One Measure of US Economic Failure

[haha]

https://www.cia.gov/cia/publications/factbook/rankorder/2187rank.html

Current account- bet you didn't know we rank below Burundi!

Ha

 

[d]

which says what?  a better measure of u.s. economy is gdp/capita
(and speaking of Burundi, each of the u.s. states has a greater gdp)

 

[FinanceDude]

which says what?  a better measure of u.s. economy is gdp/capita
(and speaking of Burundi, each of the u.s. states has a greater gdp)

Screw Burundi.............California by ITSELF is ranked in the top 100 in WORLD ECONOMIES.................

 

[Texas Proud]

Screw Burundi.............California by ITSELF is ranked in the top 100 in WORLD ECONOMIES.................

Actually I think it is number 7.... but I am sure someone with better knowledge will chime in

 

[Texas Proud]

https://www.cia.gov/cia/publications/factbook/rankorder/2187rank.html

Current account- bet you didn't know we rank below Burundi!

Ha

Or you can look at it another way... we rank above everybody else... everybody is willing to help finance our current account... we get a low/no interest loan... (don't know... I did not pay attention on this when taking econ)...

 

[Cut-Throat]

I remember seeing a cartoon about 15-20 years ago when the U.S. auto manufacturers were losing money.

It showed a little kid with a lemonade stand, with a sign on the front of it that claimed:

A steady growing company with earnings Greater than Ford and General Motors Combined​

 

[Alan]

Actually I think it is number 7.... but I am sure someone with better knowledge will chime in

It certainly used to be number 7 because it had a greater GDP than the number 7 country in the "G7".

 

[returnofbabyape]

All 50 US States are in the top 75 if you compared them to the world's countries. I just had to look it up recently.

 

[Texas Proud]

All 50 US States are in the top 75 if you compared them to the world's countries. I just had to look it up recently.

Hmmm... not saying much that they are above Angola....



#69 Syria $23,133,000,000.00
#70 Belarus $22,849,000,000.00
#71 Lithuania $22,263,000,000.00
#72 Lebanon $21,768,000,000.00
#73 Oman $21,698,000,000.00
#74 Qatar $20,426,000,000.00
#75 Angola $20,108,000,000.00
#76 Sri Lanka $20,055,000,000.00
#77 Sudan $19,559,000,000.00
#78 Dominican Republic $18,673,000,000.00
#79 Costa Rica $18,395,000,000.00


Also, there are some PEOPLE who can outdo the bottome countries...

#182 Marshall Islands $108,000,000.00
#183 Kiribati $62,000,000.00
#184 São Tomé and Príncipe $62,000,000.00

 

[Texas Proud]

I remember seeing a cartoon about 15-20 years ago when the U.S. auto manufacturers were losing money.

It showed a little kid with a lemonade stand, with a sign on the front of it that claimed:

A steady growing company with earnings Greater than Ford and General Motors Combined​

Isn't it funny that they could put out the same cartoon today?

As an FYI... I read an article that Ford and GM were making money hand over fist a few years back when SUVs were selling like hot cakes... this goes to show that the healthcare costs is NOT the problem, but lack of good vehicles in today's enviornment and just bad engineering...

Unfortunately, Ford will not get me to buy another car in my life... and I have owned more Ford products in my life than any other manufacturer... hmm... that is interesting..

3 Fords,
3 GMs (one was my dads van, which I did count for this, but do not think of it as one of my cars as I did not use if for anything.. but I did own it for a short time)...
1 Mazda (before Ford owned them)
1 Honda (great car... TL 6 speed )

 

[Delawaredave]

There was a recent Fisher Investments capital markets update CD - don't if anyone saw it.

Generally they were incredibly bullish about stocks. 

Talked at end about trade deficit - they said it was not a problem.  If a country has a trade deficit - that means they have a corresponding "capital investment surplus"

This capital investment surplus is positive for the economy, a sign of strength, and something that can go on forever.

I don't believe it - this "capital investment surplus" is just the Chinese repatriating dollars that they have to give back in the form of treasury bill purchases.

 

[Gone4Good]

I don't believe it - this "capital investment surplus" is just the Chinese repatriating dollars that they have to give back in the form of treasury bill purchases.

Yes its true, and not talked about much.  But the trade deficit and the capital investment surplus are mirror opposites.  Most folks couch the discussion in a negative light saying that the US has a huge trade deficit and that is bad.  The other side of the coin is that the US has a huge inflow of foreign capital, which is good.  It's kind of a chicken and the egg issue, does the US have a huge capital surplus because of its attractive investment environment (low taxes, regulation, and high economic freedom, property rights, and rule of law) or does it have a huge capital surplus because it consumes a large amount of imports which are paid for in US dollars?  Most folks just assume (or talk about) the imports as a problem without discussing the other half of the equation . . . reality is probably somewhere in between.

