Trade Deficit Hits Record $665.9B in 2004 - The Orange Mane

Bronco_Beerslug · 03-16-2005, 08:08 AM

This figure shows clearly the sell off of the American dollar to Asia.
We, in this country, are looking at some very hard times on the horizon if we continue increasing the double deficits. The markets will not hold up with oil prices soaring and deficits out of control.

--------------------------------------------------------
By MARTIN CRUTSINGER, AP Economics Writer

WASHINGTON - The United States deficit in the broadest measure of international trade soared to an all-time high of $665.9 billion in 2004, showing in stark terms the speed with which the country is becoming indebted to the rest of the world.

The Commerce Department (news - web sites) reported Wednesday that the shortfall in the current account was 25.5 percent higher than the previous record, the $530.7 billion deficit set in 2003. The department also noted that the deficit was worsening as the year ended with the shortfall in the fourth quarter hitting a record $187.9 billion, up 13.3 percent from the third quarter deficit.

The Bush administration contends the soaring trade deficits reflect a U.S. economy that is growing faster than the rest of the world, pushing up imports and dampening demand for U.S. exports. But private economists are worried that the huge level of resources being transferred into the hands of foreigners will eventually result in lower U.S. living standards.

Meanwhile, the Federal Reserve (news - web sites) reported that output at the nation's factories, mines and utilities rose by 0.3 percent in February, following a tiny 0.1 percent increase in January. It was the best showing since a surge of 0.8 percent in December and was led by a 0.5 percent jump in manufacturing, the third straight 0.5 percent gain in this sector.

In other economic news, the Commerce Department said construction of new homes and apartments rose by 0.5 percent to a seasonally adjusted annual rate of 2.195 million units in February, the fastest pace in 21 years.

Construction of single-family homes hit an all-time high of 1.775 million units, up 0.3 percent from January, and multi-family construction was up 1.7 percent to 420,000 units.

Analysts believe the housing sector, which has set sales records for four straight years, will begin to cool this year under the impact of rising interest rates.

The current account trade deficit is closely watched by economists because it is the broadest measure of international trade, covering not only trade in goods but also trade in services and investment flows between nations. The deficit for 2004 was not only a record in dollar terms but also as a percentage of the total U.S. economy, climbing to 5.7 percent of the gross domestic product, up from 4.8 percent of GDP (news - web sites) in 2003.

The deficit represents the amount in resources that the United States is transferring into the hands of foreigners in exchange for foreign oil, cars and other products that Americans are purchasing.

While foreigners have been more than willing to exchange their products for U.S. dollars, there is a worry that at some point they will become less willing to do so and will seek to exchange dollars for other foreign currencies.

The dollar's value against other currencies has been declining for three years but so far that decline has been orderly.

However, some private analysts worry that one day the dollar might begin falling in value more sharply if foreigners suddenly decide to diversify into other currencies and begin cashing in their holdings of U.S. stocks, bonds and Treasury securities. Such a development could send stock prices in this country plunging and interest rates surging.

Investor Warren Buffett (news - web sites) warned in this year's letter to shareholders of Berkshire Hathaway Inc. that the United States could become a "sharecropper's society" by the continued transfer of U.S. assets into foreign hands. He estimated the country's debt to foreigners could surge to $11 trillion by 2015.

However, Federal Reserve Chairman Alan Greenspan (news - web sites) has said in recent speeches that he believes the country's current account deficit will be resolved without sparking financial market turmoil as the weaker dollar makes U.S. goods more competitive in foreign countries while making imports more expensive and thus less appealing to Americans.

But Buffett warned in his letter to shareholders that the growing indebtedness would require annual payments to foreigners to service the debt of around $550 billion by 2015, a transfer of resources that would mean less investment and lower living standards in the United States.

For 2004, the current account deficit reflected a shortfall of $665.5 billion in goods, up from a goods deficit of $547.6 billion in 2003. One-fourth of the deterioration was blamed on higher foreign oil imports.

