Gary, you are right, of course. By shifting production
overseas, where it's cheaper, US companies shoot themselves
in the foot, since Americans without associated high
salaries in the manufacturing sector can't consume. Where are
Intel's facilities? Malaysia?
Well, NOW we've got a crisis, since Americans can't consume
anymore, and so these companies that shifted production
overseas (globalization) can't sell their products here.
This trend is obviously unsustainable in the long run, but
it was sustained artificially by extensive creation of debt
and asset bubbles in the USA.
The current account deficit WILL drop, but not because
of increased US manufacturing (for now). Rather, drastically
decreased consumption. Manufacturing will come back eventually,
but similar to the shifts of production overseas, it's a
gradual process. They will have to do it. |
