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Trade Deficits - product of failed economic policy 

Failed Economic Policies Get Worse - Another $66,100,000,000 of debt for August ...
by Mike Crane

The Commerce Department has released the September 2005 Trade statistics. So far 2005 is on track to to establish another record breaking year of failure. If the rest of this year continues at the average year to date we would have an annual trade deficit of $704,500,000,000.00 - another record breaking year. Never before in the history of our country has such dismal failure been so well received. Never before in the history of our country have we had such sustained trade failure.

The Trade Deficit provides the best and most reliable indication of the relative international trade position of our country vs. the rest of the world. A look at the chart on the right provides incontrovertible proof that our trade position is deteriorating.

Over ten years of steady deterioration of our international trade position is very alarming to say the least. But the author is even more concerned about the apparent lack of concern about our country's deteriorating international trade position.

Every new age rocket scientist, the so called economists, clearly state that the ever increasing record breaking trade deficits can not continue forever. That a day of reckoning must come. So when our country continues down the road of trade deterioration another month, should there be some concern? Would a more accurate title for news reports on our excessive trade deficit be:

"Unacceptable trade deficit continues; day of reckoning one month closer"

How long can our country continue to accumulate foreign debt at these excessive rates?

• This is a question that no one can answer, certainly not the author. But if every new age rocket scientist states that this trend can not continue indefinitely - when is the problem going to be addressed?
   
• If your elected officials were truly representing you wouldn't they be addressing this problem?

But instead of addressing this festering problem - the Bush Administration and leading Congressional leaders of both parties have passed CAFTA (See: CAFTA passed House by two votes ...) agreement seemingly oblivious to the long term implications of these failed economic polices. Since CAFTA passed the rate of decline has increased not improved!

In fact what they call "Free Trade" is misnamed, it is "Expensive Trade" and since this idea narrowly passed Congress in 1992 (NAFTA) our country's international trade position has steadily deteriorated. Now they are setting their sights on the next Expensive Trade Agreement, the FTAA mis-named the Free Trade Area of the Americas. President Bush just returned from a trip to South America where he was selling his next Expensive Trade Agreement. He is selling your future!

Continued Decline

Take a quick look at the chart on the left. Now remember this is the chart provided by the US Commerce Department.

This is not a chart of success it is a chart showing the results of failed policies and the trend has been downward since 1993.

This is the government's chart, not ours. This is fact, not opinion.

Is this what you voted for?

In our life time this country has made the transition from the world's largest creditor nation into the world's largest debtor nation. That is not the legacy of a successful policy, but if something is not changed is the legacy we are leaving to our grandchildren. Unless something changes, we will go down in history as being responsible for the greatest accumulation of debt in the world's history (See: BUSH: Go ahead liberal punks - just try to outspend me!). This should be especially troubling to Christians.

It should be obvious to all that such levels of debt accumulation can not continue forever. But instead of beginning to look at these trends in a realistic manner, our elected officials from both the Republican and Democrats seem content to ride the downward slope.

To repeat the basics (virtually unchanged over last ten years, only gets worse):

Trade in Goods

Factories are moving to foreign countries.

Empty factories do not produce goods to be exported, even if President Bush, Congress and other elected officials tell us this is good for us, empty factories just do not produce much!

When Americans need the products those factories used to produce - they have to buy imports. As long as more factories move to foreign countries than move to our country, we will export less and import more!

The Expensive Trade Agreements - misnamed Free Trade Agreements are resulting in moving factories and goods producing facilities to foreign countries. CAFTA which was recently shoved through Congress has only created more empty factories - resulting in Americans having to buy more imports.  The Trade Deficit has gotten worse since CAFTA was passed!

Trade in Services

Every time an American company outsources jobs to a foreign country, those services are no longer available to sell to foreign companies or for American companies to purchase domestically and are now imports. While we still have a trade surplus in services it is shrinking and at the current trend will be a deficit around the end of this year.

Empty call centers, development centers, bank transaction handling centers, etc do not provide many services. When these services are obtained from foreign countries the cost adds to the trade deficit.

The products that these former American facilities and jobs used to produce are no longer produced in our country. They are produced in foreign countries and are now imports so imports rise. They can no longer be exported so exports decline. This is not rocket science.

