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

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Comments

  • Generali wrote: »
    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.

    Is Germany still a surplus country if you count Target 2 balances?
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    Gangaweed wrote: »
    Is Germany still a surplus country if you count Target 2 balances?

    Target 2 reflects movements through the banking system and to a large extent any imbalance will reflect medium term net cash movements between countries.

    For the uninitiated, Target 2 is the Eurozone inter-country payment system.

    In the end, the balance of payments for all countries must be in balance at all times, short term credit notwithstanding. Whether you're Germany or the USA, all your foreign transactions must net to zero, that's just maths. Target 2 imbalances are just an expression of that.
  • michaels
    michaels Posts: 29,224 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Generali wrote: »
    Target 2 reflects movements through the banking system and to a large extent any imbalance will reflect medium term net cash movements between countries.

    For the uninitiated, Target 2 is the Eurozone inter-country payment system.

    In the end, the balance of payments for all countries must be in balance at all times, short term credit notwithstanding. Whether you're Germany or the USA, all your foreign transactions must net to zero, that's just maths. Target 2 imbalances are just an expression of that.

    On the other hand as I understand it if you add up all countries the world appears to run a blance of payments deficit with itself - thus looking at actual bank flows rather than official balance of payments numbers might be another way of looking at the same story?
    I think....
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    michaels wrote: »
    On the other hand as I understand it if you add up all countries the world appears to run a blance of payments deficit with itself - thus looking at actual bank flows rather than official balance of payments numbers might be another way of looking at the same story?

    Increasingly I would imagine that will be true as we move away from using cash as a primary form of payment.

    Presumably the massive balancing items in balance of payments figures reflect 3 things:

    - The fact that not every single official transaction is measured: sampling is used
    - The likelihood that somewhere between very few and no black market transactions are captured
    - Some default by importers: most trade is done on credit and where you have credit you have default

    For an example of the second item, what value of cocaine sales is captured in the economic data of Southern American countries do you think? As illegal drugs are somewhere between the second and first most traded goods by value in the world we are probably talking a highly significant figure which is entirely missed by official data.
  • dryhat
    dryhat Posts: 1,305 Forumite
    The "black market" is estimated to be between 25-40% of world trade.

    This market is currently the only true measure of economic activity we have since all official figures are manipulated and distorted and purposely include all the fraud and theft taking place in the financial markets.
  • antrobus wrote: »
    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.:)

    Strange though that they make some of them in the USA?

    Globalisation requires that you make stuff in all parts of the world, to prevent getting screwed by exchange rate changes etc.

    What happens in a country, always imports more than it exports ? Look at the Debt free diaries on here. People go bankrupt, but the USA start printing money. :rotfl:
  • michaels
    michaels Posts: 29,224 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    German response to Americans: "How dare you lecture us when you are living on credit"

    Americans response: "Would you rather we had not run a trade deficit with you and you have suffered the unemployment that that reduction in demand would have brought?"

    Do the Germans not understand that their trade surplus and other countries trade deficits are two sides of the same coin?
    I think....
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