Trade deficit drops to $39.9B; lowest in 6 years

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Trade deficit drops to $39.9B; lowest in 6 years

WASHINGTON — The U.S. trade deficit fell to the lowest level in nearly six years in December as the recession depressed demand for imports. The trade deficit in 2008 fell for a second straight year and economists expect an even bigger decline this year.

http://seattletimes.nwsource.com/html/businesstechnology/2008732310_webtrade11.html

that just goes to show my point that recessions are not always bad and sometimes necessary to correct the economy.
 
This just goes to show that trade deficits aren't necessarily a bad thing.

A recession is no more a "correction" than a car crash is a correction of your car.
 
Watermark said:
This just goes to show that trade deficits aren't necessarily a bad thing.

A recession is no more a "correction" than a car crash is a correction of your car.
Click to expand...


It is a correction. It's when overvalued assets come back down to level based on reality. In the current situation, for instance, loans were bad in poor judgement to people who can't pay them. This created vastly underperforming assets. Now they're asking the american taxpayer to protect banks from the ramification of their errors. When reality is kept out of a situation, the system becomes more and more unstable as the errors are continually repeated, because learning never occurs.


It would be best to be reducing the trade deficit and growing the economy at the same time. These two vectors are orthogonal, however, and unfounded claims of intertwineship should be avoided.
 
Watermark said:
This just goes to show that trade deficits aren't necessarily a bad thing.

A recession is no more a "correction" than a car crash is a correction of your car.
Click to expand...

Hey hey, Watermark gets it right for once. No, trade deficits are not bad at all and mostly occur during good times.
 
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AssHatZombie said:
It is a correction. It's when overvalued assets come back down to level based on reality. In the current situation, for instance, loans were bad in poor judgement to people who can't pay them. This created vastly underperforming assets. Now they're asking the american taxpayer to protect banks from the ramification of their errors. When reality is kept out of a situation, the system becomes more and more unstable as the errors are continually repeated, because learning never occurs.


It would be best to be reducing the trade deficit and growing the economy at the same time. These two vectors are orthogonal, however, and unfounded claims of intertwineship should be avoided.
Click to expand...

AssHat, that's a dangerous, completely untrue view that is no longer taught in modern economics. A recession is not a correction. It's a mistake. It's a catastrophe. It's a disaster. A disaster may be reality, but it's dangerous when you try to construe that reality as desirable, and something that we shouldn't avoid. It's like if you were about to be hit by a hurricane and you refused to go inland because you wanted to save gas.

http://krugman.blogs.nytimes.com/2008/12/27/hangover-theorists/

Hangover theorists

Somehow I missed this: via Steve Levitt, John Cochrane explaining that recessions are good for you:

“We should have a recession,” Cochrane said in November, speaking to students and investors in a conference room that looks out on Lake Michigan. “People who spend their lives pounding nails in Nevada need something else to do.”

So the hangover theory, which I wrote about a decade ago, is still out there.

The basic idea is that a recession, even a depression, is somehow a necessary thing, part of the process of “adapting the structure of production.” We have to get those people who were pounding nails in Nevada into other places and occupation, which is why unemployment has to be high in the housing bubble states for a while.

The trouble with this theory, as I pointed out way back when, is twofold:

1. It doesn’t explain why there isn’t mass unemployment when bubbles are growing as well as shrinking — why didn’t we need high unemployment elsewhere to get those people into the nail-pounding-in-Nevada business?

2. It doesn’t explain why recessions reduce unemployment across the board, not just in industries that were bloated by a bubble.

One striking fact, which I’ve already written about, is that the current slump is affecting some non-housing-bubble states as or more severely as the epicenters of the bubble. Here’s a convenient table from the BLS, ranking states by the rise in unemployment over the past year. Unemployment is up everywhere. And while the centers of the bubble, Florida and California, are high in the rankings, so are Georgia, Alabama, and the Carolinas.

So the liquidationists are still with us. According to Brad DeLong,

Milton Friedman would recall that at the Chicago where he went to graduate school such dangerous nonsense was not taught

But now, apparently, it is.

Update: Not to mention the idea that employment is dropping because workers don’t feel like working.
 
