Us presidential election 2004

[Albert Schweitzer 10]

the formula is as follows:

GNP

well GNP and GDP isnt much of a difference. Only excluding depreciation (like cash flow vs free cashflow). Give me the figures to put into them and I give you the results. Anyhow, this calculation has already been done. If you would have taken the links I have given you then you would have seen the increase /decrease of GDP per year from 2001 onwards. And the increase/decrease in % is recent statistics. If you are so sure about, then please show me 2003 stat that approves your calculation.

[ralphwiggum 6]

Quote[/b] ]So you're saying that the GDP in two countries using different currencies can't be compared?

it can be compared, just not good. for better comparison, a single currency for the whole earth is needed. and that ain't gonna happen(and hopefully not in my life time).

Quote[/b] ]I don't think I ever said that. I have only been refering to the GDP and the GDP/Capita plus I have mentioned my hesitation about the validity of GDP as a relevant measure.

of course you did not say it outright, but your point was that US economy, relative to EU's, sucks.

Quote[/b] ]I think you need a bit of a reality check. The EU market is bigger than the US market. And the EU is richer (both in GDP and GDP/capita).

[denoir 0]

http://europa.eu.int/comm....ownload

page 49.

year 2003, ratio of EU and US curency 0.9/1

quite consistent huh? this is why currency rate is not a good factor.

You need to brush up on your reading skills

And take a look at the 2002.

[denoir 0]

the formula is as follows:

GNP

well GNP and GDP isnt much of a difference. Only excluding depreciation (like cash flow vs free cashflow). Give me the figures to put into them and I give you the results. Anyhow, this calculation has already been done. If you would have taken the links I have given you then you would have seen the increase /decrease of GDP per year from 2001 onwards. And the increase/decrease in % is recent statistics. If you are so sure about, then please show me 2003 stat that approves your calculation.

You have the growth numbers that I gave you.

Current GDP = growth*PreviousGDP

All the necessary calculations have been made by far more knowledgable people in the area than we are.

1) We know the GDP in 2002 (EUR)

2) We know how much it grown.

==>We know the GDP in 2003

All that remains is the dreaded currency conversion from EUR to USD

[Albert Schweitzer 10]

good man, now take the exchange rate from the 2 previous years as well and divide the entire thing by 3. Viola, there you got your conversion rate.

[1st.Sig 0]

Kerry is a smuck, and that's pretty much sums it up..

I supported Bush Jr. from day 1 and will continue to stand behind him at the voting poll.

[ralphwiggum 6]

and you need to know how to read between the lines. looking at the data, it is clearly shown that against USD, Euro's rate fluctuated anywhere from 1.11 in 2001 to 0.88 in 2003.

my point was that currency exchange rate is not the best direct conversion method. i said 0.9 to round it up, and type less.

[ralphwiggum 6]

Kerry is a smuck, and that's pretty much sums it up..

I supported Bush Jr. from day 1 and will continue to stand behind him at the voting poll.

ok, first rule of posting. no one liners, give clear arguments.

[denoir 0]

good man, now take the exchange rate from the 2 previous years as well and divide the entire thing by 3. Viola, there you got your conversion rate.

No, that's how you calculate the GDP in the first place. This is baked in into both the GDP growth rate. That calculation has already been made.

Your method would give the average three-year GDP. I'm looking at the GDP right now, not an average.

[ralphwiggum 6]

You have the growth numbers that I gave you.

Current GDP = growth*PreviousGDP

All the necessary calculations have been made by far more knowledgable people in the area than we are.

1) We know the GDP in 2002 (EUR)

2) We know how much it grown.

==>We know the GDP in 2003

All that remains is the dreaded currency conversion from EUR to USD

nope, growth of US GDP too.

[Albert Schweitzer 10]

this is what I AM TELLING YOU dear Denoir. The Conversion rate is build on a 3 YEAR EXCHANGE RATE AVERAGE!

Quote[/b] ]The GNP per capita figures are calculated according to the World Bank Atlas method of converting data in national currency to US dollars. In this method, the conversion factor for any year is the average exchange rate for that year and the two preceding years, adjusted for differences in rates of inflation between the country and the United States. This averaging smooths fluctuations in prices and exchange rates. The resulting estimate of GNP in US dollars is divided by the midyear population to obtain the per capita GNP in current US dollars.

A: GDP is always in USD

B: Exchange rate average

C. population mid year

but of yourse you are right, either / or. Either start from the scratch and implement exchange rate or just proceed with the given % increase/decrease

[Ex-RoNiN 0]

Kerry is a smuck, and that's pretty much sums it up..

