Slouching Towards Calcutta
That six-dollar gasoline is looking more and more likely:
The U.S. dollar tumbled for the third straight day on Thursday, as super-low interest rates and the crushing weight of a massive budget deficit pushed the greenback closer to an all-time low.
But, hey — the trade gap is narrowing!
The United States trade deficit shrank in February, government figures showed on Tuesday, but economists said the trend could be short-lived as a surge in oil prices affects future reports.
OK, so it’s narrowing for now, and mostly because we can’t afford to buy anything from overseas anymore! By the way, this is exactly how Greece and Italy used to stay competitive, before they got locked into the euro — they’d devalue their currencies to make their exports cheaper. Welcome to Athens on the Potomac.
So don’t you worry about that weak dollar, because Ben Bernanke is going to keep on making more of them.
The trade gap narrowing happens automatically any time the dollar goes down – because a weak dollar means cheap American goods.
This is natural and correct – I’m always confused by people who want both a strong dollar and lots of American exports; it’s like they think the rest of the world should choose to buy the most expensive thing…
Well, when your product is largely mediocre but priced at a premium because of politically inflated costs, your options are either to reduce those costs by relocating to a less expensive place, or (as the left-behinds have always been inclined to do) insult the customer for choosing a product of equal or possibly even better quality because it’s (ugh) cheaper!
The same people who think employers should be forced to hire people at inflated wages with inflated benefit packages and inflated pension obligations, will of course think everybody should buy the most expensive thing.
Last week,
GDP growth estimates fell to 1.4% from previous forecasts of 4.1%.
Back this winter and fall, I called it. Consumers paid inflated prices because of thrift-turnout and the babyboom echo II. They bought thing they had put off for too long and many had children now old enough to remember Xmas. It cut into.savings that will need to be made up for during the year.
The rise in costs and stagnation of wages drive up the need for savings (uncertainty makes people need liquidity). Investment is impractical because easing drives institutional investment and prices up before they can save. Seeing the declines in their and their peers discretionary disposable income, they know profits to justify security prices are not sustainable.
America a nation of multi billionaires under Obama and the democrats.