Trade balances

[loborugger]

So, today I had some free time and I came across a copy of the Economist Magazine. I was flipping thru the pages, skimming articles here and there. Finally I made it to the last page.

The last page had the stats for a number of nations and their trade balance. Of course, there was the US as the biggest loser. I am doing this all from memory... however, I believe the US was -809 billion for the fourth quarter of 2007. Simply amazing.

So I continued skimming the list. The list was from covered most of the major nations on the planet. Besides the US, the UK and Spain were also big losers with both over 100 billion in red.

And, then I started to look at the nations in the black. China, of course, along with Japan. Both big winners, at over 100 billion in the black. Russia and Saudi Arabia were also bigger winners, and I figure that is cuz of the booming commodities market. Many developing nations were slightly in the black, and again I guessed it was due to the booming comodities market.

But the nation that totally surprised me was Germany. Germany had (again, from memory) a 236 billion dollar trade surplus in the fourth quarter of 2007. I was shocked. Most of the developed, first world nations were in the red, or slightly in the black. But, Germany was a bigger exporter than China (again, if I remember my #s correctly).

I am surprised that Germany, a 1st world nation with a high standard of living, has a huge trade surplus. And it got me to thinking...

What the hell has Germany done well that we havent? They face a lot of the same challenges we do. They have a high standard of living, there workers wont work for pennies an hour. They border developing nations just as we do. Maybe the differences between the standards of living arent as big as for Germany as the US/Mexico, but it still exists. Maybe its the East Germans? Maybe they still will work for peanuts?

I dont know, but I thought I would throw it out here for everyone on the Mane to comment on.

[cutthemdown]

I couldn't tell you other then that maybe Germans buy German products. They have a strong sense of Nationalisim in Germany. They also make some good products and have some big brands like BMW. Other then that you would have to see if maybe they somehow give help to german products through tariffs or subsidies etc.

I've heard though that Europes economy is having some trouble so I don't know just looking a trade deficits is the whole show. Many countries like Russia export commodities, and have vast populations that can't afford goods from countries like USA/UK/France/Germany. So that could be why they are in the black.

America is a consumer nation we buy from everywhere but we do need to decrease the trade deficit. I think govt letting the dollar drop is part of that. It makes our products more affordable around the world. I'm not sure how long the Europeans can go worrying about inflation and keeping the Euro so high. Eventually they will have to lower the int% to create growth just like the USA has. The Euro had some bad news with some bank writeoffs of their own so we will see.

[Bronco_Beerslug]

It's pretty simple, Germany is the largest economy in Europe and subsidizes almost all major products they export and are strategically located for trading with it's neighbors, Eastern Europe and Russia.

[W*GS]

I'm not 100% sure myself, but I would examine what EU trade rules are before claiming that Germany engages in subsidies to exporters and tariffs against imported products. Generally the EU takes a very dim view of such shenanigans.

[loborugger]

Originally Posted by Bronco_Beerslug

It's pretty simple, Germany is the largest economy in Europe and subsidizes almost all major products they export and are strategicly located for trading with it's neigbors, Eastern Europe and Russia.

I hadnt heard about any subsidies... not that I follow it much.

As for German cars, I guess they do buy them almost exclusively. So, that means they dont import many autos. However, the quality of their product is going down.

Another thing I noticed was how robust the German economy is. There trade surplus was less than 1 percent of their GNP. Compare that to China... where there 100 billion plus trade surplus was a markedly higher percent of their total GNP.

[Bronco_Beerslug]

Originally Posted by loborugger

I hadnt heard about any subsidies... not that I follow it much.

As for German cars, I guess they do buy them almost exclusively. So, that means they dont import many autos. However, the quality of their product is going down.

Another thing I noticed was how robust the German economy is. There trade surplus was less than 1 percent of their GNP. Compare that to China... where there 100 billion plus trade surplus was a markedly higher percent of their total GNP.

Germany produces a lot of industrial power generation equipment, chemicals, autos, etc... I think the total EU trade deficit was something like 200 billion or .05% of EU GDP.

[ScottXray]

I work for a large German multinational electrical company, here in the US.
Almost all of our products are made in Germany, but the US
market is the largest in the world (for now...China coming up fast).

In order to offset the imports the company buys american companies that manufacture components. Sometimes components are imported and products manufactured here. Those are purchased, shipped to Germany and incorporated in more products there. On the official books the cost of goods is the same and the balance sheet even, but the consumer price ends up in VERY good profits for the company. Essentially every division in the company makes a profit by manufacturing products that are sold at a profit to another company division...which then turns around and sells its product to another division (at a profit), and on and on. ALL the profits eventually end up in the main companies hands. And they also re-invest about 6-8% of the gross income into R&D for new product development.

In order to get contracts for medical equipment in China the company has licensed some manufacturing of OUR products in China to chinese companies there....of course they also end up buying some products back...but mostly those products can only be sold in china....they get the specifications and the technical know how to produce sophisticated products (which also happen to work BEST with other products, made in Germany only).

The Germans are excellent capitalists...always have been. The East german situation is caught up to the West German part, mostly. Still a lot of investing in their infrastructure, but mostly there....and all of that is NEW plants that are well automated and robotic. In addition they have a skilled work force that remains well educated, and strong labor laws to protect and re-educate labor.

They also have high taxes, and almost universal health care.

Basically they are using there strengths to compete very well....

[footstepsfrom#27]

Have you priced a Mercedes lately?

