Has No Means to Recover from a Depression
Dustin Ensinger
OpEdNews
December 8, 2008
$this->bbcode_second_pass_quote('', 'S')peaking in front of members of Congress on Tuesday, economist Peter Morici, a professor at the University of Maryland, said the job loss experienced in November "was much worse than was expected … The threat of a widespread depression is now real and present." *** Unfortunately, during the Great Depression we had the capacity to innovate, manufacture and otherwise create wealth that could drag us out of the hole we were in. Today, we no longer have that capability. We have forfeited that ability through disastrous trade policies that have shipped the majority of America’s manufacturing prowess across the border and overseas. Without the capability to manufacture and create wealth, the U.S. will never truly recover. Today we are maintaining our living standards only with imports & through the good graces of our creditors who loan us money. How can our creditors have faith in our credit worthiness when we can only pay them if we can borrow money from someone else to pay them.
America Has No Means to Recover from a Depression
Dustin Ensinger
OpEdNews
December 8, 2008
$this->bbcode_second_pass_quote('', 'S')peaking in front of members of Congress on Tuesday, economist Peter Morici, a professor at the University of Maryland, said the job loss experienced in November "was much worse than was expected … The threat of a widespread depression is now real and present." *** Unfortunately, during the Great Depression we had the capacity to innovate, manufacture and otherwise create wealth that could drag us out of the hole we were in. Today, we no longer have that capability. We have forfeited that ability through disastrous trade policies that have shipped the majority of America’s manufacturing prowess across the border and overseas. Without the capability to manufacture and create wealth, the U.S. will never truly recover. Today we are maintaining our living standards only with imports & through the good graces of our creditors who loan us money. How can our creditors have faith in our credit worthiness when we can only pay them if we can borrow money from someone else to pay them.
The USA's Endless Depression
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Re: US has larger trade deficit than all other nations combi
by ReverseEngineer » Sat 13 Dec 2008, 08:49:03
Didn't the Germans also recently have to bail out there own banks?
Do none of you find it the leat bit curious that the "losers" from WWII, Germany and Japan, are the so-called "Winners" here in the Shell Game of international finance as the "Creditor Nations"? What is wrong with that picture? LOL.
How would it be that nations completely decimated in WWII, nations far smaller in size and natural resources than the "Winner" end up being the "Rich" folks?
The reason my friends is the fiat money system and money as debt. It is simply impossible for a nation like Germany to have created more wealth than the US over the period from WWII to the present, particularly if you take into account war reparations and so forth. What they did have though was a savvy banking system that perpetuated itself after the war, funnelled through the American economy and then funnelled back in the aftermath of the war.
In this current situation however, your big creditor nations are in no way better off than the big debtors, since it is all paper wealth and not representative of real value anymore. The Germans and the Japanese are completely insolvent, just as all the big Investment Banks are. The "wealth" and the trade balance is based on mountains of debt, which they in fact issued here. The only way they would be really rich is if somebody would pay them back on the loans. Nobody is paying back any loans anymore.
Double Entry accounting insures that for every Debit in one place, there must be a Credit in another. That still is true, but thing is the Credits that are held aren't REAL credits anymore, while the Debits are in fact VERY real. The debits come from 6B hungry mouths on the planet, the credits come from loans on McMansions that won;t ever be paid back. Take those into account, and societies which seem Positive in their trade balance are in fact NEGATIVE.
The Germans, the Chinese and the Japanese are going to crash here just as hard as Lehman. They are just bigger banks that hold a LOT of bad paper. The US is like a Credit Card holder that ran up the tab here, but we aren't going to be paying it back. It is a BIG MISTAKE to loan money to people who do not pay their bills. Bigger mistake still when you loaned out more money than you actually HAD.
Never a Borrower or a Lender Be.
Reverse Engineer
Do none of you find it the leat bit curious that the "losers" from WWII, Germany and Japan, are the so-called "Winners" here in the Shell Game of international finance as the "Creditor Nations"? What is wrong with that picture? LOL.
How would it be that nations completely decimated in WWII, nations far smaller in size and natural resources than the "Winner" end up being the "Rich" folks?
The reason my friends is the fiat money system and money as debt. It is simply impossible for a nation like Germany to have created more wealth than the US over the period from WWII to the present, particularly if you take into account war reparations and so forth. What they did have though was a savvy banking system that perpetuated itself after the war, funnelled through the American economy and then funnelled back in the aftermath of the war.
In this current situation however, your big creditor nations are in no way better off than the big debtors, since it is all paper wealth and not representative of real value anymore. The Germans and the Japanese are completely insolvent, just as all the big Investment Banks are. The "wealth" and the trade balance is based on mountains of debt, which they in fact issued here. The only way they would be really rich is if somebody would pay them back on the loans. Nobody is paying back any loans anymore.
Double Entry accounting insures that for every Debit in one place, there must be a Credit in another. That still is true, but thing is the Credits that are held aren't REAL credits anymore, while the Debits are in fact VERY real. The debits come from 6B hungry mouths on the planet, the credits come from loans on McMansions that won;t ever be paid back. Take those into account, and societies which seem Positive in their trade balance are in fact NEGATIVE.
The Germans, the Chinese and the Japanese are going to crash here just as hard as Lehman. They are just bigger banks that hold a LOT of bad paper. The US is like a Credit Card holder that ran up the tab here, but we aren't going to be paying it back. It is a BIG MISTAKE to loan money to people who do not pay their bills. Bigger mistake still when you loaned out more money than you actually HAD.
Never a Borrower or a Lender Be.
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Re: US has larger trade deficit than all other nations combi
by CarlosFerreira » Sat 13 Dec 2008, 08:49:07
$this->bbcode_second_pass_quote('Sixstrings', 'G')lad you appreciated the link. It is an eyeopener to just look at some hard numbers now and then. Personally, I was surprised how much a debtor nation Spain is, second only to the US. You'll also notice Greece is towards the bottom too.
