Interesting - Trade Debt beginning to drop.

[MJBuddy]

http://biz.yahoo.com/ap/080214/economy.html?.v=13

Ian Shepherdson, chief U.S. economist at High Frequency Economics, said that the smaller December trade deficit will help to boost overall economic growth from the final three months of last year from the initial estimate of a mere 0.6 percent expansion. He predicted trade and a better reading on inventory stockpiles would boost growth in the gross domestic product to 1.1 percent when the figure gets revised later this month.

In other economic news, the Labor Department reported that the number of newly laid off workers filing claims for unemployment benefits fell by 9,000 to 348,000 last week. That was larger than the 6,000 decline that analysts had been expecting.

The country's trade performance is expected to be a major issue in the upcoming presidential campaign, with Democrats arguing that the huge deficits have contributed to the loss of more than 3 million manufacturing jobs since 2000 as U.S. companies moved production to low-wage countries such as China.

[Johan]

National debt 9.25 TRILLION and counting. (http://www.brillig.com/debt_clock/)

We just need to outsource child care and all will be well. (http://www.theonion.com/content/video/report_many_u_s_parents)

[MJBuddy]

We just need to cut social programs :P Bam there goes national debt.


Then we'll have more money for wars.


That said, you're digressing from the topic.

[Oxonian]

Johan, this article is about the trade deficit. Why are you talking about government debt?

This isn't really surprising. A weak dollar and weak domestic consumption = less demand for imports. A weak dollar and strong overseas consumption = greater demand for exports.

This struck me as very weird, though:
The country's trade performance is expected to be a major issue in the upcoming presidential campaign, with Democrats arguing that the huge deficits have contributed to the loss of more than 3 million manufacturing jobs since 2000 as U.S. companies moved production to low-wage countries such as China.
Far be it from me to argue with the economic geniuses of the Democratic Party, but doesn't the causation work the other way around? As manufacturing moves overseas, we both (a) export less manufactured goods and (b) import more manufactured goods, increasing the trade deficit. So our trade deficit grows.

[Johan]

Johan, this article is about the trade deficit.

Offsetting the "good" news of a diminished trade deficit (though still a deficit!) with the reality that, regardless of where the deficits fall on the accounting/balance sheets, we're buried up to our necks in debt.

[NationalKato]

This country needs a good war to get the ol' economy going again!

Erm, wait...

[MJBuddy]

Offsetting the "good" news of a diminished trade deficit (though still a deficit!) with the reality that, regardless of where the deficits fall on the accounting/balance sheets, we're buried up to our necks in debt.

Should I then reply to all topics with obituaries because well, who cares what happens because we're all going to die anyway.

[Bargash]

Should I then reply to all topics with obituaries because well, who cares what happens because we're all going to die anyway.

Only if your obituaries are awesome as this one.

http://www.counterpunch.org/thompson02212005.html

[Disgustipated]

I bet if we didn't spend trillions on Iraq we could throw it towards that trade deficit.

[Johan]

Should I then reply to all topics with obituaries because well, who cares what happens because we're all going to die anyway.

Sure! (http://www.relationshipobit.com/)

shortshort.

[digitalErich]

Far be it from me to argue with the economic geniuses of the Democratic Party, but doesn't the causation work the other way around? As manufacturing moves overseas, we both (a) export less manufactured goods and (b) import more manufactured goods, increasing the trade deficit. So our trade deficit grows.
If a US held company moves it's manufacturing overseas but ships all it's produced goods back to the US, is this considered a true import?

I really don't know how they classify this stuff. I would imagine it would be tallied differently than a Chinese held company shipping goods into the US vs a US company with a factory in China shipping goods "back" to the US. Or if it comes into port is it just all imports?

[Bargash]

If a US held company moves it's manufacturing overseas but ships all it's produced goods back to the US, is this considered a true import?

I really don't know how they classify this stuff. I would imagine it would be tallied differently than a Chinese held company shipping goods into the US vs a US company with a factory in China shipping goods "back" to the US. Or if it comes into port is it just all imports?

While I don't know if this directly answers your question this should help you understand better. The article breaks down the global value of an Ipod.

http://people.ischool.berkeley.edu/~hal/people/hal/NYTimes/2007-06-28.html

[MJBuddy]

If a US held company moves it's manufacturing overseas but ships all it's produced goods back to the US, is this considered a true import?

I really don't know how they classify this stuff. I would imagine it would be tallied differently than a Chinese held company shipping goods into the US vs a US company with a factory in China shipping goods "back" to the US. Or if it comes into port is it just all imports?


Short answer:

If British Citizen travels to New York, walks up to a street vendor and purchases a bagel, that bagel has just been exported to Great Britain.

I think everything else can be inferred from there onward.


