Trade imbalances and the US$

vivatifosi

Wookster wrote: »

You mean if the US actually produces things that the rest of the world wants.

I'm not sure I see that happening in a gradual way, hence why I see a more drastic solution...

The US has a uniquely sized home market that means that even its largest companies can have a significant proportion of their business in the home market. As a result, US corporations have been able to get away with just producing for the domestic market and making minor tweaks for overseas, without having to do too much. UNCTAD does some interesting reports on Transnational Corporations (TNCs) (see https://www.unctad.org).

Although there are big US TNCs (Microsoft, Coca Cola to name but two), many big US companies can get by with 60+% of their business from the domestic market and less than 40% from overseas. This could never happen for a Nestle or Toyota, as the home markets are not big enough. Similarly although people could argue that the EU is a single market, it is far less homogeneous than the US. FWIW I think Americans themselves are getting fed up with poor quality products, but I think that will drive a lot of this change.

purch

hence why I see a more drastic solution...

This is my only real point of issue...

Trade Imbalances have been with us for years, and 'drastic solutions' to them have been predicted for just as many.

The demise/collapse of the USD is at the cornerstone of most of the most dire predictions about the future of the Worlds economy, but it is something I cannot agree is likely to happen any time soon.

Wookster

vivatifosi wrote: »

The US has a uniquely sized home market that means that even its largest companies can have a significant proportion of their business in the home market. As a result, US corporations have been able to get away with just producing for the domestic market and making minor tweaks for overseas, without having to do too much. UNCTAD does some interesting reports on Transnational Corporations (TNCs) (see https://www.unctad.org).

Interesting - the result now is that when belts are tightened some of the larger dinosaurs of the American economy (Chrysler/ GM) are on death's door.

The US is a source of fantastic innovation but it doesn't produce enough good quality, competitively priced goods that the rest of the world wants.

setmefree2

Hi

I haven't got time to stop and have a "chat" LOL ( I have yet to respond to Wookster's posts;)) but I came across this linky that I thought might interest posters:-

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5096524/The-G20-moves-the-world-a-step-closer-to-a-global-currency.html

The G20 moves the world a step closer to a global currency

PS If you are going to have a global currency, don't you think it deserves a better name than "special drawing rights" what about the Woro or the Globo?

StevieJ

I notice Sterling was positive this week against the USD (1.48) and Euro (.9075).

Old_Slaphead

StevieJ wrote: »

I notice Sterling was positive this week against the USD (1.48) and Euro (.9075).

Maybe because (in case of) euro, interest rate cut....cue gordon Clown....

StevieJ

Old_Slaphead wrote: »

Maybe because (in case of) euro, interest rate cut....cue gordon Clown....

Don't think so, the expectation was a 0.5% cut, must be a bit more confidence in UK finances :cool:

bluey890

setmefree2 wrote: »

Hi

I haven't got time to stop and have a "chat" LOL ( I have yet to respond to Wookster's posts;)) but I came across this linky that I thought might interest posters:-

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5096524/The-G20-moves-the-world-a-step-closer-to-a-global-currency.html

The G20 moves the world a step closer to a global currency

PS If you are going to have a global currency, don't you think it deserves a better name than "special drawing rights" what about the Woro or the Globo?

the idiots dont know they already have one, its called gold.

setmefree2

bluey890 wrote: »

the idiots dont know they already have one, its called gold.

China Added 454 Tons of Gold to Reserves Since 2003

China has added 454 metric tons of gold to its reserves since 2003 through domestic purchases and refining scrap, the official Xinhua News reported, citing Hu Xiaolian, head of the State Administration of Foreign Exchange. Total gold reserves now stand at 1,054 tons, it said. The country has the world’s biggest foreign-exchange reserves at $1.95 trillion as of March 31, according to data compiled by Bloomberg. The foreign exchange reserves were $286 billion at the end of December 2002.



http://www.bloomberg.com/apps/news?pid=20601087&sid=aoLApmbjN47k&refer=home

China Increases Gold Reserves 76% to Fifth-Largest
China boosted its gold reserves by 76 percent since 2003 and has the world’s fifth-biggest holding by country, the official Xinhua News Agency said, citing Hu Xiaolian, head of the State Administration of Foreign Exchange. The nation increased its reserves by 454 tons to 1,054 tons through domestic purchases and refining scrap metal, the agency said, without elaborating.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aypyRVuxbszg&refer=home



Just out of interest Wookster (no offence intended but you do seem to have taken a pro China/ anti US stance) how can China justify such holdings rather than spending on health services, pensions housing for the poor?

Generali

setmefree2 wrote: »

Just out of interest Wookster (no offence intended but you do seem to have taken a pro China/ anti US stance) how can China justify such holdings rather than spending on health services, pensions housing for the poor?

China has built up large reserves as a deliberate policy to hold their currency low against the USD which has allowed them to build up their industry by making their exports cheaper than they would otherwise be.

If they had spent the money domestically, exports would have fallen and the currency risen.