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Strategies & Market Trends : Heinz Blasnik- Views You Can Use -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (801)	5/6/2003 11:00:03 PM
From: LLCF	Read Replies (3) \| Respond to of 4912

<economists have been sanguine about the US with the idea that it's OK to have a mfg glut due to our wonderful service economy. but as it becomes apparent that more service jobs can be shipped overseas to India and China, we could see a wholesale repricing of the middle and upper-middle class service sector in > Not only that, but if jobs continue to be lost, who are they going to service? IMO, we could be an upside down pyramid in danger of being blown over. IF foreign investment in the US continues to dry up, a gaint game of dominoes could endanger all the big employment sectors of the US economy. DAK

To: Wyätt Gwyön who wrote (801)	5/6/2003 11:14:01 PM
From: Win-Lose-Draw	Respond to of 4912

people in the developed world don't have a divine right to 10 times the riches as the developing world that statement is outright heresy to an enormous chunk of the population. we just fought a war in g-d's name to establish we do, in fact, have that right.

To: Wyätt Gwyön who wrote (801)	5/6/2003 11:40:22 PM
From: EL KABONG!!!	Read Replies (1) \| Respond to of 4912

Darfot, US demand outstrips US GDP by about 5%, so we depend on foreigners to make up the difference with their excess supply. they depend on us for demand and we on them for supply. it all worked so well when the dollar was strong. how will it go with a weaker dollar? The USA has more than ample excess capacity of its own to work off, so my guess is that demand for foreign supply could easily shift to demand for domestic supply were a weaker dollar to result in more expensive foreign supply. according to conventional theory, a weaker dollar is supposed to make our exports more competitive and foreigners' imports less so, thus moving the trade deficit back the other way (towards a surplus). but instead our deficit continues and mfg gets weaker. what's going on? As you pointed out, eastern European countries, Asian countries and much of South American countries are still a cheaper source of labor, and therefore a cheaper supply source than domestic supply. Even including the additional costs of shipping from a foreign supply source to a domestic demand source, the total price of domestic supply in many instances is simply not competitive with comparable foreign supply. One additional reason for the apparent anomaly of a weak dollar and weaker demand is simply that foreign demand is rapidly decreasing. It's not only the USA exporters that are feeling the pinch. The Asians and eastern Europeans will likely soon run into the same problem themselves. Would the federal government impose tariffs to equalize prices in a (misguided) attempt to preserve American jobs? Protectionist legislation only rarely, if ever, solves any underlying problem. compared to Europe, i think the one who will really suffer from a reduced dollar is Japan Agreed! Japan is waist-deep in doggy-doo and there's not a pooper-scooper in sight... Re: the rest of your post... You've simply described one path of deflation, where the rate of remuneration for employment migrates from a regional (country to country) scale to a global scale. One way that might happen is for all countries to deflate to the lowest common denominator. Or the poorer countries could raise their standards to those of the developed countries. (Not likely!) What is most likely is that those at the bottom of the wage scale come up a little bit and those at the top come down, until they eventually meet somewhere below the current mean, or the current average. For the current set of developed countries, a lowering of living standards is probably unavoidable in a true global economy. KJC