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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: jttmab who wrote (161262)	5/3/2005 8:06:01 AM
From: Hawkmoon	Read Replies (1) \| Respond to of 281500

After 1970, however, the almost unbroken string of trade surpluses turned into one of trade deficits, and in the 1980s and 1990s, those deficits grew quite large (see Figure 1)...." My bad.. (nice find).. Logic was indicating to me that the US was taking items in barter, in exchange for the technology and expertise needed to rebuild the world. Something to think about with those numbers though.. Remember that prior to the 1970's US companies were owners of the oil production in the Mid-East, paying royalties to the various nations. Thus, energy exports to the US would, I believe, have counted in favor as a trade surplus, when sold to other countries. But upon nationalization of the energy companies, we became importers of oil from foreign entities, and the balance of those payments starting exiting from US shorts. Just a theory that might account for a substantial portion of the trade deficit increasing in the '70s. China, for example is looking at an annual GDP growth of ~10% and is taking measures to slow down that growth. Except revaluing the Yuan that they have conveniently permitted to devalue against all the other world currencies by maintaining the peg to the US$. The US$ has retreated some 25-30% against the Euro and the Yuan has followed suit due to that peg making their goods 30% cheaper than they were when the dollar was at its peak. Take that peg away and let the Yuan float freely and watch the hot money disappear from China. Let's see the Yuan restore that 30% of lost value against the Euro and find out what happens. Some 50% of China's loans are bad, according to recent figures. That places them in the nearly the same situation as the Japanese AFTER their bubble burst. That's why they are EXTREMELY reluctant to let the Yuan appreciate. It would pop the bubble on their economic growth and cause a tremendous loss of equity and real-estate values. No one [or country] invests in a single instrument; Warren Buffet is investing in a dozen foreign currencies. Maybe he was, but I have a feeling he's getting ready to, or is in the process of, unwinding those positions. I heard a blip on Bloomberg the other day mentioning some comments he made on the US$ and that maybe that most of the damage had already been done. Hawk