This may have been the largest planned mix-use RE development in the U.S.
"Developers who a year ago would have gleefully bid any price for a building or a project are now delaying or abandoning projects in New York and elsewhere as the economy has slowed and many lenders have balked at financing real estate projects in the wake of the credit crisis.
At the same time, the sudden setback in the development of the railyards is a very public embarrassment for everyone involved, including the developer, whose reputation may be at risk; the authority, which was counting on the money for its capital budget; and the Bloomberg administration, which had made the transformation of the once-industrial West Side a centerpiece of its two-term mayoralty."
"Private investment firms have been amassing what may seem like unusual stakes in New York real estate: they have bought hundreds of apartment buildings with thousands of rent-regulated units across the city that produce decidedly meager returns.
Some residents and tenant advocates say that they began seeing what they consider a pattern of harassment of low-income tenants this year and suspect that it is a result of the new owners business models. Tenants have been sued repeatedly for unpaid rent that has already been received by the landlords; they have been sent false notices of rent bills, lease terminations and nonrenewals; and they have been accused of illegal sublets."
Rent regulated apartments are gradually disappearing in NYC due to inflation. When rents go above $2,000 per mo., the apartment comes off rent regulation. The $2,000 isn't inflation-adjusted.
This trade deficit graph represents things from the US viewpoint. It's interesting to visualize things from its non-pegged trading partners' viewpoint, though (i.e. taking currency movements into account). US exports don't rise as much, and non-petroleum imports fall further. Both views are valid, of course.
[Meanwhile, crude futures advanced to a wild territory, rising above 126 dollars per barrel for the first time, which weighed on stocks as investors concerned about rising inflation]
The worst of the credit crisis is past us and inflation is now moderating. Nothing to see here. WrightB rulz.
The trade deficit is a complete non-issue. Many of the countries with the greatest trade surpluses are complete baskete cases (North Korea, anyone?). Heck, just having foreigners buy real-estate or stock in your country contributes to a negative deficit, but you are clearly NOT worse off because some foreigner decided they wanted to buy some stock.
A trade deficit, in and of itself, doesn't mean a thing. You have to look into the details of what caused the deficit to tell if there is a problem or not. Unfortunately it is often impossible to get enough granular information to make any rational assessment as to what a given balance of trade really means.
In any event, the balance of trade statistics are pretty much the least useful indicator as to the health of an economy so just talking about it creates undue confusion.
In any event, the balance of trade statistics are pretty much the least useful indicator as to the health of an economy so just talking about it creates undue confusion.
Sniglet | 05.09.08 - 12:37 pm | #
So often said by citizens of nations who consume the labor & resources of others and give little back in return.
crispy&cole, This trade deficit is somewhat smaller than expected ($58.2B vs. concensus of $60.8B), but I don't think it will have much impact on Q1 GDP. It depends on the BEA's internal estimate of the trade deficit for the advance GDP report.
Also did you catch that Hugo said he was prepared to get into the internal politics of another Latin American state if there is a regional vote for autonomy (cf. Bolivia)?
A trade deficit, in and of itself, doesn't mean a thing. You have to look into the details of what caused the deficit to tell if there is a problem or not. Unfortunately it is often impossible to get enough granular information to make any rational assessment as to what a given balance of trade really means.
I would agree with you if our trade deficit was driven by imports being used in the development of productive investments that would be likely to offset the current expenditures in the future.
However I disagree with you because it appears that our deficits have been driven by a massive consumption orgy (though that appears to be changing).
That's the kind of thing that ends in bankruptcy or hyperinflation if it keeps up.
If you deflate exports by the export price index, you find that y/y export growth is roughly half due to prices. Real exports are up about 7.6% y/y, real imports down 6.7% (hope I got that math right). In March, real exports were down 3.2%, real imports down 5.7%. That's just one month, but it ain't healthy. A great deal of what looks like an increase in trade is an increase in prices.
The Bolivia split is about the richest 99.99% maintaining control of the countries resources now that a poor native named Morales is the President. That is what happens when the people are allowed to vote and the US Corporations dont like the results
Uh oh -- check out that quote from the Marketwatch story:
There is this overwhelming reluctance to admit that we're simply in a new paradigm for prices and short of a wholesale collapse of the global economy, prices just aren't going to pull back to a $74 level for oil," said Neal Ryan, a manager at Ryan Oil & Gas Partners
Can't help but recall this beauty of a quote from the New York Times, circa March 2005:
"Premonitions of a bubble on the verge of popping do not ruffle those who are bullish on real estate. In Miami, Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors, predicted that a limited supply of land coupled with demand from baby boomers and foreigners would prolong the boom indefinitely.
"South Florida," he said, "is working off of a totally new economic model than any of us have ever experienced in the past."
CC & CR, between a smaller than expected deficit in March and downward revisions, today's trade report is worth 0.5%-0.7% in Q1 GDP. Yesterday's wholesale trade data were a drag on GDP (sorry, haven't done the math). That is exactly as it should be. BEA would assume that some part of imports would end up in inventories, exports would come out of inventories. When the trade gap is smaller than the plug, inventories are probably going to be smaller, too.
Ironically, when you look at a list of countries with the top trade deficits vs those with the top trade surpluses, I would generally rather live in the ones with deficits. The countries with trade surpluses are often the nations where no one would have to live/invest (with notable exceptions).
Ironically, when you look at a list of countries with the top trade deficits vs those with the top trade surpluses, I would generally rather live in the ones with deficits. The countries with trade surpluses are often the nations where no one would have to live/invest (with notable exceptions).
Sniglet | 05.09.08 - 1:19 pm | #
Me too - I'd much rather have people do my work for me, make stuff for me, send it to me for cheap and all I do is send them paper & promises - life is great. Can't see why that can't go on forever.
Uh oh -- check out that quote from the Marketwatch story:
There is this overwhelming reluctance to admit that we're simply in a new paradigm for prices and short of a wholesale collapse of the global economy, prices just aren't going to pull back to a $74 level for oil," said Neal Ryan, a manager at Ryan Oil & Gas Partners
A key element to any bubble is some underlying legitimacy and a strong widespread belief.
I don't know how many times people told me I didn't "get it" when it came to real estate because I wasn't accounting for all the illegal immigrants flooding into the country.
So I'd say, "I guess that explains why a starter home in Mexico City costs a million dollars."
"No comments about how the trade numbers don't look recessionary?"
Seems to me the blog does want it only to be bad news. Admittedly the City news sounds horrendous.....
Not so long ago i was hearing here that containers were piling up in every available piece of land in California. And i could find news to support that
Then i was hearing some place that eastern ports to Europe were booming and western ports were not doing so good.
Now I here on his blog there are not sufficient containers for exports....and yet i am assured the trade figures are worsening or something?
I confess to being an ignoramous who relies on others to report the news.
But it kind of seems bottomy to me.
Sure we could bounce around here for years but can it really get so terribly worse if exports respond to dollar devaluation?
"Premonitions of a bubble on the verge of popping do not ruffle those who are bullish on real estate. In Miami, Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors, predicted that a limited supply of land coupled with demand from baby boomers and foreigners would prolong the boom indefinitely.
"
I see the correlation, but it falls short, in that the engine of the world economy depends entirely on oil. Homeowners can simply choose not to put their houses up for sale and stay put. There is always a need for oil. There is never an absolute need to flip a house.
Oil demand will never turn back as long as there are developing economies in the world. If this is a bubble, we are not seeing the kinds of profit-taking moves that one would expect after a 100% year-over-year gain, i.e., some kind of intermediate correction (big or small) would have already occured.
[I would generally rather live in the ones with deficits]
We are now done using HELOCs & Cash-Out refis to pay for our trade deficit. We are now using CCs, that will never get paid back. The only way to zero this out is if our trading partners are the ones who extended us the credit to buy their crap in the first place, and they get stuck holding the bag. Seems that way for some of our debt, but the debtor of last resort, The US Taxpayer, seems to have by far the biggest bag.
This national business plan works until 1 day it doesn't. I don't see us growing our way out of this deep hole...
ever wonder why Chavez gets nonstop negative press in our corporate media while being tremendously popular at home?
ummm...because he controls the ones at home? and "wildly popular"? Oh you mean like when the voters didn't give him the right to retain the presidency forever? that type of popular?
Then i was hearing some place that eastern ports to Europe were booming and western ports were not doing so good.
Now I here on his blog there are not sufficient containers for exports....and yet i am assured the trade figures are worsening or something?
I confess to being an ignoramous who relies on others to report the news.
But it kind of seems bottomy to me.
