Trade Deficit hits record

Today's New York Times
http://www.nytimes.com/...

reports that the January 2006 trade deficit was 68.5 billion dollars.  By contrast, the January 2005 trade deficit was a mere 58.3 billion dollars, a sixth lower.

The 2005 trade deficit was 725 billion dollars.

When matters cannot continue, they often don't.  However, until that limit is reached, it is straightforward to estimate the trade deficit to be expected for 2006, namely

below the fold

the year trade deficit in 2005 was a bit under 13 times the January deficit.  If nothing much changes, one predicts that the 2006 trade deficit will be

850 billion dollars

and the 2007 trade deficit will be

one trillion dollars or a trifle less.

Someplace, I think I predicted the 725 or so billion, but I cannot now find the prediction to see how far off I was.

Eventually, the ship of state will run up on the rocks, and these matters will right themselves.  When this occurs, it is reasonable to expect that the dollar will fall, perhaps appreciably, making foreign goods like oil and VCRs much more expensive.  A possible secondary response will be that the Federal Reserve board raises rates to discourage a fund outflow, though it is not obvious that you can raise rates high enough to have an effect on the situation.

No, I cannot predict whether this will happen before or after the next election.

A few specific categories of stock will benefit, namely stocks whose underlying firms have large foreign operations that return dividends to the US, and stocks in energy firms.

•  Tip Jar

  It should be apparent that there are political implications of a substantially lower dollar, notably 'skyrocketing prices for appliances and computers' and 'our country:  so poor soldiers abroad cannot afford to eat off-base'.

  by phillies on Thu Mar 09, 2006 at 02:28:28 PM PDT

•  $507 Per Month in Lost Assets for Each Taxpayer

  I posted this on usenet today:

  AWOL Bush's 'free' trade deficit grew to a new record (new record each month) of
  $68,500,000,000.

  In 2005 Fed government debt grew by $554,000,000,000.
  http://mwhodges.home.att.net/...

  Let's see... divide $554 billion by twelve, then divide that by 135,000,000 taxpayers and we
  get $341 per month new government debt for each and every taxpayer.

  So, if you add $341 and $507 together you get $848. If you added $848 or more to
  your pile of accumulated wealth last February after paying your bills, then
  congratulations -- yur makin' progress!

  If you added less than $848 to your wealth -- after paying your bills -- AND if
  you're a 'Free'-Trade supporting, Wally*World lovin' Republican, then you are a
  f*cking FOOL!
   

  by GW Chimpzilla on Thu Mar 09, 2006 at 03:25:10 PM PDT

•  unsustainable economy

  The trade deficit is yet another reason why our economy is completely unsustainable.  Escalating budget deficits (which will only get worse if the economy tanks), a negative savings rate, and dependence upon a finite resource whose costs will escalate (oil) would be other reasons why our economy is on borrowed time.  The dollar will have to revalue itself at some point - we can't just raise interest rates ad infinitum to keep attracting more and more foreign capital.

  by CA Pol Junkie on Thu Mar 09, 2006 at 03:33:22 PM PDT