Is economic collapse in the United States imminent?

[Ivan Seeking]

In order for the exporting of wealth to have a large negative impact on the country, the wealth exporting has to happen faster than wealth creation. The trade deficit is on the order of $320 B a year. That's probably higher than it should be, but it is only 3% of our GDP. Compared to the national deficit/debt, that's not a very significant problem.

A trade surplus is what we need; not an "acceptable" deficit. Also, by adding 3%-5% to the GDP - added to what some people now consider a healthy economy - the debt is far more sustainable. How about a 3% gain as the proper goal, rather than a 3% loss?

Note that oil imports alone are worth about half of the budget deficit. While that doesn't translate directly, it could be applied directly in the form of taxes on domestically produced fuels [in place of imports], and it can certainly help to keep things in perspective. Depending on the price of crude, imported oil is worth between $400-$600 billion a year. If that isn't significant, then no one should be complaining about the bank bailouts or the cost of the wars. And unlike the bailouts, we pay for oil every year.

 

[TheStatutoryApe]

Because you spend twice as much per head of the population on health care compared to European countries. Outside of the US, the prevailing view is that your health care system is very inefficient and that it hurts the US economy. So, reforming the system would be welcomed by countries who buy/hold US treasuries.

It may somewhat effect the economy with regard to worker productivity and performance but with the way it is are there not many large corporation making large sums of money off of the situation? If the chinese are interested in making money off of the US is it really very clear which system will be more profitable?

Edit: Perhaps a good measure would be to look at how much they invest in countries with national health care versus those that do not. Maybe we can look that up.

 

[WhoWee]

A trade surplus is what we need; not an "acceptable" deficit. Also, by adding 3%-5% to the GDP - added to what some people now consider a healthy economy - the debt is far more sustainable. How about a 3% gain as the proper goal, rather than a 3% loss?

Note that oil imports alone are worth about half of the budget deficit. While that doesn't translate directly, it could be applied directly in the form of taxes on domestically produced fuels [in place of imports], and it can certainly help to keep things in perspective. Depending on the price of crude, imported oil is worth between $400-$600 billion a year. If that isn't significant, then no one should be complaining about the bank bailouts or the cost of the wars. And unlike the bailouts, we pay for oil every year.

Ivan, let me say it for you - DRILL BABY DRILL!

 

[tchitt]

And how does that discount the fact that they are second in line to be a superpower?

I didn't say that it does. Russ noted that China is a backwards nation which could mean any number of things. You're the one who somehow twisted it into "China could never be a superpower."

notion that a communist country doesn't care about their citizens but they are willing and able to provide a universal health care system is a bit contradicting, don't you think?

Communism (from Latin: communis = "common") is a family of economic and political ideas and social movements related to the establishment of an egalitarian, classless, or stateless society based on common ownership and control of the means of production and property in general, as well as the name given to such a society.

http://en.wikipedia.org/wiki/Communism

Do you have any basic knowledge of civics? I assumed you realized that a communist government is expected to provide virtually everything for their citizens because the state owns everything.





Now tell me they care about their citizens. Really.

Count Iblis: http://www.bloomberg.com/apps/news?pid=20601103&sid=aaVGe5smuZAU

Again...

Treasury Secretary Timothy Geithner pledged to rein in the U.S. deficit as China underscored concern about preserving the value of its $801.5 billion of Treasury holdings.

The U.S. will ensure a “sustainable” deficit by 2013, Geithner said at the beginning of the first round of Strategic and Economic Dialogue talks under President Barack Obama in Washington. China is “concerned about the security of our financial assets,” Assistant Finance Minister Zhu Guangyao said.

China is not happy about all the spending... your point is moot and you're basically speculating on something which you've apparently got no knowledge on. To continue repeating that mantra when it's contrary to facts only serves to weaken your position. Obama himself has come to admit that healthcare reform is going to cost a lot of money... as opposed to his earlier claims that it would save us money. No one bought it.

 

[russ_watters]

It's hard to call a nation backwards when they're next in line to be a superpower.

It should be pretty obvious that you can be powerful but still be backwards. All power requires is being big. China is big but not developed.

 

[russ_watters]

A trade surplus is what we need; not an "acceptable" deficit. Also, by adding 3%-5% to the GDP - added to what some people now consider a healthy economy - the debt is far more sustainable. How about a 3% gain as the proper goal, rather than a 3% loss?

Two things:
1. You misquoted me there. I didn't use the word "acceptable", nor did anything I said imply it. That's dishonest. Words in quotes should be quotes.
2. I agree that it should be lower. I said so explicitly!
3. You're responding to something that wasn't being discussed. The question I was answering was whether the trade deficit was leading us toward economic collapse. The answer is no.

 

[mheslep]

As already pointed out the bank bailouts occurred on Bush's watch.
http://www.cnn.com/2008/POLITICS/09/24/bush.bailout/index.html...