The increase in exports is definitely good news. Fundamentally what's required to get the US economy back in balance is to get exports up and imports down.
The problem is that we are a consumption economy (71% of the GDP) not a production economy. The declining imports, probably being an indication of declining consumption, are probably the more important indicator in terms of short-term pain. So in that regard I think it's appropriate to call it bearish.
However I would argue that kind of short-term distress is what's needed for longer-term prosperity.
For that reason in the grand scheme of things I'd have to consider the report positive overall (assuming the oil surge in oil is more of a temporary phenomenon and doesn't lead to excessive international tensions).
Oil demand will never turn back as long as there are developing economies in the world.
Yes and house prices would never go down because no one is making any more land. Heard it all before, and it's just more indication that there is a bubble here. But go ahead and invest as if there is a "new paradigm". I'm sure it will work out for you.
The declining imports, probably being an indication of declining consumption, are probably the more important indicator in terms of short-term pain.
Maybe. But the declining consumption, in my book, only means the impact is felt more elsewhere than here. Look at the drop in Chinese imports, for example. So the way I'm looking at this is that it makes decoupling arguments seem even more thin. If the demand for production falls off in China and elsewhere because we're not consuming as much, it's bullish for us sooner rather than later.
Not really - they are importing fewer components that they then perform low value added assembly on prior to export resale. They are now making way more of those components domestically. They might be importing less but exporting more value added.
They aren't even close to feeling pain yet - unless its the 'pain' of hyper-growth (10%/yr range). That BTW has been part of their plan for a while - move of the value added food chain ASAP. They are on schedule as far as I can see. The other pain might eventually come - it isn't there yet.
"The problem is that we are a consumption economy (71% of the GDP) not a production economy."
and well known for being a bid overweight and driving too much!
You guys have just about the cheapest gas in the world too.
Things are expensive pretty well all over the world. A house of our own is a luxury which i for one would not give up unless it were forced upon me.
How about eating a little bit less and driving a little bit less, complaining less, and being a bit more philosophical:-) OR just being a bit happier without needing all the consumption......like the rest of the world manages to do quite happily given this human life we have.
You want comment on the implications of trade for economic performance? No problem.
Both imports and exports fell in March. That is evidence of reduced economic activity. The fact that this is only one month is the only saving grace in that regard. The fact that traded goods prices were up substantially in March means that the real, inflation adjusted level of imports and exports fell very hard in March.
Of course, a smaller deficit works out as a boost to growth in the GDP accounts, but we all understand (right?) that all else equal, the trade balance is countercyclical. It helps keep the economy nearer trend through swings in activity because it runs hot when domestic demand runs cold. A narrowing deficit is not, in itself, a sign of economic strength, any more than a runny nose is a sign of health. It's just a sign that the economic immune system is doing what it can to get you over a period of illness.
Seb,
I really believe this is gonna end up as the tale of two economys. I have a friend who just shut his trucking business down. Overlevered to the max. It is gonna be pretty ugly for him. The trucking company I work for? Not so much. We are currently flat to just slightly ahead of last year. Also fuel surcharges are helping. Little to no debt. Looking to aquire(per cfo).
Would I want to be in the financial side of things right now? Not just no but hell no...
OR just being a bit happier without needing all the consumption......like the rest of the world manages to do quite happily given this human life we have.
Enjoy!
Worried
Dude, if you're talking about Europe then forget about happiness. People in the US are way more optimistic than Europeans. They are a lot more envious and love forced wealth redistribution. Did you read recent polls on how conservatives are way happier than liberals? Europeans are way more liberal than US liberals. So much for misery. I'm not going back there.
O-Joe
If the demand for production falls off in China and elsewhere because we're not consuming as much, it's bullish for us sooner rather than later.
I disagree.
I think there's a possibility that China's growth is being fueled by excessive capital spending (though I haven't done enough research to be confident about that claim).
If this is the case and demand for Chinese goods falls off, it could trigger a deflationary death spiral in the Chinese manufacturing industry leading to a fire sale of foreign goods being dumped on our shores possibly creating the same sort of trade nightmare we saw in the 1930s when we were the ones that had industrial overcapacity problems.
A tsunami of cheap goods flooding the world would destroy exporters everywhere.
How about eating a little bit less and driving a little bit less, complaining less, and being a bit more philosophical:-) OR just being a bit happier without needing all the consumption......like the rest of the world manages to do quite happily given this human life we have.
Worried - some of us are there already - the weakening dollar will get more of us there sooner.
::::
dr strangemoney writes:
Decouple or not decouple? Oh, I can't take the suspense anymore!
dr strangemoney | 05.09.08 - 1:59 pm | #
The couple-decouple argument is simplistic - always was. Of course we are 'coupled' - but how tightly and what are the feedback loops & transfer mechanisms?
I'd say the US running a high non-renewable materials content & energy intensive consumption based economy was unsustainable no matter if imported or domestic. Those are EXACTLY the kinds of things we import however. Its gonna slow a lot regardless. World better consider Plan B.
There's no doubt that the weak economy - recessionary or not - is decreasing demand for imported goods. HOWEVER, I think we need to be careful in attributing all of the decline in imports to the weak economy. People mainly focus on exports as the mechanism in which trade comes back into balance after currency adjustments have taken place. But we should also expect to see decrease in imports, not necessarily because the demand for goods has decreased, but because domestic producers are more competitive and more "stuff" can be made here. Granted, that's probably not happening on a large scale, but it's certainly happening to some degree.
dryfly said: "I'll bring a towel if it will make you feel better."
Gee, thanks, LOL!
(OT) Shameless, self-serving plug that I only mention because of the timeliness: Two of the six stocks in the small-cap portfolio I've been "touting" over the past couple of months: ARD and EGLE.
ARD is an oil-gas drilling and exploration stock, and EGLE is a bulk shipper.
I should also point out that I was absolutely not prescient about oil prices or a shipping container shortage, these two stocks simply came up on my small-cap growth stock screen and I bought them.
I consider this more proof that simply following the numbers instead of a subjective opinion is the best way to be "right".
Sebastian and Steve -
What are you talking about? The trade numbers DO look recessionary. Look what happened historically: http://www.census.gov/foreign-trade/statistics/historical/gands.pdf
The trade deficit decreased or the surplus increased in EVERY recession we've had going back to 1960!!
You are not at touch with reality.
Things are very bad and getting worse. I see it every day and talk to customers and suppliers who are living it as well.
The second half of this year is going to be worse than the first half too.
But we should also expect to see decrease in imports, not necessarily because the demand for goods has decreased, but because domestic producers are more competitive and more "stuff" can be made here. Granted, that's probably not happening on a large scale, but it's certainly happening to some degree.
Its happening on a much larger scale than folks know - believe me. We better hope consumption declines some because there isn't enough domestic capacity to supply all the crap we've been used to buying that was supplied to us by people pricing in manipulated currencies & produced with 'almost free' labor. That's ending too...
The substitution effect of not using import sources for domestic mfg is probably greater than the increase in exports. That is my WAG. I think the full effect of this would be quite difficult to tease out of official stats do to multipliers (here & abroad) but I know its real & significant - I see it in my biz.
Must be. I could not understand how Spitzer could get busted for taking a prostitute 'over state lines'. ?? His deceit though was pretty gross.
I am in Finland. The foreign minister had to resign for obsessively texting a young stripper but he got another job in the government. The prime minister always seems to be having affairs. The culture minister is a bit sad and unhappy over her lost love at the moment.
I think we define liberal differently perhaps? I recall people were forgiving of British Liberal leader Jeremy thorpes revelation of homosexuality until they heard he had arranged for his ex lovers dog to be shot in a fit of revenge or something with more sinister overtones.
OT) Shameless, self-serving plug that I only mention because of the timeliness: Two of the six stocks in the small-cap portfolio I've been "touting" over the past couple of months: ARD and EGLE.
Seb, will you be playing the CNBC game? I'd love to see how your Wright Model B portfolios compare to my 5 over the next 10 weeks:
Tech Flyer
$1,000,000.00
--\t
Anti Kramer
$1,000,000.00
--\t
Anti Kudlow
$1,000,000.00
--\t
Mortgage Meltdown
$1,000,000.00
--\t
Serious Investing
$1,000,000.00
It should be noted that the "Serious Investing" portfolio stands no chance as it will be traded as if it were real money and not a game.
TCA, liberals don't like being told what to think? How come they all end up with the same opinions then? NPR does their thinking for them. (Conservatives are just as bad in case you think I'm taking sides.)
How much of the exports were things like coal and raw materials?
