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Thread: The Coming Export Boom

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    Default The Coming Export Boom

    http://www.huffingtonpost.com/tom-si..._b_598978.html

    The Coming Export Boom

    Until recently, 70 percent of the United States' GDP was spent on consumer goods and housing, according to Greg Ip, a senior writer for the Wall Street Journal. Because the Great Recession scared Americans to the point where they started saving money for the first time in decades, there has been a decided shift away from consumer spending on the homefront. And what it augurs could be the next transformation in the U.S. economy. To make up for the slack and speed economic recovery, American manufacturers are broadening their efforts to sell more products to expanding overseas markets. To accelerate the anticipated surge, the Obama Administration has committed itself to doubling exports in five years. Despite the canard of America not making anything, we are still strong in medical devices, pharmaceuticals, software, Hollywood movies, cars, auto parts, semiconductors, industrial machinery, food, housing components and even architectural services.

    "There's continued strong export growth ahead," said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, MA. Exports grew 0.9 percent, the seventh consecutive gain, to $138.2 billion in November of 2009, reflecting increasing demand overseas for food and American-made automobiles and semiconductors. Demand from China for American goods climbed to a record $7.3 billion, led by surging purchases of soybeans, according to the Commerce Department. The increase slashed the U.S. deficit with China by 11 percent to just $20.2 billion. (Remember that the Asian financial crisis of the 1990s with its currency devaluation was what helped create our trade deficit.)

    The increase in automobile exports primarily reflects cross-border trade with Canada and Mexico, as well as the growing Asian market. China is now Buick's biggest market and the key reason the brand survived General Motors' bankruptcy restructuring. Buick sales soared 60 percent in China in 2009, to 447,000 cars -- quite a contrast to 2009 Buick sales in the United States, when just 102,306 cars were sold - a precipitous 25 percent drop when compared to the previous year.

    Architectural services also are finding new markets overseas. American architects are increasingly designing projects - both commercial and residential - for construction in markets ranging from China to India to the Middle East to Latin America to Europe. A recent American Institute of Architects survey found that large architecture firms reported billings from international work had doubled in just four years. Meanwhile, billings in the United States fell to their lowest levels in 12 years. While there's no hard data, more U.S.-made windows, roofing systems, furnaces and other specialized materials are being shipped overseas to fast-growing countries like China because residential projects designed by Americans are built to U.S. construction standards, said Jim Haughey, an economist with Reed Construction Data. Some of the developments overseas bear an uncanny resemblance to California suburbs and are marketed to affluent buyers who have lived in the U.S. and are attracted to the suburban lifestyle. This trend started during the early 1990s and has intensified in recent years because of the American housing downturn. Homebuilders that have ventured abroad report that doing so has helped them weather the economic slowdown.

    So what we are looking at is the next phase of our economic meta-narrative. After the war, we were a fordist economy built around the mass production of consumer durables, union recognition and heavy government involvement in arbitration. In the 1970s, we moved to a post-fordist model of international outsourcing, technological innovation and the emergence of the knowledge worker class. The Great Recession may set the stage to a new export-based model for the American economy. The United States market is only 27 percent of global consumption today vs. emerging markets which are at 34 percent. Clearly, the rest of the world is no longer an afterthought. American corporations need to face this next chapter with a renewed sense of national purpose - a chance to both be integrated within a global framework as an equal rather than an exceptional member (in other words, one that plays by the same rules), and a chance to burnish the Made in America label once again.

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    Default Re: The Coming Export Boom

    ^^^ you can throw all of that in the trash bin with the US dollar's exchange rate rising to recent record levels as a result of the recent PIIG problems weakening the Euro and the political / economic policy changes in Japan weakening the Yen.