I guess this means we could look to Spain as a flashpoint for TSHTF in Europe.. that deficit for their size is out of sight.
I guess this means we could look to Spain as a flashpoint for TSHTF in Europe.. that deficit for their size is out of sight.
The whole Mediterranean has a lot of problems. There's Spain, of course, but also Portugal (my country), Italy, France, Turkey and Greece on the bottom of the list. These are also the countries that are closer to Northern Africa; if, due to Peak Oil or Climate Change, there is a wave of refugees coming from the Africa of the Middle East, these will be the more heavily pressured countries.
As for where the money will come from, finance is not a zero-sum game. But there have to be limits somewhere. We do have to start paying back our debts, but not so quickly and violently that will stall the economy further and bankrupt the whole thing. The system can't be stopped, and even reducing pace is very painful.
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Re: US has larger trade deficit than all other nations combi
by Sixstrings » Sat 13 Dec 2008, 09:00:41
ReverseEngineer wrote:
$this->bbcode_second_pass_quote('', 'T')he US is like a Credit Card holder that ran up the tab here, but we aren't going to be paying it back. It is a BIG MISTAKE to loan money to people who do not pay their bills. Bigger mistake still when you loaned out more money than you actually HAD.
$this->bbcode_second_pass_quote('', 'T')he US is like a Credit Card holder that ran up the tab here, but we aren't going to be paying it back. It is a BIG MISTAKE to loan money to people who do not pay their bills. Bigger mistake still when you loaned out more money than you actually HAD.
I think this is exactly why some form of world currency, or some new worldwide reserve currency will have to come to pass. The rest of the world won't accept a US default. A US default amounts to a worldwide default -- so TBTB will have no choice but to create a new currency.
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Re: US has larger trade deficit than all other nations combi
by lawnchair » Sat 13 Dec 2008, 10:49:38
The US has been trading away since about 1972. 36 years from a nation that was a major manufacturer with no trade deficit to this point in history.
Note that year 1972. That was the year the US finally fully abandoned the economic principles (protection of manufacturing, subsidy, infrastructure investment) of Alexander Hamilton, List, and Carey, that were so ingrained they were known as the "American School of Economics". Most Americans, if they think about it at all, think we were founded and built by free-trading devotees of Adam Smith, when in real history we rejected him utterly for most of our first 195 years.
Again, note the year we made that shift. 1972. Ring a bell? Oh, yeah. The year the US peaked on oil. For the first time, we no longer controlled the destiny of our #1 industrial input. And oil was so addictive, so powerful, we reversed the history of the US and decimated our middle class dream, rather than attempt to change away from oil. That day, we determined to become a debtor nation, agitated for free trade, and here we are.
I'll get back to the 'theory of 1972' in a couple of days for the totemic peak of the US (the day Apollo 17 lifted men off the moon for the last time).
Note that year 1972. That was the year the US finally fully abandoned the economic principles (protection of manufacturing, subsidy, infrastructure investment) of Alexander Hamilton, List, and Carey, that were so ingrained they were known as the "American School of Economics". Most Americans, if they think about it at all, think we were founded and built by free-trading devotees of Adam Smith, when in real history we rejected him utterly for most of our first 195 years.
Again, note the year we made that shift. 1972. Ring a bell? Oh, yeah. The year the US peaked on oil. For the first time, we no longer controlled the destiny of our #1 industrial input. And oil was so addictive, so powerful, we reversed the history of the US and decimated our middle class dream, rather than attempt to change away from oil. That day, we determined to become a debtor nation, agitated for free trade, and here we are.
I'll get back to the 'theory of 1972' in a couple of days for the totemic peak of the US (the day Apollo 17 lifted men off the moon for the last time).
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Re: US has larger trade deficit than all other nations combi
by Tyler_JC » Sat 13 Dec 2008, 15:57:46
$this->bbcode_second_pass_quote('', 'H')ow would it be that nations completely decimated in WWII, nations far smaller in size and natural resources than the "Winner" end up being the "Rich" folks?
The reason my friends is the fiat money system and money as debt. It is simply impossible for a nation like Germany to have created more wealth than the US over the period from WWII to the present, particularly if you take into account war reparations and so forth. What they did have though was a savvy banking system that perpetuated itself after the war, funnelled through the American economy and then funnelled back in the aftermath of the war.
The reason my friends is the fiat money system and money as debt. It is simply impossible for a nation like Germany to have created more wealth than the US over the period from WWII to the present, particularly if you take into account war reparations and so forth. What they did have though was a savvy banking system that perpetuated itself after the war, funnelled through the American economy and then funnelled back in the aftermath of the war.
Not exactly...
Japan and Germany received large amounts of foreign direct investment in the post war years. Brand new modern factories were built by the thousands.
They had no overhang from existing pensions, existing outdated infrastructure, old inefficient businesses, and the rest.
They started over brand new on everything. Moreover, they had no international credibility, no military to fund, and a burning desire to work hard and prove themselves.
And they did.
Germany's unemployment rate stayed below 2% for decades. They rebuilt their entire country and became a manufacturing powerhouse.
Japan did the same thing with a slight lag. They started off from a much lower starting point but eventually came to overtake much of the world.
Compare the savings rates of these countries to the savings rate of the United States.
Why wouldn't they have a large current account surplus?
Moreover, a trade deficit is a measure of a YEARLY deficit or surplus. Not a cumulative figure.
It is not a measure of wealth creation, either. It's a measure of wealth creation relative to wealth consumption (using a rather poetic definition of "wealth")
The US produces more wealth than Saudi Arabia or Russia. We just happen to consume a lot more than we produce.
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