Colonies tend to export a lot of raw materials.
skeptictank | 05.09.08 - 2:14 pm | #
Not really - some one posted the numbers LAST report & there is a lot of Caterpillar, John Deere & Boeing in there with the corn & coal.
Plus commodities aren't always 'low value added' - consider corn: if its produced on a large farm using extremely high technology (adv. genetics, GPS targeted min. input chem application utilizing expensive capital... etc.) how is that like using slaves in a colony? How is high tech farming lower value added than say producing MBS and 'exporting' that to the world?
On the other hand high tech farming has its 'costs' too... like poorly constructed MBS.
There are a lot of misunderstandings and half thought out stereotypes both ways.
JS writes:
TCA, liberals don't like being told what to think? How come they all end up with the same opinions then? NPR does their thinking for them. (Conservatives are just as bad in case you think I'm taking sides.)
JS | 05.09.08 - 2:24 pm | #
I said "liberal", not "progressive". There is a difference.
Rob Dawg said: "I'd love to see how your Wright Model B portfolios compare to my 5 over the next 10 weeks..."
Well this explains a lot. The Wright Model "B" is a yield-curve indicator that I use to forecast/not forecast recession, which has nothing to do whatsoever with stock selection.
For what it is worth, I have a table/chart of our top 20 fastest growing exports ($500 million or more year to date) complete with a rather sarcastic title for those interested.
This actually made me laugh outloud. Thanks for the enlightenment Greedspan!
Former Federal Reserve Chairman Alan Greenspan indicates the worst of the credit crisis will pass once investors 'fully' anticipate the likely losses on securities tied to subprime and other mortgages, where defaults have surged - Bloomberg
Sebastian -
So are you saying that a contracting trade deficit is not consistent with a recession then?
Is this the first time in the past 50 years that is the case?
"I said "liberal", not "progressive". There is a difference."
So which of these 2 like taxes a little higher and which a lot higher? And which pol party do these 2 elite groups tend to vote for? The cheerful Pelosi contingent?
"It appears to me that when oil gets expensive enough people start using less of it."
If this were only about taking too many college kids taking roadtrips, I would agree. The demand level for oil does not boil down to making one less trip to the grocery store. Emerging economies are propelling much of the demand. i.e., conservation may help gas prices in the short term, but I don't believe that consumer moderation can put a dent in the cost of oil itself where India and China can easily soak up what we don't take... for now.
There is a tipping point somewhere, but that won't be reached until international demand is shattered by a prolonged economic swoon.
So which of these 2 like taxes a little higher and which a lot higher? And which pol party do these 2 elite groups tend to vote for? The cheerful Pelosi contingent?
barely | 05.09.08 - 2:43 pm | #
True liberals are opposed to taxation as it is a violation of individual liberty. You must be confusing liberalism with socialism. The socialists have done an effective job co-opting the term since WWII.
The first two paragraphs from the Wikipedia entry on liberalism define it nicely.
"Liberalism refers to a broad array of related ideas and theories of government that consider individual liberty to be the most important political goal.[1] Modern liberalism has its roots in the Age of Enlightenment.
Broadly speaking, liberalism emphasizes individual rights and equality of opportunity. Different forms of liberalism may propose very different policies, but they are generally united by their support for a number of principles, including extensive freedom of thought and speech, limitations on the power of governments, the rule of law, the free exchange of ideas, a market or mixed economy, and a transparent system of government.[2] All liberals as well as some adherents of other political ideologies support some variant of the form of government known as liberal democracy, with open and fair elections, where all citizens have equal rights by law.[3]"
The monthly drop in the trade deficit of 3.4 Bn represents about .3% of total monthly GDP. So assuming the BEA's estimate for this last month was off by this amount, it seems to me the effect on the full qtr's GDP would be around .1%.
Ok I'm a novice, but is there a quick way of pointing out the error of my ways?
Oil will not be a real concern unless the gas pumps are turned off. Consumers will just accept the rising prices (not much they can do about them) until the gas pumps are turned off.
Complain all you want about the price as that's all we've done.
Stagflationary Mark writes:
For what it is worth, I have a table/chart of our top 20 fastest growing exports ($500 million or more year to date) complete with a rather sarcastic title for those interested.
Thanks Stagflationary Mark, you just confirmed my suspicions that we're becoming a colony type economy. I hear the Chinese are very interested to aquiring farm and timberland all over the world right now. Timberland is getting cheap here in the PNW.
Wouldn't it be funny if the inflation resulting from Bernanke refusing to allow certain parts of the financial system to collapse down to sustainable levels leads to global protectionism and a destabilizing breakdown of global trade, causing international conflict and untold human suffering?
In the trenches asked: "Sebastian -
So are you saying that a contracting trade deficit is not consistent with a recession then?
Is this the first time in the past 50 years that is the case?"
What I'm saying is that the timing is wrong in the business cycle for a recession.
According to CR's chart, the trade deficit contraction looks like it started nearly two years ago, and the first big jump looks like it was larger than the entire contraction of the last recession (2001).
Yet still no recession.
In looking at the deficit contraction before the previous recession (1990-1991) it started from a low point in 1987. IOW, it took 3 years of contraction before a recession came around.
So I'm saying what I've been saying for a long time: Yes, there will ultimately be a recession, it's just not going to be anytime soon.
It certainly doesn't look like what an advanced economy would export. I think Dryfly makes a great point that our farming industry is advanced though. That's something at least.
On the other hand, how many jobs were created to boost those top growing exports? It seems to me that rising prices (inflation) is much of it. Here are some more charts you might be interested in (as it relates to what we are exporting).
"There is a tipping point somewhere, but that won't be reached until international demand is shattered by a prolonged economic swoon."
Given that US demand is contracting rapidly why would you think EM demand is going to hold up better? Last I looked percapita GDP is a whole lot higher in the US than in Chindia.
I don't know if anyone is paying attention but today was the first day that july crude traded thru june.
Sebastian -
You better hold your self calls until the final restatements on GDP are done. You probably dont know since you seem to be short on facts and long on yourself but the govt GDP prelim numbers missed the start of the last 2 recessions and the last consumer led recession in a very big way.
You'll see.
It ain't pretty out there and the job's numbers are going to get worse in the coming quarters. As is GDP.
No back to dealing with our businesses.
Unfortunately, I have to deal with the realities of this mess which means I have to let go about 500 people in the next couple months.
You go tell them, my vendors, customers or shareholders there's no slowdown or recession here or looming.
They'll get a kick out of that.
In the trenches said: "...Unfortunately, I have to deal with the realities of this mess which means I have to let go about 500 people in the next couple months.
You go tell them, my vendors, customers or shareholders there's no slowdown or recession here or looming..."
I'm sorry to hear that, and my sympathies to you and your colleagues.
However, the problems of 500 (or even 5,000 or 50,000) employees out of a total employed workforce of 140 million (give or take) is simply not my concern when I'm gauging where the economy is headed next.
Thanks Stagflationary Mark, you just confirmed my suspicions that we're becoming a colony type economy. I hear the Chinese are very interested to aquiring farm and timberland all over the world right now. Timberland is getting cheap here in the PNW.
skeptictank | 05.09.08 - 3:15 pm | #
Before you apply for a job at an 'American Plantation' for our nouveau colonial masters at least look at the actual numbers...
Its the link from Stag Mark's site to the seasonally adj exports BY CATEGORY 2008 YTD:
Food, Bev, & Feed (ag) : $27,343MM
Indust. Supplies : $92,871MM
Capital Goods : $116,326MM
Auto & Parts : $30,079MM
Consumer Prod : $39,160MM
Other : $13,181
While ag exports might be the fastest growing right now the category is small compared to industrial goods. The reason ag products are growing so fast is their 'sell cycle' is incredibly short... the time it takes a farmer to empty a bin and haul to terminal to load on a train to haul to a port to load out. BTW - ag exports shut off just as quickly when the farmer decides to keep the stuff in his bin instead of sell for a 'loss'.
Compare that with the 'sell cycle' for a Boeing jet - years - it will take a lot longer for capital goods & machinery to respond to the weak dollar stimulus but they will & are responding.
The dollar is having an impact on exports & imports whether folks want to admit it... and there is still a lot of capacity domestically to play with. But I wouldn't expect paper pushers to know any of this - they don't see it in their daily lives.
The total of the top 20 list (year to date) was $49.275 billion (of which nonfarm tractors and parts was only $768 million). That's not exactly a trivial amount. Within the top 20 list, the leaders by dollar amount were actually "petroleum products, other" ($6.87 billion) and "nonmonetary gold" ($6.15 billion).
The dollar is having an impact on exports & imports whether folks want to admit it...
