Wednesday, November 24, 2004

US Dollar in Deep Doo Doo?

Check out this piece from former Labor Secretary Robert Riech, which reads in part:

Nearly all of the increase in public debt over the last four years -- some 1 trillion dollars -- has been financed by foreigners, lending us the money. But who wants to lend more and more to a drunken sailor? Foreigners are bailing out of dollars. Even the Chinese and Japanese, who have kept lending so we’ll keep buying their exports, are starting to wise up.

And in fact, the Wall Street Journal just had a big article last week on how Chinese citizens are trying to convert the dollars they once hoarded back into their own currency.

Uh oh.

Which points up one of the fallacies of the tax-cutting principles: that the wealthy who benefit will re-invest in the US economy. In fact, right now the US economy is not the best place to invest. People are putting their money in overseas banks; buying real estate abroad; and generally diversifying their portfolio right out of the US of A...

10 Comments:

At 12:43 PM, Blogger Charles Edward Mann said...

Krugman and Riech have it right--we're in for on hell of an economic ride in the near future. George Bush is ruining 50 years of social and economic progress and taking us with him.

 
At 4:36 PM, Blogger Rob Mortimer (aka Famous Rob) said...

On the one hand its good for importing to the UK.

On the other I am very very scared for my friends in the US right now. If Bush carries on the way he has, he will leave a bankrupt America, both morally and financially.

 
At 8:46 PM, Anonymous Anonymous said...

What is this - ?

 
At 6:46 PM, Anonymous Anonymous said...

The left in this country seems to ignorantly justify intant gratification. The fact is that, yes, President Bush's tax cuts and corporate outsourcing policies are hurting the economy now. Yes, it may look bad on the surface. However, we must realize that it is a cycle. Corporate outsourcing has proven to not only create more domestic jobs in the long run, but also, every dollar that goes abroad in outsourcing, returns at a greater rate. For instance, every dollar outsourced to India in 2003 returned to America at the rate of $1.12. Also, tax cuts are part of a proven, consistent cycle. First, the tax cuts are sent out and the deficit and economy in general suffer because of the depleted capital. However, consumer spending will inevitably go up and more money will be invested into the economy. Increased profits will allow for increased employment rates, and the whole economy, along with job numbers, will go up. This isn't an idealistic, maybe this will happen theory either. It's been done. Reagan did it, and it didn't start to take effect until the end of the first President Bush's turn. Clinton's credited with saving the economy, but guess who it was guys...Reagan!

 
At 6:16 AM, Blogger Geoff said...

Ah...I remember when we had a $200 million dollar surplus, and the dollar was strong and we didn't have to worry about this crap.

Thanks to Bush and his free-spending ways, namely a pre-emptive war of which he has changed the reasoning at least twice, plus a crazy tax cut FOR THE RIGH when the economy took a downturn. Reaganomics...didn't work then, won't work now. The whole trickle down idea is a joke. A joke that hurts the middle class and the impoverished people in our country. If we keep having $400 billion deficits, we will eventually find ourselves in a hole we will never get out of...a hole I fear we are nearing. The unbelievable trade deficit reflects what we've known for a while and something President Bush hasn't addressed--outsourcing. Companies can live on the cheap elsewhere, with more incentive to leave and make more money outside the country.

One of the previous posts mentions the idea that we need to increase education. This is a very valid point. The United States became the most powerful country in the world because of our inventive and creative nature. We used to be ahead of everyone else, but now they've caught up. Look at Japan. Strong economy, premier technology driven nation. And they lack most major natural resources. Yet somehow they have a strong economy. We have many natural resources, but are so reliant upon other nations for things, such as oil, that we are hurting. The thing Kerry was promoting was the idea of advancing ideas of new ways of making energy. I feel we may have missed out on possible new technologies and ideas that could've meant great amounts of money for U.S. companies.

 
At 1:22 PM, Blogger jomama said...

"People are putting their money in overseas banks; buying real estate abroad; and generally diversifying their portfolio right out of the US of A..."

Did that years ago along with voting with my feet.

Never regretted it.

 
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