Most of you have heard the MSM, politicians, and some here on this very forum wax poetic about how the American Family is not earning enough to keep up. And also the debt per family is going through the roof with no hope in sight.

However, if you take the household debt, and compare it to the household assetts, suddenly something entirely different shows up here. Suddenly the amount of debt is not so much of a big deal.

Here, read this.




So, are the naysayers yet willing to admit that the 2003 tax cuts are the main reason for the huge change? Just look where he climb begins again following the recession.

I think it can rightfully be called "The Bush Boom", just as the 80s is known as the Reagan Boom , whether you like it or not.

Home mortgages are the biggest demander of credit so debt should be up during a real estate boom pushed by lower interest rates. Real estate debt is good debt.

Once again, you are right on Brooklyn! Unfortunately, there are a few here, who need to "see the light" also.

I wonder if they will admit this?

I'm actually a millionaire! I just don't have the money yet!

Is that the best you can come up with Grizz? In other words, since you have no logical rebuttal, I am therefore correct, and you concede the argument.

Thank you. I will remind you in the future, when you drag out the same old Collectivist, Class Warfare carcus and attempt to beat it for the umpteenth time.

What do you want me to tell you, John? Its like saying you're a homeowner, while you are going to the bank to make a payment on that MORTGAGE.

Don't worry, you already have. And others can read your message as well.

Anyway, thanks for the admission. Since that is the best you can allow for yourself, I'll take it!

Oh, one other thing Grizz. I certainly HOPE that some of this will eventually sink in, and not run out at the first opportunity. If so, then it will have all been worth it.................I think.

Personal kidding aside - isn't most of this 'net asset' calculation due to the boom and bubble of real estate valuations? Other statistics say that savings rates are now negative, or at least that personal savings are the lowest they've been in many decades. The stock market is still in the doldrums, and was before the 9/11 disaster.

Joe Sixpack and Susie SoccerMom think the only investment they need is their personal real estate. Maybe not.

Pensions, whether fixed benefit plan or defined contribution plan, are fast becoming a thing of the past. I could retire early because the present value of my future pensions was ten times the value of my cash assets. Contrarily, a worker in his fifties who has no hope of a pension should consider his retirement years as a huge liability. Most retirees couldn't get a reverse mortgage that would pay their medical expenses until they die.

I suggest that a realistic 'net value' computation should include the value (positive or negative, asset or liability) of pensions or the lack thereof. The computation should also allow for a very likely 20% overall decline in property values in the forseeable future. For many people with new mortgages (some of them interest only, or variable rate), that would mean they have negative equity.

Im sure a lot of it is. But it also includes stocks, bonds, retirement accounts, and just about everything of value inside the home. As long as property values remain stable this figure should not drop. The 20% drop you speak of is not a sure thing. I would also like to know where you came up with that figure.

Anyway there are a lot of things that can make property values drop. One thing I could see happening is, when oil becomes even more expensive and affordable hybrid cars or other alternatives have not been made readily available, property values in suburban and far reaching areas could drop. Though this would probably mean areas that are closer to the city center would go up. This is all pretty far off and may not even happen.

Hmmm! an opine if I may.

Headline:

The U.S. trade deficit soared to an all-time high of $725.8 billion in 2005, pushed upward by record imports of oil, food, cars and other consumer goods. The deficit with China hit an all-time high as did America's deficits with Japan, Europe,OPEC, Canada, Mexico and South and Central America.

Whereby, these deficit driven imports generate foreign based economy, where jobs are created, internal economic growth and economic opportunity is sustained and continued. To which the counter weight of NO US TRADE DEFICIT would implore upon China, Japan, Europe OPEC, Canada, Mexico and South and Central America to quickly and desperately seek an alternative as to where do they sale these goods no longer demanded by the US market place.

Ya think that is why they buy our bonds maybe to finance their jobs, growth and opportunity on the back of our consumerism?

Of course, the down side is we are losing our own jobs to which there is a point of equalization whereby, if the number of US consumers and their ability to consume diminishes to a pivotal point, the demand will not equal the supply, thereby impacting imports from these nations.

The question then is, can the fastes growing economies and potential markets, China or India, take up the slack in US Consumerism? Are they capable of that now. NO! Then, how long could it be before they are, as long as 50 or 100 years? Maybe or maybe not.

The U.S. trade deficit with China rose to a record $201.6 billion last year. How many jobs did that create and how many Chinese became wealthy because of it. Where so they alternatively replace that amount and Volume of trade?

