> > As I have said before, the assertion that the
> USA is the world's engine room is no longer true.
>
> It certainly isn't true as it was 8 years ago, but
> economists are debating
> how tied the world is to the spending of the US on credit
> cards (and their
> Fanny Mae equivalents.)
>
> >An American crash or collapse might slow
> > the rest of the world, but it won't plunge the
> rest of the world into
> > recession necessarily any more.
>
> That's true. And, you see in my post that the
> consumption of the most
> critical commodity (oil) is not what it was 30 years ago.
> But.....there are
> still a lot of unknowns. For example, the US has been
> running a gigantic
> trade deficit this decade....near 800 billion last year
> IIRC. A lot of that
> money is going into Fanny Mae and Freddy Mac bonds.....and
> these
> institutions may be technically insolvent.
> The US has to back them, it has little choice. But it will
> be much harder
> to arrange a soft landing for the US housing bubble for the
> world economy
> than the Asian bubble of '98.
>
> The fall of the dollar has been orderly.....but unless the
> trade imbalance
> fades with the dollar, there is a risk of a "run on
> the bank."
> The real question for me is what happens with China if/when
> US purchases
> from China start to fall. Last year the US had a quarter
> trillion dollar
> trade imbalance with China...we imported 321 billion and
> sold 61 billion. I
> personally lost a chance at a lucrative contract when the
> Chinese communist
> ordered the Chinese oilfield service company to develop
> everything in house.
> This can't go on forever, and I'm not certain if
> China can maintain 10%+
> economic growth without this type of arrangement.
> The only real answer will be to watch. And even then,
> folks will argue for
> years afterwards as to the true cause of this and that.
> Dan M.
> BTW, I'm not really arguing with you; I'm 90% in
> your corner in this
> discussion....I just have some worries about short and mid
> term problems.
> In the long term, the continued improvement in productivity
> will facilitate
> economic growth.....but we could have a few rather
> unpleasant years. It's
> really unfortunate that Brad isn't an active
> member.....he could add a lot
> to this type of discussion.
i think we can all agree that there are a lot of factors that affect the
domestic and global economy. we can also agree that we are all to blame,
although we both have our opinion who, and what, are more to blame.
i don't know how the price of oil, adjusted for inflation over 30 years,
factors in, but america imports far more oil than in 1978, and a lot more is
being produced. the petrochemical industry has also grown tremendously along
with production.
i believe that the recession and increased demand will continue to cool off the
economy in america and abroad. higher production and higher consumption have to
reach a limit at some point (unless there is a major break through in non
renewable, and non polluting sources of energy).
jon
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