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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Road Walker who wrote (367146)	1/16/2008 5:57:24 PM
From: tejek	Read Replies (1) \| Respond to of 1573421

So until this 'problem' is dealt with....and frankly, I don't know how you deal with it......there is always going to be problems with spending and deficits when it comes to the federal budgets. Its why I don't understand what appears to be a general complacency and inevitability when talking about "unwinding the deficit". Even if it doesn't mean what I think it means we don't want it to happen and we need to be doing whatever it takes to prevent it from happening. This business of tough loving our way through economic problems is BS. You maintain your style living in the best way you can; otherwise many people will suffer some serious pain. It's debt but it's also the trade deficit. It actually has been unwinding in a relatively orderly fashion... just look at a dollar chart. When you see the dollar decline like it has, what it's telling you is that financial stability of the US is declining vs. the other country (in this case against all the major trading countries). It's been a rational reaction to the fact that they make and sell more valuable stuff (in total) than we make and sell... and that our personal and public debt are seemingly out of control (with additional risk that we may not be able to pay it back or worst case service the debt). I've heard economists link the balance of trade deficits with a declining dollar but it doesn't make sense to me. Since I was a kid, the US has had a negative trade deficit. Back then, they would say that we had surpluses when it came to services and that's how things balanced out. Frankly even as a kid, I thought that was BS. Now I am not an economist but if you look at the what the dollar did in the 90s....it went up when things were good.....in the last half of the 90s and in 2000, and went down when we were in recession in the early 90s and then again when we went into recession in 2001. Now instead of strengthening after 2002 when we came out of recession, it has continued to move sideways or down. To me that suggests what we all know.....that the recovery in the US has been weak vis a vis the rest of the world and that Bush's economic policies have been horse puckey. Yes, the budget deficits are part of it; yes, the trade deficit is part of it; yes, its the housing problems are part of it but I think its the overall picture that is causing the decline of the dollar and not one or two sub parts like debt and trade deficits. BTW here's the chart I used for the dollar: tfc-charts.w2d.com If I want to borrow $100 from you and I make $100 a week and owe $20K, you probably won't accept my IOU. If I make $5000 a week and don't have any debt you will probably say OK. If you want to borrow $100 and only make $100, and owe 20k but have 40K worth of assets, then I probably would lend you the money. That's the thing people seem to ignore in this whole argument........the US has incredible assets......probably the best in the world. That's the only reason Bush has been able to get away with his prolific and mindless spending. Now if you get a slow orderly decline... you will get a slow orderly decline in our relative standard of living but eventually the stuff we make get's so cheap things start to level out. John, I don't think that's ever going to happen. Its another argument I have heard since I was a kid. In fact, I think its a pipe dream. Through productivity and through specialized, highly scientific manufacturing we may be able to close the gap but we will not be able to produce things cheaper than say India at its current standard of living. And when India's standard of living catches up with us, there will be another country to take its place. Eventually, no place on earth will produce goods cheaper than another place but that will take centuries to achieve. I think we have maximize the qualities and products that the Indias of the world can not produce with their cheap labor. If you have a "run on the dollar" (and the international credit crisis spured by irrational US debt practices dramatically increases that risk), then you will have sky high import prices coupled with a huge domestic slowdown and a giant leap in interest rates. Stagflation... at best. True but why would the people who hold our debt cause a run on the dollar? It would work against their own best interests on a number of levels. Economists (including Greespan) have been talking about our "unsustainable" twin deficits for years... and how they would eventually unwind. And they have become worse, not better. Debt is real, money is real. If you owe it you have to pay it back. And it will come out of all our pockets... not some distant Federal Government. And frakly the Fed, in the end, won't much influence the outcome by cutting interest rates a few percentage points... in fact they may exacerbate the crisis. I disagree......you can't pay debt back if there is less revenue generation. The Feds cutting the interest rates will stimulate the economy which will produce the revenue that can be used to pay debt. Unfortunately, revenue production under Bush has been like the boxer who has one hand tied behind his back. It just ain't going to make his boxing very strong and rewarding. You can't cut taxes to the rich and run two wars and expect to have surplus monies. We'll see what happens. These things have a mind of their own and nobody can predict unless they get lucky. But I was right about one thing... it was a great day for a day trade! Yup. I blew it. I didn't get in fast enough and then I didn't sell when I had a small profit. Now I am stuck with what I bought overnite and flat in terms of profit.