    Remember that from the standpoint of a 'foreign' buyer comparing the purchase price of a US export product versus a European export product versus a Japanese export product versus a domestic product, they actually care about the purchase prices as measured in their home currency. Thus an Indian farmer deciding to buy, say, a tractor from Indian Mahindra versus German AGCO Fendt versus American John Deere versus Japanese Kubota boils down to how much each costs after all have been converted into Rupees ! For that reason, the strengthening dollar has delivered a major kick in the teeth to John Deere by increasing the rupee denominated price of their tractor by nearly 10% while the rupee denominated price of the AGCO Fendt tractor dropped by nearly 10% over the past couple of months.

    This change in the US dollar exchange rate over the past couple of months should be painfully apparent when Caterpillar, Deere, and other US based export manufacturers post their 3rd quarter profit numbers !!! At that point you'll find that the only export booms are to be found in Germany and Japan !

    Your author is probably correct, though, about US engineering firms obtaining a growing number of commissions from rich US ex-pats now living in foreign countries ! Unfortunately, the positive economic effect of increased business for the engineering firm won't come close to offsetting the negative enconomic effect of the 'rich' ex-pat (former) American clients having left the USA in the first place !

    ~
    Last edited by Melonie; 06-17-2010 at 04:26 PM.

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    Default Re: The Coming Export Boom

    Thank you Melonie. This is getting ridiculous. First we had the Obamamaniacs debasing the value of the dollar to promote exports. Despite their best efforts, the collapsing Euro ( thanks to the PIIGS ) has strengthened the dollar. It makes our imports cheaper and is one reason why oil prices have stabilized. But it makes our exports more expensive and less competitive.

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    Default Re: The Coming Export Boom

    ^^^ and as I have already pointed out, the recent dollar strength is also the only factor that is keeping a lid on rising US dollar denominated oil / gas / food prices. However, over the past few days, thanks to central bank actions the Dollar is again falling relative to the Euro and Yen. This will indeed restore some competitiveness for US export industries, but will also 'take the leash' off oil / gas / food prices i.e. US dollar price inflation.

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    Default Re: The Coming Export Boom

    Quote Originally Posted by Melonie View Post
    ^^^ and as I have already pointed out, the recent dollar strength is also the only factor that is keeping a lid on rising US dollar denominated oil / gas / food prices. However, over the past few days, thanks to central bank actions the Dollar is again falling relative to the Euro and Yen. This will indeed restore some competitiveness for US export industries, but will also 'take the leash' off oil / gas / food prices i.e. US dollar price inflation.
    It ought to be kept in mind that the recent relative strength of the Dollar is NOT based on the Dollar's strength, but on the weakness of the Euro.

    Keep you eye on the yield of the Ten-Year T-Note. After a high of 3.88 % earlier in the year it has dropped as low as 3.19 and is now hovering around 3.3 give or take. Let's see how long that lasts. Let's see how long the "flight to quality" ( U.S. Treasuries and Dollars ) lasts.

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    Default Re: The Coming Export Boom

    well, here's some relevant commentary from the 'piece of work' Mogambo Guru ... who has a knack for not only removing all sugar coatings but also replaces them with snake venom LOL !!!

    (snip)"Euro Declines on a Sea of Bankruptcy and Paper Promises

    Do you ever get the feeling that you are in some kind of weird dream, where someone is holding a pillow over your face so that you can’t breathe, and you can dimly hear your children asking, “Is he dead yet, mom?” and I am thrashing around and yelling out, “No, I’m not dead, you morons!” but nobody is paying attention? Me, too!

    And I get the same feeling watching the collapse of the economic system, as was always confidently predicted by the Austrian Business Cycle Theory and proudly on display at Mises.org, as my head is spinning, spinning, spinning around with wild conspiracy theories to try, desperately, to explain how a country that has so many colleges and universities, and which have graduated so many self-important alumni, for so long, has allowed this to happen!

