Mike, I apologize for the length on my response. I get carried away at times...
I admit that I don't fully understand the implications of hedonic pricing or whether the analysis has merit over previous economic theories.
But I do know that there MANY discrepancies between US accounting procedures and those of our competitors. This shows up most profoundly when European companies list on US exchanges and must comply to US GAAP standards and SEC disclosure rules.
I know that in many economies paying kickbacks to potential customers is considered just another cost of business, even though it violates US law (as evidence by the use of US intelligence assets such as "echelon" to uncover these unfair business practices).
Furthermore, we see systemic barriers to free trade in many of our competitors, which forces the US to respond in kind when they negatively impact US industry. And most recently we see subsidization of major industries, such as Airbus, funded by a consortium of semi-private companies.
The issue is whether Airbus privatization next year will permit them to erase nulligy loans that occur under their semi-private status, netting them an effective governmental grant on the backs of European taxpayers, a benefit denied to most US corporations.
seattletimes.nwsource.com.
it has been remarkable how the US has been able to borrow prosperity from abroad but I believe there are limits
Again, because of this export based economic growth Europe and Asia is relying upon, they have more to lose in a US slowdown than we do. We buy our goods from them because it is cheaper to do so.
When that cost/benefit analysis no longer applies and it is cheaper to produce our own goods, then I see more economic weakness overseas than here at home.
If they lose their export markets here in the US, they will have to spur domestic demand and that will require deficit spending by their governments.
Regards,
Ron |