The first bailout of a non-deposits-only bank was Long Term Capital Management in 1998, pushed by the NY Fed. There were warnings at the time that the bailout would encourage more risks of the same kind. The recent mortgage securities related failures began under Bush/Paulson, but a substantial part of the bailout money (if not the majority) was handed out and redirected under Obama/Geitner, including large parts of the AIG bailout, Fannie&Freddie money.
http://en.wikipedia.org/wiki/Long-Term_Capital_Management#1998_bailout"
http://www.insurancejournal.com/news/national/2009/03/01/98275.htm" (March 1, 2009)

 

[Galteeth]

Short answer: Large scale human behavior and interaction with the environment is one of the most chaotic systems we can classify. Good luck trying to make accurate predictions of what's "imminent."

 

[Wax]

It should be pretty obvious that you can be powerful but still be backwards. All power requires is being big. China is big but not developed.

Sorry, but you are mistaken. Have you ever been to China? They have a much nicer infrastructure and they are still developing at a 6% growth rate while America will probably see no growth this year.


http://www.prospect.org/cs/articles?article=the_china_path

You may remember when the world was divided between communism and capitalism, and when the Chinese were communists. The Chinese still call themselves communists, but now they're also capitalists.

In fact, visit China today and you find the most dynamic capitalist nation in the world. In 2005, it had the distinction of being the world's fastest-growing major economy.

China is the manufacturing hub of the globe. It's is also moving quickly into the highest of high technologies. It already graduates more computer engineers every year than the United States.

Its cities are booming. There are more building cranes in use today in China than in all of the United States. China's super-highways are filled with modern cars. Its deep-water ports and airports are world class. Its research and development centers are state of the art. At the rate it's growing, in three decades China will be the largest economy in the world.

Communist, as in communal? Are you kidding? The gap between China's rich and poor is turning into a chasm. China's innovators, investors, and captains of industry are richly rewarded. They live in luxury housing developments whose streets are lined with McMansions. They dine in fancy restaurants, and relax in five-star hotels and resorts. China's poor live in a different world. Mao Tse Tung would turn in his grave.

So where are the Chinese communists? They're in government. The communist party is the only party there is. China doesn't have freedom of speech or freedom of the press. It doesn't tolerate dissent. Authorities can arrest and imprison people who threaten stability, as the party defines it. Any group that dares to protest is treated brutally. There are no civil liberties, no labor unions, no centers of political power outside the communist party.

China shows that when it comes to economics, the dividing line among the world's nations is no longer between communism and capitalism. Capitalism has won hands down. The real dividing line is no longer economic. It's political. And that divide is between democracy and authoritarianism. China is a capitalist economy with an authoritarian government.

For years, we've assumed that capitalism and democracy fit hand in glove. We took it as an article of faith that you can't have one without the other. That's why a key element of American policy toward China has been to encourage free trade, direct investment, and open markets. As China becomes more prosperous and integrated into the global market -- so American policy makers have thought -- China will also become more democratic.

Well, maybe we've been a bit naive. It's true that democracy needs capitalism. Try to come up with the name of a single democracy in the world that doesn't have a capitalist economy. For democracy to function there must be centers of power outside of government. Capitalism decentralizes economic power, and thereby provides the private ground in which democracy can take root.

But China shows that the reverse may not be true -- capitalism doesn't need democracy. Capitalism's wide diffusion of economic power offers enough incentive for investors to take risks with their money. But, as China shows, capitalism doesn't necessarily provide enough protection for individuals to take risks with their opinions.

 

[mheslep]

Sorry, but you are mistaken. Have you ever been to China? They have a much nicer infrastructure and they are still developing at a 6% growth rate while America will probably see no growth this year.


http://www.prospect.org/cs/articles?article=the_china_path

You may remember when the world was divided between communism and capitalism, and when the Chinese were communists. The Chinese still call themselves communists, but now they're also capitalists.

In fact, visit China today and you find the most dynamic capitalist nation in the world. In 2005, it had the distinction of being the world's fastest-growing major economy.

China is the manufacturing hub of the globe. It's is also moving quickly into the highest of high technologies. It already graduates more computer engineers every year than the United States.

Its cities are booming. There are more building cranes in use today in China than in all of the United States. China's super-highways are filled with modern cars. Its deep-water ports and airports are world class. Its research and development centers are state of the art. At the rate it's growing, in three decades China will be the largest economy in the world.

Communist, as in communal? Are you kidding? The gap between China's rich and poor is turning into a chasm. China's innovators, investors, and captains of industry are richly rewarded. They live in luxury housing developments whose streets are lined with McMansions. They dine in fancy restaurants, and relax in five-star hotels and resorts. China's poor live in a different world. Mao Tse Tung would turn in his grave.

So where are the Chinese communists? They're in government. The communist party is the only party there is. China doesn't have freedom of speech or freedom of the press. It doesn't tolerate dissent. Authorities can arrest and imprison people who threaten stability, as the party defines it. Any group that dares to protest is treated brutally. There are no civil liberties, no labor unions, no centers of political power outside the communist party.