    And, as cold comfort as it is, it’s not just us. Everybody, in every country, is in the same boat, a nice little yacht made of promises and paper instead of fiberglass and steel, now being tossed and battered by an angry sea of losses and bankruptcy instead of water and waves, which, if you have ever made a paper boat out of a sheet of paper and put it in the water, always results in disaster when it gets soggy and ends up as a wet, useless, misshapen lump of soggy paper, ending your dreams of building a paper boat big enough to hold you so that you could just sail away to someplace where you could stay up as late as you wanted, and you could eat cookies and cake for breakfast if you wanted, anytime you like, and you didn’t have to listen to anybody tell you that Keynesian economics is not the piece of crap that it is, or that the Federal Reserve is not the treacherous, traitorous, ruination-by-inflation piece of crap that IT is.

    Extending the metaphor (since I seem to be on somewhat of a roll), it is the euro that is in the part of the paper boat that is sinking fastest, although The Economist magazine is ever-optimistic, and says that “the euro’s decline, in contrast, should bolster exports for big manufacturers (particularly in northern Europe) and luxury goods companies while boosting tourism across the continent” which makes me wonder where in the hell people are getting the money to go on a European vacation and buy luxury goods, because there is nobody around here like that.

    In fact, this is a dismal fact that was brought up by Larry Kudlow, on CNBC, where he asked some panel of morons for their explanations of where the money for real recovery is going to come from, now that the figures show that M3 money supply is falling, incomes are falling, the equity-extraction (“Your house is an ATM machine, ready to spew out money!”) madness that swept the country is completely gone, the collateralized mortgage market has disappeared and it is, I summarize, bad (pause) news (pause) all (pause) around.

    Nobody, of course, had an answer to where the money was going to come from, meaning that everybody assumed that the money would come from, I assume, the same magical fairy-land where everybody lives, we collectively assume, happily ever after, and nobody ever has to live next door to somebody like me.

    Unless, of course, the magic will be in the rising prices of gold, silver and oil, which makes investing so pleasantly easy"(snip)

    from

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    Default Re: The Coming Export Boom

    Mel

    You just can't find good news in anything can you? You don't even live here anymore but yet you pizz and moan about how the big bad US taxes world wide income and how that is so "unfair" because "no one else does.

    Call it teh price of being an American!

    The vast majority of us have jobs, we DO NOT live off of divedends and any divendends we do get are NOT from "off shore assetts"

    We do not really care about this "issuue" because it does NOT effect us.

    If it such a huge deal to you, fine go down and turn in your passport and see how many of those other countries you think are so on the right track want you.

    Most of us are not living off nest eggs squirreled away from giving a million lap dances and hidden in swiss banks for years and years. We have jobs here and even if we didn't we like living in the US.

    I for one and I am sure plenty of others could live just fine with out you every other day telling us "how bad things are"

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    Default Re: The Coming Export Boom

    ^^^ actually, the 'inconvenient truth' is that this issue affects ( or will affect ) YOU far more as an 'ordinary income' earning US taxpayer than it does me as an offshore 'dividend clipper'. The root of my concern does not stem from my own personal situation because, as you point out, I am able to avoid the brunt of fiat currency problems via my precious metal investments / investments denominated in non US dollar currencies - and I am also able to avoid some portion of the increasing tax rate problems via my offshore residence and the IRS 'foreign income' exclusion. However, for the record, I am still far from free of paying US taxes !!!

    Actually, my personal concern stems from my son ... who is still living in America, who is having difficulty putting his newly obtained college degree to its intended productive use, whose budget is already stretched by having to work at a non-degree related 'straight' job ( the best option he was able to land), and whose future budget will be forced to shrink even further as the result of already announced 2011 increases in 'ordinary income' tax rates reducing his future take-home paychecks.

    However, my son's personal financial situation is also very relevant to dancers ... since he is probably fairly typical of many younger strip club customers who are increasingly unable to afford going out to clubs, and when they do go out to clubs are unable to spend much in the way of private dances as they used to. Thus every time the amount of money my son is forced to spend on world market commodities like gasoline and food go up in terms of the US dollars in his paycheck, and with every additional dollar withheld from that paycheck in order to pay higher US 'ordinary income' tax rates, that directly translates into future dollars that my son will be unable to spend at a club thus prompting lower earnings for the dancers working in that club !!!

