Doug Henwood wrote:
I really have no idea how this is going to end. But I do know there's no way the U.S. can run a c/a deficit of >5% of GDP indefinitely. Something's got to give, but who knows what or how?
Could it not be the case that exactly that is possible after all? � namely, if other countries run substantial c/a surpluses *indefinitely*, then the U.S. could afford to run a substantial c/a deficit indefinitely? Could it not be the case that territorial, so-called sovereign, states and their foreign trade balances have become unimportant in a globalized world economy? (Thurow: a global economy has replaced national economies. Leftist literature on the demise of the sovereign nation-state.) Who knows whether the state of California has a c/a surplus or deficit with the rest of the U.S.? Most people don�t know and don�t think that is important.
Why would other territorial units (countries) have an interest in running c/a surpluses with the U.S. indefinitely? One reason could be an indefinite interest in export-led job creation by those foreign countries (e.g. Germany). Another reason could be that the exports from other territorial units (countries) to the U.S. are, partly, sales of foreign affiliates of U.S. multinational corporations to the U.S. � e.g., Ford Canada to the U.S. market or U.S. Corporation X in China or Thailand to the U.S. market, so that part of the U.S. c/a deficit is actually due to intra-company trade of U.S. TNCs. (According to some estimates, about 40% of U.S. foreign trade is intra-company trade.)
Gernot
