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To: Ilaine who wrote (7357)	8/18/2001 10:04:31 AM
From: elmatador	Read Replies (1) \| Respond to of 74559

Elmat: 1. 2. I agree.. 3. The US has never been very dependent on exports,. and is even less dependent than it used to be. elmat: I strongly disagree: "In the 1990s, overall export growth has accounted for one-third of the increase in U.S. gross domestic product (GDP). Total exports over the last 5 years have accounted for about 10 to 12 percent of total GDP." Foreign Affairs: Perspectives on Foreign Affairs Programs and Structures (Letter Report, 11/08/96, GAO/NSIAD-97-6). Besides that the US actively promotes exports. US Export Promotion foreignpolicy-infocus.org US Export promotion has dot.com company too: buyusa.com. Don't be fooled byt the 12% of total GDP. We have to look to what the USDA says when the US uses trade sanctions against the usual suspects (you know Cuba, Iran, Iraq, North Korea, Libya and Sudan: There is a big cry because trade sanctions hurst US exports. The numbers also don't tell the truth if we see that the US is a third World country that dominates a big share of world trade in basic products. See, please, usaengage.org Table 2: 4 U.S. Share of World Trade is the U.S. share of world exports of the specified commodity in 1996. The 12% is heavily loaded with basic products. The US government defends this 12% with nail and claw: "One area where lawmakers may be using fiscal measures to spur growth is in the farming sector. The $73.5 billion farm bill that would automatically funnel more money to growers when prices fall may be debated by U.S. House of Representatives in early September. ``Will farm equipment lead the economic recovery? I can't think of an alternative sector right now,'' said David Hale, chief economist at Zurich Financial Services in Chicago. Under the legislation, grain, cotton and soybean growers would see $45 billion over 10 years in guaranteed annual payments plus an estimated $37 billion in payments triggered by ''target prices'' when receipts from market prices and subsidies fall below the goal set by Congress." (What Can Rate Cuts Do for 'New' Economy?) 4. Many economies are highly reliant, if not dependent, on exporting to the US. AS A RESULT OF 1. AND 2. BEING TRUE, THIS IS ALSO TRUE. I will respond to the remaining ones in next posting (or postings)

To: Ilaine who wrote (7357)	8/19/2001 1:03:10 AM
From: elmatador	Read Replies (3) \| Respond to of 74559

Now back to answering 5. Sorry for the delay, had a busy Saturday. I agree with your statement but by different reasons. You say: 5. "The strong US dollar enables more imports/foreign exports to the US, and fewer exports from the US, but the US economy won't really notice it all that much because - see # 3." Elmat says: I think is much more complicated than that. I would say that you are right only for the agricultural goods that the US exports. But prices affected by devaluation of USD can be taken care of. Example: In the US economy (or politics) and its dependence on farming sector, remembering that: "The $73.5 billion farm bill that would automatically funnel more money to growers when prices fall may be debated by U.S. House of Representatives in early September." If you would permit to re-write that it would be like this: 5. "The strong dollar (USD) makes foreign goods cheaper in the US and US goods costlier in foreign markets." Then it becomes interesting because: a) The dollar -which prices crude oil- is being devalued and petroleum gets cheaper in currencies not pegged or loosely pegged to the USD and the US is in the oil business all over the world. b) US imports are exports of US firms based abroad. Semiconductors. Car parts, sporting goods etc, all US companies foreign based. And the Hong Kong dollar, the Argentinean peso and the Brazilian real -there are others- are pegged to the dollar they are being devalued too. c) The US firms produce in foreign markets and are importers and exporters in those foreign markets. Goodyear -apart from the US- produces tires in Thailand, Indonesia, Brazil, Mexico. The company has internal traders (G. Zaccardi would call them speculators) that buy and sell tires based in which country is more competitive at a given moment. Example: when the Indonesia Rupiah collapsed Goodyear could beat any competitor selling tires form Indonesia. When the Brazilian Real drops Brazilian tires become more competitive and so it goes. SUMMARY: The US economy won't notice very much the USD devaluation because the US economy is tightly woven integrated with the economies of the rest of the world. GDP would say more accurately about the size of an economy when we had much more economic borders than today. In an integrated world economy the figure of a US 10 trillion dollar-size economy has to be taken with a grain of salt. This figure is the size of the US share of the whole world economy. That's because you can't easily pinpoint exactly where you count the 'ownership' of a given part of the Gross 'quasi-domestic Product. Where is -accurately- accounted for the case of GM that has a financial arm that finances car dealerships and cars all over the world? It is not only the USD in circulation within the US that is being devalued. That big pile of foreign reserves of Taiwan, Hong Kong and China are devalued vis a vis other currencies. I think this also answers 6. The US is trading dollars for goods - and the dollars are stacking up outside the US. Only keeping in mind that when the USD is devalued, the foreign reserves kept in USD are also devalued too.