The U.S. surplus in services shrank to $48.4 billion last year, down from a surplus of $51 billion in 2003. U.S. investors earned $24.1 billion in their foreign holdings last year while foreign investors earned a higher $33.3 billion on their holdings in the United States. Unilateral transfers, including such things as foreign aid, totaled $72.9 billion in 2004, up from $67.4 billion in 2003.
http://story.news.yahoo.com/news?tmp..._ec_fi/economy

Bronco_Beerslug · 03-16-2005, 09:26 AM

Greenspan: Budget Gaps Threatens Economy
By Glenn Somerville

WASHINGTON (Reuters) - U.S. lawmakers should act swiftly to shore up the Social Security (news - web sites) retirement system and avoid economically crippling budget deficits in the future, Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) warned on Tuesday.
(CONTINUED)
http://story.news.yahoo.com/news?tmp...greenspan_dc_4

A truck departs after picking up a container Wednesday, Oct. 13, 2004, at the Port of Long Beach, Calif. The United States deficit in the broadest measure of international trade soared to an all-time high of $665.9 billion in 2004, the Commerce Department (news - web sites) reported Wednesday, March 16, 2005. (AP Photo/Ric Francis)

L.A. BRONCOS FAN · 03-16-2005, 06:29 PM

Quote:

Originally Posted by Bronco_Beerslug

This figure shows clearly the sell off of the American dollar to Asia.
We, in this country, are looking at some very hard times on the horizon if we continue increasing the double deficits. The markets will not hold up with oil prices soaring and deficits out of control.

Huh?

What are you talking about, BB?

According to folks like patteu, Dubya has 'turned the economy around,' and everything's hunky dory.

You're so full of hate and bitterness...

Greenspan: Budget Gaps Threatens Economy

He should have thought about this when he was shilling for Bush's tax cuts for the super-wealthy.

L.A. BRONCOS FAN · 03-18-2005, 02:08 AM

The coming economic meltdown: Sorry, but we're toast

Don't look now, but Bush's house-of-cards economy is about to come crashing to earth. Just yesterday the Commerce Dept announced that the trade deficit soared to an all time high of $665 billion in 2004; a whopping 25% increase from the previous year. America's gluttonous appetite for cheap foreign goods and its inability to produce more of what it consumes is quickening the country's inevitable day of reckoning. Despite the rosy projections from the Bush clan and their friends in the media, the probability of an economic meltdown becomes more likely every day.

Does the average American have any idea of the catastrophe that's facing us?

Apparently, not. As the AP's Martin Crutsinger says, "The deficit for 2004 was not only a record in dollar terms but also as a percentage of the total U.S. economy, climbing to 5.7 percent of the gross domestic product, up from 4.8 percent of GDP in 2003. (By way of comparison; Argentina collapsed when its trade deficit hit 4% of GDP)

The deficit represents the amount in resources that the United States is transferring into the hands of foreigners in exchange for foreign oil, cars and other products that Americans are purchasing."

So, $665 billion of American assets fled the country in just one year alone! How long do you think a nation (however strong) can keep up that pace?

The danger is that central banks across the globe will start backing away from US greenbacks; a fact that's already reflected by the steadily falling dollar.

Of course, there are ways to prop up the dollar and stabilize the economy. Reverse the Bush tax cuts that are plunging the country towards disaster; reinvest in the industrial sector so America can start manufacturing things again; raise interest rates to build confidence in the dollar, and tighten up government expenses to show the world some fiscal responsibility.

Of course, none of these will happen. We know from experience that when the Bush administration is headed over the cliff, the first thing they do is hit the gas. The same suicidal scenario is unfolding now.

For example, two days ago Fed-master Alan Greenspan was addressing the Council on Foreign Relations (CFR) saying the greatest threat to America's economic future was the huge deficits. (Ironic that Greenspan would concede this point, given his unflinching support for the Bush tax cuts) At the same time Greenspan was making his presentation, the Republican House was proposing a budget that would provide ANOTHER $106 BILLION TAX CUTS FOR AMERICA'S RICHEST PEOPLE.

Don't expect to see any change in this behavior either. What seemed like a crazy conspiracy theory just two years ago is now a documented fact; the Bush Administration (with the help of Greenspan) is trying to bankrupt the nation and put the American people under the control of the country's creditors. (Greenspan's friends in the banking industry and foreign countries holding US bonds) So far, they've done a bang-up job by racking up another $3 trillion in debt in just 4 years by looting the US Treasury and jeopardizing the dollar's status as the world's reserve currency. If the world moves en masse away from the dollar (as it may, if Bush goes ahead with his twisted plan for attacking Iran) the US will rapidly devolve into a third world nation.

Currently, the dollar is underwritten by $8 trillion of debt; which explains why world banks are dumping their holdings. The only thread holding the economy together is (artificially) low interest rates, cheap oil and $450 billion of tax cuts that are sluiced back into the economy. (according to Supply-side theory) When these three buckle beneath the weight of the increasing debt load, the American dream will go up like a pillar of black smoke from a Baghdad pipeline.

From this viewpoint, it looks like wily Greenspan is intentionally keeping interest rates low so Bush can keep his (war) date with Iran. (probably just months away) When the Fed-chief finally pulls the rug out from under us and raises rates to save the dollar, housing will grind to a halt and America will stumble into recession, or worse.