Empty facilities do not produce much - never have and never will. 

Maybe you should load up one of these Republican or Democrats that say this is good for us and drive them to an empty facility parking lot. Give them a pencil and paper and let them count the trucks leaving with products for sale! Let them count the number of people arriving for work! In a few days they might begin to get the picture, but the real question is do they represent you - or do they represent special interests?

Agriculture

Agriculture has been producing a positive trade balance for decades. But even this mainstay of American Trade is sliding toward a negative balance. In May, Agriculture was down to breakeven, continuing the trend downward toward a deficit in what has been a positive balance for decades:

U.S. exports of food, feeds and beverages rose by $558 million to a record $5.6 billion in May. However, imports in the same agricultural categories also set a record of $5.6 billion in May.

In June: Foods, feeds, and beverages were virtually unchanged.

In July: Decreases [exports] occurred in other goods ($0.4 billion) and foods, feeds, and beverages ($0.1 billion).

In August: Both imports and exports in foods, feeds, and beverages was $0.1 billion.

In September: The August to September change in imports of goods reflected increases in and foods, feeds, and beverages ($0.2 billion). 

American companies are shunning agriculture products grown in our country under high standards to import food stuffs grown with much lower standards.

Conclusion:

In conclusion - every component of international trade is on a downward trend. There is one category that shows the extent to which President  Bush's (and previous President Clinton's) economic policies are destroying our international trade position - advanced technology.

Now most would believe that our country leads the world in advanced technology, which at one time we did. But no longer:

Feb - Advanced technology products (ATP) exports were $14.9 billion in February and imports were $18.3 billion, resulting in a deficit of $3.4 billion (See: Bush Economic Polices - Screen doors on submarine - same concept).

March - Advanced technology products (ATP) exports were $19.5 billion in March and imports were $21.0 billion, resulting in a deficit of $1.5 billion.

May - Advanced technology products (ATP) exports were $17.2 billion in May and imports were $21.0 billion, resulting in a deficit of $3.9 billion.

June - Advanced technology products (ATP) exports were $19.3 billion in June and imports were $22.9 billion, resulting in a deficit of $3.7 billion. 

July - Advanced technology products (ATP) exports were $17.3 billion in July and imports were $21.5 billion, resulting in a deficit of $4.2 billion. 

August - Advanced technology products (ATP) exports were $18.5 billion in August and imports were $21.8 billion, resulting in a deficit of $3.3 billion.

September - Advanced technology products (ATP) exports were $17.1 billion in September and imports were $22.6 billion, resulting in a deficit of $5.6 billion.

Even in advanced technology products  - empty factories and development centers do not generate much! And the trend continues. Virtually every month additional "high tech" companies outsource development and make major investments in foreign production facilities (See: More American jobs to foreign countries, HP this time ...).

American jobs that are sent to another country have something in common with empty factories, call centers and development centers. A lot of Americans who used to think every thing was going well  - they used to work there.

Today they do not!

How Continuing Trade Deficit affects you, the citizens

Some may ask, "Why should I care?"

The answer to that will fall into two categories; those that are directly affected and those who are not.

Directly affected:

Those who are directly affected by loss of job or reduced income resulting from the effects on the job market will probably not ask the question. It is pretty obvious that empty factories, call centers and other facilities do not employ many people. Those who no longer work in the facilities that have moved to foreign countries do not need further explanation. Instead they should be asking why their government, elected to represent them has established policies that ignores them and instead favors special interests?

This is a question that has to be directed at both the Democratic and Republican leadership. We have focused on President Bush, not because he originated these policies, actually former President Clinton is the one who pushed NAFTA through Congress.

But President Bush who is in charge now, bears responsibility for his actions and his Party continues to support and accelerate the failed policies. He pushed CAFTA through Congress with Republican support. His re-election campaign and the Republican National Committee outsourced 10,000,000 campaign phone calls to India instead of using Americans (See: India claims big election victory and laughs at Americans). You can not blame Clinton for CAFTA or the recent mushrooming of outsourcing.

Not directly affected:

You only think that you are not directly affected. The debt being accumulated is being done on a credit card - so to speak - which has not only your name on it, but the names of your children and grandchildren.

