Yes, but you do realize that there are huge geographic differences between a country in the middle of other western industrialized countries (100 million German people surrounded by 250 million other westerners) and a country of over 300 million people bordered by 2 oceans, a sparsely populated northern neighbor, and a much less developed southern neighbor. In other words, just because you can make an argument, you should think about what you are saying so that you don't hurt your credibility

.
So what? My arguement is that exports make up a small portion of the total GDP and that means that in order to work its way out of the recession the domestic economy Must improve since even double digit growth in exports won't have the impact it would elsewhere. Why? As a portion of the whole economy its small. (By the way I overestimated, exports acount for only 12% of US GDP. Now thats a way up from 3% during the 1930s...but still not anywhere comparable to China or Germany....
Only 1% of US companies are exporters by the way....
source: http://www.washingtonpost.com/wp-dyn/content/article/2010/09/03/AR2010090302208.html

By the way, if California was a country, I presume that it's relative export activity would rival that of Germany's.

When ifs and buts are candies and nuts we'll all have a happy christmas.

And you're concept of what the US exports is a little off. Services and intellectual property are a large component. And specialized technologies.
Ray, if the exports only account for 12% of the GDP, and they grew by 8% while the domestic economy stood absolutely still, the overall US GDP would have grown by less than 1%.
If germany, where roughly 40%of economy is exports, increases exports by 8% they increase their GDP by 3.2 percentage if the domestic economy freezes.
This is pretty basic math.... it means that economies that maintain a healthy export trade Can trade their way out of a recession. An economy that has a huge trade imbalance, can't.

The US is an enormous economy, the worlds largest.But it is driven primarily by domestic consumption.... With an industrial strategy that focussed on short term corporate profits over long term national interest a lot of industries that could be exporting, left the US. Your export growth might have been 15% for instance ... That affected the US both by taking exporting industries away but also degraded the domestic employment siutuation and therefore the domestic market.
Do you know that the Germans have supplanted the US as the greatest exporter to China of household white goods? They did it because US manufacturers refused to retool to meet the smaller standards China. (fridges and stoives are smaller). The Germans are no closer to China geographically than the US. In fact shipping is less direct.

http://www.cbo.gov/ftpdocs/122xx/doc12212/2011_06_22_summary.pdf

Higher levels of debt imply higher interest payments
on that debt, which would eventually require either
higher taxes or a reduction in government benefits and
services.

Rising debt would increasingly restrict policymakers’
ability to use tax and spending policies to respond to
unexpected challenges, such as economic downturns
or financial crises. As a result, the effects of such developments
on the economy and people’s well-being
could be worse.

Growing debt also would increase the probability of a
sudden fiscal crisis, during which investors would lose
confidence in the government’s ability to manage its
budget and the government would thereby lose its
ability to borrow at affordable rates. Such a crisis
would confront policymakers with extremely difficult
choices. To restore investors’ confidence, policymakers
would probably need to enact spending cuts or tax
increases more drastic and painful than those that
would have been necessary had the adjustments come

Sounds pretty dire... Also sounds like the predictions I was making. Exactly why we need strong policy and legislation mandating changes before we get to this point. RickyP uses the CBO as an "expert witness" of fiscal responsibility.

Nobody took up the challenge I made to offer a plan. Apparently much easier to criticize other's plans.

Ricky:

Do you know that the Germans have supplanted the US as the greatest exporter to China of household white goods?

I'd rather have the microprocessor market anyway.

I hear your point: By virtue of its size the US cannot substantially grow its economy through exports. However, that will change to some extent as China and India continue to grow, especially if they start to pay us fairly for all of the intellectual property that we provide.

My comment pertains to the often quoted comment that the US is in export decline which you have repeated but not sourced. One hears that a lot. However, the reality is that the US continues to grow its export market. It was interesting to me how easy it was to debunk a myth that is forever provided by the media.

I'd rather have the microprocessor market anyway.

You can thank Ron Reagan for his only original act of govenrment intervention in the industrial base for that.... Sematech wsa a 50/50 government private industry answer to hanging on to a semi conductor business that was threatening to leave for Taiwan when the Pentagon pushed, for national security reasons for a US industry and Ronny actually listened.
Shame he didn't think that displays were important, or other peripherals.... Originally that industry was 80% American made.

