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About That Soaring Dollar: US Trade Deficit Excluding Oil Has Never Been Worse
Remember that in a beggar thy neighbor world, where currency warfare has once again broken out between the US, Europe and Japan, for every winner there is a loser. In this case, the loser is the one country that has decided that a strong currency is a great thing for its economy (if only for the time being): that would be the US. There is a problem with that, however: because in Q3 the trade deficit rose by 7.6%, virtually identicaly to how much stronger the US Dollar basket, the DXY, increased by in the same period which surged by 7.7% the most since Q3 2008 when Lehman blew up!
So why is this relevant? Because as the chart below shows, US trade excluding Petroleum, just tumbled to $48.3 billion, essentially matching the worst print in the history of the series, suggesting that portrayals of the US as a resurgent export powerhouse are completely erroneous, and that instead the US is as big a net importer of goods and services, aside from the Shale revolution of course, as ever.
And the other side of the coin: if and when the Saudi crude crunch finally starts taking out shale capacity slowly at first, then very fast, watch how the headline trade balance line and the line ex-Oil slowly but surely converge, as the US reverts to its status as the world's biggest net importer once more.
The bigger question, however, is how much longer will the Fed stand on the side and pretend not to notice that once again the surging USD (because, snicker, the Fed will never do QE again) is about to crush the US economy yet again. And woe to the spinners if this winter there is no heavy snowfall on which to blame the resultant GDP collapse.
One thing is certain: if the trade deficit surge continues, and Q4 GDP tumbles to 1% or less, the Fed will be right back at the frontlines, CTRL-Ping the US economy right back into "beggar thy global neighbor" competitiveness.
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it will be a bitch when hyperinflation hits
Hot damn.....a new record......YES WE CAN!!!
Hows that strong dollar working out for ya?
it will be a bitch when hyperinflation hits.
Its already a bitch. Its gonna get worse?
Just wait until amnesty hits......you'll be lucky to get a 29.5 hr/wk job.
You meant 29.5/wk job......fixed it for you
you guys are nailing it.....I don't think they should report a "trade deficit". it's too nebulous.
We should be reporting a record exportation of US Dollar Paper...because that's exactly what it is, and.....the world still wants US Dollars because they want oil, and a few I-thingy's....but most of all, because they believe it's still a great way to store wealth.
The endgame will not be pretty...it may not be soon.....but it will not be pretty.
it is the same thing, and it's going on since 1971, just to put it in context. if "trade deficit" is too nebulous, picture the reality of container ships arriving full and leaving empty
and someone finances this, and the vehicle is...
Wonder where I can find the same data for Canada?
Any helpers out there?
RIPS
They know the dollar is going into the toinet but what choice do they have? If they stop accepting dollars, what will they take in return for their goods? There isn't enough gold in the world. The Euro and Yen are garbage. At some point the banksters will usher in a new global currency.
As a massive net importer of EVERYTHING (not just oil), I'll take a strong dollar. Japan went from running big trade surpluses to running big deficits after Fukushima and then killed their currency. And that ain't working out for them.
What people save in fuel costs they will almost certainly spend on something else, so there are offsets to oil industry losses. And those costs are built into EVERYTHING. GDP growth be damned (it was overstated due to fudged GDP deflator numbers anyway). A strong dollar might be the only real break the average working guy gets for his never-increasing pay.
I have faith that if you put money in the average American's pocket, they'll spend it. Put it in Wall Street's pocket and they'll just keep it, malinvest it and rehypothecate it for their own non-GDP-boosting advantage.
So yeah, I'll take a stronger dollar.
Helps keep yard maintenance costs down.
A soaring dollar could make your asshole sore too.
works til a few billion question the viability of da dolla. yes, this could go on for quite some time. in a nutschell that is the game. period, faith, period...
That's what Volker said...it's all a confidence game...in all senses of the word.
A srong dollar is great in that it makes imports cheaper. (We can buy more euros or yen with fewer dollars) but it is a double edged in that it makes our exports more expensive and less competitive on the world market. And we do export quite a bit more then you might think.
A strong dollar also makes for a good time to see Europe!
Ross Perot made his famous "giant sucking sound" warning in the 1992 Pres debates
https://www.youtube.com/watch?v=Rkgx1C_S6ls
NAFTA started in Jan 1, 1994 - 2 years later and US exports collapsed in a giant sucking sound
US needed a way to export inflation so that sheeple do not notice it to hide their wages eroding away due to inflation.
But soon after Mexico, they found China.
so now you have non-exportable services looking expensive like healthcare and education, but it is just your low wages.....