China shows that when it comes to economics, the dividing line among the world's nations is no longer between communism and capitalism. Capitalism has won hands down. The real dividing line is no longer economic. It's political. And that divide is between democracy and authoritarianism. China is a capitalist economy with an authoritarian government.

For years, we've assumed that capitalism and democracy fit hand in glove. We took it as an article of faith that you can't have one without the other. That's why a key element of American policy toward China has been to encourage free trade, direct investment, and open markets. As China becomes more prosperous and integrated into the global market -- so American policy makers have thought -- China will also become more democratic.

Well, maybe we've been a bit naive. It's true that democracy needs capitalism. Try to come up with the name of a single democracy in the world that doesn't have a capitalist economy. For democracy to function there must be centers of power outside of government. Capitalism decentralizes economic power, and thereby provides the private ground in which democracy can take root.

But China shows that the reverse may not be true -- capitalism doesn't need democracy. Capitalism's wide diffusion of economic power offers enough incentive for investors to take risks with their money. But, as China shows, capitalism doesn't necessarily provide enough protection for individuals to take risks with their opinions.

Wax - you need to quote all that copied text. Use the Quote symbol in your message tool bar. And all those statements asserted as facts deserve a reference.

 

[Wax]

Wax - you need to quote all that copied text. Use the Quote symbol in your message tool bar. And all those statements asserted as facts deserve a reference.

Sure thing! I just thought it was common knowledge among people who keep up with economics. Six percent growth rate for China is considered a hard landing. They normally grow at 10%.

http://www.radio86.co.uk/china-insight/special-reports/china-and-the-financial-crisis/news/9282/china-can-withstand-a-growth-rate-of-6-in-2009-academic

Recently, the Chinese government has enacted a series of measures to bolster confidence in maintaining economic growth in 2009. It can be surmised that the country has set itself a target of achieving a growth rate of 8 percent in 2009. However, in an interview with the Economic Observer, Director of Nanjing Construction Committee, and Macroeconomics expert Lu Yulong expressed the view that China can tolerate an economic growth rate as low as 6 percent in 2009.

A range of information makes it clear that there are some severe shortcomings in China's economic structure, such as a widening gap between rich and poor, increasingly severe unemployment issues, and the need for a social security system and a basic medical security system. It is widely suggested that if an 8 percent growth rate cannot be guaranteed, problems and issues that are currently simmering under the surface will have to be faced by the government.

However, as a scholar who has studied macroeconomics since the 1980s, Lu Yulong holds the view that the current economic slowdown in China is more a case of returning to a normal growth level. "It is something of a miracle that China has achieved a target growth rate of over 10 percent in the past 30 years," he noted.

"In fact, many social problems have been caused by excessive growth. For example, some local governments have implemented large-scale demolition policies, in order to speed up urban construction, which correspondingly generated housing and employment problems," Lu said. "From now on, China must say no to single-minded pursuit of growth."

According to Lu, overproduction is a major problem in China. At present, automobile production already exceeds 10,000,000, and the country is already first in the world in iron and steel production. In these circumstances, China must take more measures to decrease energy consumption, enhance technological capability and lower production costs, rather than focusing exclusively on volume of production.

After the 1998 economic crisis, the Chinese government promptly adjusted its policies, which allowed economic development to enter a new round of rapid growth.

"However this is 2008, and we should not be over-optimistic about the effects of government policies during the current severe international financial crisis. The situation today is totally different," Lu said.

"Firstly, China has just made a start in housing system reform, and housing demand is a significant driver of domestic demand; secondly, the current foreign trade situation is one of overproduction and market saturation, while in the years following 1998 there was high growth in international demand; thirdly, at present the hidden liabilities of some local governments already exceed annual fiscal revenues, which makes it dangerous to continue with a fiscal deficit policy, " he added.

Deutsche Bank lowered its forecast for China's expected GDP growth rate in 2009 from 7.6 percent to 7.0 percent, suggesting that the fiscal deficit to achieve a target of 8 percent GDP growth will be beyond the government's capacity. It expects that ultimately the Chinese government should and will accept a GDP growth rate of 6-7 percent.

http://english.peopledaily.com.cn/90001/90778/90858/90864/6537086.html
I'm not going to paste this complete article, only point out that growth rate in the U.S. is zero to nothing for this year. The next powerhouse is China and they are not underdeveloped.

Under its new forecasts, the Fed now believes the world's largest economy could be flat or grow by just 0.3 percent this year

Edit: The notion that china is purely a sweatshop economy is far from the truth. Their economy is based on undervaluing their currency and providing a high level of education so that the same goods and services are sold at a lower rate then other countries. This works in their favor in two ways. They are able to purchase their own goods at the cheaper prices and at the same time they export at a lower rate then other countries.

Here's a youtube video so you can see for yourself how much they have developed.