I also want to add that I think the dollar is having a very large impact on exports & imports. I'm just not as optimistic that a devaluing currency will bring us more prosperity.
It is also having a very large impact on my stagflationary hoarding tendencies, but that's probably off topic.
I offer some more trivia to ponder and a correction to a previous point. Fuel oil was also an export growth leader by dollar amount as we exported $6.612 billion so far this year (compared to just $2.552 billion last year ytd).
Of the $20.921 billion growth in Industrial supplies and materials (ytd compared to last year's ytd), $9.906 billion of it was confined to just three items.
I also want to add that I think the dollar is having a very large impact on exports & imports. I'm just not as optimistic that a devaluing currency will bring us more prosperity.
Without trying to sound too yin-yang... devaluation won't produce 'more prosperity' but it will 'reduce poverty'... the only other way you rebalance huge systemic & unsustainable current account deficit imbalances is through lay offs & 'domestic output' reduction. That will preserve the wealth for the wealthy with lots of dollar denominated assets but will NOT help those who rely on everyday ongoing domestic production (jobs) for their sustainance.
It was regrettable but unavoidable given the years of high deficit.
But again - all is not lost - look at the aggregate numbers I posted taken form the census link you provided - the short term 'growth' in commodities exports was large but in aggregate that is a small part of the pie. Capital goods & industrial supplies dwarf our commodity exports.
Since the thread is most likely dying (as all threads do over time), I feel comfortable with yet another dose of trivia for those wishing to read more of my drivel.
Of the $3.994 billion increaase in Consumer goods exports (ytd vs. last year's ytd), $1.508 billion was confined to just two items (the two largest by dollar amount increase within that category).
Gem Diamonds: $1.050 billion
Artwork, antiques, stamps, etc.: $489 million
You know I generally agree with what you say. I have for years. I just want to point that out, lol. However...
Capital goods & industrial supplies dwarf our commodity exports.
Look to the details in the industrial supplies. Those ARE commodities for the most part. For example, copper is its own line item. It is especially disturbing to see "fuel oil", "petroleum products, other", and "nonmonetary gold" leading the charge (deficit pun intended!).
Without trying to sound too yin-yang... devaluation won't produce 'more prosperity' but it will 'reduce poverty'... the only other way you rebalance huge systemic & unsustainable current account deficit imbalances is through lay offs & 'domestic output' reduction. That will preserve the wealth for the wealthy with lots of dollar denominated assets but will NOT help those who rely on everyday ongoing domestic production (jobs) for their sustainance.
I'm not arguing with you much on this just so you know. We live in an era of least worst options and you have described what may end up being yet another least worst option. As for the reduction in poverty, I would qualify that by saying relative to the alternatives. I'm thinking poverty is increasing these days.
Gem Diamonds: $1.050 billion
Artwork, antiques, stamps, etc.: $489 million
Once again, it does not inspire optimism in me.
Stagflationary Mark | Homepage | 05.09.08 - 6:18 pm | #
I understand you aren't arguing per se & I agree it isn't all smurfy that we 'work for less' due to a weaker currency but that is a LOT better than not working and in the long run that's the only real way we dig out & re-establish wealth.
But again - the numbers you site are the GROWTH YTD and NOT the net number. You are going to have far more instantaneous change in things like gold & gems which are (1) inventoried and (2) immediately available for transaction as opposed to airplane production where capacity is pretty flat and the lead-times & back logs are measured in YEARS and if they aren't in the queue already they don't ship soon. You don't see airplane production jump 200% YTD...
If you go to the nominal absolute numbers in that report and pull out the fluff - you find most of it isn't fluff. Most of it is solid stuff like engine parts & semi-conductors & airplanes... and even fuel oil can have a pretty positive 'value added' component if you are starting with crappy crude & 'hydro-crack' a lot of it (which is increasingly happening).
I understand you aren't arguing per se & I agree it isn't all smurfy that we 'work for less' due to a weaker currency but that is a LOT better than not working and in the long run that's the only real way we dig out & re-establish wealth.
Somehow, this dismissing oil when looking at U.S. imports/exports seems more than a bit flawed.
American oil production has been declining since 1972, which isn't really a surprise to anyone paying attention - Carter was the last President who could credibly be concerned about 'energy independence'. (And look at what it brought him.) America isn't unique, either - Romania, another original oil producer, has been declining for decades. Recently, Norway, the UK (now a net oil importer), Indonesia have followed the same path. The oil fairy simply doesn't exist - oil that is burned does not magically become oil again.
There is still major amounts of oil in the ground. For that matter, there are major amounts of everything still in the ground - it is simply that economically extracting it is beyond us at this point. For another perspective, read Goethe's Faust for an excellent passage on this idea - it came from Mephistopheles, as a suggestion on how to stay rich when apparently bankrupt - just include everything in the ground that hasn't been discovered yet.
The American economy requires oil to function, and at a level which an economy such as Germany's doesn't. Why? American workers drive to work, after all. Without having much in the way of alternatives, in part because of poor urban planning (yes, time for a certain dawg to wag his tail again), in part because of American's love of 'mobility,' and in part because what was assumed to be good for GM turned to be a disaster for both GM and America.
And goods in the U.S. are essentially moved by truck, to a much greater extent and distance than in Germany - where both river and rail networks cover much of the country, especially the industrial regions. Many workers here already use transit, walk, or bicycle to manufacturing jobs
Dismissing the fact that rising American exports are merely compensating for rising oil prices is a fallacy, in my opinion. And odd as it may sound, oil prices are not the same as oil availability - oil production will become definitive, not the price. Because even as the price has gone higher, oil production has not kept pace. Though there are a myriad of reasons for this, the simplest explanation remains that with current technology and infrastructure, the amount of oil available to pump is finite - and we are at the point of arguing about a half full glass.
One that will never be full again, by the way. Such is the truth of living on a finite world.
First?
Second?
Thurd
OT
Deal to Build at Railyards on West Side Collapses
Deal to Build At Railyards On West Side Collapses - NY Times
This may have been the largest planned mix-use RE development in the U.S.
"Developers who a year ago would have gleefully bid any price for a building or a project are now delaying or abandoning projects in New York and elsewhere as the economy has slowed and many lenders have balked at financing real estate projects in the wake of the credit crisis.
At the same time, the sudden setback in the development of the railyards is a very public embarrassment for everyone involved, including the developer, whose reputation may be at risk; the authority, which was counting on the money for its capital budget; and the Bloomberg administration, which had made the transformation of the once-industrial West Side a centerpiece of its two-term mayoralty."
--every hour-- Every minute!
CR-
Do you have any guess if the trade and inventory announcements the last few days will cancel each other out and have zero impact on the revised GDP?
OT
As Investment Firms Buy Up Buildings, Tenants See Bullies - NY Times
Questions of Rent Tactics by Private Equity
"Private investment firms have been amassing what may seem like unusual stakes in New York real estate: they have bought hundreds of apartment buildings with thousands of rent-regulated units across the city that produce decidedly meager returns.
Some residents and tenant advocates say that they began seeing what they consider a pattern of harassment of low-income tenants this year and suspect that it is a result of the new owners business models. Tenants have been sued repeatedly for unpaid rent that has already been received by the landlords; they have been sent false notices of rent bills, lease terminations and nonrenewals; and they have been accused of illegal sublets."
Rent regulated apartments are gradually disappearing in NYC due to inflation. When rents go above $2,000 per mo., the apartment comes off rent regulation. The $2,000 isn't inflation-adjusted.
This trade deficit graph represents things from the US viewpoint. It's interesting to visualize things from its non-pegged trading partners' viewpoint, though (i.e. taking currency movements into account). US exports don't rise as much, and non-petroleum imports fall further. Both views are valid, of course.
[Meanwhile, crude futures advanced to a wild territory, rising above 126 dollars per barrel for the first time, which weighed on stocks as investors concerned about rising inflation]
The worst of the credit crisis is past us and inflation is now moderating. Nothing to see here. WrightB rulz.
Canada's trade surplus grew,
CBC News - Money - Canada's trade surplus grew again in March
What are you guys doing wrong?
Is celebrity gossip included in our exports numbers? Our nation is the leader in celebrity gossip, and I hope this is duly credited in the numbers.
The trade deficit is a complete non-issue. Many of the countries with the greatest trade surpluses are complete baskete cases (North Korea, anyone?). Heck, just having foreigners buy real-estate or stock in your country contributes to a negative deficit, but you are clearly NOT worse off because some foreigner decided they wanted to buy some stock.