This article is total nonsense and so are the bulk of the comments.
It is true that an expanding trade deficit (excluding oil?) lowers growth...but what's the connection to the soaring dollar again?
The latter is a clear sign of "competitiveness" and "winning."
I don't understand what a trade deficit has to do with any of that. You could argue the fact that the dollar is soaring in spite of a huge trade deficit (excluding oil) because the U.S. economy is winning big actually.
In short "the world will trade very valuable stuff for worthless pieces of paper." Certainly one look at return on savings says the dollar is pretty worthless to me. So why are all the shelves stocked and prices are falling?
Stsckers
That's why we need another Clinton in the WH in 2016. sarc gag we're screwed.
Great to see the U.S. is now fucked between a rock and a hard place with the dollar.
On one side a lower dollar risks it losing global reserve currency status which would kill foreign purchases of U.S. bonds needed to fund U.S. global military dominance
And on the other, a stronger dollar kills our exports and thus our economy which means WE can't afford to fund U.S. global military dominance
Which means we are definitely going to have a global war while we still have the ability to fund it!
Long bomb shelters and radiation suits, pills, Geiger counters...
Oh yeah... BECAUSE OBAMA!
Enter the Fed for Act 4, stage right.
Headbanger - China is the new reserve currency. With it comes the job of global policeman. Why is the US screwed if we can't project as much power? The USA has nukes, the quantum computer and now energy weapons. Don't think we have to worry about invasion any time soon.
Why do you think all these towns are getting military surplus now? It's because of downsizing. The military misadventures to protect billionaire wealth and paid for politicians is what bankrupted our country. That and imbalanced trade subsidized by government (that means you and I paying for it).
The Soviet Union collapsed it didn't mean use it or lose it did it? Our collapse is still underway but at least I can buy poptarts if I want, just not as many and perhaps that is a good thing.
Well, the same forces that created it also put a bid under US markets.
Well then we better get to work depreciating the dollar!
I like bitches.
It's the Bitchez That'll Getchaz yeah! http://www.reverbnation.com/familyrotten/song/21864382-bitchez-getchaz
Keep it real Bro.
http://24.media.tumblr.com/tumblr_meo4e9vtBR1qil3x2o1_500.png
HA!
i said it anyways, guess wha?t she still listened...
some bitcheez get it (the economy stupid) ha...
I think we could go through a sharp deflation first. I see hyper-inflation as resulting from efforts to stop the deflation...
That deflation might have already happened or we are going through it now.
I forget who wrote the article, maybe Jim Rickards, but he pointed out the fact that inflation or deflation is almost irrelevant in the world of money printing and that currency collapse is the end game, regardless. Plus, the whole definition of inflation/deflation is FUBAR'd as eCONomists tend to look at it in terms of asset (better get some if you want to be wealthy - Yellen), while the general population is looking at inflation as it relates to Maslow's hierarchy of needs. In the end, the central bank fucktards only have a printer and regardless of the end of QE they HAVE to print money in order to keep interest rates artificially low and printing will lead tothe innevitable. The question of WHEN is on everyone's mind.
Also with the crazy money printing going on around the world, it could be inflation in nominal terms but deflation in real terms. Plus that people dont have any money either (unemployment) to buy anything anyway.
Did the people living through Weimar knew what was going on?
Reading some of the accounts, it seems like people were hanging on to the System till the last minute. e.g. People getting paid weekly and then daily just because prices were going up so fast.
If true, those people must be pretty daft not to see its fucked up when prices rise significantly from one day to another or they were totally helpless by then.
Money is a yardstick to measure everything, prices, GDP, profits etc.
When the measure is messed up, you cannot trust any readings based on it.
Its all bullshit from here on out.
Yes, no one knows there's deflation or inflation because no one knows what the prices are SUPPOSED to be!
They've successfully destroyed the markets most important function...price discovery.
People aren't going to know WHAT'S going on when the market reasserts itself. It's gonna rip the rug out from under a lot of folks. Both financially and emotionally. Lot's of people who think they're pretty wealthy now are going to be shocked when their assets are re-priced by the REAL world.
These people are so impressed by numbers! They don't even TRY to interpret the numbers, as long as they're bigger.
Print all the money you want. If people think prices are too high, they won't buy.
Inflation/deflation is not about how much currency is circulating, or what prices are doing today. It's a PSYCHOLOGICAL phenomenon, NOT a monetary one...
These people think the economy is set on a thermostat...just fiddle with the dial as needed, set it to the right number, and viola!...assholes.