The United States also recorded record deficits with Japan at $82.7 billion. How many jobs did that create. Where so they alternatively replace that amount and Volume of trade?

Additionally, there was a $122.4 billion gap with the 25-nation European Union, a $92.7 billion deficit with the nations that belong to the Organization of Petroleum Exporting Countries, a $76.5 billion deficit with Canada and a $50.1 billion deficit with Mexico. Canada and Mexico are America's partners in the North American Free Trade Agreement. The deficit with the countries of South and Central America rose to a record $50.7 billion last year.

Likewise, where could they go to replace these amounts and volumes of trade if there were an US economic collapse?

Mutual interdependence and global economic dependence is here and is omnipresent. Whereby we all ride the in the same economic boat so that if its main compartment floods, it is not likely the boat will stay afloat and will likely sink along with the main compartment.

For example, why was Saudi Arabia upset about Bush’s 2025 Foreign Oil Independence inititative. Because If no one needs Arab oil, what do they have but a lot of oil and no market to sale it. To wit, no money for their economy and their people as Oil is all they have to offer at this time.

Consumerism is the engine of all economies without which, few could stand alone and independent from the others. That is unless we want a world like existed in the 17th century as some extremist would prefer I think.

http://news.yahoo.com/s/ap/20060210/ap_on_...o_ec_fi/economy

If you are a good "Demand-Sider", then this is acceptable. However, Classical Economics places the emphasis on investment and production. So do I.





Also, technically speaking, there is no such thing as a Trade deficit, except under one, and only one, scenerio. A trade deficit exists when one side sells goods and services for a price, and the consumer agrees to purchase it, but only at an agreeded later time of payment.

In the case of All the "so called" trade deficits, this is not happening. There are goods being exchanged for Dollars. That is not a trade deficit. It is a " Trade Imballance", and it goes on all over the world, all the time.

when you go to the grocery store and purchase food, you either pay by cash or debit. YOu are, in effect, creating a trade imballance with the grocer. Do you expect them to turn around and purchase goods from you in exchange? Certainly not.

All this Trade Deficit hogwash is just that, hogwash. Goods are being exchanged for the current value in Dollars, and those very dollars are either being used to repurchase other goods, OR they are being used to reinvest in the US economy, which is not only good, but GREAT.

What is it that you people don't understand? All this protectionism is harmful to the US AND World economy. I suspect that there are more of you who need an education in Classical Economics.

If I haven't started a thread in the Economics section on Trade Deficit hoopla, I will. Ignorance is not good for anyone, especially when it pertains to the economy.

You have to look at balance of payments:

When Americans buy goods from overseas they send dollars out and accept goods in. This creates a deficit in the current account. However these dollars find their way back to U.S. in the form of capital. This creates a surplus in the capital account. The two balance each other out so America gets valuable goods in exchange for a piece of paper that will find its way back to the U.S. anyway.

What have we learned? There is a trade imbalance but it swings back to zero when you include inflows of capital.

Unfortunately, there are too many who listen to the likes of Patrick Bucnannan, and others, who know nothing about macroeconomics, free trade, or how these things relate to each other. Pity.

JohnL I know this is YOUR area of expertise and I understand what you are saying. However, ( a but, in other words. Hey!)

Nonetheless I would suppose some confusion in what you said. if one invests, in the classic emphasis as you say, they do so with a motive. Which, in a so called capitalist culture anyway, is mostly to reap a reward, usually subscribed as a profit that is worthy of the risk, the time cost of money and opportunity costs to mention but a few reasons.

Likewise, one seeks to produce things in anticipation that they can exchange them with someone else who has something of value usually currency but other things as well.

This all occurs, investment and product, because there are markets of consumption and or created markets of consumption to invest in and to produce for. Therein in these venues of consumption to which the investor and producer are betting will lead to greater demand and consumption and thus greater production and, if competitively efficient, greater profit.

To get that profit and to produce what ever it is you produce, one must exercise a scheme that translates into an exchange of value, usually money, between their investment and production proposition and some other sources THAT HAS valued goods and or funds to exchange for what they have invested in and or have produced.

The issue then is, are there sources with the necessary resources available for the exchange, currently and rationally well into the future. If not the investment is lost and the production ceases.

Is that not but the essential engine or system, if you must, that is inherent within the generally accepted concepts behind of investment and production.

