A trade deficit not necessarily bad??

handful

http://www.ft.com/cms/s/0/a8f43326-082b-11de-8a33-0000779fd2ac.html?nclick_check=1

Quote:
A trade surplus is not necessarily a sign of strength. In the case of Germany and Japan it reflects weak domestic demand, itself a product of very high savings rates. If savings rates were to fall in these countries, this would stimulate consumption and reduce their dependence on exports. To this extent, it could be argued that Germany and Japan are indeed better placed than the UK and US. However, all the evidence suggests that savings rates in these countries will not fall.
Indeed, the opposite is inevitable, as recession and subsequent stagnation depress employment and wages. The external price competitiveness of German and Japanese manufacturing industries will benefit, but they will find it difficult to boost their sales because of huge overcapacity in many industries and very weak global demand. At the same time, these big surplus economies will remain beset by chronically depressed consumption. With demand for their exports likely to remain weak for years, Germany and Japan arguably face a bleaker outlook than do the US and Britain.

An interesting view on the state of our industrial health...not sure if I totally agree with it though.

Really2

handful wrote: »

http://www.ft.com/cms/s/0/a8f43326-082b-11de-8a33-0000779fd2ac.html?nclick_check=1

Quote:
A trade surplus is not necessarily a sign of strength. In the case of Germany and Japan it reflects weak domestic demand, itself a product of very high savings rates. If savings rates were to fall in these countries, this would stimulate consumption and reduce their dependence on exports. To this extent, it could be argued that Germany and Japan are indeed better placed than the UK and US. However, all the evidence suggests that savings rates in these countries will not fall.
Indeed, the opposite is inevitable, as recession and subsequent stagnation depress employment and wages. The external price competitiveness of German and Japanese manufacturing industries will benefit, but they will find it difficult to boost their sales because of huge overcapacity in many industries and very weak global demand. At the same time, these big surplus economies will remain beset by chronically depressed consumption. With demand for their exports likely to remain weak for years, Germany and Japan arguably face a bleaker outlook than do the US and Britain.

An interesting view on the state of our industrial health...not sure if I totally agree with it though.

I agree in a way if your manufacture consumer goods to export your GDP is going to get a beating.

Also manufacturing Carry's a higher proportion of labour per £ (etc) of GDP
so when manufacturing suffers masses are made unemployed (like we have seen in the past)

So could we have less unemployment because of not being a Major exporter or manufacturer. Possibly

Cannon_Fodder

Other commentaries on Japan savings/consumption;

http://www.nytimes.com/2009/02/22/business/worldbusiness/22japan.html

http://stefanmikarlsson.blogspot.com/2009/02/new-york-times-misleading-article-on.html