I like what the above zh'ers wrote about inflation and deflation. It helps makes sense out of the "official" nonsense numbers.
For those [like me] who are not up on Maslow:
The original hierarchy of needs five-stage model includes:The internal imbalance between financial assets and real assets is the quantum investing reality driven by TBTF manipulation of essentially everything via abuse of asymmetric leverage and options. Exit all financial assets for real assets. . Most importantly, liquidate float scams to raise cash buy gold.
I think it's just beginning...a real deflation hits across all sectors. Housing and stocks have a LONG way to fall yet.
It hasn't yet slipped through their fingers, but they've lost their grip.
Have you seen oil and gas prices lately?
[Voice of Dr Evil] "Oil see your Deficit and raise you a Trillion."
Gold actually still Green!
Hold on a minute. I'll make a call and we'll have that fixed for you in a jiffy.
But, but I thought the shale miracle was going to save us, oh wait a minute...
Just realized you're not at Huffpo.....didn't you?
uncapability in raw numbers
congrat ussa
When a country consumes more than it produces, it becomes poorer. Clinton's NAFTA has been a disaster for Amerika.
That giant sucking sound is starting to sound like a wind tunnel.
Time to elect Clinton's wife.....even though she's never really done anything.
That giant sucking sound is actually Criminal Obama sucking off Reggie's Cock.
HA!
Time to elect Clinton's daughter.....because she's so fucking smart. I'm wondering when the nude selfies will start popping out, it's the only way to speak to the younger generations. Bet the nips will be light pink. Hope she's got the box from Bill's side of the family, cuz Hitlery's gotta be rotten rotten. Wouldn't look at it even if it was only 13 years old.
Pretty much everything since JFK was murdered - er, pardon me, assassinated - has been a disaster for Amerikkka.
I don't know obviously how things would have been had we been granted the good fortune of having JFK and RFK in the White House back-to-back instead of LBJ and Tricky Dick, but I wish I could have.
I'll bet Robert Kennedy wouldn't have sold us out to China and taken us off of the gold standard. And Viet Nam would have ended long before it did, likely early in JFK's second term. JFK and RFK were real leaders, something we lack in our current age.
I'm sure we all can agree on that last part. No leaders, just followers.
Taking on the Fed and/or the CIA/MIC has proven to be hazardous to one's health.
Economics that they don't teach you in school:
"When your outgo exceeds your income, your upkeep will be your downfall." (My parents [TWO of them!] taught me that one.)
And your parents prolly learned it from Charles Dickens and Mr Micawber's famous, and oft-quoted, recipe for happiness:
NAFTA 1.0 worked just great for America, when it was just US and Canada. Check the facts.
Everything changed when Bush brought Mexico into NAFTA, and gave us 2.0.
As long as the government give me that money I don't care much how they go about it.
Not that this is all the fault of the FSA, but I had to share this FSA biotch. https://www.youtube.com/watch?v=bH1ltKsfi_Y
Now only if someone can make a parody of this with Jamie Dimon and all of his free shit.
look this is right on script....everything is great up to the midterms....if the repubs gain majority the dems can play the "see the economy is worse" card for the next 2 years....if the dems hold they can play the "everything is not so great, but improving card" and allow the QE4 thought to permeate markets.
LoL What to do....
Mountains of USD out there...don't want to accidentally break the dam for their flooding back....or maybe they do.
You didn't build that.
Small business doesn't create jobs.
I give you a '10' for hyperbole and a '0' for originality.
And the fact that we all saw this coming years ago doesn't mean that they (Fed) didn't as well?
RE:
Or just do what the govt does: overstate, obfuscate, and blantantly lie about the GDP number and act like everything is A-OK!
The dollar is perceived strong only because out of all the currencies in the world today the US is still viewed as a safe haven - the only reason.
Cash, gold, silver, etc. is all based on a belief system. If people believe it is the best and the safest to be the in the US dollar - it is.
Sometimes people are wrong.
It is about liquidity right now - as well as safety. The byproduct here is also returns which keep pension funds alive.
The people who are running this show know that the system is terminal. There is no way they dont at this point. This is a global game of domination that is quickly going full contact. WWIII is raging already in economic terms.
Japan is carpet bombing the pboc ...... blast of frosty deflation as china is already slowing and her consumer is on said back already. but, but, but i thought all the farmers would come off the polluted fields and start buying ipads & condo's driving global growth ... gulp ....
Of course. Perception of utility and trust is ultimately what fiat money is all about, because it is literally based on nothing but flim flam. I think almost every ZHer has posted their moment of clarity when they actully understood "money" for the first time. You can call it a "belief system", I called it a delusion based on habit, trust and popularity that has ultimately led the world to a m-c-m economic model where both the source and outcome of any economic activity is fiat money instead of actual tangible stuff and progress.