Is this not inherent, by design, simply stated, all for consumption by another in exchange for some value one wants. Is that not the raw nature of the interrelationship between Investment, production and its objective of market derived consumerism.




I completely understand and agree about the misnomer between the common usages of Deficit, just pose, as to its actuality being an imbalance of trade. As in the Balance of Trade between to separate entities or nations. I also agree and understand that trade between nations is not nor is it supposed to be inherently balanced.

Nevertheless, there is, of consequence, a wealth or value of ones currency in exchange component relationship that is codependent to the eventualities of ones deficit/surplus in totality, Is there not?

I mean your grocer analogy, is correct, in its limited scope, as to an exchange of value and the creation of an imbalance with both parties involved in the exchange. Yet, there is as well the issue of ability and capability as to the wealth of the exchangers that is remise in your analogy I Think.

If the grocer does not have enough timely exchange of value to afford to replenish that which I and others demand, he, without the item of exchange, loses out to another that does have such capabilities.

Similarly, if I and others find a more effective or better priced item elsewhere ( another market source) he loses his market, his wealth and thusly his capability is impacted as well as effecting his down stream suppliers in some effect.

Then, eventually, if this diminishing capability in acccumulating more things of value needed to exchange continues, he can no longer obtain the items need to create a market of exchange and thus has no exchange capability and may cease to exist as a grocer.

Likewise, If I am unable to replace the value I exchange with him or have diminishing inputs of exchange values (wealth), I soon find myself needing something but unable to obtain for a lack of valued exchange.

Just Pose that against that, a couple of unlikely but possible concepts occurring. One, the idea that I and maybe others have something to exchange but choice not to exchange it with you.

Two, I and others demand more than you can afford in exchange for what you need and want.

Or three, I and others can not, for our own reasons of inadequacies, supply you even though you are well capable of affording it.

There is, under these unlikely circumstances, a resulting impasse of value and exchange this has a interdependence in relationship to ones wealth for us both. Is that not true.

Is not true that in your teaching us, you left remise the idea of a relationship between the concept that Money is primarily a scheme institutionalize to finance consumption to which both investment and production is codependent. As well, there is another dimension to it all, that being the decision to willingly and freely accept another’s money. As it is a decision as to ones willingness to engage in monetary exchange and or not to engage in such exchanges.

Thereby, if there is an increase in the supply of money paired with a decrease in velocity ( consumption via a lack of wealth say) this can produce dyer consequences that impact these engines of investment, productions and consumption, bringing them to a grinding and miserable halt or at least to drastic decreases.

I do grasp and agree that free trade is the best for all. I also accept the idea you presented that this over fascination with Trade imbalances is not reflective directly in the exchange of wealth as it does not conceptualize the cash flows involved entirely. Particularly as relating to the interdependent global economic community whereby multinational corporations and related investment therein impact significantly where these exchanges of monies eventually end up.

Oddly though, as to those last comments, I am unsure to whom you were addressing this “ignorance salvo”? It was, I think, somewhat condescending and pretentious though. Don’t you think?

Then again maybe I am not really grasping your expertise entirely. I am, after all, illiterate, as they say. Despite my short comings, I am always open to learning something though.

Just a few thoughts of engagement and opine.


Trade= the commercial exchange (buying and selling on domestic or international markets) of goods and services;

Deficit – where output is less than input, where in one direction of the mutual exchange of something that party exchanges less outwardly to another than they receive internal from the other.

Balance of trade figures are the sum of the money gained by a given economy by selling exports, minus the cost of buying imports. They form part of the balance of payments, which also includes other transactions such as the international investment position

First, investment in an industry comes because the capitalist feels he can make a good return on his investment. A new producer or investor gets into a market when prices are high. So usually there is not much chance the entire industry could dry up from a lack of demand. The introduction of this new capital could lead to more efficiency which allows the firm invested in to produce more and lower its prices a bit. The law of demand states that more is puchased at a lower price. So this firm enjoys higher profits until soon thereafter the other firms in the industry follow suit or lose their shirt. There also should be high elasticity in the industry as well (meaning the response to a drop in price will be a greater increase in the quantity demanded thus creating additional profit.)

In any case Classical economics does not disregard demand. It just focuses more on stimulating supply to boost an economy because policy that only influences demand has a temporary benefit at best. By trying to stimulate supply not only do you lower prices but you allow businesses to expand thus allowing your economy to grow.