    My son also has zero chance of winding up being a beneficiary of the original news blurb's contentious claim that US export competitiveness will increase with a declining US dollar. That 'honor' is more or less reserved for the existing unionized employees of Cat, Deere, Firestone, GM etc. if and when it actually materializes on a sustained basis.


    I for one and I am sure plenty of others could live just fine with out you every other day telling us "how bad things are"
    I'll gladly stop reporting economic bad news when the economic bad news stops happening !!! Actually, i'd be reasonably content if the bad news were only to slow down a bit ! Along similar lines, I feel it completely appropriate to question apparent 'good news' reports that are the result of incorrect facts, tortured interpretations, selective statistics etc.

    If you personally prefer viewing the US economy from what the Mogambo referred to as a 'magical fairy-land' viewpoint, don't let me stop you from enjoying it. But as was so elegantly quoted in regard to the Gulf oil spill, 'please don't piss on my leg while trying to tell me that it's raining'. Arguably, that is exactly what the author of the original blurb was attempting to do.

    ~
    Last edited by Melonie; 06-18-2010 at 01:03 PM.

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    Default Re: The Coming Export Boom

    The balance between a weaker dollar (fostering increased exports) and a stronger dollar (fostering increased imports and exported jobs) lies in what the conservatives like to call "market forces." An artificially valued dollar just stands in waiting for some economic force which it cannot hold back, and then a sudden shift upsets a lot of things. It is MUCH better to allow the dollar to seek its own value, rather than fight it with government intervention. The only exception comes with unfair trade and currency valuation practices occur, such as is the case curently with China etc.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: The Coming Export Boom

    ^^^ well, I'll sidestep the Chinese currency manipulation issue as long as Tim Geithner does so !!!

    However, I will point out an inconvenient truth ... that there are a large number of govt's ( or coalitions of gov'ts ) who are now actively 'influencing' international currency valuations, and that their main 'target' is the US dollar. In this arena, the US is woefully 'outgunned' since the US no longer has any 'real money' with which to counteract these interventions by other gov'ts. Statistically speaking, the US has something like 60 billion available for foreign exchange interventions, whereas China alone has something like 2 TRILLION dollars available. Thus if China wants to maintain their Yuan peg via foreign exchange interventions, there isn't a damn thing that the US could do to directly stop it. Same is true of the EU and the Euro exchange rate, as well as Japan and the Yen exchange rate.

    This is now a truly global economy, and in some aspects the US has already lost control of its economic future ( to its creditors ! ). The 'market forces' you refer to are now minority players in international currency markets compared to central banks and sovereign wealth funds. As they have demonstrated on past occasions, the Chinese central bank ( for example ) is perfectly willing to take actions that appear to be economically counterproductive for China's domestic economy when those actions achieve a desired political goal of the Chinese gov't ! This is the antithesis of a 'free market' situation.





    To complicate matters even further, the Russians have now jumped on the 'new world order' bandwagon ... with Medvedev showing off his newly minted 'World Currency' coin at the G8 , intended to replace the US dollar's current role as the world's 'reserve currency'.



    ~
    Last edited by Melonie; 06-19-2010 at 10:51 PM.

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    Default Re: The Coming Export Boom

    I agree that things are far from ideal, which is what my post was about. Political and exploitative market forces are always trying to gain a unilateral advantage, and usually successful. But stupid, costly decisions (such as Bush's war and financial de-regulation consequences) gives them such advantages.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: The Coming Export Boom

    ^^^ not wanting to veer too far toward the political, but the recent 'proven failure' of some $787 billion in Keynesian stimulus spending, the recently issued 6 month ban on US offshore oil drilling, the issuance of record levels of new gov't debt in the last 18 months to finance record levels of deficit spending etc. would clearly seem to fall into your 'stupid, costly decisions' category.

    as always, a picture is worth 1000 words ...





