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Monday, 20 March 2006 00:00 |
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For the past years I have continually bombarded you with information about the excessive debt situation in our country. See my comments at the end of this letter. The information that I have read on the subject would probably fill a car trunk. Needless to say, I think it is a very, very bad situation. On 3/16/2006, congress again raised the debt ceiling. It is now at $8.965 trillion. The debt ceiling has been raised four times since 2002. No family, business, government, or empire can continue to spend more than they make without something bad happening. However we are writing history. “We look at previous history and we find little to help us. Usually, it is a Third World banana republic that runs deficits of this magnitude not an empire that has gone bananas. When the deficits reach 5% of GDP, the world's investors typically won't stand for it. They sell off the nation's currency and its bonds” ( Daily Reckoning). We depend on foreign people and governments to buy our government debt to keep us running. If they lose confidence or stop buying our debt, the party is over. So what do foreign buyers of U.S. debt have to say? The Russian newspaper Pravda said, “The United States is heading to a financial crisis at top speed. If the current trend continues, America will sooner or later, default on its foreign debt.” About six months ago South Korea said they would not buy any more U.S. debt. What happens when confidence in the dollar and our country’s debt erodes? Does the marketplace require higher interest rates in order pay the debt or do they stop buying totally? Then what? Is the United States forced to grossly devalue its currency or default on its obligations? It would not surprise me if you thought, “No way, America would never default on its obligations.”
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Thursday, 16 March 2006 00:00 |
Last letter I talked about the fallout from the sale of U.S. port operations by a company from Dubai. It seems as though some members of Congress are jumping on the bandwagon for political reasons.
"In recent weeks Members of Congress have suggested that the foreign-ownership ban should apply to roads, telecommunications, airlines, broadcasting, shipping, technology firms, water facilities, buildings, real estate and even US Treasury securities." (The Wall Street Journal editorial, March 10, 2006). Congress is now raising our budget deficit limit to nine trillion dollars. Where do they think that money comes from? It comes from the generosity of foreign investors by not only buying companies and real estate but especially U.S. Treasury securities. If they did not buy those treasury securities or have an appetite to buy our companies and real estate, then interest rates would quickly grow to double digit to entice people to buy our debt. In the nineteen seventies and early eighties when we did this, the American economy ground to a halt. I don’t think we can afford this again. I also found it interesting that Senator Hillary Clinton was one of the biggest opponents of foreign ownership all the while her husband Bill has been earning thousands of dollars in consulting to Dubai.
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Monday, 27 February 2006 00:00 |
Last week I talked about the trade deficit and what affect it has on our economy. A few months ago I mentioned that I had spoken at my local rotary club about the economy and my concerns. Someone in the crowd said that he had been to a seminar the night before and they told him that the trade deficit didn’t matter. This week in the news was a major story about how a British company was selling the business of port operations for a number of our sea ports to a company from Dubai. It has created quite a stir. How dare the president and or Congress allow such a thing to happen. Wake up America. By having a trade deficit with foreign countries leaves those foreign countries with lots of U.S. dollars to spend. Here is a commentary I’ve read by Kate Incontrera from the publication “Daily Reckoning”
Dominating the news this week was the deal made to sell London-based Peninsular & Oriental Navigation Company to the United Arab Emirates controlled Dubai Ports World. ‘How can we be making a deal like this in our post-9/11 world?’ wonder both Republicans and Democrats, whipping the media frenzy into high gear.
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Monday, 20 February 2006 00:00 |
One of the great mysteries to a lot of folks is the TRADE DEFICIT. A recent Associated Press article reported that our country’s trade deficit has hit an all time high. A short story from a friend plus an Associated Press’ report will provide you with insights as to why we should all be concerned about the condition of our foreign trade. It can be argued that when you export your manufacturing base, the eventual result will be a loss of wealth, economic power and an enviable decline in the country’s standard of living.
First the short story.
Joe Smith started the day early having set his alarm clock (MADE IN JAPAN) for 6am. While his coffeepot (MADE IN CHINA) was perking, he shaved with his electric razor (MADE IN HONG KONG). He put on a dress shirt (MADE IN SRI LANKA), designer jeans (MADE IN SINGAPORE) and tennis shoes (MADE IN KOREA). After cooking his breakfast in his new electric skillet (MADE IN INDIA) he sat down with his calculator (MADE IN MEXICO) to see how much he could spend today. After setting his watch (MADE IN TAIWAN) to the radio (MADE IN INDIA) he got in his car (MADE IN GERMANY) filled it with gas from (SAUDI ARABIA) and continued his search for a good paying AMERICAN JOB. At the end of another discouraging and fruitless day checking his Computer (MADE IN MALAYSIA), Joe decided to relax for a while. He put on his sandals (MADE IN BRAZIL) poured himself a glass of wine (MADE IN FRANCE)! And turned on his TV (MADE IN INDONESIA), and then wondered why he can’t find a good paying job in …. AMERICA.
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