I really don't think any sane person outside the US regards the USD as a safe haven anymore, so my take on the strong dollar is manipulation to allow the elite to jump ship and buy something, anything - commodities, industries, land, governments, political allies, etc offshore for cheap before the dollar collapses so they can continue their stronghold unabated. This buying spree sure seems to be accelerating the past few years - I don't think there is a single large company left in the UK that isn't all or partially US owned.
They sure don't care about destroying the shale oil industry with cheap oil (Which I'm sort of glad about because let's face it, it was a shit industry anyway). It is clear that the government and the corporations don't give a shit about the effect of the strong dollar on exports and the way TAFTA is being rushed up the arse of the EU which will result in people in both continents being raped by the multinationals, the elite are desperate for safe, money generating assets all over the planet to park their ill gotten gains.
I know it is a broken record because I say this every bloody year, but more than ever the conflated result of oil prices, war, untenable debt, dismal output, unemployment, market manipulation, counterparty risk and damn it, the fact that a lot of the sheep are getting hungry enough to notice the whipping they've been getting, well they all seem to point toward an outcome of systemic collapse. Yeah, I know. I say that every year. :)
Look the soaring dollar is causing record spreads in the paper markets and physical precious metals markets. Price of Eagles 20+ percent over spot. 4 for you and 1 for them bitchez.
1 - 19 $20.08 $20.78 20 - 99 $19.58 $20.27 100 - 499 $19.08 $19.75 500 or more $18.58 $19.23the last time it was this high was due to a usa housing and stock market bubble. good thing we don't have to worry about those anymore. /s
OK they got Japan to do 80 trillion so they could do 80 trillion....common Germany... 80 trn Euro....
All the Fed had to do is use QE to buy gold on the open market and we will have COMPLETE strategic control of currencies. Should have done that rather than giving the money to TBTF to front run financial assets. I'd China doesn't let the RMB appreciate and rebalance its economy, we'll have all the monetary gold.
Gold and Silver is for when you don't know which way to run....or you have to run.
Persistently strong dollar means... no jobs.
I'm running in circles....round and round....gold rounds and silver rounds....but I'm getting dizzy
A Republican midterm win is being priced in. The radio told me that after every midterm since 1944 the market rallies the following six months.
...... " In fact there were strong rumors last year that the PBoC was technically insolvent as a consequence of the 20% increase in the value of the RMB against the dollar during the 2005-08 period of currency appreciation. Weirdly enough, although the numbers are huge, it has proven difficult to convince anyone that the PBoC is not the richest institution in the world, and that it is actually very vulnerable to big losses.
The problem for the PBoC occurs not just because of the currency mismatch but also because it needs repressed funding costs to keep it profitable. How much do the PBoC foreign currency assets earn? I would guess probably between 3% and 4%, maybe less. The RMB funding cost, on the other hand, is roughly between 1.5% and 2.5%. This leaves the PBoC with a net positive carry of between 1% and 2%.
If the RMB appreciates by as little as 2% a year, in other words, the PBoC runs a negative carry on its assets. Every further 1% increase in interest rates, or additional 1% rise in the value of the RMB, then, erodes its capital by at least $25 billion (annually, if it happens through an increase in interest rates). Let’s assume, for example, that over the next two years we see a combined appreciation and interest rate increase of 10% (let’s say a 2% increase in interest rates and a 4% annual appreciation), which is, in my opinion, the absolute minimum that China must do to slow down the worsening domestic imbalances. Assuming no change in the rate earned on reserve assets, which in fact may decline, this means that the PBoC’s net indebtedness would rise by over $250 billion, or roughly 5% of the country’s GDP.
These kinds of number quickly add up. And of course it is not just the PBoC that has this addiction to repressed interest rates. Many years of very low cost borrowing has created a huge dependency on low interest rates among SOEs, local governments, and other creditors of the bond markets and the banks (not to mention the banks themselves), all of whom are directly or indirectly funded by long-suffering households. " ..........
- Mike Pettis
Meanwhile the low interest rates are death to pension funds... not just in US but throughout western nations. And, ironically, both will require opposite and ever more aggressive adjustments in order to avoid collapse. Now that is the definition of between a rock and hard place!
Same solution to all problems if those running things could get out of their own way. All financial assets have to lose value in terms of real assets. That can only be accomplished via real assets not dependent upon cash flows and that means gold because it is the real asset that central banks own.