    Circling back on topic, the high probability of a steep decline in the US dollar's international valuation as a result of this profilgate gov't borrowing and spending is indeed likely to give the appearance of a US export boom ... on the simplistic basis that in terms of US exports being paid for in Euros or Yen or Rupees the embedded cost of a $15 an hour US wage may be effectively cut in half via relatively currency devaluation.

    However, the flip side of that development is that the $15 an hour US wage will only be able to purchase half as much in 'world market' commodities i.e. energy, food, durable goods, etc. as it does today as a result of the very same currency devaluation. If US workers press for pay raises to stave off the falling 'purchasing power' of their stagnant US dollar denominated paychecks, any exchange rate based US export boom will self-destruct. So, arguably, any future US export boom must be driven by the same mechanism currently driving China's export boom - i.e. exploitation of worker productivity versus the purchasing power of their paychecks !

    Our former president that is most experienced with the effects of global devaluation of the US dollar , and with stagnant US dollar wages but rapidly rising US dollar prices, strongly agrees as well ...



    ~
    Last edited by Melonie; 06-20-2010 at 05:30 PM.

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    Default Re: The Coming Export Boom

    I disagree that the $787B is a 'proven failure' due the the stoppage of job losses, albeit it was delayed but then so was the spending. There are several statistics we have posted on SW that demonstrate that.

    The fact that the deficit is larger than previous comparable one is because the Roosevelt debit spending was done in much less inflated dollars and when there was a (deflated) gold standard, a vestige of the mercantilistic mindset still holding on at the time.

    Yes, real wages (for those still working) are steadily but slowly decreasing when measured against a standard international currency (whichever that one is), but most Americans do not (yet) see that because (as I've stated in another DD thread) most peoples' expenses are for domestic expenses and for the time being that will continue. So in absolute terms against a "standard" we are losing ground, but against the de facto virtual standard we are holding steady (for thse having an income they produce by themselves). How long this will continue depends on just how fast US production will be transferred overseas.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: The Coming Export Boom

    Quote Originally Posted by threlayer View Post
    I disagree that the $787B is a 'proven failure' due the the stoppage of job losses, albeit it was delayed but then so was the spending. There are several statistics we have posted on SW that demonstrate that.

    The fact that the deficit is larger than previous comparable one is because the Roosevelt debit spending was done in much less inflated dollars and when there was a (deflated) gold standard, a vestige of the mercantilistic mindset still holding on at the time.

    Yes, real wages (for those still working) are steadily but slowly decreasing when measured against a standard international currency (whichever that one is), but most Americans do not (yet) see that because (as I've stated in another DD thread) most peoples' expenses are for domestic expenses and for the time being that will continue. So in absolute terms against a "standard" we are losing ground, but against the de facto virtual standard we are holding steady (for thse having an income they produce by themselves). How long this will continue depends on just how fast US production will be transferred overseas.
    The "standard international currency" ( for now ) is the DOLLAR !

    "Domestic Expenses" ? How exactly do you segregate those from imports ? Gas at the pump ? Imported. Clothing ? 95% imported. Even if you make your own, the vast majority of fabrics and almost 100% of all sewing supplies are imported.
    Food ? Still mostly domestic . Drive a car; fly on a plane ? Imports, imports.

    Where have you seen "stoppage in job losses" ? Take out the Census Bureau and other government jobs, (Federal, state and local) and WHERE pray tell are there any meaningful job gains ?

    As I rhetorically asked and which no Keynesian or Obama fan has answered : Name one sector of the American economy that is growing WITHOUT some kind of subsidy or tax break ? Show me one sector that just maintained growth or held steady once the Federal stimulus was removed or expired ?