I supported Bush Jr. from day 1 and will continue to stand behind him at the voting poll.

One of the best constructed arguments I have seen lately - amazing sources you gave to back up your points too. I am impressed

[denoir 0]

You have the growth numbers that I gave you.

Current GDP = growth*PreviousGDP

All the necessary calculations have been made by far more knowledgable people in the area than we are.

1) We know the GDP in 2002 (EUR)

2) We know how much it grown.

==>We know the GDP in 2003

All that remains is the dreaded currency conversion from EUR to USD

nope, growth of US GDP too.

True of course, slap on some 3% on the US GDP

Ok, I have to run now. It was an interesting discussion.

Unfortunately Albert forgot the single most important thing.

[Albert Schweitzer 10]

How could I forget! I would rather forget the name of ..... hell.....the....I mean...how did they call him again...

[NavyEEL 0]

http://europa.eu.int/comm....ownload

page 49.

year 2003, ratio of EU and US curency 0.9/1

quite consistent huh? this is why currency rate is not a good factor.

You need to brush up on your reading skills

http://denoir.ma.cx/ofp/gdp2.jpg

And take a look at the 2002.

Well if you base arguments on this data table, then what is the big deal?  It is clear to see that the ratio between the USD and the EURO currencies have fluctuated quite a bit over the past decade.  Just because the dollar is at a low at the moment does not mean our economy is crumbling.  It appears to me that, as usual, an event involving the US economy has been taken to an extreme.

EDIT:  Oh, and if I'm totally wrong on this, somebody please correct me.  I could be reading this table wrong.

edit:ralph: please do not quote images.

[Schoeler 0]

An Economist article on the possible effects of a U.S. economic slowdown:

Quote[/b] ]SUBMERGING AGAIN?

Contents

Latin losers

Indecent exposure

America's slowdown is likely to prove painful for emerging economies in Asia and Latin America

EVERY year or two the world seems to go through some sort of emerging-market crisis: Mexico in 1995, Asia in 1997, Russia in 1998 and Brazil in 1999. Plenty of people reckon that another crisis is now overdue. They cite several potential faultlines, from Turkey, which was forced to devalue in February, to Argentina, where the risk of default is rising. In fact, the greatest problem for emerging economies appears to be the slowdown in America's economy.

Over the past few years America's economic engine has helped to pull along emerging economies, by sucking in imports. Nowhere has this been more crucial than in East and South-East Asia, where exports account for almost two-fifths of regional GDP. America is the region's biggest export market, with Japan second. Together these two take about one-third of the region's exports. Little wonder, then, that the recent troubles of both economic giants have undermined business confidence in Asia's economies.

During Asia's financial crisis in 1997-98, America was growing at an annual rate of more than 4%. Such powerful growth in their biggest market, combined with their super-competitive currencies after devaluation, allowed the Asian economies to export their way out of recession. The region now faces a double-edged threat. Not only is America's economy faltering, reducing its overall appetite for imports. The economy's demand for information technology (IT) equipment is likely to fall even more sharply, as business investment slumps. Electronic equipment accounts for over half of total exports by Malaysia, Singapore and the Philippines; it makes up as much as 80% of Malaysia's exports to America.

As American firms slash their IT budgets, emerging Asia is suffering a sharp slowdown in exports. In Taiwan, exports were 4% lower in January and February than a year earlier, compared with an annual growth rate of 30% in the third quarter. South Korea's export growth has slowed from 27% to 6% over the period. South Korea's GDP fell in the fourth quarter of 2000, at a time when American firms had barely begun to slash their IT budgets.

An analysis by the Asian Recovery Information Centre, part of the Asian Development Bank in Manila, concludes that, if the growth rate of electronic exports were to fall in volume by 20 percentage points, from an annual 30% in recent years to 10%, this would knock two percentage points off Malaysia's GDP growth rate, and 1.2 percentage points off South Korea's. Much more would be knocked off if IT exports actually went into decline.

Exports have long played a leading role in Asia's growth, but there is a key difference this time, compared with America's last recession in 1990-91. Domestic demand is weak, and governments have less scope to boost it. A legacy of the 1997-98 crisis is that many countries already have swollen budget deficits. Asian economies, excluding China, ran an average budget deficit last year of almost 4% of GDP; in 1997, before the full force of the financial crisis, their budgets were close to balance. And monetary policy is likely to be less effective now, because the region's financial systems are fragile. Banks, still saddled with too many bad loans, are unwilling to increase new lending.