Finally, a Republican Government that will save us, kill the EPA. Frack and Roll!
This would presume that someone with the ability to print money has the intention of keeping the dollar as the global currency. To do so, the world must be flooded with dollars and other countries must be dependent on its existence.
That cannot be done unless the Fed and its owner banks massively print and distribute dollars.
However, this goes in the opposite direction of the nascent BRIC currency future dominance and against the destruction of the petro dollar, both of which have made headlines recently.
Are there really two independent groups or just one power at the top orchestrating division?
Follow the real money and the question answers itself.
It is harder now to find anything 'Made in the USA' than it was even 5 years ago. Obamacare is finishing off US production of everything.
Even the Russians are making the brides now a days!
If you are in America, make something other than a gross tissue!
Don't worry, dollars around the globe are about to come flooding back into the U.S... ...oh wait, crap.
I think it's time for alittle mean revisioning. someone needs to take some profit on the carry or some pegged pair, and get this shit storm rolling. Long Greek Bonds.
I'm doing my part.
I chose gold and silver bars minted in the U.S. over the foreign stuff yesterday.
Some of that foreign made ammo is pretty good though...
"if the trade deficit surge continues, and Q4 GDP tumbles to 1% or less, the Fed will be right back at the frontlines, CTRL-Ping the US economy right back into "beggar thy global neighbor" competitiveness."
Nope. They're not ending QE because they actually think the economy has taken off. They're ending it becaus the have to:
http://market-ticker.org/akcs-www?post=227616
Karl is a smart guy. Odds are he's right...
Gold smacked back down $10
It takes 6 months or more for the stronger dollar to work itself into the system
I'm noticing the premium on silver is about 20 cents cheaper when NY is closed.
An article I wrote some time ago concerning how huge trade deficits are unsustanable remains relavent. Let us get to the crux of the problem, you cannot go on year after year spending more then you earn. When coupled with huge government budget deficits the trade deficits weaken the dollar and drive America in direction of bankruptcy.
Let me say it again "this is unsustainable." It is a myth that we can "export" our way out of this mess, a myth spread by politicians preaching the "no pain" method of solving a problem. The numbers today show nothing has changed and this remains a problem going forward. The article was from 2012 but still rings true.
http://brucewilds.blogspot.com/2012/07/it-was-reported-yesterday-that-u.html
If the production is in country than this increase / decrease in supposed value doesn't matter. But since we now purchase everything from overthere there is an adjustment period where the lesser 'valued' currency is advantages. Once the raw goods prices rise it re-equalizes and the advantage is gone. If the currency is gold based (100%) then the gold will simply flow back and forth finally equalizing.I am sure there will be much dispute from the expert players but it's how I see it.
The PTB want a world money system. They had it with gold/silver but the problem is they could not print the metals. All they could do was adjust the price and even that was limited.They know their power is directly derived from the ability to print what they need so they come up with all these theories to make it appear as a science when in reality it's just another scam on the producers.
The whole thing is coming apart so they are suggesting that a bigger and better world currency would solve all the problems. It's just another scam covering up the prior scams so they can keep their throat hold on all of us. In the past bankers were hung that pulled these scams but it appears through perserverence, their supposed theories and the dumbing down they have managed to get past that... for now.
But history shows humans never learn from their past. The scams and fraud just repeat over and over and over and over ad nauseum.
Enjoy your Christmas gift while it lasts...
I'm guessing this is .... Bullish, right?
New highs in the stawk market, right?
Hey wait a minute... Where's 'Marc-to-Market' on this 'news'...? And here I thought Professor Marc was telling us how the $DX is set to rise a whole lot more - especially with interest rates set to rise pretty soon, and - well, just because...
And hence there are still enough morons, who buy Treasury Bills.
For Oil.....Does the fed control the emergency Reserves?
I read that the oil reserves are poor grade so are they wanting to replace it with high quality, and if so for what? Other than profits and Moar ability to manipulate are they preparing for a bigger War?
End the Fed....the people pay for the reserves and it seems they pay through the Nose. Hey Mr. President................
WE ARE BLEEDING.
First by deflation (strong$), then by inflation.....
So easy even a colonial could see it coming, we were not eternally vigilant.
GL BITCHEZ This will be the one talked about for 1,000s of years!
So long as the world loves taking our funny money, this can continue into perpetuity...
Big deal
You're referring to a country that will have a $20 trillion dollar national debt by 2020.
And in the last 6 years printed currency 'measureless to man' (and zh commenters).
Why in the world do you think the PTB care about the Trade Deficit?
Silly you.