This is no joke. Smart people should be bailing-out right now, and looking for Euro bond funds, energy funds or gold. We're in deep trouble and we shouldn't expect the Wall Street wise guys who picked us clean during the stock market crash to be straight with us now.

No wiggle-room in the oil market

As if the deficits and the falling dollar were not enough to worry about, oil surged to a new high yesterday of $56.10 a barrel. When supply can't meet demand, oil can go from $56 bbl to $156 bbl in short order. (These numbers don't surprise anyone who has followed the peak oil issue, and they were certainly anticipated by the administration before the invasion of Iraq. Oil companies spend zillions on flow-charts, global projections and available stockpiles. There's no doubt that they knew that this day was coming and fabricated the WMD scare to bamboozle the public into an unnecessary war) The Bush administration doesn't intend to allow that to happen. They know that recession is typically preceded by an up tick in energy prices, so they have to nip the problem in the bud. A sharp downturn in the economy would foil Bush's plans for an attack on Iran.

White House press secretary, Scott McClellan was asked a question at Monday's press conference that shed some light on the administration's strategy for dealing with potential oil shortages:

"Several OPEC oil members have said that they've received phone calls from Energy Secretary Bodman. I was wondering if you could just confirm that the Energy Secretary is, indeed, lobbying OPEC to lift production? And also, my second question is, has President Bush joined in this effort?"

Yes, Bush has quietly joined the effort by pressuring the Saudi's to push the other OPEC members to crank up production another 1 million barrels a day. But, what does that say about long term production when the system is already operating at maximum capacity?

Gasoline stocks have fallen precipitously and Reuters is reporting that, "strong demand forecasts have exacerbated concern that cartel (OPEC) supply may not be able to meet growing global demand later this year."

"Supply may not meet demand?"

It's only 2005 and already the demand for oil is exceeding the (normal) supply? And, what is Bush's response to this new state of affairs?

Hide it from the American people, so he can continue with his war-agenda.

Unbelievable.

Welcome, Fellow Sharecroppers!

This is a very serious situation. America is facing a calamity of incalculable magnitude and, yet, the government keeps obfuscating the facts while the media oozes its reassuring platitudes that "all is well".

All is not well. Staggering deficits, rising energy costs and the falling dollar are bearing down on us like a rock-slide. Looks like we're headed for some pretty dark times.

Sorry to say it, but we're toast.