A trade deficit, in and of itself, doesn't mean a thing. You have to look into the details of what caused the deficit to tell if there is a problem or not. Unfortunately it is often impossible to get enough granular information to make any rational assessment as to what a given balance of trade really means.
In any event, the balance of trade statistics are pretty much the least useful indicator as to the health of an economy so just talking about it creates undue confusion.
What are you guys doing wrong?
ugh | 05.09.08 - 12:31 pm | #
We aren't cutting enough of our trees and aren't digging enough great big holes...
After all nothing is so precious as a hole in the ground
.
In any event, the balance of trade statistics are pretty much the least useful indicator as to the health of an economy so just talking about it creates undue confusion.
Sniglet | 05.09.08 - 12:37 pm | #
So often said by citizens of nations who consume the labor & resources of others and give little back in return.
After all nothing is so precious as a hole in the ground.
Intended link:
YouTube - MIDNIGHT OIL - Blue Sky Mine (Live)
crispy&cole, This trade deficit is somewhat smaller than expected ($58.2B vs. concensus of $60.8B), but I don't think it will have much impact on Q1 GDP. It depends on the BEA's internal estimate of the trade deficit for the advance GDP report.
Best Wishes.
us future oil supply issues complicated by evidence indicating venezuela's military support for leftist rebels against columbia
thus MarketWatch is reporting that analysts see crude oil futures markets moving significantly higher
Crude futures close near $126, up over 8% for the week - MarketWatch
oil, RE, CRE, imbalance of trade, debt x3 (gov, private, corporate)...
too many body blows
S&P encountering serious resistance at 1385. If it drops though that point later today, look out!
"If it drops though that point later today, look out!"
Institutional demand tends to fade as many are vacationing beginning soon, until Sept.
Ole rule-of-thumb - "SELL in May, Go away".
mt,
Also did you catch that Hugo said he was prepared to get into the internal politics of another Latin American state if there is a regional vote for autonomy (cf. Bolivia)?
The trade deficit is a complete non-issue...
A trade deficit, in and of itself, doesn't mean a thing. You have to look into the details of what caused the deficit to tell if there is a problem or not. Unfortunately it is often impossible to get enough granular information to make any rational assessment as to what a given balance of trade really means.
I would agree with you if our trade deficit was driven by imports being used in the development of productive investments that would be likely to offset the current expenditures in the future.
However I disagree with you because it appears that our deficits have been driven by a massive consumption orgy (though that appears to be changing).
That's the kind of thing that ends in bankruptcy or hyperinflation if it keeps up.
"MarketWatch is reporting that analysts see crude oil futures markets moving significantly higher"
Hurricane season on the near horizon. We've had a couple of tame seasons in a row. Law of averages...
"MarketWatch is reporting that analysts see crude oil futures markets moving significantly higher"
Wow, that's about the first bearish indicator I've seen for oil.
If you deflate exports by the export price index, you find that y/y export growth is roughly half due to prices. Real exports are up about 7.6% y/y, real imports down 6.7% (hope I got that math right). In March, real exports were down 3.2%, real imports down 5.7%. That's just one month, but it ain't healthy. A great deal of what looks like an increase in trade is an increase in prices.
energycon-
The Bolivia split is about the richest 99.99% maintaining control of the countries resources now that a poor native named Morales is the President. That is what happens when the people are allowed to vote and the US Corporations dont like the results
Uh oh -- check out that quote from the Marketwatch story:
There is this overwhelming reluctance to admit that we're simply in a new paradigm for prices and short of a wholesale collapse of the global economy, prices just aren't going to pull back to a $74 level for oil," said Neal Ryan, a manager at Ryan Oil & Gas Partners
Can't help but recall this beauty of a quote from the New York Times, circa March 2005:
"Premonitions of a bubble on the verge of popping do not ruffle those who are bullish on real estate. In Miami, Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors, predicted that a limited supply of land coupled with demand from baby boomers and foreigners would prolong the boom indefinitely.
"South Florida," he said, "is working off of a totally new economic model than any of us have ever experienced in the past."
Hmmm...
CC & CR, between a smaller than expected deficit in March and downward revisions, today's trade report is worth 0.5%-0.7% in Q1 GDP. Yesterday's wholesale trade data were a drag on GDP (sorry, haven't done the math). That is exactly as it should be. BEA would assume that some part of imports would end up in inventories, exports would come out of inventories. When the trade gap is smaller than the plug, inventories are probably going to be smaller, too.
Ironically, when you look at a list of countries with the top trade deficits vs those with the top trade surpluses, I would generally rather live in the ones with deficits. The countries with trade surpluses are often the nations where no one would have to live/invest (with notable exceptions).
What exactly is a "universal global" bank? Did Citi consult the Department of Redundancy Department for business synergies?
The Citi call sounded like grade A business jargon shit.
he countries with trade surpluses are often the nations where no one would have to live/invest
Like Germany or Japan?
Ironically, when you look at a list of countries with the top trade deficits vs those with the top trade surpluses, I would generally rather live in the ones with deficits. The countries with trade surpluses are often the nations where no one would have to live/invest (with notable exceptions).
Sniglet | 05.09.08 - 1:19 pm | #
Me too - I'd much rather have people do my work for me, make stuff for me, send it to me for cheap and all I do is send them paper & promises - life is great. Can't see why that can't go on forever.
No comments about how the trade numbers don't look recessionary?
Uh oh -- check out that quote from the Marketwatch story:
There is this overwhelming reluctance to admit that we're simply in a new paradigm for prices and short of a wholesale collapse of the global economy, prices just aren't going to pull back to a $74 level for oil," said Neal Ryan, a manager at Ryan Oil & Gas Partners
A key element to any bubble is some underlying legitimacy and a strong widespread belief.
I don't know how many times people told me I didn't "get it" when it came to real estate because I wasn't accounting for all the illegal immigrants flooding into the country.
So I'd say, "I guess that explains why a starter home in Mexico City costs a million dollars."
"No comments about how the trade numbers don't look recessionary?"
Seems to me the blog does want it only to be bad news. Admittedly the City news sounds horrendous.....
Not so long ago i was hearing here that containers were piling up in every available piece of land in California. And i could find news to support that
Then i was hearing some place that eastern ports to Europe were booming and western ports were not doing so good.
Now I here on his blog there are not sufficient containers for exports....and yet i am assured the trade figures are worsening or something?
I confess to being an ignoramous who relies on others to report the news.
But it kind of seems bottomy to me.
Sure we could bounce around here for years but can it really get so terribly worse if exports respond to dollar devaluation?
"Premonitions of a bubble on the verge of popping do not ruffle those who are bullish on real estate. In Miami, Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors, predicted that a limited supply of land coupled with demand from baby boomers and foreigners would prolong the boom indefinitely.
"
I see the correlation, but it falls short, in that the engine of the world economy depends entirely on oil. Homeowners can simply choose not to put their houses up for sale and stay put. There is always a need for oil. There is never an absolute need to flip a house.
Oil demand will never turn back as long as there are developing economies in the world. If this is a bubble, we are not seeing the kinds of profit-taking moves that one would expect after a 100% year-over-year gain, i.e., some kind of intermediate correction (big or small) would have already occured.
Crispy, you meant the richest 00.01% right?
energyecon, ever wonder why Chavez gets nonstop negative press in our corporate media while being tremendously popular at home?
ABC, CBS, NBC< CNN. MSNBC, and CNN still refuse to address the NYT story from a few weeks ago regarding their complicity in selling the Iraq war.
They do not serve democracy, they do not serve America . . . they serve their own profit interest, and people need to wake the f up and realize it.
Viva CR and Tanta, and every other bastion of unbiased truth-telling!
[I would generally rather live in the ones with deficits]
We are now done using HELOCs & Cash-Out refis to pay for our trade deficit. We are now using CCs, that will never get paid back. The only way to zero this out is if our trading partners are the ones who extended us the credit to buy their crap in the first place, and they get stuck holding the bag. Seems that way for some of our debt, but the debtor of last resort, The US Taxpayer, seems to have by far the biggest bag.
This national business plan works until 1 day it doesn't. I don't see us growing our way out of this deep hole...
ever wonder why Chavez gets nonstop negative press in our corporate media while being tremendously popular at home?
ummm...because he controls the ones at home? and "wildly popular"? Oh you mean like when the voters didn't give him the right to retain the presidency forever? that type of popular?
Then i was hearing some place that eastern ports to Europe were booming and western ports were not doing so good.
Now I here on his blog there are not sufficient containers for exports....and yet i am assured the trade figures are worsening or something?
I confess to being an ignoramous who relies on others to report the news.
But it kind of seems bottomy to me.