Either you, your friends, your associates, your relatives, your parents, your children or grandchildren are the Americans who would have been working in those empty factories now dotting the landscape or which will be empty in the future. You have been or will be affected to some extent.

In addition, the trend can not continue forever. Will the failed policies be revised to initiate some reasonable fiscal responsibility or will our country just ride the downward slope and let some correction occur that may not be pleasant or planned?

The continuing downward trend of our Trade Deficit is a formula for disaster.

A few months ago the new age rocket scientist, Alan Greenspan stated that we had a problem, that ever increasing Trade deficits can not continue forever. Then Warren Buffet echoed our claim that the Bush policies are destroying your grandchildren's future

Instead of moving toward an "ownership society," Buffett suggested, with admitted hyperbole, that the economic burden ahead is more likely to result in a "sharecropper's society" dependent on foreign landlords.

Meanwhile the Bush Economic Polices continue their march into our country's history. Seemingly oblivious to the long term effects of these economic policies the Bush Administration continues to feed the public one crisis after another while using the power of the government to build "political capitol" (see: Bush Trade Policy - a look behind the scenes of a failed economic policy - its ugly!).

We no longer have the capacity to produce enough goods to balance the Trade deficit. This was recently confirmed in a report in a Chicago paper (http://www.suntimes.com/output/business/cst-fin-hale10.html):

But what pundits have failed to notice is that the U.S. lacks adequate manufacturing capacity to eliminate the external deficit.

U.S. manufacturers currently produce about $1.5 trillion a year in goods, and have a capacity utilization rate of nearly 79 percent. The current account deficit is equal to 40 percent of American manufacturing output.

If all of our remaining facilities ran at 100% capacity for the rest of the year and exported every bit of additional product - we would still have a trade deficit! But instead of polices to increase utilization and capacity of our facilities we have government polices in place which encourages their relocation to foreign countries!

Until the failed policies are changed - there is nothing to stop the downward trend!

Lets repeat that statement, it is very important:

Until the failed policies are changed - there is nothing to stop the downward trend!

There should be little question about the effects of the current economic policies. The trends are so obvious that you do not even need to be a rocket scientist to figure out where they are headed. Do not be misled by small month by month fluctuations. Our international trade position is steadily deteriorating. Down, down, down - like a submarine with screen doors.

It is up to you the American citizen to decide how long - you - are going to let it continue. The most recent Expensive Trade Agreement - CAFTA - was passed by the narrowest of margins in the US House of Representatives, by one vote. Many of you have voted for and supported members of Congress that turned their back on you under intense Bush Administration and corporate lobbying. You have the power to "retire" these corporate representatives and get replacements who will represent you - not special interests. Every one of the US Representatives that voted for CAFTA (Roll Call Vote: http://clerk.house.gov/evs/2005/roll443.xml#Y) is up for election next year.

Are you going to send them back so that they can vote for FTAA? Just what we need - more empty facilities; less jobs, less exports and more imports. Perhaps we need less Republicans and Democrats, but that is up to you - the citizens. You get what you vote for!

The Southern Party has released a position statement that would change the failed and misnamed "free trade" to one of FAIR Trade (See: A Southern Party of Georgia Position on solving our country’s Trade Deficit). If you are concerned about this issue - we hope you will take a few minutes to read this position statement. We also appreciate any help in passing this information on to others.

“Nobody made a greater mistake than he who did nothing
because he could only do a little.”
― Edmund Burke (1729 - 1797)

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Author's Note:

This is the first month on 2005 where the y-t-d trade deficit applied to the whole year exceeds our 2005 trade deficit projection. So far it looks like our projection will be closer to the mark than any of the well known economists. We are not smarter, we just believe that they represent the globalist multi-national corporations and will down play the trade deficit and try to explain it away. Just like most of your elected Republicans and Democrats, they pander to special interests and ignore the citizens.

Excellent Reference site:

The Grandfather Economic Reports - http://mwhodges.home.att.net/

Several of the charts and graphs that are used on the Southern party web site are from this excellent web site. We recommend that you visit it frequently and spend some time reading the variety of economic reports available.

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