Americans tell it how it is on Export led growth, BBC doesn't understand

michaels

Q1. can every country in the world simultaneously run a trade surplus?
Q2. if a country wants to run a permanent trade surplus where will the deficit countries get the money to buy the exporter's goods?

http://www.bbc.co.uk/news/business-24753267

The US has criticised Germany's economic policies, saying that its export-led growth model is hurting the eurozone and the wider global economy.

'Bit strange'

Germany, the eurozone's largest economy, has been one of its key drivers of growth in recent years.


Its importance to the 17-nation bloc has only increased since the development of the region's debt crisis, which has affected other bigger economies such as Italy and Spain.
Germany has been one of Europe's stronger economic performers and its exports prowess is seen as one of its key strengths.

antrobus

michaels wrote: »

Q1. can every country in the world simultaneously run a trade surplus?
Q2. if a country wants to run a permanent trade surplus where will the deficit countries get the money to buy the exporters goods?

http://www.bbc.co.uk/news/business-24753267

Q1. can every country in the world simultaneously run a trade deficit?
Q2. if a country wants to run a permanent trade deficit where will they get the money to pay for the exporters goods?

The yanks are just p'd off because the Germans make better cars. Amongst other things.:)

Generali

michaels wrote: »

Q1. can every country in the world simultaneously run a trade surplus?
Q2. if a country wants to run a permanent trade surplus where will the deficit countries get the money to buy the exporters goods?

http://www.bbc.co.uk/news/business-24753267

Germans and Chinese should pay their workers more so they can afford to import goods or buy the goods they make. Normally that pay rise comes via an increasing exchange rate but both countries are locked into very long-term fixed exchange rates so that avenue is closed.

The Germans now seem unwilling to continue to finance their surplus so something will have to give.

AndyGuil

Germany have effectively pegged their currency to countries with far weaker currency. This gives them the huge trade advantage. If only Germany used the euro it would be worth a lot more. It has also given the countries in the EU with the previously weak currency a stronger currency which has given them more purchasing power.

Thrugelmir

Funny how the announcement comes out while the spying issue is the news. The USA is attempting to deflect the debate away I suspect.

System

michaels wrote: »

Q2. if a country wants to run a permanent trade surplus where will the deficit countries get the money to buy the exporter's goods?


a) By mining gold and using it to buy the other country's goods.

b) By issuing bonds and periodically defaulting on them.

c) By threatening to start a war unless the other country gives it the goods

d) By shaming the other country into giving aid, by mismanaging its own economy so that most of its people are starving.

dryhat

When you have the world reserve currency which you can print at will and the biggest military you can run as much surplus/deficit as you want.....

.... until you can't.

Jim_B_3

Depends how you do your accounting, I suppose. Trading works because both sides want what they're getting more than what they have, so they could both ascribe a higher value to their imports than their exports. Hey presto, they're both running a trade deficit, but they're both better off than they were before.

grizzly1911

If the US wasn't a basket case and was exporting they wouldn't give a toss.

ging84

major oil producing nations run massive permanent trade surpluses

Generali

ging84 wrote: »

major oil producing nations run massive permanent trade surpluses

Actually, many run deficits.

Those that do run surpluses generally recycle the money into SWFs or similar. In fact China does the same thing, for example through the Social Security Fund (NCCSF or similar).

Germany seems to have no long term plan for financing the deficit. Continuing to collect interest bearing IOUs from the rest of the Eurozone can't work as everyone else will simply run out of cash in the end.

If your customers are broke you can no longer run a surplus.