However, that will change to some extent as China and India continue to grow, especially if they start to pay us fairly for all of the intellectual property that we provide.

Well, then the trade policy should be to restrict Chinese access to the US until there is real protection for IP. Right now, china is still a wild west. And India actually worse but also worse at capitalizing.
Too often trade deals are made in order to make some short term sale, and a long term market is surrendered. I'm thinking here recently of Obamas surrender in aero space to China.
The US are short term interest free traders dealing with neomercantilists who are interested in the long game....

If the Chinese middle class does continue to grow (Its what 300 million right now?) it could rapidly take over from the US as THE target market. But that won't happen until the currency is unpegged. Until then the Communists are protecting their export market because they understand they need enormous trade surpluses to fund the development of their peasant population...
One enormous advantage for the US is that English is by far the language of business. (No otehr language is as remarkably flexible. When Germany went to China to make autos BMW couldn't find chinese engineers who spoke German or german engineers who spoke Mandarin . But both countries could supply English speakers...
And as such there is a market for English language cultural exports and the US leads this industry. But its an easily ripped off product so again, trade policy has to hold firm to ensure that the developing nations develop enforcement of IP....So far the results havn't been great.
Too much folding on the long term front in order to get the next wheat deal...

What? The CBO report did not set off fireworks and emergency bells in anyone's head? This is a debt issue, not imports and exports. It is a debt issue, not taxation.

WE ARE SPENDING TOO MUCH!
http://home.adelphi.edu/sbloch/deficits.html

Sure imports and exports bring revenue, but that revenue is being gobbled up even faster than we make it. It is said above that the recession has caused the debt to increase. Yes, that is one reason that it increased. You have to go back to 1956 to find a surplus. Both parties are doing this. Let's not quibble on who did it more... THEY BOTH DID!

http://online.wsj.com/article/SB1000142 ... lenews_wsj

Some budget details to make your blood boil.

<Brad slumps at desk in coma>

Meanwhile, Democrats want . . . more stimulus: http://thehill.com/blogs/on-the-money/b ... iden-talks

Sure imports and exports bring revenue, but that revenue is being gobbled up even faster than we make it. It is said above that the recession has caused the debt to increase. Yes, that is one reason that it increased. You have to go back to 1956 to find a surplus. Both parties are doing this. Let's not quibble on who did it more... THEY BOTH DID!

It is true that the US is spending too much. But it is also true that the economy has to be growing to effectively attack a debt level. Especially in the US. Because so much of your economy is domestic, anything that negatively affects domestic consumption ends up negatively affecting revenues.
Its no good to spend 20% less, if it equally reduces revenues 20%. There'd be no net change in the deficit.
Thats why exporting nations have such an advantage. They CAN reduce domesticgovernment spending and yet still receive duties or taxes that result from econmic activity that is exported. (Its good to be germany sometimes...)
So although your 10% across the board solution might work, probably more effective would be attacking spending that isn't generating consumer spending. Social security, for example, is generally sent right back into the economy.

Ray Jay wrote:http://online.wsj.com/article/SB10001424052702304657804576401412033504294.html?mod=googlenews_wsj

Some budget details to make your blood boil.

Interesting article.Thanks for sharing. How does the Supplementary Nutrition Assistance Program work exactly? Are people given a voucher which entitles them to spend a certain amount of money on food which the person then redeems at participating grocery stores?

If that is the case, I'm not sure how that provides supplementary nutrition unless the people making the purchases are buying healthy foods. (I wish I had learnt about this earlier. I had to write a report on a public policy issue for a statistics class and this would have been an interesting topic to address. Instead I wrote about the World Bank's Policy for Agricultural Reform in Zambia.)

The article you shared highlights, in my mind, the significance of a public policy review in the United States as a mechanism for reducing spending. Of course, as mentioned earlier, can this be conducted in time before the debt ceiling is reached?

However, has there been any mention in the news that the US is conducting reviews of government programmes in order to find savings?

But it is also true that the economy has to be growing to effectively attack a debt level.

Perhaps I’m not fully understanding your comment Rickyp. If the economy had been growing at a pace which allowed the US to tackle debt levels then why is there discussion about raising the debt ceiling? Moreover, the US Federal Reserve Chairman announced that the economic recovery is proceeding more slowly than expected.

