Current account deficit of the US in 2005

[KrazyHorse]

6.4% of GDP

Wow.

[GePap]

We haven't maxed out the national Visa card yet thought....

Only the Mastercard.

[Sava]

rofl

[MrFun]

Originally posted by GePap
We haven't maxed out the national Visa card yet thought....

Only the Mastercard.

And please -- no one tell Bush that there is a national Discover card lying around somewhere in the White House ok? HE DOESN'T NEED TO KNOW!!

[DanS]

Impressive.

[DaShi]

Cool, we can use the Visa to pay off the Mastercard.

[snoopy369]

I'd like to know how that compares when considering (both pos. and neg.) only people with incomes < 100k a year ...

Honestly, 6.4% doesn't sound that bad. If I only owed 6.4% of my annual income, I'd be happy

[KrazyHorse]

Originally posted by snoopy369
I'd like to know how that compares when considering (both pos. and neg.) only people with incomes < 100k a year ...

Honestly, 6.4% doesn't sound that bad. If I only owed 6.4% of my annual income, I'd be happy

That's not owing 6.4% of your annual income. That's spending 6.4% more than you earn, just over the past year.

The total amount the US owes right now (net international investment position) is probably gaining on 32-34%. It was at 24% at year-end 2003. If currencies didn't fluctuate, market valuations of equities didn't change and GDP remained constant then all you would have to do to figure out NIIP each year would be to add the current account balance to last year's total. Unfortunately, those factors aren't constant, so figuring out the NIIP is a monumental task (much more difficult than figuring out current account balance)

[snoopy369]

Originally posted by KrazyHorse


That's not owing 6.4% of your annual income. That's spending 6.4% more than you earn, just over the past year.

The total amount the US owes right now (net international investment position) is probably gaining on 32-34%. It was at 24% at year-end 2003. If currencies didn't fluctuate, market valuations of equities didn't change and GDP remained constant then all you would have to do to figure out NIIP each year would be to add the current account balance to last year's total. Unfortunately, those factors aren't constant, so figuring out the NIIP is a monumental task (much more difficult than figuring out current account balance)

Ah, good point, i'd forgotten what CAD meant.

[Jon Miller]

hmm, if I look at my life, my current account deficit for 2005 would be on the order of 50%

JM

[KrazyHorse]

That's because you're insane.

[One_more_turn]

Why is the Dollar still rallying then?

I think the primary reason why the CAD is so large is because US companies manufacture everything overseas, but bank all their profits in the US.

Apple doesn't manufacture the iPods in the US. It is subcontracted to some Taiwanese outfits (Honhai Precision among them) who survive on razor-thin profit margins. Meanwhile, Apple HAS TO IMPORT the iPods for sale in the US and pockets insane amount of profits. During last 2 years, Apple's cash on its balance sheet has doubled from $5 Billion to almost $10 Billion, while increasing its R&D and marketing expenses by another 60% (That's job creation!).

Where does Apple store its profits then? I doubt the money will be in Bank of China, or Mitsubishi Bank, or HBC, or Royal Bank of Canada, or Deutsche Bank, or UBS. The money will most likely be banked in an US outfit, such as Citigroup, Bank of America, Wells Fargo, etc...

Who gets the best deal out of the whole process?

[DaShi]

The corporate leaders?

[Jon Miller]

Originally posted by KrazyHorse
That's because you're insane.

well, maybe

I think that I just don't like living off of my small salary

JM

[One_more_turn]

Shareholders, including baby boomers with fat pension plans and retirees.

US financial institutions. Their assets are growing, and assets are the most important thing to a bank.

US Government. They get cheap loans because a huge portion of the profits are invested in US TREASURIES!

This process will not break down and stay beneficial as long as US businesses can generate returns matching or exceeding investors' expectations. I sometimes get the feeling that the world is willing to lend money to the US to find solutions on some very nasty problems, with one being about how to fund retirement of an aging population.