they would not be in a trade surplus
Since I can't seem to find any available hard data on the balance of payments from those years, and seeing how logic dictates -as you suggest- that they would be borrowing more than they could offset by exports to the US from agricultural or raw materials, it would appear that I'm chasing a red herring here (tying US % of global GDP to trade deficits).
However, since 1998, we've seen a tremendous upsurge in the trade deficit, concurrent with lethargic economic performance in Asia.
In fact, I went to freelunch.com trying to track down some economic data and I was surprised with what was available there. Here's a link that shows US current accounts for the past 40 years (hopefully reliable)
economy.com
Now the question is whether the trade deficit exists because the US is consuming more, or whether the rest of the world is consuming less particularly.
And if we are maintaining our consumption levels vis-a-vis their economies rather than raising tariffs and other protectionist barriers, isn't this comparable to the manner in which the US subsidized the world financially after WWII, except that now we're doing through markets, rather than outright loans?
I've found it interesting in the way the Europeans are screaming about the current accounts deficit in the US. But isn't this tantamount to one of your neighbors trying to make you feel guilty because you make more money than they do?
As the following link points out, balance of payments may not be the concern that we think it is, but may itself be a red herring:
newaus.com.au
After all, if the Europeans are so concerned about it, all they have to do is tighten credit requirements, right?
But then that would be tantamount to slitting their own economic throats.
I'm sorry Zeev.. I just have a hard time believing that a BOP deficit is a real issue, when it is apparent that the FED had to take incredibly harsh measures in order to slow down this economy.
They are trying to slow the growth of the US, while every other major Central Bank is attempting to spur their own sluggish economies.
And the Europeans howling about the deficit seems a convenient means of trying to distract attention from their own inability to maintain economic progress.
Now where this all ends up is unknown. But slowing the US economy merely to keep from outpacing our lethargic competitors seems a radical reaction to their problems.
More likely we'll see calls for greater protectionism and pressure building on NAFTA. After all, it is US free-trade policies that permit our competitors to grow through export, rather than being coerced into taking the necessary steps to restructure and increase their imports of US goods.
Regards,
Ron |