Watermark said:
AssHat, that's a dangerous, completely untrue view that is no longer taught in modern economics. A recession is not a correction. It's a mistake. It's a catastrophe. It's a disaster. A disaster may be reality, but it's dangerous when you try to construe that reality as desirable, and something that we shouldn't avoid. It's like if you were about to be hit by a hurricane and you refused to go inland because you wanted to save gas.

http://krugman.blogs.nytimes.com/2008/12/27/hangover-theorists/

Hangover theorists

Somehow I missed this: via Steve Levitt, John Cochrane explaining that recessions are good for you:

“We should have a recession,” Cochrane said in November, speaking to students and investors in a conference room that looks out on Lake Michigan. “People who spend their lives pounding nails in Nevada need something else to do.”

So the hangover theory, which I wrote about a decade ago, is still out there.

The basic idea is that a recession, even a depression, is somehow a necessary thing, part of the process of “adapting the structure of production.” We have to get those people who were pounding nails in Nevada into other places and occupation, which is why unemployment has to be high in the housing bubble states for a while.

The trouble with this theory, as I pointed out way back when, is twofold:

1. It doesn’t explain why there isn’t mass unemployment when bubbles are growing as well as shrinking — why didn’t we need high unemployment elsewhere to get those people into the nail-pounding-in-Nevada business?

2. It doesn’t explain why recessions reduce unemployment across the board, not just in industries that were bloated by a bubble.

One striking fact, which I’ve already written about, is that the current slump is affecting some non-housing-bubble states as or more severely as the epicenters of the bubble. Here’s a convenient table from the BLS, ranking states by the rise in unemployment over the past year. Unemployment is up everywhere. And while the centers of the bubble, Florida and California, are high in the rankings, so are Georgia, Alabama, and the Carolinas.

So the liquidationists are still with us. According to Brad DeLong,

Milton Friedman would recall that at the Chicago where he went to graduate school such dangerous nonsense was not taught

But now, apparently, it is.

Update: Not to mention the idea that employment is dropping because workers don’t feel like working.
Click to expand...

It is a necessary thing if you insist on using currency and creating bubbles with it. You can't have your cake and eat it too. We could prevent them by keeping growth based on the needs of the population instead of what you can convince them to buy on credit, to their own personal detriment.

Grow up. Economists are paid douchebags, paid to lie and pretend that totalitarian and statist currency policy is a necessary thing. They like it, because they like to use it as a tool of manipulation. Stop being such a brainwash victim.
 
AssHatZombie said:
It is a necessary thing if you insist on using currency and creating bubbles with it. You can't have your cake and eat it too. We could prevent them by keeping growth based on the needs of the population instead of what you can convince them to buy on credit, to their own personal detriment.

Grow up. Economists are paid douchebags, paid to lie and pretend that totalitarian and statist currency policy is a necessary thing. They like it, because they like to use it as a tool of manipulation. Stop being such a brainwash victim.
Click to expand...

You're an idiot. Savings and loans simply allow resources to be used that would otherwise remain idle. It's not fake at all. Just because you are incapable of understanding it doesn't mean it doesn't exist.
 
Fiat currency distorts society in many ways. When value is created by a single party, and at will, instead of by work or skill, it dilutes the power of actual contributors to society, workers, craftsmen, engineers, putting them in an unwinnable contest against the most violent amongst, the insecure assholes with guns, who enforce the power of their currency via the killing ability of their military. QFT.

When money is created according to the agenda of a single entity, and distributed to an insider list of vendor companies he worked for, and invests in, there is no actual free market, there is only fascistic cronyism.

You need to grow up, live in the real world, and put away the Fairy Tale books of childhood.
 
AssHatZombie said:
Fiat currency distorts society in many ways. When value is created by a single party, and at will, instead of by work or skill, it dilutes the power of actual contributors to society, workers, craftsmen, engineers, putting them in an unwinnable contest against the most violent amongst, the insecure assholes with guns, who enforce the power of their currency via the killing ability of their military. QFT.

When money is created according to the agenda of a single entity, and distributed to an insider list of vendor companies he worked for, and invests in, there is no actual free market, there is only fascistic cronyism.

You need to grow up, live in the real world, and put away the Fairy Tale books of childhood.
Click to expand...

You're an idiot.
 
AssHatZombie said:
Fiat currency distorts society in many ways. When value is created by a single party, and at will, instead of by work or skill, it dilutes the power of actual contributors to society, workers, craftsmen, engineers
Click to expand...

You are begging the question. You are assuming that I agree with your premise that value is being "created at will" by monetary policy. You do stuff like that a lot.

And then you proceed with a ramble to hide the fact.
 
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