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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: rich evans who wrote (28347)3/18/2005 7:35:23 PM
From: Elroy JetsonRead Replies (1) of 306849
 
The end result of a current account deficit is the same, even if it is confusing in the interim. Let's make it simple.

Let's say America consists of one business and I own it and run it. I employ all Americans.

When my capital is invested here, Americans are employed, our economy is prosperous, I get the profits and our Current Accounts are in balance.

Let's say I replace my US factories with similar factories in Malaysia. Malaysians are employed, Americans borrow against their homes to buy the products from Malaysia, I get the profits and we have a Current Account deficit. It's still an American company since I still own it, but most of the revenue generated by the company goes to Malaysia.

Now let me add another twist. I want to be closer to my company and live in style. So I give up my American citizenship, move to Singapore and re-incorporate the company in Bermuda like Tyco did. Now none of the company profits are included in the US Current Account.

When did my company create a deficit in the American Current Account - when I moved all the jobs to Malaysia, or when I re-incorporated in Singapore?

When did my "globalization" hurt American propserity - when I moved all the jobs to Malaysia, or when I re-incorporated in Singapore?
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