Most economists expect America to slow sharply this year, but still to escape a recession. If so, then East Asia's growth might dip from 7% last year to 5%. But suppose, to take a gloomier view, that America has zero GDP growth this year. Asian growth would then dip to 3.9%, according to Goldman Sachs. Apart from the mid-crisis year of 1998, that would be the slowest since the late 1970s, even though the figure includes China, which not only has high natural rates of growth, but is also relatively less affected by an American downturn. The bank estimates that growth in South Korea, Taiwan, Hong Kong and Singapore would drop from a combined 8.5% to 2.3%, and growth in the non-developed ASEAN economies from 4.8% to 1.3%.

Fears that the region is about to suffer another financial crisis are overdone, all the same. Most of the former Asian tigers have abandoned the fixed exchange rates that were at the root of their previous crisis. In 1997 all of them had large current-account deficits, but today they have surpluses. They have also replenished foreign-exchange reserves and cut short-term debt.

In 1996 most Asian currencies were tied to the dollar. As the dollar soared against the yen, this eroded their economies' competitiveness. In contrast, over the past year, as the yen has slumped once more against the dollar, Asian countries have allowed their currencies to fall. For example, the Korean won has fallen by 15% over the past 12 months. This has helped competitiveness.

Latin losers

Emerging Asia is hurt by a sharp slowdown in America (and Japan) largely though exports. In contrast, emerging economies in Latin America have only modest trade links, with the notable exception of Mexico. Eastern Europe, meanwhile, is more dependent on markets in Western Europe.

The dependence of Brazil and Argentina on exports to America is tiny, just 2% and 1% of their respective GDPs. In contrast, Malaysia's exports to America amount to 24% of its GDP. Where Latin economies are more vulnerable, however, is in their need for foreign capital. They cannot afford to see it dry up.

The table shows some striking differences among emerging economies in Latin America and Asia. Not only is Latin America a great deal less dependent on exports to America and Japan, but exports of IT equipment are also less prominent. On the other hand, while the Asians have current-account surpluses, Latin American economies all have deficits. If international investors become more risk-averse in the face of an American recession, it is the countries with the biggest external financing needs that would suffer most.

Argentina, one of the few economies that is still tied (through its currency board) to the dollar, has now been in recession for almost three years. This has made it harder for the government to reduce its swollen public debt. Argentine bonds account for as much as one-quarter of J.P. Morgan's benchmark index of emerging-market bonds. So if Argentina defaults, or is forced to reschedule its debt, the contagion effects on other borrowers in the region could be nasty.

Argentina's problems have already sent the Brazilian currency and bond markets tumbling this year. On March 21st, concern that a weaker real would push up inflation caused the central bank to increase interest rates for the first time in two years. That did not stop the currency sinking to a new low. The Mexican peso, by contrast, has been more resilient, even though 88% of the country's exports go to America.

Brazil is relatively insulated from the direct impact of a fall in American imports, but it has a current-account deficit of over 4% of GDP, and its foreign debts amount to more than 330% of its exports, second only to Argentina's 412%. South Korea's debt of 65% of exports looks small by comparison.

Anything that seems likely to cause even a small deterioration in Brazil's external account--whether coming from America or Argentina--could therefore set off jitters in Brazil's financial markets and push the currency lower. That would force the central bank to raise interest rates to hold inflation within its target. About half of Brazil's public debt is linked to overnight interest rates, and almost one-quarter is linked to the real-dollar exchange rate. So a rise in interest rates and a fall in the currency automatically swell the government's debt burden.

On the whole, though, East Asia will suffer more from America's economic downturn than Latin America. America's boom in the late 1990s was the main reason why emerging Asian economies got back on their feet faster than expected after their crisis. In turn, the boom allowed governments to delay reforms, such as bank and corporate restructuring. With America slowing, they may regret their dithering. The Asian economies would be in a better state to weather the coming storm had they put their houses in order first.

