Do trade deficits matter? - Aussie Stock Forums

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  1. #1

    Question Do trade deficits matter?

    With the popular beleif that the US dollar will tank, I thought a bit of balance to the argument could be justified. I have been bearish but I'm contrarian also

    This was prompted by an article from John Maudlin @ http://www.frontlinethoughts.com (newsletters)

    To long to post, can be read there. I'll summarise the main points

    The US trade deficit @ $800 billion is 7% of $12 trillon GDP. Simple maths says 15 yrs to 100% in hock.

    But US assets (private sector) is $52 trillion net and $64 trillion gross, with $12 trillion liabilities. Therefore 7% GDP equals 1.2% of US assets.

    The $2.5 trillion net foreign debt is a scarey 20% of national income, but 4% of net worth.

    Wealth has been growing at 5-6% since 1955, equals $3 trillion a yr. So could borrow indefinately & never owe > 26%. At this rate by 2045 debt to asset is $100 to $500 trillion borrowed from a world economy of 5-8 times as much

    He then quoates a corporation borrowing money. A similar example would be borrowing for a house. Say ave $50k worker borrows $200k for a $250k house the repayments are scarey but compared to the asset small & should continue to appreciate over time (or now in W.A.)

    Anyway food for thought, this may set the cat amongst the pidgeons for the $US bears.

  2. #2

    Default Re: Do trade deficits matter?

    Not only the domestic but govt debt to factor in. Any more better informed opinions? (WayneL)

  3. #3

    Default Re: Do trade deficits matter?

    What about the Us Space program ?

    How can anyone talk about the deficit and not put the space program in perspective?


    Untold Billions are being spent there.............

    Where does that money come from? .........
    (Dont insult your intelligence and say taxes)

    How come no one complains about that funding? .................

    It always seems to be there .........

    And for what , we have enough problems down here.
    We willl just pollute space with every thing we have polluted down here with anyway, thats where we are headed.

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