Trade deficit as root cause of so-called crisis PDF Print E-mail
Written by Stumo   
Thursday, 25 September 2008

Wacko free traders talk about gaining access to markets and more exports.  Fine.  But look at the imports.  Trade deficit.  They never talk about that.  But it is a root cause of the Wall Street crisis/correction.  

Bush blamed, in his address to the nation last night, an influx of foreign money as a cause of the crisis last night, and said foreign money was coming in because America is such a great place to do business. 

First, how did our economy reach this point? Well, most economists agree that the problems we're witnessing today developed over a long period of time. For more than a decade, a massive amount of money flowed into the United States from investors abroad because our country is an attractive and secure place to do business.

This large influx of money to U.S. banks and financial institutions, along with low interest rates, made it easier for Americans to get credit. These developments allowed more families to borrow money for cars, and homes, and college tuition, some for the first time. They allowed more entrepreneurs to get loans to start new businesses and create jobs.

Well, actually you need to import foreign money to pay for the trade deficit, Mr. Bush.

Economists say U.S. consumers’ appetite for spending has made foreign investment necessary to finance the deficit in the U.S. current account.

Our trade policy is unilateral free trade.  We are the only free traders and most others are mercantilists.  We don't address currency manipulation, border taxes, foreign subsidies, etc.  Other countries reduce tariffs and replace them with something else just as effective, but we ignore it.  Hopefully the next president will address the root problems.
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written by George Krainovich , September 26, 2008
It's up to American consumers to start exerting their influence on behalf of their own economy.

Whenever possible, buy goods Made in the USA.

Do not buy goods made in China.

Please see "Dollar to the Giant" on YouTube:

http://www.youtube.com/watch?v=TUj8leZxmK8

for some valuable insights into our relationship with China.
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President, Finishes Ltd, Colorado Springs, CO
written by Frank Shannon , September 25, 2008
There is a correlation between the current financial market meltdown and our trade meltdown that was a precursor to the current economic problems. Neither market has the proper oversight.

Markets work for everyone when there are rules and someone is watching the activities in the market. The human condition is such that when people are tempted with great wealth, some will cheat the system.

Ronald Reagan said, "trust but verify". In the financial meltdown unfolding before our very eyes, we trusted but didn't verify. As a result, otherwise virtuous men were tempted to be not so virtuous and began "gaming" the system since nobdoy was watching and/or they bought the watchers.

In trade, we made even more gross mistakes. Besides making bad agreements and then ignoring the agreement and the rules, we trusted foreign nations known not to be virtuous and we expected them to behave like we do. They never have been trustworthy before so why would we expect them to be so now?

When we began deregulating many of our markets, it could be argued that they were, in fact, over-regulated and maybe even stifled.

So we proceeded, as we always seem to do, to go to the other extreme and abandoned proper oversight allowing people to ignore the rules and "game" the system.

Markets do NOT function properly when there are no rules. We do not have "free trade" or "free markets" without rules. Without rules, we can't have agreements/contracts. Without agreements/contracts we can't have laws. Without laws, there is no redress and we have chaos. Does this sound a bit familiar?

In our present environment of trade anarchy, the most aggressive, ruthless, unethical, immoral win and those of us who follow the rules and are guided by ethics and morals lose.

Goodbye "American Dream"
Thank you Washington


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