"Hawke" wrote in message
...

I disagree Ed.

If we are so productive, then why are the jobs leaving the country?

Because we may be the most productive, but we aren't the cheapest. They
are
two different things. Productivity is a measure of the dollar (or other
currency) value of output per labor hour. Cheapness is a measure of how
much
one has to pay to get something made. If you're Reebock and you can get
running shoes assembled in the interior of China for $0.17/hour, you
don't
care if they only get 1/10th the productivity of US workers, or even
1/20th.

If we are so productive, then why has so much of our manufacturing
infrastructure been moved offshore?

See above.

I would suggest looking at the national debt, the rate of lending that
the Feds doing and the loss of housing equity and then get back to me
as to how much money/credit this country still has.


You can't draw a conclusion about how much money or credit we have from
that
information, TMT. As for our national debt, as a percentage of our GDP it
is
less than that of Japan, Canada, Norway, Sweden, Switzerland, France,
Germany, and about 60 other countries. You'll have to define what
constitutes "lending," in your view, by the Fed before we can address
that
question. Regarding housing equity, the bubble of exuberance is getting a
haircut and probably will decline to something closer to housing's true
replacement value.

--
Ed Huntress


It's also not a fair comparison to simply look at debt as a percentage of
GDP. You have to look at what a country is going into debt for. Has a
country made major inventments in the future or in its infrastructure? Has
it borrowed to make the country better? Or has it borrowed and gotten
nothing for it, like us. We have borrowed the entire cost of the Iraq war.
We have paid for none of it. That's bad debt. We owe a lot of money but
have
nothing to show for it. So tell us what the other countries with higher
debt
than the US went into hock for because one thing is for sure they didn't
go
into debt for a war of choice.

TMT was saying that our indebtedness is a cause of a decline in money and
credit. It probably has the *opposite* effect on money. As for credit, you
have to define in terms of credit for whom, by whom, and at what interest
rate.

Now you're saying it's "bad debt," and that the comparison therefore is not
"fair." I've never seen an analysis that says anything like that, and I
think your speculation is probably unconnected with reality.

The issue with debt is the trend and its relation to other economic trends,
not the static value at a point in time, including this point in time. I
doubt if anyone cares what we spend the money on. There are connected
factors that are related to our economy's health and growth potential, such
as infrastructure and invested capital, but those factors probably have
nothing whatever to do with the value of the dollar on world currency
markets right now, either.

What _The Economist_ said in that article is what it is: the value of the
dollar is measured relative to other currencies and those currencies with
central banks paying higher interest rates are the ones that are gaining
against the dollar. Relative to what a dollar is "worth," in terms of
purchasing power, the dollar was overvalued and will still decline somewhat
to reflect reality. But the gains that the euro have made because of their
central-bank policies versus ours are also illusory, as _The Economist_
points out, and it is now the euro that is, as they said, "extremely
over-valued."

The US could raise the value of the dollar, because China, Japan, and all of
Europe want it to rise, too, and would cooperate with bank interventions.
But the US doesn't really want it to rise right now. We want to see current
accounts move in a positive direction as a result of better trade balance.
We won't admit it, but that's the fact.

--
Ed Huntress