The truth is that the trade deficit and capital surplus reflects an imbalance, which is dangerous.  But it is not just an imbalance with the US, as most people assume.  It is a global imbalance that reflects both a dearth of US savings and an excess of foreign savings.  Yes, too much savings is also a bad thing when it comes to national economies.  Places like China have very little domestic demand to support their economy and are dependent on exports for growth.  Their economies are inherently less stable as a result.  If the US enters a serious recession, places like China will likely suffer severely as a result. 

 

[Nords]

The other side of the coin is that the US has a huge inflow of foreign capital, which is good.  It's kind of a chicken and the egg issue, does the US have a huge capital surplus because of its attractive investment environment (low taxes, regulation, and high economic freedom, property rights, and rule of law) or does it have a huge capital surplus because it consumes a large amount of imports which are paid for in US dollars? 

I still think the trade deficit doesn't properly account for intellectual property. When an Intel engineer designs the next chip and e-mails the plans to a Taiwan fab, that "export" does not count as profit for an American company. Yet the money Intel makes on that chip design is far more profit than any Asian computer manufacturer makes on a laptop based around that chip. Andy Kessler calls it "We think, they sweat."

I've noticed that selling Rockefeller Center and Pebble Beach to the Japanese was a great idea. They thought they had trophy-property bargains and they poured millions into them... before they sold them back to us at a significant discount. So today's American properties are really just a third-millenium version of the Brooklyn Bridge.

 

[veritasophia]

Almost 70% of US gdp comes from consumers. The trade deficit represents less than 15%, and as Nords pointed out "[it] doesn't properly account for intellectual property."

The thing to watch out for is the folks buying here at home. If they become cranky and start scrimping, the US economy is likely to get hit much harder than if we keep importing almost 1 trillion more than we export.

 

[perinova]

Yes its true, and not talked about much. But the trade deficit and the capital investment surplus are mirror opposites. Most folks couch the discussion in a negative light saying that the US has a huge trade deficit and that is bad. The other side of the coin is that the US has a huge inflow of foreign capital, which is good. It's kind of a chicken and the egg issue, does the US have a huge capital surplus because of its attractive investment environment (low taxes, regulation, and high economic freedom, property rights, and rule of law) or does it have a huge capital surplus because it consumes a large amount of imports which are paid for in US dollars? Most folks just assume (or talk about) the imports as a problem without discussing the other half of the equation . . . reality is probably somewhere in between.

The truth is that the trade deficit and capital surplus reflects an imbalance, which is dangerous. But it is not just an imbalance with the US, as most people assume. It is a global imbalance that reflects both a dearth of US savings and an excess of foreign savings. Yes, too much savings is also a bad thing when it comes to national economies. Places like China have very little domestic demand to support their economy and are dependent on exports for growth. Their economies are inherently less stable as a result. If the US enters a serious recession, places like China will likely suffer severely as a result.

I concord with what you are writing - the recession is for the whole world, here because we can't comnsume any more, over there because the surplus won't be absorbed by the US.
BUT:
1) The Chinese market will be far beyond ours in size.
2) At the End of the day the Chinese will still own the capital to the US economy (albeit in bad shape, they will still do). In addition to the means of manufacturing.

Even after an economic crash you are better off as a creditor of stocks and bonds than a debtor.

 

[haha]

I concord with what you are writing - the recession is for the whole world here because we can't comnsume any more over there because the surplus won't be absorbed by the US.
BUT:
1) The Chinese market will be far beyond ours.
2) At the End of the day the Chinese will still own the capital to the US economy (albeit in bad shape they will still do). In addition to the means of manufacturing.

Even after an economic crash you are better off as a creditor of stocks and bonds rthan a debtor.

This appears to be how Warren Buffet sees it. We buy, they sell. They need us as much as we need them.

But not for long, this is a transition. Who can doubt that a nation of over 1 billion intelligent hard working people will very soon develop a huge home market for their goods?

When that happens we'll be on our own again, but unfortunately we will have misssed a generation of manufacturing expertise development.

As to intellectual property, remember than China alone graduates many, many times more scientists and engineers every year than we do in the US. I imagine they will soon not have any unusual need for our intellectual capital.

