Much of that “massive” trade imbalance is due to the yuan being significantly undervalued relative to the dollar, to which it is pegged. The result: a chronic U.S. trade deficit with China that adds up to more than $5B/week.
If you’re talking about “trade deficit” only - then yes, the “size” of the federal government is not really relevant. However, the borrowing binge that the American consumer has been on for the past 10 years has its roots in the outrageously low interest rate set by the Fed. This borrowing power has fueled much of our importing from China.
Umm…the chart speaks for itself: the value of “goods” (re: everything not under “services”) as a percentage of GDP has actually increased over the past 50 years. Surprising, I know. But true.
The problems we’re facing are NOT due to the “free” economy - but rather to boneheaded governments here and abroad.
It also needs to be recognized that our economy is not free-market, at all, when it comes to banking.
The availability of credit, interest rates, and money supply all have great skewing effects on the economy and are not consequences of free market decisions, but rather of a rather bizarre and definitely not free market system.
Additionally, the mortgage situation was most definitely not free market. Banks were being sued by the Justice Department for not granting “enough” loans to each and every community or to each income group, and thus to generate the numbers deemed necessary by the government, were compelled to change lending standards. Additionally, a profit incentive was offered by the government to write just about any sort of loan – zero down or even 105% financing, no proof of income, etc, and just turn it around and sell it to Fannie Mae or Freddie Mac.
None of that is free market. It was government distortion of the free market, wrecking what had been a very sound line of business historically until said government intervention.
Speaking of the market, everybody got their crash helmets on today?
[quote]Doug Adams wrote:
Speaking of the market, everybody got their crash helmets on today?[/quote]
Yep - all strapped in. Hopefully, BO is going to rethink his budget/tax proposals…
[quote]katzenjammer wrote:
Doug Adams wrote:
Speaking of the market, everybody got their crash helmets on today?
Yep - all strapped in. Hopefully, BO is going to rethink his budget/tax proposals…[/quote]
Actually, I hope he does NOT rethink them, as any rethinking he may do would likely be towards increasing taxes and spending even more. He’s already cracked opon the door hinting on possible need for yet more “stimulus.”
Oh, I’m sure he would just HATE to increase spending and size and control of government yet further above what he has thus far accomplished in, what, six weeks, but on any further thinking he might well decide on just that.
[quote]katzenjammer wrote:
Doug Adams wrote:
Speaking of the market, everybody got their crash helmets on today?
Yep - all strapped in. Hopefully, BO is going to rethink his budget/tax proposals…[/quote]
I think it’s pretty clear: Obama and his cohorts do not care about markets.