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To: GraceZ who wrote (223017)	2/20/2003 8:08:03 PM
From: patron_anejo_por_favor	Read Replies (1) \| Respond to of 436258

<<So we should see the fact that the trade deficit went up as a sign that it will soon go down?>> The trade deficit is a measure of FUTURE investment flows. The bigger the deficit, the less future overseas investment will be as the deficit corrects, and the lower the prices that will be paid for those assets in constant dollars. This isn't the chart of Microsoft in 1991 we're talking about, it's an accounting entry that MUST be balanced. It's more a question of "how much" rather than "when", but the bigger it gets, the worse it's gonna be. And since you cited Japan, I would reply that their trade surpluses have made the economic impact of their post bubble recessions much milder than it would have otherwise been. Their manufacturing base is still functional and producing. Their main problem was with financing more than with trade, and with failing to write down debt. Unemployment there has risen, but not nearly as fast as ours has despite a much longer period of stagnation. Ultimately, the real effects of the trade deficit are not seen while it is increasing, they are seen as it is normalizing. That will show you all you need to see....

To: GraceZ who wrote (223017)	2/20/2003 9:07:01 PM
From: JRI	Read Replies (1) \| Respond to of 436258

Grace...aren't you a bankruptcy lawyer? If so, no wonder you think everything going ok-g,ng

To: GraceZ who wrote (223017)	2/21/2003 10:09:50 AM
From: yard_man	Read Replies (1) \| Respond to of 436258

>>Well that's got to be a good thing since everyone here seems to agree that a rising deficit is not good. Unless, gee whiz, you think both a rising or a falling trade deficit are considered bad signs for the economy? << I am not saying a bad deficit number last month is a killer, in and of itself -- I'm talking about the situation engendered by having trade deficits which are very large over an extended period of time. If the trade deficit never comes in, I don't see a problem, but the trade deficit WILL come in -- and this means worldwide economic downturn -- Last month's number is bad news from this standpoint: The longer the deficit persists -- the worse will be the adjustment when it comes and it is coming soon.