Its no good to spend 20% less, if it equally reduces revenues 20%. There'd be no net change in the deficit.

Again, I’m not sure how this works. Are you saying that 100% of government spending is efficiently returned to government coffers?

[quote="rickyp"
So although your 10% across the board solution might work, probably more effective would be attacking spending that isn't generating consumer spending. Social security, for example, is generally sent right back into the economy.[/quote]

Glad to see that the 10% meets your approval. Unfortunately, the 10% only kicks the problem down the road. That is my point. There is waste in every department. I think that there is even 20% waste in every department. That would not impact government employees too much; and it would begin to solve the problem.

Good question ME. Perhaps we can INCREASE the spending to 200% of current levels to fire up the economy. Oh wait... we tried that with the 867 Billion dollar spending plan on shovel-ready projects.

I think that the debate about slashing deficit vs spending yourself out of a recession will be answered decisively within a couple of years.
Europe and the IMF is forcing Greece and to some degree Ireland, Portugal and Spain to slash spending like crazy to combat the deficit, which seems to only suceed in crashing what's left of their economies. The UK i think has also decided to aggressively cut the deficit, which i believe has led to a slow recovery compared to lets say France or especially Germany, right Sass, Dani ?
The Germans chose a slightly different way: they helped companies to keep on workers during the slump via a mix of legislation and subsidies and moderately increased spending, which led to a quick, strong recovery and job creation. France followed a similar path and it's recovery is stronger than the UKs too.
Now i'm no economist, but it seems to me that maybe it's actually brighter to follow good ole Keynes with the addendum that you actually reduce the structural deficit when the economy is strong.

Faxmonkey wrote:I think that the debate about slashing deficit vs spending yourself out of a recession will be answered decisively within a couple of years.
Europe and the IMF is forcing Greece and to some degree Ireland, Portugal and Spain to slash spending like crazy to combat the deficit, which seems to only suceed in crashing what's left of their economies.

Isn't it true that each is incapable of maintaining its budget AND paying interest on its debts? If so, how would YOU propose they go forward? Should their debts be restructured? Aren't they already being restructured? Would that be enough to stop them from (once again) going bankrupt?

As I see it, the problem with most free, democratic, and socialist-leaning countries is that they keep voting for "more" from a mythical, all-providing government. When the realization hits that the "government" is nothing more than the combined income from taxpayers and taxes must be raised to beyond draconian levels to maintain the entitlements and attending corruption, rioting hits the streets.

Is that what Keynes had in mind?

Had these governments, and ours, made the determination long ago that they would live within their means and set aside money for troubled times, none of them (including the US) would face the straits we do now. Instead, when times were good, they (and we) overspent. When times were bad, they (and we) overspent even more. That's a recipe for disaster.

The UK i think has also decided to aggressively cut the deficit, which i believe has led to a slow recovery compared to lets say France or especially Germany, right Sass, Dani ?

Short-term, as you imply. Long-term? We'll find out.

The question is whether government spending brings prosperity. If so, there must be some breaking point. If government control and spending could solve every financial problem, we might still have the Soviet Union.

The Germans chose a slightly different way: they helped companies to keep on workers during the slump via a mix of legislation and subsidies and moderately increased spending, which led to a quick, strong recovery and job creation. France followed a similar path and it's recovery is stronger than the UKs too.
Now i'm no economist, but it seems to me that maybe it's actually brighter to follow good ole Keynes with the addendum that you actually reduce the structural deficit when the economy is strong.

How would you compare what F/G did to what Obama did? Did they spend a couple of trillion dollars?

What of the CBO's recent analysis that our current trajectory takes us to over 100% of debt to GDP in 10 years? Is that to be shrugged off, Atlas?

Doctor Fate wrote:

Faxmonkey wrote:I think that the debate about slashing deficit vs spending yourself out of a recession will be answered decisively within a couple of years.
Europe and the IMF is forcing Greece and to some degree Ireland, Portugal and Spain to slash spending like crazy to combat the deficit, which seems to only suceed in crashing what's left of their economies.