- Mike Whitney

03-16-2005, 08:08 AM	#1
Bronco_Beerslug Angling in the Deep Join Date: Oct 2003 Location: Texas Riviera, Southern Mountains Posts: 24,281	Trade Deficit Hits Record $665.9B in 2004 This figure shows clearly the sell off of the American dollar to Asia. We, in this country, are looking at some very hard times on the horizon if we continue increasing the double deficits. The markets will not hold up with oil prices soaring and deficits out of control. -------------------------------------------------------- By MARTIN CRUTSINGER, AP Economics Writer WASHINGTON - The United States deficit in the broadest measure of international trade soared to an all-time high of $665.9 billion in 2004, showing in stark terms the speed with which the country is becoming indebted to the rest of the world. The Commerce Department (news - web sites) reported Wednesday that the shortfall in the current account was 25.5 percent higher than the previous record, the $530.7 billion deficit set in 2003. The department also noted that the deficit was worsening as the year ended with the shortfall in the fourth quarter hitting a record $187.9 billion, up 13.3 percent from the third quarter deficit. The Bush administration contends the soaring trade deficits reflect a U.S. economy that is growing faster than the rest of the world, pushing up imports and dampening demand for U.S. exports. But private economists are worried that the huge level of resources being transferred into the hands of foreigners will eventually result in lower U.S. living standards. Meanwhile, the Federal Reserve (news - web sites) reported that output at the nation's factories, mines and utilities rose by 0.3 percent in February, following a tiny 0.1 percent increase in January. It was the best showing since a surge of 0.8 percent in December and was led by a 0.5 percent jump in manufacturing, the third straight 0.5 percent gain in this sector. In other economic news, the Commerce Department said construction of new homes and apartments rose by 0.5 percent to a seasonally adjusted annual rate of 2.195 million units in February, the fastest pace in 21 years. Construction of single-family homes hit an all-time high of 1.775 million units, up 0.3 percent from January, and multi-family construction was up 1.7 percent to 420,000 units. Analysts believe the housing sector, which has set sales records for four straight years, will begin to cool this year under the impact of rising interest rates. The current account trade deficit is closely watched by economists because it is the broadest measure of international trade, covering not only trade in goods but also trade in services and investment flows between nations. The deficit for 2004 was not only a record in dollar terms but also as a percentage of the total U.S. economy, climbing to 5.7 percent of the gross domestic product, up from 4.8 percent of GDP (news - web sites) in 2003. The deficit represents the amount in resources that the United States is transferring into the hands of foreigners in exchange for foreign oil, cars and other products that Americans are purchasing. While foreigners have been more than willing to exchange their products for U.S. dollars, there is a worry that at some point they will become less willing to do so and will seek to exchange dollars for other foreign currencies. The dollar's value against other currencies has been declining for three years but so far that decline has been orderly. However, some private analysts worry that one day the dollar might begin falling in value more sharply if foreigners suddenly decide to diversify into other currencies and begin cashing in their holdings of U.S. stocks, bonds and Treasury securities. Such a development could send stock prices in this country plunging and interest rates surging. Investor Warren Buffett (news - web sites) warned in this year's letter to shareholders of Berkshire Hathaway Inc. that the United States could become a "sharecropper's society" by the continued transfer of U.S. assets into foreign hands. He estimated the country's debt to foreigners could surge to $11 trillion by 2015. However, Federal Reserve Chairman Alan Greenspan (news - web sites) has said in recent speeches that he believes the country's current account deficit will be resolved without sparking financial market turmoil as the weaker dollar makes U.S. goods more competitive in foreign countries while making imports more expensive and thus less appealing to Americans. But Buffett warned in his letter to shareholders that the growing indebtedness would require annual payments to foreigners to service the debt of around $550 billion by 2015, a transfer of resources that would mean less investment and lower living standards in the United States. For 2004, the current account deficit reflected a shortfall of $665.5 billion in goods, up from a goods deficit of $547.6 billion in 2003. One-fourth of the deterioration was blamed on higher foreign oil imports. The U.S. surplus in services shrank to $48.4 billion last year, down from a surplus of $51 billion in 2003. U.S. investors earned $24.1 billion in their foreign holdings last year while foreign investors earned a higher $33.3 billion on their holdings in the United States. Unilateral transfers, including such things as foreign aid, totaled $72.9 billion in 2004, up from $67.4 billion in 2003. http://story.news.yahoo.com/news?tmp..._ec_fi/economy

Thread Tools
Show Printable Version Email this Page
Display Modes
Linear Mode Switch to Hybrid Mode Switch to Threaded Mode

03-16-2005, 09:26 AM	#2
Bronco_Beerslug Angling in the Deep Join Date: Oct 2003 Location: Texas Riviera, Southern Mountains Posts: 24,281	Greenspan: Budget Gaps Threatens Economy By Glenn Somerville WASHINGTON (Reuters) - U.S. lawmakers should act swiftly to shore up the Social Security (news - web sites) retirement system and avoid economically crippling budget deficits in the future, Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) warned on Tuesday. (CONTINUED) http://story.news.yahoo.com/news?tmp...greenspan_dc_4 A truck departs after picking up a container Wednesday, Oct. 13, 2004, at the Port of Long Beach, Calif. The United States deficit in the broadest measure of international trade soared to an all-time high of $665.9 billion in 2004, the Commerce Department (news - web sites) reported Wednesday, March 16, 2005. (AP Photo/Ric Francis)