The increase in exports is definitely good news. Fundamentally what's required to get the US economy back in balance is to get exports up and imports down.
The problem is that we are a consumption economy (71% of the GDP) not a production economy. The declining imports, probably being an indication of declining consumption, are probably the more important indicator in terms of short-term pain. So in that regard I think it's appropriate to call it bearish.
However I would argue that kind of short-term distress is what's needed for longer-term prosperity.
For that reason in the grand scheme of things I'd have to consider the report positive overall (assuming the oil surge in oil is more of a temporary phenomenon and doesn't lead to excessive international tensions).
Mike_in_Fl | Homepage | 05.09.08 - 1:13 pm |
South Florida? I wouldn't know nuthin bout that...
Chris
Oil demand will never turn back as long as there are developing economies in the world.
Yes and house prices would never go down because no one is making any more land. Heard it all before, and it's just more indication that there is a bubble here. But go ahead and invest as if there is a "new paradigm". I'm sure it will work out for you.
The declining imports, probably being an indication of declining consumption, are probably the more important indicator in terms of short-term pain.
Maybe. But the declining consumption, in my book, only means the impact is felt more elsewhere than here. Look at the drop in Chinese imports, for example. So the way I'm looking at this is that it makes decoupling arguments seem even more thin. If the demand for production falls off in China and elsewhere because we're not consuming as much, it's bullish for us sooner rather than later.
Oil demand will never turn back as long as there are developing economies in the world.
Hmmm...
It appears to me that when oil gets expensive enough people start using less of it.
Steve said: "No comments about how the trade numbers don't look recessionary?"
I'm getting a little tired of carrying the water, especially when the bears just gang-up on me and empty the bucket over my head.
Sebastia
Look at the drop in Chinese imports, for example
Not really - they are importing fewer components that they then perform low value added assembly on prior to export resale. They are now making way more of those components domestically. They might be importing less but exporting more value added.
They aren't even close to feeling pain yet - unless its the 'pain' of hyper-growth (10%/yr range). That BTW has been part of their plan for a while - move of the value added food chain ASAP. They are on schedule as far as I can see. The other pain might eventually come - it isn't there yet.
I'm getting a little tired of carrying the water, especially when the bears just gang-up on me and empty the bucket over my head.
I'll bring a towel if it will make you feel better.
"The problem is that we are a consumption economy (71% of the GDP) not a production economy."
and well known for being a bid overweight and driving too much!
You guys have just about the cheapest gas in the world too.
Things are expensive pretty well all over the world. A house of our own is a luxury which i for one would not give up unless it were forced upon me.
How about eating a little bit less and driving a little bit less, complaining less, and being a bit more philosophical:-) OR just being a bit happier without needing all the consumption......like the rest of the world manages to do quite happily given this human life we have.
Enjoy!
Decouple or not decouple? Oh, I can't take the suspense anymore!
You want comment on the implications of trade for economic performance? No problem.
Both imports and exports fell in March. That is evidence of reduced economic activity. The fact that this is only one month is the only saving grace in that regard. The fact that traded goods prices were up substantially in March means that the real, inflation adjusted level of imports and exports fell very hard in March.
Of course, a smaller deficit works out as a boost to growth in the GDP accounts, but we all understand (right?) that all else equal, the trade balance is countercyclical. It helps keep the economy nearer trend through swings in activity because it runs hot when domestic demand runs cold. A narrowing deficit is not, in itself, a sign of economic strength, any more than a runny nose is a sign of health. It's just a sign that the economic immune system is doing what it can to get you over a period of illness.
Sebastian
Sebastian | 05.09.08 - 1:55 pm |
Seb,
I really believe this is gonna end up as the tale of two economys. I have a friend who just shut his trucking business down. Overlevered to the max. It is gonna be pretty ugly for him. The trucking company I work for? Not so much. We are currently flat to just slightly ahead of last year. Also fuel surcharges are helping. Little to no debt. Looking to aquire(per cfo).
Would I want to be in the financial side of things right now? Not just no but hell no...
Chris
Canada's trade surplus grew,
What are you guys doing wrong?
Hey! Be careful or we'll invade you a second time
OR just being a bit happier without needing all the consumption......like the rest of the world manages to do quite happily given this human life we have.
Enjoy!
Worried
Dude, if you're talking about Europe then forget about happiness. People in the US are way more optimistic than Europeans. They are a lot more envious and love forced wealth redistribution. Did you read recent polls on how conservatives are way happier than liberals? Europeans are way more liberal than US liberals. So much for misery. I'm not going back there.
O-Joe
If the demand for production falls off in China and elsewhere because we're not consuming as much, it's bullish for us sooner rather than later.
I disagree.
I think there's a possibility that China's growth is being fueled by excessive capital spending (though I haven't done enough research to be confident about that claim).
If this is the case and demand for Chinese goods falls off, it could trigger a deflationary death spiral in the Chinese manufacturing industry leading to a fire sale of foreign goods being dumped on our shores possibly creating the same sort of trade nightmare we saw in the 1930s when we were the ones that had industrial overcapacity problems.
A tsunami of cheap goods flooding the world would destroy exporters everywhere.
How about eating a little bit less and driving a little bit less, complaining less, and being a bit more philosophical:-) OR just being a bit happier without needing all the consumption......like the rest of the world manages to do quite happily given this human life we have.
Enjoy!
Worried | Homepage | 05.09.08 - 1:58 pm | #
Worried - some of us are there already - the weakening dollar will get more of us there sooner.
::::
dr strangemoney writes:
Decouple or not decouple? Oh, I can't take the suspense anymore!
dr strangemoney | 05.09.08 - 1:59 pm | #
The couple-decouple argument is simplistic - always was. Of course we are 'coupled' - but how tightly and what are the feedback loops & transfer mechanisms?
I'd say the US running a high non-renewable materials content & energy intensive consumption based economy was unsustainable no matter if imported or domestic. Those are EXACTLY the kinds of things we import however. Its gonna slow a lot regardless. World better consider Plan B.
There's no doubt that the weak economy - recessionary or not - is decreasing demand for imported goods. HOWEVER, I think we need to be careful in attributing all of the decline in imports to the weak economy. People mainly focus on exports as the mechanism in which trade comes back into balance after currency adjustments have taken place. But we should also expect to see decrease in imports, not necessarily because the demand for goods has decreased, but because domestic producers are more competitive and more "stuff" can be made here. Granted, that's probably not happening on a large scale, but it's certainly happening to some degree.
"Oil has reached a permanently high plateau."
Where have we heard this before?
dryfly said: "I'll bring a towel if it will make you feel better."
Gee, thanks, LOL!
(OT) Shameless, self-serving plug that I only mention because of the timeliness: Two of the six stocks in the small-cap portfolio I've been "touting" over the past couple of months: ARD and EGLE.
ARD is an oil-gas drilling and exploration stock, and EGLE is a bulk shipper.
I should also point out that I was absolutely not prescient about oil prices or a shipping container shortage, these two stocks simply came up on my small-cap growth stock screen and I bought them.
I consider this more proof that simply following the numbers instead of a subjective opinion is the best way to be "right".
Sebastia
How much of the exports were things like coal and raw materials?
Colonies tend to export a lot of raw materials.
Sebastian and Steve -
What are you talking about? The trade numbers DO look recessionary. Look what happened historically:
http://www.census.gov/foreign-trade/statistics/historical/gands.pdf
The trade deficit decreased or the surplus increased in EVERY recession we've had going back to 1960!!
You are not at touch with reality.
Things are very bad and getting worse. I see it every day and talk to customers and suppliers who are living it as well.
The second half of this year is going to be worse than the first half too.
But we should also expect to see decrease in imports, not necessarily because the demand for goods has decreased, but because domestic producers are more competitive and more "stuff" can be made here. Granted, that's probably not happening on a large scale, but it's certainly happening to some degree.
Its happening on a much larger scale than folks know - believe me. We better hope consumption declines some because there isn't enough domestic capacity to supply all the crap we've been used to buying that was supplied to us by people pricing in manipulated currencies & produced with 'almost free' labor. That's ending too...
The substitution effect of not using import sources for domestic mfg is probably greater than the increase in exports. That is my WAG. I think the full effect of this would be quite difficult to tease out of official stats do to multipliers (here & abroad) but I know its real & significant - I see it in my biz.
"Europeans are way more liberal than US liberals"
Must be. I could not understand how Spitzer could get busted for taking a prostitute 'over state lines'. ?? His deceit though was pretty gross.