Isn't it true that each is incapable of maintaining its budget AND paying interest on its debts? If so, how would YOU propose they go forward? Should their debts be restructured? Aren't they already being restructured? Would that be enough to stop them from (once again) going bankrupt?

My understanding is that as soon as they got the Euro, they also got credit alot cheaper and instead of using the money they borrowed to do something useful, like investing in infrastructure they spent it on useless stuff.

That makes your statement:

Doctor Fate wrote:As I see it, the problem with most free, democratic, and socialist-leaning countries is that they keep voting for "more" from a mythical, all-providing government. When the realization hits that the "government" is nothing more than the combined income from taxpayers and taxes must be raised to beyond draconian levels to maintain the entitlements and attending corruption, rioting hits the streets.

somewhat true. However Goldman Sachs for example was hired to help the Greeks hide their true deficit from other countries and banks. The private financial sector was more than happy to lend them cash altough they at least partially knew how crappy their finances were. They were happy to take the risk, infact they again took on so much, that we can't deal with Greece without the financial system taking the next dive and probably taking the economy with it again ...

Doctor Fate wrote:Is that what Keynes had in mind?

Nope

Doctor Fate wrote:Had these governments, and ours, made the determination long ago that they would live within their means and set aside money for troubled times, none of them (including the US) would face the straits we do now. Instead, when times were good, they (and we) overspent. When times were bad, they (and we) overspent even more. That's a recipe for disaster.

I agree 100%. I would add that the byzantine ways of the financial markets play an important role too. We don't know were some big player hid debt and once Greece for example can't serve it's debts anymore, there will once again be mistrust and no lending. Boom there go the now much larger banks again, because interbanking lending will freeze up again and people once again will pull their money.
I don't see how we can deal with the debt levels wihtout writing at least some of it off. We can't do that however unless we have a grasp were the debt lies and who holds it and send them into bankruptcy too. But how can we do that if basically every bank and insurance company is so interconnected that we can't let them go under without a global financial disaster.

Doctor Fate wrote:

Faxmonkey wrote:IThe UK i think has also decided to aggressively cut the deficit, which i believe has led to a slow recovery compared to lets say France or especially Germany, right Sass, Dani ?

Doctor Fate wrote:Short-term, as you imply. Long-term? We'll find out.

The question is whether government spending brings prosperity. If so, there must be some breaking point. If government control and spending could solve every financial problem, we might still have the Soviet Union.

Question is wether you have to go at it with a flamethrower or if you can do it in a more rational way that doesn't hurt the economy shortterm and still reduces the debt. I don't really know, maybe that's politically unfeasable.

Doctor Fate wrote:

Faxmonkey wrote:]The Germans chose a slightly different way: they helped companies to keep on workers during the slump via a mix of legislation and subsidies and moderately increased spending, which led to a quick, strong recovery and job creation. France followed a similar path and it's recovery is stronger than the UKs too.
Now i'm no economist, but it seems to me that maybe it's actually brighter to follow good ole Keynes with the addendum that you actually reduce the structural deficit when the economy is strong.

How would you compare what F/G did to what Obama did? Did they spend a couple of trillion dollars?

Ok i had to look that one up and the numbers are in Euros according to the IMF, because i really don't remember what the relation $ to € was at that time: they "only" spent 2008 4 billion, 2009 40 billion and 2010 24 billion.
The advantage they had was that the companies hardly layed off people in the slump, but rather only had them work less hours which was supported politically by the unions and financially by the government.
I'm not at all sure how comparable the economic structures of the US and Germany are, but i'd guess it isn't so much the size of spending program, but rather what you use it for.
Digging holes in the middle of nowhere is probably crap. Overhauling bridges and highways or some such is probably a wise investment.

Doctor Fate wrote:What of the CBO's recent analysis that our current trajectory takes us to over 100% of debt to GDP in 10 years? Is that to be shrugged off, Atlas?

That's the question though isn't it. Are the Germans and French able to tackle their deficit somewhat more effectively because they are more willing to cut, or because their economy is bringing in more taxmoney and shrinking debt by growing GDP.
As an outside observer to US politics it seems to me that they usualy squabble about were to spend copious amounts of money and not necessarily about how to reduce the structural deficit in every sector. But maybe that's a wrong impression.