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    Default Re: The Coming Export Boom

    Most of the $787B has been returned with in fact a net income of some $24B ( I believe). some will not be returned (eg AIG), but given time nearly all will be repaid. Meaningful increases in job gains will occur this year; in fact meaningful stoppage of job losses has already stoped, census workers, road construction crews or not. The stimulus has been working while you've been denying it. Wake up and smell the coffee and look around occasionally.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: The Coming Export Boom

    ^^^ that statistic depends on TARP losses being 'disguised' by additional payouts from the FDIC as an increasing number of TARP recipient instutitions fail to make scheduled payments in their inexorable march toward bankruptcy. But of course it doesn't technically count as a loss if the treasury's TARP fund is repaid from the treasury's emergency FDIC bailout fund (i.e. taxpayer money instead of bank money), does it ?

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    Default Re: The Coming Export Boom

    I hear what you're saying very clearly. The missing parts of the puzzle are those of help to the mortgage-strapped homebuyer who was duped into buying a too expensive home at (apparently) with unstable interest rates and job security. This has been one of the failing of the whole stimulus concept, though it was 'sold' with the idea that this critical component was a major part pof ther concept. It's sort of like repairing all parts of a car except not finding fuel to get it started. to me if this isn't done (with dollars not yet in existence) the rest of this massive effort will continue to be bogged down.

    People have been "duped" into buying housing with the expectation that they would have the ability to trade up occasionally and leverage themselves into a wealthy status. That was totally dependent on a dubious assumption that housing values would continue increasing as they have for decades. That doesn't sound like diversity to me, so I never was one to buy into that idea fully. and we found a perfect storm of situations that perturbed that house of cards.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: The Coming Export Boom

    ^^^ agreed to some degree about 'dupes' being involved in writing mortgages based on low / no equity, low income to debt ratio etc. The larger question of course from the borrowers' side is how much of the 'duping' was victimization, versus how many 'dupes' were willing accomplices. And the larger question from the lenders' side is how much of the 'duping' was based on actual greed, versus how much of the 'duping' was the result of deliberate gov't policy, threatened bad publicity, threatened prosecutions, or simply being forced to compete with other lenders on an 'equal' basis.

    Circling back on topic, your 'fuel for the car' analogy may be more apt than you realize. Is it helpful or cruel for a gov't to 'give' someone a car knowing that their own limited capacity to pay for the necessary fuel is insufficient ? In most economically distressed countries, when the capacity of most workers is limited to riding bicycles the gov't 'gives' them a motorbike. In the context of any export boom, this will only be sustainable if the standard of living of Americans with limited capacity to produce 'added value' is equalized versus the standard of living of those with similar capacity to produce 'added value' in competitor countries ... or per your analogy giving up the cars that they cannot sustainably afford to purchase or fuel in favor of motorbikes that they CAN sustainably afford. However, this would be a major departure from current US policy of 'giving' them the car and also paying for 1/2 of the fuel cost on an ongoing basis via wealth transfer !

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    Default Re: The Coming Export Boom

    You turned around my analogy of a car (being the economic fixes in place) with no gas (being the lack of mortgage help to the poor dumb saps who got duped into this mess. Reports I've seen show pretty clearly that the aggressive lending policies of some banks began spilling over because of competitive forces. I call that greed.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: The Coming Export Boom

    Reports I've seen show pretty clearly that the aggressive lending policies of some banks began spilling over because of competitive forces. I call that greed.
    Many others would call that gov't sanctioned 'Moral Hazard', combined with a drive for future economic survival. Remember that banks that did not agree to make X percent of loans to minority / low income / inner city residents and businesses were also legally prevented from expanding thanks to CRA. Keep in mind that as long as there were a handful of banks willing to make shaky minority / low income / inner city loans ( on the basis of implied gov't guarantees ), that any competing banks who continued to refuse such loans were at risk of simply being 'cut out' of the business. Granted that at some point the Angelo Mozilo's of the industry vastly took advantage of the implied gov't guarantees as well as the 'less than 100% financially 'literate' borrowers. But during the early years of this gov't sanctioned minority / low income / inner city lending policy it was the gov't and not the bankers who was strongly promoting the expansion of high risk lending.

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    Default Re: The Coming Export Boom

    All you're doing is repeating the standard right-wing lies. Most of the high risk loans were not going to poor minorities.

