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Let's just sell America off.

Discussion in 'Business & Economics' started by PLC1, Aug 18, 2008.

  1. PLC1

    PLC1 Moderator Staff Member

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    The Great American Yard Sale

    So, is America for sale to the highest bidder, at bargain rates due to the decline of the dollar, or is foreign investment something to cheer? What do you think?
     
  2. pocketfullofshells

    pocketfullofshells Well-Known Member

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    I think we screwed it up, lets just sell it off and let them do it. Hell lets not even vote anymore, Americans do a crapy job knowing what they are voting for anyway...so Sell Sell Sell
     
  3. PLC1

    PLC1 Moderator Staff Member

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    If we were to outsource federal elections to say, Switzerland (nice neutral country), or maybe to France, we might just do better than we have been doing ourselves.

    I wouldn't want to outsource to Venezuela or China, however. That's too risky.

    And no, that wasn't a serious suggestion.:p
     
  4. BigRob

    BigRob Well-Known Member

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    I think that none of this matters at all. The trade deficit is meaningless, and who really cares who owns what? Remember before he slowdown it was the US buying up everything overseas.
     
  5. PLC1

    PLC1 Moderator Staff Member

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    It matters where the profits go from the businesses, and which government gets the taxes from them.

    It's far from meaningless that the US produces so few manufactured goods, or that we import nearly half a trillion dollars worth of oil every year. All of those dollars going out, and fewer coming in, is the reason why the dollar is losing value against other world currencies.

    The Euro used to be worth a fraction of the US dollar. Now it is trading at about $1.60. That definitely impacts the price of imported goods, including that $4 a gallon gas everyone is complaining about.
     
  6. BigRob

    BigRob Well-Known Member

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    No it does not. Look at it this way. Regardless of who owns what, business that is done in the United States is done using the US Dollar. So, what then can the people do with the dollars that they get?

    1) Buy other goods with the dollar in the country that uses the dollar (or invest it). This is the US. This helps the US.

    2) Convert the money. This still sends the money back to the US economy in the same situation as point 1. Whoever ends up with the money is then presented with the same issue.

    3) Take the dollar out of circulation. This is what China has been doing for years now, but is this really a bad thing? I do not think so. It only makes the dollars that are in circulation that much more valuable.

    Why does it matter that we do not produce many manufactured goods here? Who cares? We can import them from somewhere else for cheaper, and they can be of equal or better quality. It also frees up our resources to focus on what we do best. Advanced technology.

    This is a bit of a dubious claim, as the EU continues to add new economies that bolster their own positions. Add to that, the cyclical value of the dollar etc. Also one must consider the fiscal policy of the FED and the EU version of the FED. The EU is falling in value now to the dollar, and given the policies that the EU FED has been following, they are on the verge of facing a massive problem of their own.

    What the more valuable Euro will do for the US however, is make US exports and investments in the US much more attractive. This is clearly obvious as people are pouring money into the US right now. This adds strength to the dollar and continues the cyclical nature of currency.
     
  7. PLC1

    PLC1 Moderator Staff Member

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    The trade imbalance is self correcting in a way, as cheaper dollars will make American made goods more attractive and encourage foreign tourism, which will eventually help raise the price of the dollar and complete the cycle you're talking about. The real downside to the cheaper dollar is inflation. All of those imported goods will cost more, oil will cost more, and the price of everything will rise. What will most likely not rise as fast as inflation is wages.

    Believe it or not, there used to be manufacturing jobs in this country that paid enough for a family to have a middle class lifestyle on one income. There are still a few jobs like that, but they are disappearing fast.
     
  8. BigRob

    BigRob Well-Known Member

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    I agree that certain sectors are not experiencing wage increases that equal that of inflation and the cost of living. That said, our economy is not a manufacturing economy any longer, it is a service economy and what we do make is very advanced technology.

    If we let the market work, when it does not make sense to maintain manufacturing jobs they will not be maintained, artificially maintaining them by government intervention only adds to any problems we are already facing.
     
  9. PLC1

    PLC1 Moderator Staff Member

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    True, artificially maintaining manufacturing will only make matters worse.

    Saying that we now have a service economy begs the question of just what we produce if all we do is provide service for people here.

    And, our advanced technology is being taken and made commercially successful in Japan and China. It makes me wonder just how long we can afford to continue to have a decent lifestyle while producing so little for the world market.

    What I see happening as a result of the trade imbalance is the living standards of other nations rising, while ours is falling. We are still doing pretty well, but if we want to continue to do so, there are some serious challenges facing us as a nation.
     
  10. GenSeneca

    GenSeneca Well-Known Member

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    Rob and PLC,

    Please humor me... and sorry for interrupting but exactly what do you guys think constitutes a trade deficit?

    I don't think there is such a thing... For example, I spend money at the grocers and they never spend money with me... is that a trade imbalance/deficit?

    Or the case of my town... We spend money outside of our town because there is almost NO business allowed to operate inside our town (although there are banks on every corner here) so does my town have a trade deficit with the surrounding towns?
     
  11. Libsmasher

    Libsmasher New Member

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    Who cares who owns it?? :D The japanese did this in LA and ended up owning most of the key buildings in downtown Los Angeles in the early 1990s. It turned out badly for them - they ended up reselling them and taking huge losses. It doesn't matter at all who owns buildings.
     
  12. BigRob

    BigRob Well-Known Member

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    I agree with you. Yes, your situation is a trade "deficit" but it does not matter. Most people who are upset about trade deficits are not really concerned about the actual deficit as they are with who it is with.

    If they were, it would matter what the trade deficit is between states, and even down to the individual levels as you say.
     
  13. Shadow

    Shadow New Member

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    How can you sell what you don't own. The US is essentially "owned" by China and others that it is indebted to. You might want to discuss such a sale with them first;):)
     
  14. mike9537

    mike9537 New Member

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    I dn't no if I'm going on a tangent here but, isn't there a big issue that once the oil runs out and the middle eastern countries are done with milking the money from everyone, they will have developed such a huge FDI economy as well as the money lending they allready do to national banks and such that we have a situation where were stuck in eternal debt to these countries. The can almost just sit down and speculate to accumulate unless something big changes.

    My advice to Americans is to forget about investing in your own country and look into places like Abu Dhabi. For example, atleast this way you no that your investment is in a financially secure region.

    Im personally considering it as a UK investor, but as nations the UK and USA should both be looking to globalize their FDI as much as possible to hedge there future losses. :confused:
     
  15. PLC1

    PLC1 Moderator Staff Member

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    A trade deficit happens when a nation imports more than it exports, thus creating a glut of that nation's currency on the world market and devaluing said currency. Such a devaluation can create a huge increase in the price of commodities that are calculated in that currency.

    For example: Petroleum is priced in dollars, US dollars. Since there is a glut of US dollars on the world market due to the trade imbalance, it cost of oil has gone up significantly.

    Maybe that price increase will turn out to be a good thing in the long run, as we might, just maybe might, this time around, develop our own energy sources and quit depending for our lifeblood on nutty Mid Eastern countries that hate us .

    That probably is too much to expect, but there may be a glimmer of hope at least.

    In the short run the price of oil is causing some headaches and complaints, especially among the drivers of enormous SUVs and RVs who think they have a right to drive as much and as fast as they want.

    In the long run, maybe BigRob is right: It really doesn't matter, not so long as we do develop our own energy sources. The devaluation of the dollar will help correct the trade imbalance in the end, as imported goods become more dear and exported ones cheaper.

    But, in the short term, it certainly is causing some economic headaches.
     
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