Did you know that we buy about a half a trillion dollars more stuff from the rest of the world than they buy from us? The U.S. balance of trade is not only mind-blowingly bad – it is the worst in the world. It is being projected that the U.S. trade deficit for 2011 will be 558.2 billion dollars. That would be an increase of more than 11 percent from last year. As I have written about previously, the United States is the worst in the world at a lot of things, but as far as the economic well-being of our nation is concerned, our balance of trade is particularly important. Every single month, far more money goes out of this country than comes into it. Tax revenues are significantly reduced as all of this money gets sucked out of our communities. The federal government, state governments and local governments borrow gigantic piles of money to try to make up the difference, but all of this borrowing just makes our debt problems a whole lot worse. In the end, no amount of government debt is going to be able to cover over the fact that our national economic pie is shrinking. We are continually consuming far more wealth than we produce, and that is a recipe for economic disaster.
The “current account balance” is one key indicator of how a country is doing economically. The following is how the CIA World Factbook defines “current account balance”….
This entry records a country’s net trade in goods and services, plus net earnings from rents, interest, profits, and dividends, and net transfer payments (such as pension funds and worker remittances) to and from the rest of the world during the period specified.
If someone were to ask you what countries in the world have strong, thriving economies right now, what countries would you think of?
Would countries like China, Germany, Russia and Saudi Arabia come to mind?
Well, all of those nations have huge positive current account balances. In fact, China has the best current account balance in the world at +$305 billion.
So who is on the other end of the scale?
The following information comes directly from a CIA World Factbook chart….
190 Turkey $ -48,420,000,000
191 Canada $ -48,500,000,000
192 India $ -51,780,000,000
193 France $ -54,400,000,000
194 United Kingdom $ -56,190,000,000
195 Spain $ -63,650,000,000
196 Italy $ -67,940,000,000
197 United States $ -470,200,000,000
The United States is rated dead last at number 197.
Just take a close look at those numbers for a minute.
The U.S. had a current account balance of negative 470 billion dollars in 2010. That figure was almost 7 times worse than the next worst country (Italy).
Not only does the United States have the worst current account balance in the entire world, the truth is that no other country is even in the same ballpark as us.
We are bleeding wealth so fast that it is hard to even describe it.
But perhaps a real life example can help put this all into perspective.
One 22-year-old Saudi Arabian student has a collection of sports cars that is worth more than 12 million dollars. Reportedly, his collection includes at least three Lamborghinis, five Ferraris and five Porsches.
And guess who paid for it?
Every month, billions of dollars go out of the United States to help pay for the insane lifestyles of the ultra-wealthy oil barons of the Middle East.
Meanwhile, dozens of major U.S. cities are degenerating into hellholes.
Once upon a time, Detroit was one of the greatest industrial cities that the world has ever seen. It was the envy of the entire globe.
But now Detroit is an utter nightmare….
*An analysis of census figures found that 48.5% of all men living in Detroit from age 20 to age 64 did not have a job in 2008.
*If you can believe it, the median price of a home in Detroit is now just $6000.
*Only 25 percent of students in Detroit graduate from high school.
So what happened to Detroit?
Well, just as has been happening in so many other U.S. cities, industry has been leaving at an astounding pace.
Overall, the U.S. has lost a total of more than 56,000 manufacturing facilities since 2001.
This country is bleeding middle class jobs profusely, and neither major political party seems to care.
American family budgets are being stretched tighter and tighter these days. There are not nearly enough good jobs to go around and yet the cost of everything just seems to keep going up.
Many families are going into massive amounts of debt in an attempt to make ends meet. According to a recent CNN article, credit card use in the United States is experiencing a major upswing once again….
Purchases made with credit cards rose 8.2% in the first quarter of 2011, 9% in the second quarter and 10.6% in the third quarter, according to First Data.
Of course American consumers were out in force on Black Friday once again this year. They gleefully filled up their carts with cheap plastic crap made overseas, and many racked up huge credit card balances in the process.
But most of us never stop to think about those that make all of these cheap plastic products for us.
Thanks to the globalization of the economy, big corporations and corrupt governments can make stuff in countries where it is legal to pay slave labor wages and then ship their products into the United States for free.
It is important for all of us to learn what actually happens to these people that are working so hard for slave labor wages. The following comes from a recent article in the Guardian….
At the Hung Hing factory the researcher found that the 8,000 workers put in up to 100 hours of overtime a month, far in excess of the legal maximum. Workers say they have to sign a document agreeing to work additional overtime on top of the legal maximum. The basic wage was £132 a month (up to £250 with maximum overtime payments) but wages were paid up to three weeks late.
Workers complained of inadequate training with the factory machines and last year one worker died when he fell into a machine. They said there were frequent injuries and concerns over the chemicals used. There were also complaints about the standard of the dormitories, where water for washing and flushing toilets is turned off at 10pm.
How in the world are American workers supposed to “compete” for jobs at those wage levels?
As I have written about previously, Professor Alan Blinder of Princeton University is warning that 40 million more U.S. jobs could be sent offshore over the next two decades if nothing is done to stop this.
But instead, our “representatives” in Congress just keep pushing more “free trade” agreements as the answer to our problems. Congress has passed new free trade agreements with South Korea, Colombia and Panama, and the Obama administration has made “the NAFTA of the Pacific” a very high priority.
Well, if “free trade” is supposed to create so many jobs, then why was last decade the worst decade for the creation of jobs since the Great Depression?
If you can believe it, zero jobs were created between 1999 and 2009. The following comes from an article in Washington Monthly….
“If any single number captures the state of the American economy over the last decade, it is zero. That was the net gain in jobs between 1999 and 2009—nada, nil, zip. By painful contrast, from the 1940s through the 1990s, recessions came and went, but no decade ended without at least a 20 percent increase in the number of jobs.”
But our leaders don’t care about us. In fact, even the members of Obama’s “jobs panel” have been shipping jobs out of the United States at a very rapid pace.
The U.S. has run a negative balance of trade with the rest of the globe every single year since 1976. During that time, the U.S. has run up a total trade deficit of more than 7.5 trillion dollars with the rest of the planet.
That 7.5 trillion dollars could have gone to support U.S. workers and U.S. businesses.
But it didn’t. Instead, it went out of the country and it made foreigners wealthier as our own cities slowly rotted.
Now we are actually passing laws that encourage wealthy foreigners to come in and buy up pieces of the United States.
For example, there is actually a bill in Congress that would automatically give residence visas to any foreigners that are willing to spend at least half a million dollars to buy houses inside the United States.
The idea behind the bill is that this will get the housing market moving again.
There aren’t enough Americans with good jobs to buy houses, so we have now decided to beg foreigners to buy them.
How bizarre is that?
Until our horrendous balance of trade is fixed, the employment situation in this country is going to continue to get worse.
Any politician that tries to sell you on a “jobs plan” that does not address our balance of trade is either totally incompetent or is straight out lying to you.
The economic infrastructure of America is crumbling a little bit more every single day. If something dramatic is not done, we will continue to bleed businesses, bleed jobs and bleed wealth.
Please share this information with as many people as you can. The American people need to understand what is happening to the economy. We need to work to wake up as many people as we can before it is too late.
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