George, Mr.Buchanan's views are right on the money...but IMO with one
or two major exceptions
For one: none of the cycles related events that he is alluding to are really can be avoided by GVN's action..Indeed a rising Trade Deficit is a strong hint of the future Asian recovery, that may not be so desirable for USA in form of inflation, but that would in turn bring about another round
of productivity boost, as say happening in Chip-making industry
(layoffs, inefficient plant closing, cash conservation and so on..
None would be possible without global competition..
Second, Surely Gvn actions can influence or affect development in a short run, but not only in a positive way, as disengaigement
from Asia or any other region can precipitate World Crisis, not only economic (that may not be avoidable) but possibly military...that could be a disaster for USA economy...The problem with Clinton's administration is that it has indeed placed USA in a position of far less influence on the World (China including) blinded by it's own elief that they are so smart that the cycle was manufactured by what ammounts to incosequential liitle moves..IMO Rubin understands it ar better than Bill and depends far less on that image..thus I predict he will resign before it is all over..
U.s. Trade Deficit Widened In May To Record $15.745 Bln As Exports Slump
U.S. Economy: Trade Gap Widens to New High in May (Update2) (Adds
closing markets in 11th, 12th paragraphs.)
Washington, July 17 (Bloomberg) -- The U.S. trade deficit widened in May
to a new high as the economic crisis in Asia hobbled export demand and
flooded American markets with low- priced imports.
The shortfall in goods and services grew to $15.7 billion last month
after widening in April to $14.3 billion, the Commerce Department said.
The trade gap is on track to set a record this year and Asia accounts
for almost all the increase from last year.
Exports fell 1.3 percent in May to $76.2 billion, reflecting weaker
demand for motor vehicles, business equipment and consumer goods.
Imports rose 0.5 percent to a record $92.0 billion, led by computers,
aircraft and autos.
The drop in exports is ''more swift than most would have imagined'' and
will ''act as a restraint on U.S. manufacturing,'' said William
Sullivan, an economist at Morgan Stanley Dean Witter in New York.
At the same time, falling import prices hold inflation in check, ''and
that keeps consumer spending going and interest rates low,'' said former
Federal Reserve Governor Lyle Gramley, now a consulting economist at the
Mortgage Bankers Association of America. That will counter the slowdown
in manufacturing, he said.
Inventory accumulation in the second quarter could slow to as little as
$20 billion, measured at an annual rate, after piling up at a record
pace of more than $100 billion in the first quarter, Gramley said.
While that, and the drop in exports, will probably depress the economy's
growth rate for the second quarter, it also suggests domestic sales
''were growing like gangbusters,'' he said. ''Somebody was buying that
stuff!''
Competitiveness Issues
In addition, while the trade deficits of the 1980s were more a symptom
of the lack of world competitiveness for U.S. businesses, this year's
widening gap almost entirely stems from the crisis in the Pacific. U.S.
business is now more competitive and efficient than it has been at
anytime since the post World War II boom. ''The trade deficit is large
because we live in a integrated global economy and our economy has been
strong while the Asian economy has been in trouble,'' President Bill
Clinton said.
Underscoring that point, consumer confidence in the economy is still at
a high level. The University of Michigan's index of consumer sentiment
registered 104.8 in July, just below June's reading of 105.6, though
well above the decade's average of 88.73
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