Indecent exposure

Legend for chart:

A = Exports as % of GDP, 1999, to: US

B = Exports as % of GDP, 1999, to: Japan

C = IT equipment as % of total exports 1999

D = Current-account balance as % of GDP 2000

E = Total external debt as % of exports* 2000

A B C D E

China 4.2 3.3 15 1.5 51

Hong Kong 26.2 5.9 22 3.7 19

Indonesia 6.0 7.4 13 7.3 203

Malaysia 23.5 12.5 53 9.9 41

Philippines 13.7 6.1 63 11.6 98

Singapore 26.0 10.0 52 23.6 5

South Korea 7.1 3.6 30 2.4 65

Taiwan 11.4 1.5 37 3.0 23

Thailand 10.7 7.2 26 7.8 92

Argentina 0.9 0.2 4 -3.3 412

Brazil 2.0 0.4 5 -4.1 334

Chile 4.6 3.4 na -1.2 169

Mexico 24.9 0.3 19 -3.1 90

*Exports of goods and services

Sources: Goldman Sachs; MSDW; J.P. Morgan Chase; EIU; national statistics

Section: FINANCE AND ECONOMICS

TIGHT-FISTED

THE surge in American consumer confidence in March, as tracked by the Conference Board, was greeted with widespread relief. Commentators concluded that aggressive easing so far this year by America's Federal Reserve is helping to prevent a recession. Hang on a minute: what aggressive easing?

Interest rates have been cut by one-and-a-half percentage points over the past three months. By themselves, though, interest rates are a poor gauge of the tightness of policy. Monetary policy also affects the economy through the exchange rate and the stockmarket. This is why Goldman Sachs, an investment bank, publishes a "financial conditions index", which includes short-term interest rates, corporate-bond yields, the dollar's trade-weighted index and the ratio of stockmarket capitalisation to GDP. The level of the index reflects the looseness of financial conditions: a fall in either interest rates or the exchange rate means a loosening, a drop in share prices a tightening.

Over the past decade, Goldman Sachs's index has been a better predictor of economic activity than interest rates alone. It is alarming that the index shows that the cuts in interest rates this year have been fully offset by the plunge in share prices and the rise in the dollar. Indeed, the index suggests that financial conditions are now close to their tightest in three years. That might undermine optimism that the Fed can steer the American economy away from recession.

--------------------------------------------------------------------------------

Copyright of The Economist is the property of Economist Newspaper Limited and its content may not be copied or e-mailed to multiple sites or posted to a listserv without the copyright holder`s express written permission. However, users may print, download, or e-mail articles for individual use.

Source: The Economist, 03/31/2001, Vol. 358 Issue 8215, p67, 2p

Item: 4274225

[Schoeler 0]

And just for Denoir, here is the entire text of the earlier article:

Quote[/b] ]Flying on one engine

Contents

Low on fuel

A less mighty dollar

America can no longer propel the global economy. Unless other countries take over, argues Zanny Minton Beddoes, the economic outlook is grim and globalisation is at risk

THE evidence is still tentative, but America's economy seems to be gaining momentum. Consumers have stepped up their spending; the housing market is still sizzling; even manufacturing is perking up. For months, Wall Street's number-crunchers have predicted that America's real GDP growth will reach more than 4% in the second half of this year. That figure now looks more like a forecast and less like wishful thinking.

As the signs of an upturn accumulate, the relief abroad is palpable. From Mexico to Malaysia, the world is looking to America to lead a global economic rebound. In its latest projections, published on September 18th, the International Monetary Fund puts the growth in global GDP next year at 4.1%. But excessive reliance on America is also the biggest problem facing the global economy today. As Lawrence Summers, Treasury secretary under Bill Clinton, once put it: "The world economy is flying on one engine."

The statistics are startling. Since 1995 almost 60% of the cumulative growth in world output has come from America, nearly twice America's share of world GDP (see chart 1, next page). America's disproportionate contribution to global growth reflects an extraordinary rise in American spending. Domestic demand in America has risen, on average, by 3.7% a year since 1995, twice the pace of the rest of the rich world.

Just as flying on one engine is inherently risky, so a one-engined world economy is more likely to crash. Global prosperity depends overwhelmingly on American demand. If it were to drop significantly, the world would tumble into recession. Yet for years Americans have been spending far beyond their means.

America's national saving rate is at an all-time low. The country's current-account deficit--in effect, the amount it must borrow annually from foreigners to spend more than it produces--has been rising fast, and is now running at over 5% of GDP, a historic high (see chart 2, next page). As a result, the United States, which as recently as 1980 was the world's biggest creditor country, has now become the world's biggest debtor country.

This survey will argue that the world cannot continue indefinitely to rely on American spending. The chances are that Americans themselves, weighed down by the burden of high debts, will eventually start to save more. But even if they do not, foreigners will become increasingly unwilling to fund American spending.

