The United States is doing too much buying but not enough selling

[NNN0LHI]

http://www.jamaicaobserver.com/business/US-trade-deficit-widens_7873789

US trade deficit widens

BY P PARAMESWARAN

Friday, August 13, 2010

<snip>The trade gap grew at the fastest monthly pace on record to reach US$49.9 billion, threatening to erode already slow US economic growth.

"This is spectacularly terrible," said Ian Shepherdson of High Frequency Economics, explaining that rising imports will eat into already anaemic domestic growth as cash drains out of the economy.

June's deficit surged past the US$42-billion level seen in May, to become the largest trade gap since October 2008 in the depths of a brutal recession.

US imports increased three per cent to US$200.3 billion dollars in June, thanks in large part to the flow of autos and consumer goods, while exports declined 1.3 per cent to US$150.5 billion, the Commerce Department said.

[MadHound]

1. Well, this is what happens when you gut your manufacturing sector

And ship it overseas. What do they expect?

[Bonhomme Richard]

3. And effectively cut discretionary income with...

real wage reductions.

[KharmaTrain]

2. Someone Just Noticed?

We haven't had a positive balance of trade in decades. It's gotten worse in the past decade as more corporations offshored but the last half century has seen a total collapse of our industrial sector that is now being felt on the consumer side. When you have to pay more for the eseentials...have a mortgage that is higher than the value of your house, face escalating food and healthcare expenses with a dollar that has less buying power every day there's not much to "consume".

Seems the corporates, politicians and media still don't get it. People are broke...bankrupt...no longer can charge up debts (especially with 25% and higher interest rates) and are making due with what they have. Guess it'll take a few years of losses of profits for them to feel it...but it's too late.

[david13]

4. Well, the truth is probably that nothing can be done about it. It is

a big thing.
And the politicos get mileage out of saying "we just have to pass a law" or "give more power to the unions" or we have to blame it on the other political party.
But the trends are greater than that, and take place over time, over generations. Kind of like the tide, not really something that can be stopped.
England was once a great empire and manufacturing center, and all that is long gone too.
I think the future will be China, and India, or maybe just China.
dc

[Raineyb]

5. Of course something CAN be done. It just WON'T be done.

I think it's been well established that our tax code, our trade agreements, our lack of a manufacturing policy, and our abandonment of tariffs which worked for 2 centuries before they were abandoned, is actually rewarding companies that push its manufacturing out of the county. These things can be changed but the powers that be don't want to change them because it allows them to make even more profit than ever. The companies didn't lower prices as their manufacturing costs went down they put that extra money in their already fat pockets. Not to mention about half of our "international trade" is American companies buying from their foreign subsidiaries. It's a sham, it's bullshit but nothing will be done because our politicians are bought and paid for by these same corporations. It can be done. It just won't be.

[david13]

8. You're right. It's just an easy fix, isn't it? Do you think you could

have that band aid ready later this afternoon? Then we could fix it.
???
dc

[KharmaTrain]

7. Being An Empire Ain't What It Used To Be...

I think in our age of instant communications and globalization the concept of a "world power" is fading. Our corporations have already set up mutliple distribution systems to capitalize on any consumer market...exploit it and move onto the next. In the 80s the Japanese were considered the economic dynamo that would soon dominate the world...then came along China and Korea that undercut their costs and Japan's economy swooned (similar to ours)...China's growth is based on its ability to export and if we and other customers can't afford, they'll swoon as well. The Chinese know this...that's why they've bought so much of our debt since without our markets their economy crashes with far more dangerous results than what we experience.

Many on this side of the sandbox still aren't atuned to how corrupt our entire political culture has gotten. Making change, especially in such a short period of time (18 months vs. 30 years) is not going to happen. We've seen half measures, but in this climate, that's the best to expect. I wish it weren't that way, but these are the current cards on the table. My big concern is this administration has become so shell-shocked that they've alienated too many...right, left and center.

[david13]

9. Reminds me of the song "Who'll Stop the Rain?". I think

your assessment as "shell shock" is probably about right.
But maybe also an understanding of the futility of it.
And, it doesn't show on the surface. Mr Barak Obama arrives for a big fund raiser tonight, and he's out there campaigning and speaking as confident and good sounding as ever.
So I think he'll get his second four years.
His hair is turning gray (is it?), but I don't think he's coming apart at the seams, like Nixon seemed to do.
dc

[NorthCarolina]

6. We are now a consumer nation, not a manufacturing giant. eom