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Pow! Get ready for a big fall

Published in The Orlando Sentinel on September 26, 2000

The U.S. trade deficit is running at an annual rate of $353.7 billion so far this year. That means, as Jackie Gleason's character used to say in the Honeymooners, one of these days, pow!

By that I mean that the U.S. stock market will go into the tank. Even the gnomes at the International Monetary Fund are starting to fret about that possibility.

What trade deficits mean is that foreigners end up holding billions of U.S. dollars, much of it invested in American stocks and bonds. All they have to do is decide one day to cash out and go into gold or Swiss francs or whatever.

When will they decide to do that? Who knows?

Maybe they will one day decide to play the game America's oligarchs have played: Let's crash the market and then go back in and pick up the pieces at dirt-cheap prices.

Americans should realize by now, especially in view of the hot air being expended on the China trade agreement, that all this talk about free trade and generating American jobs is baloney. Look at the July figures. We bought $7.6 billion more from China than it bought from us. The July deficits with our other major trading partners are Japan, $7.5 billion; Europe, $7.2 billion; and Canada, $4.7 billion.

For example, in July we exported $4.04 billion worth of farm products, but at the same time we imported $17 billion worth of foreign cars and car parts.

China isn't going to buy very much more of anything from America. After all, China is in control of its high tariffs, and if

that country wanted to lower them, it could have done so. What is going to happen is that more American jobs are going to be eliminated and moved to China, where the commissars guarantee both a docile and a cheap labor force.

You don't really think that we're actually buying Chinese products to create that huge trade deficit, do you?

No, we're buying American products made in China. For heaven's sake, even my Confederate coffee mug was made in China. Try buying something that isn't made in China. Try it and then look at the brand names on the stuff that is made in China. You won't find any Ming or Xiaping brand appliances.

Sen. Fritz Hollings, D-S.C., told the truth about the bill. "You people," he said in his great Southern drawl, "are shipping the good jobs over to China, and yet you're always yapping, `I'm for the working man.' "

It's interesting to me, as a student of the Establishment press, that Hollings' criticism was not mentioned in the news stories of three national newspapers. To read their stories, you would think that the only critics of the China trade bill were naove people who think that the annual review gives them some leverage over China's human rights. It doesn't, of course. That never was a valid argument.

The only valid argument is Hollings' unreported argument: You're sending American value-added manufacturing jobs to a cheap-labor country.

Well, hey, what about record low unemployment?

Well, hey, if you believe the Clinton administration's numbers, then you probably believed the president when he said he did not have sex with "that" woman. For one thing, the Labor Department's unemployment numbers are estimates based on a sample. For another, people who have given up looking for a job are not counted as unemployed. They're just dropped down the statistical memory hole and no longer exist. For a third, a man who lost a $12-an-hour job and is now flipping burgers for $5.75 an hour is employed. Just wait. Americans are being set up for a big fall.

http://orlandosentinel.com/automagic/columnists/2000-09-26/OPEDreese26092600.html

-- Martin Thompson (mthom1927@aol.com), October 01, 2000

Answers

I certainly agree that we are headed for a great fall, but not for the same reasons as the writer.

True our trade balance is way out of whack, but that's tangible products. As for money flows, U.S. banks stil hold $40 TRILLION (that's right, TRILLION, not billion) of the world's total, $90 trillion, in hedge fund holdings.

THIS is the area of greatest danger: the unraveling of the world financial structure due to such unconscionable excess.

It's clear that the author of this piece is not an experienced busness / financial writer.

-- JackW (jpayne@webtv.net), October 01, 2000.

I agree, wholeheartedly. It's that gigantic portfolio of hedge fund investments held by American banks that is the real underlying threat. This is what was most commonly referred to, last year, as bubble.com.

-- Wellesley (wellesley@freeport.com), October 01, 2000.