During the 1990s boom, it was American firms that powered the global economy with a huge debt-financed investment spree. But after the stockmarket crashed in 2000, investment spending collapsed as firms tried to strengthen their balance sheets. Total spending has kept going in part because American households have yet to make that adjustment. They, too, spent beyond their means during the 1990s bubble but carried on after the bubble burst, thanks to sharp cuts in interest rates that allowed them to borrow against their homes. American consumers' indebtedness is currently growing twice as fast as their incomes.

Increasingly, America's spending has also been fuelled by the government. The federal budget has shifted from a surplus of over 2% of GDP in 2000 to a deficit of over 4% of GDP this year. But ever bigger budget deficits will not be able to compensate forever if private spending flags.

Moreover, borrowing from abroad at an accelerating rate can go on only for so long. Eventually the interest on the debt will become too onerous. Long before then, however, foreigners will become reluctant to provide the necessary capital. Already the share of America's current-account deficit that is funded by private foreign investors has fallen. It is Asia's central banks--mainly Japan's and China's--that are picking up an ever bigger share of the tab by buying huge quantities of American government bonds.

Their motivation is not altruistic. By piling into American bonds, Asia's central banks keep their currencies weak, supporting Asia's exports to America. But America's growing trade deficits are now causing protectionist pressures at home, particularly against China.

In the past three years almost 3m jobs have been lost in American manufacturing, one out of six in that sector. With a presidential election due in 2004, demands for action against China are multiplying. Either Asia's currencies will have to adjust, or America will retreat from free trade. On both political and economic grounds, it seems, the world's reliance on one engine is reaching its limit.

Low on fuel

But how can the world be weaned off its over-reliance on American spending without sending the global economy into recession? In theory, the route to a more balanced world is clear. Americans must spend less and/or foreigners must spend more and/or the dollar must fall (because a cheaper dollar shifts Americans' spending away from imports and boosts exports). Ideally, most of the adjustment should come from higher spending by foreigners. If other countries revved up their economies, they would suck in more American imports. That would allow America's current-account deficit to fall without causing the world economy to suffer.

It has been done before. In the early 1980s, when Ronald Reagan was president, America also borrowed furiously from foreigners, pushing up the current-account deficit to over 3% of GDP. In the later part of the decade, that deficit came down again without causing a global recession, thanks to a big but controlled drop in the dollar and especially to booming economies in Germany and Japan.

Can history repeat itself? If today's current-account deficit could be painlessly reduced, just as it was in the 1980s, the one-engined world might not be such a problem. But the chances of a repeat performance are slim. The imbalances are much bigger and more entrenched, and the world economy as a whole is both more fragile and more complex. There are no other obvious engines, and there is no easy way to get the dollar down.

Given their economic size, the euro zone, especially Germany, and Japan remain the most likely back-up motors for the global economy. But these economies are in a mess. Both regions are having to cope with a worrying combination of ageing populations (which tend to dampen spending) and structural rigidities (which slow down growth). In recent years, both have also suffered from extraordinarily incompetent macroeconomic policies.

Japan, the world's second-largest economy, has had an abysmal decade of deflation and stagnation, brought on by its government's inability to deal with the aftermath of its own asset bubble in the 1980s. In Europe, an obsession with tight macroeconomic policy has exacerbated the recent economic downturn.

There are some signs of change. In Germany, especially, there is now a recognition that the overtaxed and over-regulated economy has to be reformed. In Japan, the economy is perking up and there are glimmers of evidence that policymakers are at last grasping the need to reform. But both Europe and Japan have a long way to go before they can provide any back-up.

A less mighty dollar

With no alternative engines ready to kick in, the dollar will have to play an even more important role in America's adjustment than it did in the 1980s, when it fell by 55% against the D-mark and 56% against the yen. Since its peak in 2002, the dollar has already fallen by a total of 8% against its trading partners. But that is nowhere near enough.

Many economists reckon that, in the absence of a shift in global demand patterns, it would need to fall by 40% or more to make a serious dent in America's current-account deficit. That kind of depreciation is hugely risky. The more a currency falls, the greater the danger that it will fall too far, too fast. A sudden dollar crash could roil financial markets and plunge the world into recession.

Moreover, the dollar is unlikely to fall evenly against other currencies. The Asian central banks' determination to stop their currencies rising has, so far, concentrated the dollar's fall on the euro, with a 20% drop against the European currency since early 2002 compared with 8% overall. A further, even bigger drop in the dollar, targeted on the euro, would probably sink Europe's economies.

To spread the burden of a dollar drop more evenly, Asia's currencies too must appreciate. But that will not be easy either. In Japan--which has the world's biggest savings surplus and intervenes most actively to hold down its exchange rate--a dearer yen would lower import prices and further aggravate the economy's deflationary crisis.

