Thomas, This piece was one of the dumbest I've seen since "Business Week's" infamous The Death of Equities cover story. The first and most important fallacy that the author (Watermellon Bank dude, so how much could we expect?) makes is that a deficit is o.k. if it is one U.S. nominally based firm buying from another U.S. nominally based firm. That is total nonsense. If RCA buys SRAM chips from the Taiwanese operations of Allied Semiconductor, the only way this differs from buying from Taiwan Semiconductor is that some small portion of profit, in the rare years chip cos. have profits, may trickle back to the United States. The lion's share of the money goes into foreign based factories, foreign worker's pockets, and foreign bank deposits. Incredibly dumb reasoning on the Watermellon man's part.
Another problem is that even if the trade deficit was overstated by one third due to the above reasoning, it is still wayyyy higher than it has been historically.
He does make the point that without the run and gun US economy that recovery in Asia would have been much slower. True, but what are the long term implications for the economy that was inflated with fluff to save Asia? And Mexico? You cannot keep printing money and loosening credit without creating huge imbalances in your economy, and our economy is as poorly balanced as a Russian gymnast without her "make me short" drugs.
In other words, I loved the piece. <g> |