03-18-2005, 02:08 AM	#4
L.A. BRONCOS FAN Mo' holla fo' yo' dolla! Join Date: Dec 2002 Location: In a bunker in an undisclosed location Posts: 52,694	The coming economic meltdown: Sorry, but we're toast Don't look now, but Bush's house-of-cards economy is about to come crashing to earth. Just yesterday the Commerce Dept announced that the trade deficit soared to an all time high of $665 billion in 2004; a whopping 25% increase from the previous year. America's gluttonous appetite for cheap foreign goods and its inability to produce more of what it consumes is quickening the country's inevitable day of reckoning. Despite the rosy projections from the Bush clan and their friends in the media, the probability of an economic meltdown becomes more likely every day. Does the average American have any idea of the catastrophe that's facing us? Apparently, not. As the AP's Martin Crutsinger says, "The deficit for 2004 was not only a record in dollar terms but also as a percentage of the total U.S. economy, climbing to 5.7 percent of the gross domestic product, up from 4.8 percent of GDP in 2003. (By way of comparison; Argentina collapsed when its trade deficit hit 4% of GDP) The deficit represents the amount in resources that the United States is transferring into the hands of foreigners in exchange for foreign oil, cars and other products that Americans are purchasing." So, $665 billion of American assets fled the country in just one year alone! How long do you think a nation (however strong) can keep up that pace? The danger is that central banks across the globe will start backing away from US greenbacks; a fact that's already reflected by the steadily falling dollar. Of course, there are ways to prop up the dollar and stabilize the economy. Reverse the Bush tax cuts that are plunging the country towards disaster; reinvest in the industrial sector so America can start manufacturing things again; raise interest rates to build confidence in the dollar, and tighten up government expenses to show the world some fiscal responsibility. Of course, none of these will happen. We know from experience that when the Bush administration is headed over the cliff, the first thing they do is hit the gas. The same suicidal scenario is unfolding now. For example, two days ago Fed-master Alan Greenspan was addressing the Council on Foreign Relations (CFR) saying the greatest threat to America's economic future was the huge deficits. (Ironic that Greenspan would concede this point, given his unflinching support for the Bush tax cuts) At the same time Greenspan was making his presentation, the Republican House was proposing a budget that would provide ANOTHER $106 BILLION TAX CUTS FOR AMERICA'S RICHEST PEOPLE. Don't expect to see any change in this behavior either. What seemed like a crazy conspiracy theory just two years ago is now a documented fact; the Bush Administration (with the help of Greenspan) is trying to bankrupt the nation and put the American people under the control of the country's creditors. (Greenspan's friends in the banking industry and foreign countries holding US bonds) So far, they've done a bang-up job by racking up another $3 trillion in debt in just 4 years by looting the US Treasury and jeopardizing the dollar's status as the world's reserve currency. If the world moves en masse away from the dollar (as it may, if Bush goes ahead with his twisted plan for attacking Iran) the US will rapidly devolve into a third world nation. Currently, the dollar is underwritten by $8 trillion of debt; which explains why world banks are dumping their holdings. The only thread holding the economy together is (artificially) low interest rates, cheap oil and $450 billion of tax cuts that are sluiced back into the economy. (according to Supply-side theory) When these three buckle beneath the weight of the increasing debt load, the American dream will go up like a pillar of black smoke from a Baghdad pipeline. From this viewpoint, it looks like wily Greenspan is intentionally keeping interest rates low so Bush can keep his (war) date with Iran. (probably just months away) When the Fed-chief finally pulls the rug out from under us and raises rates to save the dollar, housing will grind to a halt and America will stumble into recession, or worse. This is no joke. Smart people should be bailing-out right now, and looking for Euro bond funds, energy funds or gold. We're in deep trouble and we shouldn't expect the Wall Street wise guys who picked us clean during the stock market crash to be straight with us now. No wiggle-room in the oil market As if the deficits and the falling dollar were not enough to worry about, oil surged to a new high yesterday of $56.10 a barrel. When supply can't meet demand, oil can go from $56 bbl to $156 bbl in short order. (These numbers don't surprise anyone who has followed the peak oil issue, and they were certainly anticipated by the administration before the invasion of Iraq. Oil companies spend zillions on flow-charts, global projections and available stockpiles. There's no doubt that they knew that this day was coming and fabricated the WMD scare to bamboozle the public into an unnecessary war) The Bush administration doesn't intend to allow that to happen. They know that recession is typically preceded by an up tick in energy prices, so they have to nip the problem in the bud. A sharp downturn in the economy would foil Bush's plans for an attack on Iran. White House press secretary, Scott McClellan was asked a question at Monday's press conference that shed some light on the administration's strategy for dealing with potential oil shortages: "Several OPEC oil members have said that they've received phone calls from Energy Secretary Bodman. I was wondering if you could just confirm that the Energy Secretary is, indeed, lobbying OPEC to lift production? And also, my second question is, has President Bush joined in this effort?" Yes, Bush has quietly joined the effort by pressuring the Saudi's to push the other OPEC members to crank up production another 1 million barrels a day. But, what does that say about long term production when the system is already operating at maximum capacity? Gasoline stocks have fallen precipitously and Reuters is reporting that, "strong demand forecasts have exacerbated concern that cartel (OPEC) supply may not be able to meet growing global demand later this year." "Supply may not meet demand?" It's only 2005 and already the demand for oil is exceeding the (normal) supply? And, what is Bush's response to this new state of affairs? Hide it from the American people, so he can continue with his war-agenda. Unbelievable. Welcome, Fellow Sharecroppers! This is a very serious situation. America is facing a calamity of incalculable magnitude and, yet, the government keeps obfuscating the facts while the media oozes its reassuring platitudes that "all is well". All is not well. Staggering deficits, rising energy costs and the falling dollar are bearing down on us like a rock-slide. Looks like we're headed for some pretty dark times. Sorry to say it, but we're toast. - Mike Whitney