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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: Crimson Ghost who wrote (14354)10/30/2004 1:46:42 PM
From: mishedlo  Read Replies (2) of 116555
 
wont it take a big drop in the price of oil before the trade deficit shrinks?

In your US consumer recession scenario one might expect imports to slow (and they will) but exports will slow as much IMO. A two-way slowage in trade does not shrink the deficit necessarily, unless you expect exports to remain stable in a US slump. I doubt it.

However if oil drops and we have a big fat recession, then yes ye can start to make some inroads in that gap. It will also help if prices of consumer goods do not rise with a huge drop in the US$ and/or if somehow the US$ stopps dropping altogether. If the latter, gold will not fare so well IMO.

Mish
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