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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (16478)	7/13/2004 12:28:20 PM
From: BEEF JERKEY	Read Replies (1) \| Respond to of 110194

"indeed, it proved unsustainable. by late 1990, the US trade account had moved back into balance from the '87 record high deficit. it took a stock market crash, a recession, and the S&L collapse to get there. since the deficit back then was a much SMALLER percentage of GDP than today's deficit, it will be interesting to see what it will take this time." I think it will be very near impossible for the US to move towards a balanced trade situation without drastic changes to the American way of life. The numbers (trade deficit) that came out today were slightly better than last month due to cheaper oil prices. Lately oil has gone back up to near $40 so forget about a lower deficit for this month. @ 46 Billion $ per month the trade deficit is still over half a trillion and about 5% of GDP - in a word - unsustainable. It's pathetic. "Hooray! The trade deficit is "only" $46 billion this month!" For the trade deficit to move towards balance you need drastically cheaper oil, among other things. Two fundamental factors work against cheap oil for Americans in the future. Supply and demand and a willingness of oil exporters to let the price of oil rise (in US $$$) as the US dollar loses relative value. Its a fine pickle that doesn't have any easy answers - but things are gonna change for the American consumer with a likely very hard landing/hangover - it's just a matter of time. A lot of Americans think it's a God given right to drive ridiculous gas guzzlers but that’s coming to a screeching halt along with a number of other shocks.