No Texx, I said both China and the US are locked into a symbiotic but unsustainable relationship and it has dire consequences for both when it ends. The soft landing scenario is that the US can slow it's deficit spending and have enough growth to pay the existing debt service while China allows it's exchange rate to float on the world market and maintain a reasonable growth rate without. Of course in the real world that's about as likely as monkies learning to fly. Boom and bust is the norm, partly because politicians can't maintain power by promising limited goals (read my lips) or by making the more difficult choice. They must always pander to the irrational. What reasonable people need to do is to look at history, recognize it and try to position oneself to mitigate the effects. What was the price of gold today?
This survey doesn't account at all for upward mobility. If you move from the middle class to the upper class, you are simply counted as the top 5% as if you were there all along. People don't stay in one section of income forever.
Good Lord, you Bush haters just can't enjoy the fact that the economy is booming for one second can you? I've watched people b**** here over and over and over saying that "this is broken, that is broken, it's soon to be broken" blah blah blah... yet we still continue to rise, month after month.
When China buys t-bills, it keeps US interest rates low. If they stop buying t-bills, the US will probably be forced to raise interest rates to keep the debt attractive to investors - which would only make the federal debt even worse. I hear that China is loosening their currency. Maybe someone smarter than me can tell what would happen if the yuan was allowed to float? I assume the yuan would rise, China's trade balance would even out a little, and US T-bills would even look cheaper... but since their export industries would be hit hard - there would be less money to buy those t-bills.
You asked that backup facts be given. They were given. It shows that the poor have gone down while only the top 5% have gone up. That one year trend covers a longer period of time than your initial post in this thread. That article merely talked about one quarter.
If one company is doing that bad, then Im lead to believe its the company, not the economy. Oh, were talking about GM? Everyone I know that have purcahsed a new automobile in the last year has been toyota. When I polled them on why they chose toyota over GM, the uanimous response was, "The economy is in bad shape, so its forced us to buy a more expensive car with quality over a cheaper car with poorer quality"
I'm not sure the relevence of this? Of course individuals are upwardly mobile. But as a whole, the poor and middle class are getting worse off, while the top 5% are getting better off. How is that an expansion that benefits the country?
glynch posted the rest of it. Here it is again: <I>The real income of the typical household has fallen five years in a row, despite the fact that the last three of those years—2002, 2003, and 2004—have been years of economic expansion. Over these years, our workforce has become a great deal more productive, as output per hour is up 15% from 2000 to 2004. Yet, as shown in Figure 1, these productivity gains have failed to reach the typical household. </I> But now, not surprisingly, you'll dismiss that too and say nothing matters except GDP.
Pharmaceuticals are slowing down. Pfizer, 0% revenue growth this year, plan to lay off 30% of sales force Merck, -2% revenue growth, plan to lay off 7000 Johnson & Johnson (pharma sector), 1% growth, no plan for layoff
Good news? Who'll take bets that the wealthy have narrow urethras and can't get enough to trickle down...
Could lower wages for the poor/middle class be a symptom of globalization and immigration? These things tend to increase the supply of labor.
You probably just used the wrong term(T-bill), but China's buying alot of 10-year. The yuan wont float, but if it did your assumptions are pretty accurate. Most people think yuan would increase vs. dollar, making Chinese goods relatively less cheap. The main issue imo is when the Chinese stop buying 10-year.
Japan's purchases of US treasury instruments DWARFS that of China's. China buys much less. We can thank Japan for financing our deficit. China plays a lesser role.
Are you planning on showing the rest of the balance sheet? Think the assets might be just a wee bit insightful? How about showing the cash flow and interest coverage position? A common misperception among economic amateurs is that debt is bad. The optimal capital structure is not debt free. Would you consider buying a house only after you had saved up enough money to finance all of the purchase price? Of course not. In a similar manner, a nation has a capital structure that makes financial sense. Simply laying out a small piece of the balance sheet tells us nothing about the financial health of the larger entity. This economy is BOOMING. There are no two ways about it. Growth is unbelieveably strong, even in the face of high energy prices. Not even the liberals doom and gloom can snuff out this economy's strength.
Well I agree with you on that, which is why I think all the cries that China is controlling US treasury bills are more political BS. http://www.treas.gov/tic/mfh.txt
Oh please, I'm not sure we should trust your economic knowledge as well. You're comparing national fiscal policy to taking a mortgage out on a house. Look the point is it is PREFERABLE to buy a house on your own rather than through a loan. Hell one of the reasons why the deficit's impact could be severe is because there is such a gigantic savings gap in this country. No one saves money anymore and consequently no one buys bonds anymore. Consequently, since Americans don't save up and get bonds, foreigners pick up the tab. Well guess what, now they control almost all of it. I think that those who are predicting the apocalypse are probably wrong but the deficit isn't a good thing. Growth is strong now but the trade deficit and weak dollar are still big issues that could affect us in the long run. Our deficit will ultimately raise interest rates in the long run. This occurs because the rising deficit forces the US to issue more bonds to pay it off. Consequently in order to attract more and more investors, the government has to raise interest rates on the bonds. This has a ripple effect that raises interest rates across the board, making it more expensive for consumers and businesses to take out loans and thus weakening the growth of the status quo. Other issues like the trade deficit and weak dollar will have similar impacts in the long run. Tell your conservative buddies in Congress to wake up and stop the spending spree. I think Boeing and Lockheed Martin have enough defense contracts. And tell Ted Stevens that Alaska doesn't need ONE MILLION DOLLARS to build a SINGLE BUS STOP or THREE MILLION to fund a new bridge to an island with FIFTY PEOPLE when the old one worked fine. Yes that is only a couple of examples of the bull**** spending created by your boys in Congress.
No, actually foreign holdings of the debt is roughly 25% (44% of what's held by the public). Care to share any more lies with us? You're out of your league here, rookie. http://en.wikipedia.org/wiki/U.S._public_debt The Bureau of the Public Debt divides the national debt into two main categories: debt held by the public, and intragovernmental holdings. Intragovernmental debt includes money for government trust funds, such as pension plans and the debt for social security which is about $1.7 trillion as of May 2005. Overall, intragovernmental holdings account for over $3.1 trillion of the total debt at this time. The remaining $4.6 trillion or so has been purchased by the public, including foreign entities. This largely comes from the issuance of US Treasury securities. Nearly half ($2.2 trillion) is composed of Treasury notes (aka T-notes), while T-bills and T-bonds (including savings bonds) cover most of the remaining public portion of the debt. Bonds sold for infrastructure projects are also part of the national debt. It is common for individual Americans and businesses to buy bonds and other securities, though much of the debt is now held overseas. At the end of 2004, foreign holdings of Treasury debt were $1,886 billion, which was 44 percent of the total debt held by the public. =================================================== Milton Friedman had a great point when he said, "It is a mystery to me why... it is regarded as a sign of Japanese strength and American weakness that the Japanese find it more attractive to invest in the U.S. than Japan. Surely it is precisely the reverse - a sign of U.S. strength and Japanese weakness."