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    Default Re: The Coming Export Boom

    ^^^ I didn't say they were. What I posted was minority SLASH low income SLASH inner city ... which basically covers all of the gov't agency mortgage programs.

    However, since you raised the issue ...



    (snip)"A variety of evidence has long pointed toward minorities accounting for a disproportionate fraction of the defaulted subprime mortgage losses that set off the economic crash. This would hardly be surprising since the government pushed hard to increase lending to minorities of marginal creditworthiness in the name of increasing minority homeownership.

    But, like the guns of Singapore in 1941, the government’s statistics-collecting apparatus is designed only to make sure that minorities are getting enough loans, not to count how often they default on their mortgages. So, we’ve been lacking direct data on foreclosure rates in the current Housing Bubble.

    Back in October, my reader Tino calculated from the Home Mortgage Disclosure Act database that minorities got half the subprime cash (for home purchases and refinancings) handed out in the big years of 2004-2007. Mortgage dollars (prime and subprime) for home purchases leant to Hispanics went up 691% from 1999 to 2006 and 397% for blacks (but only 218% for Asians and about 100% for whites).

    But, what about foreclosure rates?

    Two economists at the Federal Reserve Bank of Boston, Kristopher S. Gerardi and Paul S. Willen, have published an important paper, “Subprime Mortgages, Foreclosures, and Urban Neighborhoods,” which provides a solid indication. For the state of Massachusetts, they laboriously matched up federal Home Mortgage Disclosure Act data with country registrar data, which can tell them if the property wound up in foreclosure."(snip)

    (snip)"in Massachusetts, the Non-Asian Minority foreclosure rate on subprime mortgages was about twice the white rate. If that ratio holds true nationally, where minorities took out half the subprime dollars, then minorities would account for two-thirds of all defaulted subprime dollars. (However, Asians probably have a lower default rate, although they largely stayed away from subprime mortgages, so it’s not a big issue — so, call it five-eighths).

    In reality, what was truly disastrous was not total defaulted dollars per se but unexpected defaulted dollars. The financial industry expected a certain level of defaults each year due to family tragedies and the like, but they stupidly did not expect a systemic disaster from the government’s efforts (e.g., President Bush’s 2002 call to add 5.5 million minority home owners by 2010) to push minorities into home ownership.

    Granted, Massachusetts is not the most representative of states. Still, this data seems to roughly fit what we see elsewhere in terms of where the foreclosures happened. So, it now appears likely that a sizable majority of the unexpectedly defaulted subprime dollars were lost on properties owned by minorities."(snip)

    from the admittedly controversial website

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    Default Re: The Coming Export Boom

    Quote Originally Posted by Melonie View Post
    ^^^ I didn't say they were. What I posted was minority SLASH low income SLASH inner city ... which basically covers all of the gov't agency mortgage programs.

    However, since you raised the issue ...

    Blacks make up only 13% of the population. 4% of whites is a lot more than 10% of blacks.

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    Default Re: The Coming Export Boom

    ^^^ yes but blacks and hispanics ( and a few asians) received 50% of subprime mortgage money, meaning that whites only comprised ~50% of the subprime mortgage market. With that in mind, a 10+% default rate for black subprime mortgage borrowers plus a 7%+ default rate for hispanic subprime borrowers ... versus a 4%+ default rate for white subprime mortgage borrowers ... means that minorities are in fact responsible for the 'lion's share' majority of subprime mortgage market dollar losses !

    Nice try with the technically correct but totally inapplicable population demographics though ! And in fairness I will concede that whites are responsible for the vast majority of PRIME mortgage dollar losses since they comprise the overwhelming majority of prime mortgage borrowers. Of course the default rate on prime mortgages over the same time period was only about 2%.

    ... not that any of this is directly relevant in a thread about supposedly improving prospects for US export companies ...

    ~
    Last edited by Melonie; 06-25-2010 at 12:11 PM.

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