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Politics : THE WHITE HOUSE -- Ignore unavailable to you. Want to Upgrade?

To: HPilot who wrote (11827)	12/2/2007 11:33:05 AM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 25737

"So if you believe that the dropping dollar will not improve exports." I did not say that it totally wouldn't. For some things (Boeing's output comes to mind...) it certainly will. What I observed though was that the NET economic effect was not likely to be very positive for us... and that, (largely, but not completely due to the much smaller share that manufacturing accounts for in our nation's total economy), the beneficial effects alone are likely to be very small. 1). For example: rising pressure of long-term rates will suck the life out of the short-term benefit to exports from a lower Dollar. 2). Another - very important factor - that I've ALREADY MENTIONED, but that you continue to blithely skip over... is that nearly our entire balance of trade problem is with ASIA, mostly China and Japan, and that since their currencies are manipulated to track the Dollar --- we CANNOT GAIN trade advantages that way (until & unless their currencies are allowed to appreciate) because the DOLLAR IS NOT ALLOWED TO FALL OUT OF IT'S BAND VS. THEIR CURRENCIES. Much of the remaining portion of the trade surpluses run up against us are from the oil exporting countries --- there TOO also most of their are pegged to the Dollar. Whereas --- for example --- with the Euro zone, Europe has usually been posting only a VERY SMALL trade surplus with us (luxury goods and such), and trade flows are nearly always close to balance. No way to gain much trade improvement there, since the trade flows are so balanced... and not one-sided. 3). My THIRD point is that the DOLLAR has already dropped by about a third (against the currencies which are allowed to free float... not China, of course) over the past seven years --- and we have seen NO SIGNIFICANT IMPROVEMENT in trade balances AT ALL over that entire span. So, I pose the question to you, Hugh: Just HOW LONG does it take? And, just HOW FAR do you think the Dollar would have to fall to produce this great revitalization you seem to be expecting? (And, just to save some time... I'll give you my answer to the above question: A declining Dollar WON'T & CAN'T produce a major reversal of the US trade imbalances so long as it isn't allowed to decline vs. China, vs. Japan, and vs. the Gulf States --- with whom 90% of the trade imbalance sources to.) Re: "So you are completly wrong." Er, Hugh... this is not an argument that is likely to be carried my mere emotion alone... some actual facts would help. Some actual measurement of the size of the affected economic sectors that stand to benefit or to be harmed....