Btw, for people who actually don't understand the significance of this, the United States has been buying more than it creates for years - this is bad economically. It means effectively we are just a nation of consumerism; if our debt decreases, we are producing more, meaning we are exporting fewer jobs, have less unemployment, etc and is typically a state at which your economy must be in before it takes a jump, hence economic experts predicting a fighting economy arising from this. Arguably this is all because of the devaluation of the dollar causing many international parties to buy American because the exchange rate favors them.

Short version: America is working and spending money on American goods and many other countries are buying American goods in larger quantities than we are buying theirs.

[Backseat Killer]

I'll bet you had to search hard to get that info, MJ. This seems like the kind of info that the media and government don't want us to know easily - how does 'good' news keep us (Americans) cowering in fear?

[digitalErich]

Short answer:

If British Citizen travels to New York, walks up to a street vendor and purchases a bagel, that bagel has just been exported to Great Britain.

I think everything else can be inferred from there onward.
Well, I'm still confused but maybe I'm just dense today.

With respect to how we calculate trades deficits: if a fictitious US company has a factory in Iowa and one in China making the same product, does which factory that produced the widget I bought alter the trade deficit one way or the other?

[MJBuddy]

Well, I'm still confused but maybe I'm just dense today.

With respect to how we calculate trades deficits: if a fictitious US company has a factory in Iowa and one in China making the same product, does the factory that produced the widget I bought alter the trade deficit one way or the other?

If it's a US country, then your affect on the deficit is that you chose to buy from a U.S. company over a foreign one.

That might seem a little vague, but if you ABSOLUTELY must have 1 widget, then you're going to buy the cheapest/highest quality/the best one that fits your need, and that one in this case in coming from the U.S. not a foreign country.

Similarly, right now the U.S. is producing cheaper goods due to the lower value of the dollar and many foreign countries are buying up our products as a result.

[digitalErich]

Yeah, I understand all that stuff, I was more just asking if Ox's assertion that moving manufacturing overseas really affects trade deficit if the company is US held, that is also assuming that overseas facility ships all of it's output back to the States.

To boil it down, does where a product is produced (domestically vs overseas) affect the trade deficit if the company is US held or is it a zero sum comparison?

[Johan]

Debt isn't really a problem if they keep loaning you money and you don't worry about paying it back.

We've had the former for many decades, and the latter is fast approaching.

[Doctor Setebos]

With respect to how we calculate trades deficits: if a fictitious US company has a factory in Iowa and one in China making the same product, does which factory that produced the widget I bought alter the trade deficit one way or the other?Hey, imagine that - I happen to work for a REAL company that has a factory in Iowa and one in China that both make the same product. :D

Of course, in our case, the product produced in Iowa only gets sold in the US and Canada. The product produced in China only gets sold in China. So, I guess I can't really contribute too much to the point of the conversation. Sorry. :(

[Deadend]

Us can increase trade deficit by making the TSA calm down some to make tourism from Europe more popular.

[MJBuddy]

Us can increase trade deficit by making the TSA calm down some to make tourism from Europe more popular.

You realize as of right now every continent has the same standards of security as the U.S. right?

You realize tourism is at a huge boom as well, right?

[MJBuddy]

Yeah, I understand all that stuff, I was more just asking if Ox's assertion that moving manufacturing overseas really affects trade deficit if the company is US held, that is also assuming that overseas facility ships all of it's output back to the States.

To boil it down, does where a product is produced (domestically vs overseas) affect the trade deficit if the company is US held or is it a zero sum comparison?

I believe only in the factor that a U.S. company is importing the costs to maintain facilities overseas (electricity, water, food, etc.).

So a U.S. company that only has factories in China are importing resources to run their factory and selling their product as an export of the U.S. (obviously for profit) and yes, that would decrease the deficit because foreign imports per widget is less than the cost of each export per widget.

If a U.S. company is based in Iowa, they are not importing near as much as far as requirements to produce the widget but for every widget sold as an export, there's a larger margin of deficit decrease.

So there should be an affect, yes. There are ways for it to have different affects, such as a product having higher value overseas, etc. but these seldom exist since globalization would kill any exploitive market.


God my fever is coming back and I can only hope that I'm answering your questions or even that I'm logically explaining them.

[digitalErich]

Yeah, that makes sense. I should have thought of that myself. Your location is going to directly affect your suppliers and the raw materials you buy.

Still, I would like to know how the products are classified when they come into the country (true import vs. something else) but that is really more just academic curiosity. The real world factors you mention are definitely of more real concern.

[MJBuddy]

Yeah, that makes sense. I should have thought of that myself. Your location is going to directly affect your suppliers and the raw materials you buy.

Still, I would like to know how the products are classified when they come into the country (true import vs. something else) but that is really more just academic curiosity. The real world factors you mention are definitely of more real concern.

Academic concerns for me is the fact that so much is ignored and these numbers (like the huge amounts of illegal drugs we import).