Ha

 

[Nords]

As to intellectual property, remember than China alone graduates many, many times more scientists and engineers every year than we do in the US. I imagine they will soon not have any unusual need for our intellectual capital.

I hear ya, but the strengths of America compared to China include a strong patent system and a capitalistic society in which to pursue one's goals. Greed works pretty well here.

Otherwise we'd all be using Chinese-designed cell phones, computers, microwaves, ...

 

[d]

As to intellectual property ...intellectual capital.

it is the difference between the two which might be most important

 

[AltaRed]

Otherwise we'd all be using Chinese-designed cell phones, computers, microwaves, ...

You will be as soon as they figure out how to manage the full supply chain and out flank the Koreans and Taiwanese. IP is only as good as the next moustrap.

 

[Gone4Good]

But not for long, this is a transition. Who can doubt that a nation of over 1 billion intelligent hard working people will very soon develop a huge home market for their goods?

Of course.  And the whole world will become richer as a result.  China will not manufacture all of their own goods and services . . . it is inefficient and costly to do so.  Already China is beginning to struggle with its "low cost manufacturing" economy as standards of living rise.  As the economy grows and matures, China will increasingly need foreign goods and services to meet the increasing demands of its citizens.  It is inevitable, and it has already started to happen.  

The problem everyone seems to have is that they see the world economy as a zero sum game.  If China earns a buck, it must be that someone else loses a buck (most likely a Detroit auto worker).  But the truth is that economic growth increases the size of the pie we all share.  The emergent middle-class of China and India will provide an economic boom the world has never seen.  Obviously the chief beneficiaries are the Chinese and Indians whose standards of living have the most ground to make up.  Do not begrudge them that because the whole world will also share in the global economic growth that follows.  

Fear not.

 

[youbet]

Otherwise we'd all be using Chinese-designed cell phones, computers, microwaves, ...

I can't speak for computers or microwaves, but many folks here are using Chinese designed cell phones.......

 

[al_bundy]

This appears to be how Warren Buffet sees it. We buy, they sell. They need us as much as we need them.

But not for long, this is a transition. Who can doubt that a nation of over 1 billion intelligent hard working people will very soon develop a huge home market for their goods?

When that happens we'll be on our own again, but unfortunately we will have misssed a generation of manufacturing expertise development.

As to intellectual property, remember than China alone graduates many, many times more scientists and engineers every year than we do in the US. I imagine they will soon not have any unusual need for our intellectual capital.

Ha

a lot of chineese manufacturing is done with US machines. a lot of the computer chips are made on US designed chip machines.

the high end manufacturing is still in the US. the cheapo stuff is in china

cell phones aren't high tech. they are a mix of US designed high tech that is cheaply made in china

 

[youbet]

cell phones aren't high tech. they are a mix of US designed high tech that is cheaply made in china

Cell phone design is being transferred to Asia/China and is an example of US firms desire to outsource more design work to Asia/China just as they have outsourced much manufacturing.  Don't underestimate the talent and creativity of Asian/Chinese engineers. And at $10k to $12k salary, they represent a huge savings over US engineers.

 

[Gone4Good]

For how long have we worried that foreign competition would impoverish us?  At least back to the 1920's when "Under the watchful eye of Senator Reed Smoot of Utah, the party drafted the Fordney-McCumber tariff act in 1921 with an eye to increasing domestic firms' market share."    After the stock market crash of 1929 Senator Smoot joined up with Hawley to pass another tariff increase, which is widely accredited with prolonging the Great Depression. 

Fears of foreign competition go back decades, if not millennium.  History has repeatedly shown, however, that international trade and competition increase economic growth and living standards - but no one seems to pay attention.  More recently we've been treated to various theories of how the Japanese would "eat our economic lunch", followed by the "Asian-Tigers" and now China and India.  Over that entire time (since 1981) Real GDP has grown 3.1% and Real Wages have grown 1%.  Notwithstanding increased global competition and all the xenophobic fears accompanying it, we are wealthier then we've ever been. 

I have to admit that it’s dispiriting to see an internet forum presumably populated by financially savvy folks fall for this tired and discredited protectionist rhetoric.  If this group doesn’t know better, what hope does the nation have in fending off wrong-headed protectionist policies, which are the real threat you should all be worried about. 

 

[Eagle43]

Nicely stated, 3 Yrs to Go, Nicely stated.  All of this cocky-locky sky is falling crap is just that.

Competition is good for everybody, and from everybody, even the Chinese.  The Japanese were going to overwhelm us during the 80s.  Now, the Socialists are telling us that the European Common Market bunch is going to get us.  Don't bet on it.