[Spider]

My guess would be transportation of goods has something to do with this , while Canada is bigger , alot of nothern Canada is wilderness not alot of transportation ..... German is much smaller boarder to boarder then America , so getting goods from point A to point B there is alot cheaper ....not saying this is the only reason , but it has to be a contributing factor , Labor force is another contributing factor ......

[Bob]

Bottom line is that our nation has larger and larger trade imbalances’ with each passing decade and is shifting our collective wealth to other nations over time -- much of that wealth (that our parents bought with hard work) is going to countries that can hardly be described as friendly. As we all can’t be website developers, Holly Wood Stars, or CEO’s of large American cooperation’s that have shipped their blue-collar labor over-seas -- I worry about the long-term prospects for our country.

Have you attempted to buy something made in America lately? It seems harder and harder to do. I was committed to buy an American car a few years ago so I bought a GM, it wasn’t until I got home and looked on the inside of the door that I noticed a red maple leaf.

As for Europe intentionally deflating the Euro, so they can keep up globally by keeping their prices cheap -- I am not so sure. Perhaps they are not following the Wal Mart model to success, "make it cheap and sell allot of em" If you make a superior product the consumer may be willing to pay a premium to get it -- Think Apple and Harley Davidson -- think Buick and BMW (in China) -- those products are selling well -- not because they are “cheap” but because they are made well -- or are seen as some sort of status symbol. Winning the "race to the bottom" in cheap prices alone is hard to do against child labor in China and India. If we win that race, it may be because we have become a third world nation ourselves, complete with our Peso-priced deflated greenback.

[loborugger]

Europe intentionally deflating the Euro? Not exactly. Its about the strongest currency on the planet. In fact, when the French Prez was here a couple of months ago, he specifically mentioned that he wanted the US to strengthen the dollar vs the Euro cuz it was causing problems.

Otherwise, you have a good point. If you cant manufacture 1 billion shirts a month to be sold for a quarter a shirt - cuz its made by slave labor - then make the best damn thing you can. Not a bad idea.

Which I guess is what FS27 was getting at. When you pay 80 grand for a Mercedes, part of that sticker is just for the name. And you pay for that name cuz of a past reputation of quality.

[L.A. BRONCOS FAN]

Originally Posted by Bob

Bottom line is that our nation has larger and larger trade imbalances’ with each passing decade and is shifting our collective wealth to other nations over time -- much of that wealth (that our parents bought with hard work) is going to countries that can hardly be described as friendly. As we all can’t be website developers, Holly Wood Stars, or CEO’s of large American cooperation’s that have shipped their blue-collar labor over-seas -- I worry about the long-term prospects for our country.

[shakenbake]

Originally Posted by L.A. BRONCOS FAN

who was it that signed NAFTA ?

[L.A. BRONCOS FAN]

Originally Posted by shakenbake

who was it that signed NAFTA ?

NAFTA?

You mean that trade agreement the GOP-controlled Congress championed but Clinton takes all the blame for? (Not that it wasn't a mistake for Clinton to sign it, mind you.)

Meanwhile, that same GOP Congress deserves all the credit for the Clinton economy, according to the right-wingers.

Gotta love that conservative double standard.

[W*GS]

LABF would do a contortionist proud with his twisting and spinning for Clinton.

[shakenbake]

Originally Posted by L.A. BRONCOS FAN

NAFTA?

You mean that trade agreement the GOP-controlled Congress championed but Clinton takes all the blame for? (Not that it wasn't a mistake for Clinton to sign it, mind you.)

Meanwhile, that same GOP Congress deserves all the credit for the Clinton economy, according to the right-wingers.

Gotta love that conservative double standard.

Yea it sounds like he had no choice in signing it, he really didn't want to but those evil republicans made him do it.

http://www.multied.com/Documents/Cli...ningNaFTA.html

[L.A. BRONCOS FAN]

Originally Posted by shakenbake

Yea it sounds like he had no choice in signing it, he really didn't want to but those evil republicans made him do it.

Didn't say that.

What I said was Clinton gets all the blame for NAFTA when it was the work of the GOP Congress (whereas right-wingers invariably try to give that same GOP Congress all the credit for Clinton's economic successes.)

[shakenbake]

Originally Posted by L.A. BRONCOS FAN

Didn't say that.

What I said was Clinton gets all the blame for NAFTA when it was the work of the GOP Congress (whereas right-wingers invariably try to give that same GOP Congress all the credit for Clinton's economic successes.)

what if I don't think NAFTA is all that bad. Does that mean I can give the GOP credit for NAFTA and the economic success?

[L.A. BRONCOS FAN]

Originally Posted by shakenbake

what if I don't think NAFTA is all that bad. Does that mean I can give the GOP credit for NAFTA and the economic success?

First you would have to show some kind of causal connection between NAFTA and the economic successes of the Clinton years.

(This should be funny.)

[Spider]

Originally Posted by shakenbake

what if I don't think NAFTA is all that bad. Does that mean I can give the GOP credit for NAFTA and the economic success?

Depends on what part of the country you live in ..NAFTA has been good to California ,Texas ,and most of the gulf stream states ... not so good to Michigan , Ohio and the rest of the rust belt .... But been good to the North east and North west America .......

[W*GS]

Originally Posted by L.A. BRONCOS FAN

What I said was Clinton gets all the blame for NAFTA when it was the work of the GOP Congress (whereas right-wingers invariably try to give that same GOP Congress all the credit for Clinton's economic successes.)

Clinton expended a lot of political capital getting Congress to approve it, dork.