I am in Finland. The foreign minister had to resign for obsessively texting a young stripper but he got another job in the government. The prime minister always seems to be having affairs. The culture minister is a bit sad and unhappy over her lost love at the moment.
I think we define liberal differently perhaps? I recall people were forgiving of British Liberal leader Jeremy thorpes revelation of homosexuality until they heard he had arranged for his ex lovers dog to be shot in a fit of revenge or something with more sinister overtones.
Seb,
You are a troll and a fool.
The trade numbers reflect exactly what you'd see in a recession.
You clearly have no idea what you are talking about.
You have a culture minister?
OT) Shameless, self-serving plug that I only mention because of the timeliness: Two of the six stocks in the small-cap portfolio I've been "touting" over the past couple of months: ARD and EGLE.
Seb, will you be playing the CNBC game? I'd love to see how your Wright Model B portfolios compare to my 5 over the next 10 weeks:
Tech Flyer
$1,000,000.00
--\t
Anti Kramer
$1,000,000.00
--\t
Anti Kudlow
$1,000,000.00
--\t
Mortgage Meltdown
$1,000,000.00
--\t
Serious Investing
$1,000,000.00
It should be noted that the "Serious Investing" portfolio stands no chance as it will be traded as if it were real money and not a game.
Did you read recent polls on how conservatives are way happier than liberals?
That's because conservatives enjoy being told what to do and what to think. Liberals? Not so much.
TCA, liberals don't like being told what to think? How come they all end up with the same opinions then? NPR does their thinking for them. (Conservatives are just as bad in case you think I'm taking sides.)
How much of the exports were things like coal and raw materials?
Colonies tend to export a lot of raw materials.
skeptictank | 05.09.08 - 2:14 pm | #
Not really - some one posted the numbers LAST report & there is a lot of Caterpillar, John Deere & Boeing in there with the corn & coal.
Plus commodities aren't always 'low value added' - consider corn: if its produced on a large farm using extremely high technology (adv. genetics, GPS targeted min. input chem application utilizing expensive capital... etc.) how is that like using slaves in a colony? How is high tech farming lower value added than say producing MBS and 'exporting' that to the world?
On the other hand high tech farming has its 'costs' too... like poorly constructed MBS.
There are a lot of misunderstandings and half thought out stereotypes both ways.
JS writes:
TCA, liberals don't like being told what to think? How come they all end up with the same opinions then? NPR does their thinking for them. (Conservatives are just as bad in case you think I'm taking sides.)
JS | 05.09.08 - 2:24 pm | #
I said "liberal", not "progressive". There is a difference.
Rob Dawg said: "I'd love to see how your Wright Model B portfolios compare to my 5 over the next 10 weeks..."
Well this explains a lot.
The Wright Model "B" is a yield-curve indicator that I use to forecast/not forecast recession, which has nothing to do whatsoever with stock selection.
Do people actually watch CNBC? And why?
Sebastia
For what it is worth, I have a table/chart of our top 20 fastest growing exports ($500 million or more year to date) complete with a rather sarcastic title for those interested.
Our Thriving Export Business
Finlands culture minister....i kid you not.
http://static.yle.fi/linnanjuhlat/2007/galleria/2/tanja_saarela.jpg
In the trenches said: "Seb,
You are a troll and a fool."
Who continues to be both unfailingly civil and correct about "no recession."
Sebastia
This actually made me laugh outloud. Thanks for the enlightenment Greedspan!
Former Federal Reserve Chairman Alan Greenspan indicates the worst of the credit crisis will pass once investors 'fully' anticipate the likely losses on securities tied to subprime and other mortgages, where defaults have surged - Bloomberg
Sebastian -
So are you saying that a contracting trade deficit is not consistent with a recession then?
Is this the first time in the past 50 years that is the case?
"I said "liberal", not "progressive". There is a difference."
So which of these 2 like taxes a little higher and which a lot higher? And which pol party do these 2 elite groups tend to vote for? The cheerful Pelosi contingent?
"It appears to me that when oil gets expensive enough people start using less of it."
If this were only about taking too many college kids taking roadtrips, I would agree. The demand level for oil does not boil down to making one less trip to the grocery store. Emerging economies are propelling much of the demand. i.e., conservation may help gas prices in the short term, but I don't believe that consumer moderation can put a dent in the cost of oil itself where India and China can easily soak up what we don't take... for now.
There is a tipping point somewhere, but that won't be reached until international demand is shattered by a prolonged economic swoon.
So which of these 2 like taxes a little higher and which a lot higher? And which pol party do these 2 elite groups tend to vote for? The cheerful Pelosi contingent?
barely | 05.09.08 - 2:43 pm | #
True liberals are opposed to taxation as it is a violation of individual liberty. You must be confusing liberalism with socialism. The socialists have done an effective job co-opting the term since WWII.
The first two paragraphs from the Wikipedia entry on liberalism define it nicely.
"Liberalism refers to a broad array of related ideas and theories of government that consider individual liberty to be the most important political goal.[1] Modern liberalism has its roots in the Age of Enlightenment.
Broadly speaking, liberalism emphasizes individual rights and equality of opportunity. Different forms of liberalism may propose very different policies, but they are generally united by their support for a number of principles, including extensive freedom of thought and speech, limitations on the power of governments, the rule of law, the free exchange of ideas, a market or mixed economy, and a transparent system of government.[2] All liberals as well as some adherents of other political ideologies support some variant of the form of government known as liberal democracy, with open and fair elections, where all citizens have equal rights by law.[3]"
India and China can easily soak up what we don't take... for now.
Energy and food is subsidized in many developing economies. Every tick up in energy and food costs is a ding to Government budgets.
This was one of the triggers to the Asian Financial Crisis.
K. Harris.
The monthly drop in the trade deficit of 3.4 Bn represents about .3% of total monthly GDP. So assuming the BEA's estimate for this last month was off by this amount, it seems to me the effect on the full qtr's GDP would be around .1%.
Ok I'm a novice, but is there a quick way of pointing out the error of my ways?
Oil will not be a real concern unless the gas pumps are turned off. Consumers will just accept the rising prices (not much they can do about them) until the gas pumps are turned off.
Complain all you want about the price as that's all we've done.
Wait until mommy can't fill up the Tahoe ....
Ciao
MS
Stagflationary Mark writes:
For what it is worth, I have a table/chart of our top 20 fastest growing exports ($500 million or more year to date) complete with a rather sarcastic title for those interested.
Thanks Stagflationary Mark, you just confirmed my suspicions that we're becoming a colony type economy. I hear the Chinese are very interested to aquiring farm and timberland all over the world right now. Timberland is getting cheap here in the PNW.
Wouldn't it be funny if the inflation resulting from Bernanke refusing to allow certain parts of the financial system to collapse down to sustainable levels leads to global protectionism and a destabilizing breakdown of global trade, causing international conflict and untold human suffering?
In the trenches asked: "Sebastian -
So are you saying that a contracting trade deficit is not consistent with a recession then?
Is this the first time in the past 50 years that is the case?"
What I'm saying is that the timing is wrong in the business cycle for a recession.
According to CR's chart, the trade deficit contraction looks like it started nearly two years ago, and the first big jump looks like it was larger than the entire contraction of the last recession (2001).
Yet still no recession.
In looking at the deficit contraction before the previous recession (1990-1991) it started from a low point in 1987. IOW, it took 3 years of contraction before a recession came around.
So I'm saying what I've been saying for a long time: Yes, there will ultimately be a recession, it's just not going to be anytime soon.
Sebastia
skeptictank,
It certainly doesn't look like what an advanced economy would export. I think Dryfly makes a great point that our farming industry is advanced though. That's something at least.
On the other hand, how many jobs were created to boost those top growing exports? It seems to me that rising prices (inflation) is much of it. Here are some more charts you might be interested in (as it relates to what we are exporting).
Automation and Inequality
Sebastian you little pump monkey.
"There is a tipping point somewhere, but that won't be reached until international demand is shattered by a prolonged economic swoon."
Given that US demand is contracting rapidly why would you think EM demand is going to hold up better? Last I looked percapita GDP is a whole lot higher in the US than in Chindia.
I don't know if anyone is paying attention but today was the first day that july crude traded thru june.
Sebastian -
You better hold your self calls until the final restatements on GDP are done. You probably dont know since you seem to be short on facts and long on yourself but the govt GDP prelim numbers missed the start of the last 2 recessions and the last consumer led recession in a very big way.
You'll see.
It ain't pretty out there and the job's numbers are going to get worse in the coming quarters. As is GDP.
No back to dealing with our businesses.
Unfortunately, I have to deal with the realities of this mess which means I have to let go about 500 people in the next couple months.
