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  1. #1
    Senior Member zeezil's Avatar
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    U.S. Economy—Temporary Respite, Permanent Decline

    U.S. Economy—Temporary Respite, Permanent Decline
    By Paul Craig Roberts

    Americans were alarmed last June as the price of oil raced toward $150 per barrel. Today, as the price falls toward $100, Americans feel relieved. They have forgotten that prior to the Bush regime’s wars, the price of oil was $30 per barrel.

    Similarly with the dollar. Despair ruled as the dollar fell to 1.6 to 1 euro. Now with the dollar’s rise to 1.4 to 1 euro, relief bathes the markets. The fact that the dollar will never return to parity with the euro is out of sight and out of mind.

    In declines, as in rises, speculation can run ahead of fundamentals. Just as speculators in oil futures markets can drive the price too high, currency speculators can drive a currency too low.

    The dollar’s problems are the enormous US trade and budget deficits and the fact that there appears to be no way to close either. Offshoring of US manufacturing and service jobs has enlarged the trade deficit while shrinking the domestic income tax base. In addition to its energy imports, the US has large trade deficits in manufactures.

    When inflation is properly measured, the US economy has experienced little, if any, real economic growth in the 21st century. Yet, according to economist Joseph Stiglitz, the total cost of the Bush regime’s wars in behalf of US and Israeli hegemony is $3 trillion. Without a rapidly expanding economy, there are insufficient tax revenues to cover these costs.

    The US is dependent on foreigners to finance its $600 billion annual government budget deficit and its $800 billion annual trade deficit. The US government relies on foreigners to recycle their $800 billion trade surplus dollars to buy US Treasury bonds and mortgage debt.

    Foreigners were becoming reluctant to continue the same rate of recycling. This reluctance contributed to the dollar’s slide and to the worsening situation of Fannie Mae and Freddie Mac, which need to issue their own bonds in order to support their mortgage holdings.

    The US Treasury took steps to avert, or perhaps more accurately to push off into the future, a crisis. Foreign central banks agreed to purchase dollars so that low US interest rates could persist through the November election. High interest rates now would make the mortgage crisis unmanageable.

    To keep the recycling going, the US Treasury took the mortgage giants under its wing in order to reassure foreign investors. According to a September 8 Reuters report from Beijing, “China owned $376 billion of debt issued by US government agencies, principally Fannie and Freddie, as of mid-2007.â€
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  2. #2
    Senior Member Captainron's Avatar
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    With the rapacious profits being taken by OPEC countries it seems like they should be the ones expected to solve global poverty. Since the implementation of NAFTA, Mexico has enjoyed a growing trade surplus with the US--last year, with the high price of oil, at $75 Billion. This is money that should be invested to take care of their own people. If free trade agreements were so damaging to Mexico why have they signed on to eleven others?

    I think the US has given enough.
    "Men of low degree are vanity, Men of high degree are a lie. " David
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