You go tell them, my vendors, customers or shareholders there's no slowdown or recession here or looming.
They'll get a kick out of that.
In the trenches said: "...Unfortunately, I have to deal with the realities of this mess which means I have to let go about 500 people in the next couple months.
You go tell them, my vendors, customers or shareholders there's no slowdown or recession here or looming..."
I'm sorry to hear that, and my sympathies to you and your colleagues.
However, the problems of 500 (or even 5,000 or 50,000) employees out of a total employed workforce of 140 million (give or take) is simply not my concern when I'm gauging where the economy is headed next.
Sebastia
Thanks Stagflationary Mark, you just confirmed my suspicions that we're becoming a colony type economy. I hear the Chinese are very interested to aquiring farm and timberland all over the world right now. Timberland is getting cheap here in the PNW.
skeptictank | 05.09.08 - 3:15 pm | #
Before you apply for a job at an 'American Plantation' for our nouveau colonial masters at least look at the actual numbers...
PDF HERE
Its the link from Stag Mark's site to the seasonally adj exports BY CATEGORY 2008 YTD:
Food, Bev, & Feed (ag) : $27,343MM
Indust. Supplies : $92,871MM
Capital Goods : $116,326MM
Auto & Parts : $30,079MM
Consumer Prod : $39,160MM
Other : $13,181
While ag exports might be the fastest growing right now the category is small compared to industrial goods. The reason ag products are growing so fast is their 'sell cycle' is incredibly short... the time it takes a farmer to empty a bin and haul to terminal to load on a train to haul to a port to load out. BTW - ag exports shut off just as quickly when the farmer decides to keep the stuff in his bin instead of sell for a 'loss'.
Compare that with the 'sell cycle' for a Boeing jet - years - it will take a lot longer for capital goods & machinery to respond to the weak dollar stimulus but they will & are responding.
The dollar is having an impact on exports & imports whether folks want to admit it... and there is still a lot of capacity domestically to play with. But I wouldn't expect paper pushers to know any of this - they don't see it in their daily lives.
dryfly,
It isn't just ag exports that concern me though.
The total of the top 20 list (year to date) was $49.275 billion (of which nonfarm tractors and parts was only $768 million). That's not exactly a trivial amount. Within the top 20 list, the leaders by dollar amount were actually "petroleum products, other" ($6.87 billion) and "nonmonetary gold" ($6.15 billion).
The dollar is having an impact on exports & imports whether folks want to admit it...
I also want to add that I think the dollar is having a very large impact on exports & imports. I'm just not as optimistic that a devaluing currency will bring us more prosperity.
It is also having a very large impact on my stagflationary hoarding tendencies, but that's probably off topic.
I offer some more trivia to ponder and a correction to a previous point. Fuel oil was also an export growth leader by dollar amount as we exported $6.612 billion so far this year (compared to just $2.552 billion last year ytd).
Of the $20.921 billion growth in Industrial supplies and materials (ytd compared to last year's ytd), $9.906 billion of it was confined to just three items.
Fuel Oil: $4.060 billion
Nonmonetary gold: $3.513 billion
Petroleum products, other: $2.333 billion
Clearly some of that isn't because we are necessarily exporting much more of them, but that they are simply more expensive now.
I also want to add that I think the dollar is having a very large impact on exports & imports. I'm just not as optimistic that a devaluing currency will bring us more prosperity.
Without trying to sound too yin-yang... devaluation won't produce 'more prosperity' but it will 'reduce poverty'... the only other way you rebalance huge systemic & unsustainable current account deficit imbalances is through lay offs & 'domestic output' reduction. That will preserve the wealth for the wealthy with lots of dollar denominated assets but will NOT help those who rely on everyday ongoing domestic production (jobs) for their sustainance.
It was regrettable but unavoidable given the years of high deficit.
But again - all is not lost - look at the aggregate numbers I posted taken form the census link you provided - the short term 'growth' in commodities exports was large but in aggregate that is a small part of the pie. Capital goods & industrial supplies dwarf our commodity exports.
Since the thread is most likely dying (as all threads do over time), I feel comfortable with yet another dose of trivia for those wishing to read more of my drivel.
Of the $3.994 billion increaase in Consumer goods exports (ytd vs. last year's ytd), $1.508 billion was confined to just two items (the two largest by dollar amount increase within that category).
Gem Diamonds: $1.050 billion
Artwork, antiques, stamps, etc.: $489 million
Once again, it does not inspire optimism in me.
dryfly,
You know I generally agree with what you say. I have for years. I just want to point that out, lol. However...
Capital goods & industrial supplies dwarf our commodity exports.
Look to the details in the industrial supplies. Those ARE commodities for the most part. For example, copper is its own line item. It is especially disturbing to see "fuel oil", "petroleum products, other", and "nonmonetary gold" leading the charge (deficit pun intended!).
dryfly,
Without trying to sound too yin-yang... devaluation won't produce 'more prosperity' but it will 'reduce poverty'... the only other way you rebalance huge systemic & unsustainable current account deficit imbalances is through lay offs & 'domestic output' reduction. That will preserve the wealth for the wealthy with lots of dollar denominated assets but will NOT help those who rely on everyday ongoing domestic production (jobs) for their sustainance.
I'm not arguing with you much on this just so you know. We live in an era of least worst options and you have described what may end up being yet another least worst option. As for the reduction in poverty, I would qualify that by saying relative to the alternatives. I'm thinking poverty is increasing these days.
Gem Diamonds: $1.050 billion
Artwork, antiques, stamps, etc.: $489 million
Once again, it does not inspire optimism in me.
Stagflationary Mark | Homepage | 05.09.08 - 6:18 pm | #
I understand you aren't arguing per se & I agree it isn't all smurfy that we 'work for less' due to a weaker currency but that is a LOT better than not working and in the long run that's the only real way we dig out & re-establish wealth.
But again - the numbers you site are the GROWTH YTD and NOT the net number. You are going to have far more instantaneous change in things like gold & gems which are (1) inventoried and (2) immediately available for transaction as opposed to airplane production where capacity is pretty flat and the lead-times & back logs are measured in YEARS and if they aren't in the queue already they don't ship soon. You don't see airplane production jump 200% YTD...
If you go to the nominal absolute numbers in that report and pull out the fluff - you find most of it isn't fluff. Most of it is solid stuff like engine parts & semi-conductors & airplanes... and even fuel oil can have a pretty positive 'value added' component if you are starting with crappy crude & 'hydro-crack' a lot of it (which is increasingly happening).
This report isn't terrible news by any means.
dryfly,
I understand you aren't arguing per se & I agree it isn't all smurfy that we 'work for less' due to a weaker currency but that is a LOT better than not working and in the long run that's the only real way we dig out & re-establish wealth.
No disagreement here.
Somehow, this dismissing oil when looking at U.S. imports/exports seems more than a bit flawed.
American oil production has been declining since 1972, which isn't really a surprise to anyone paying attention - Carter was the last President who could credibly be concerned about 'energy independence'. (And look at what it brought him.) America isn't unique, either - Romania, another original oil producer, has been declining for decades. Recently, Norway, the UK (now a net oil importer), Indonesia have followed the same path. The oil fairy simply doesn't exist - oil that is burned does not magically become oil again.
There is still major amounts of oil in the ground. For that matter, there are major amounts of everything still in the ground - it is simply that economically extracting it is beyond us at this point. For another perspective, read Goethe's Faust for an excellent passage on this idea - it came from Mephistopheles, as a suggestion on how to stay rich when apparently bankrupt - just include everything in the ground that hasn't been discovered yet.
The American economy requires oil to function, and at a level which an economy such as Germany's doesn't. Why? American workers drive to work, after all. Without having much in the way of alternatives, in part because of poor urban planning (yes, time for a certain dawg to wag his tail again), in part because of American's love of 'mobility,' and in part because what was assumed to be good for GM turned to be a disaster for both GM and America.
And goods in the U.S. are essentially moved by truck, to a much greater extent and distance than in Germany - where both river and rail networks cover much of the country, especially the industrial regions. Many workers here already use transit, walk, or bicycle to manufacturing jobs
Dismissing the fact that rising American exports are merely compensating for rising oil prices is a fallacy, in my opinion. And odd as it may sound, oil prices are not the same as oil availability - oil production will become definitive, not the price. Because even as the price has gone higher, oil production has not kept pace. Though there are a myriad of reasons for this, the simplest explanation remains that with current technology and infrastructure, the amount of oil available to pump is finite - and we are at the point of arguing about a half full glass.
One that will never be full again, by the way. Such is the truth of living on a finite world.