Even in China, the case for a stronger yuan is not clear-cut. Unlike Japan, China is not running a big trade surplus. Its economy, despite rapid growth, is fragile; the banking system is bust. A sudden jump in the currency could cause the financial system to collapse, eliminating one of the few bright spots in the world economy.

With so many imbalances, and no easy adjustments in sight, the global economy is clearly in trouble. Stephen Roach, chief economist at Morgan Stanley (admittedly one of the most pessimistic seers on Wall Street), claims the world faces "its toughest array of macro problems since the end of the second world war".

The risks of a dollar crash or a serious global recession are not insignificant, and a period of sluggish growth and currency volatility seems all too likely. The 1930s offer a lesson in how protectionism can flourish when economies are in recession and exchange rates tumble. For the past few years, politicians have done little more than hope that the American engine carries on working. But this is no longer good enough. Policymakers need to act to make a crash less likely and avert protectionist threats. A good first step would be to acknowledge the size of the problem.

GRAPH: Lopsided

GRAPH: Heading for a crash

PHOTO (COLOR)

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Source: The Economist, 9/20/2003, Vol. 368 Issue 8342, p3, 3p

Item: 10888966

[denoir 0]

As I suspected Schoeler, the text is less than credible. Or better to say that its predictions are questionable. But then again it's by Minton-Beddoes a guy known for prophesizing how the Euro never would become a real currency.  

The US has a big trade deficit relative the world i.e you depend on external production. A weak dollar means a lot more expensive imports. The EU is America's largest trade-partner and in only a year the dollar/euro relation has changed by over 50%. While it certainly hurts the European export industry, the consequences are far more serious for America. Another drop like that and the US economy will crash.

Well, regardless, an unstable currency is not good for anybody.

NavyEEL:

Quote[/b] ]Well if you base arguments on this data table, then what is the big deal?  It is clear to see that the ratio between the USD and the EURO currencies have fluctuated quite a bit over the past decade.  Just because the dollar is at a low at the moment does not mean our economy is crumbling.  It appears to me that, as usual, an event involving the US economy has been taken to an extreme.

The Euro has existed as a currency only since 2002. The other values you see is from when it was a 'virtual' currency and the older ECU one (also virtual). This is a chart of the Euro vs Dollar since the Euro was introduced as a real currency:

Say you bought a bottle of a French wine in early 2002 for $20. Today that bottle would cost you $30 - the increase being the exchange rate. Stuff that is produced in Europe costs you over 50% more than it did two years ago. Good for your export companies. Bad for you, the consumer and bad for any domestic industry that uses products made outside the US.

As for comparisons of the EU and US economies, I found this fairly interesting:

[the economist]

The EMU requires that a country's overall budget deficit for each fiscal year be less than or equal to 3 percent of its GDP. This means that if the US wanted to enter the EMU today, it would not be allowed as its economy isn't good enough. Just a side note. (Although it should be noted for fairness sake that both France and Germany violated the 3 percent limit last year.) We'll see how it all works out.

Albert:

Also from the economist:

Notice the "*At market exchange rate"? So you see that you can indeed do a market price conversion rather than a three-year average.

.....

Anyway, apart from the falling dollar and the enormous deficit, at least the US economy seems to, even if slowly, be recovering. That cannot be said for the European economies yet.

It's actually quite interesting how the US/EU economies have the completely opposite problems.

The US has a willing consumer base and its industrial base is in good shape but has a difficult time taking any advantage of it due to very high dependencies on now too expensive imported products. The consumers will also be limited by the huge deficit.

EU on the other hand has for the most part surpluses (or low deficits) and can import stuff cheap (strong currency). On the other hand the markets are saturated, the consumers unwilling and internal structural problems plague the industrial base...

[qUiLL 0]

i am falling asleep reading all this again lol. and btw dont bash the one guy who supported bush (who i dont really like anyway but...) just because he didnt have an arguement. hard to bring up an arguement when your in the middle of a discussion over GDP discussing figures and terms and stuff that i dont know, the average american voter doesnt care about, and which really lacks a point ( i cant exactly see the point of all this GDP stuff??? its no longer an arguement pro- or against anyone its just discussion of it lol. at least make your point of how it is connected to the election each time you post. i know you ppl are really sluggin it out with the GDP stuff but...ah well whatever lol ill come back when the post is back on topic dont really matter anyway)

note: i hope i didnt kill this thread

[Albert Schweitzer 10]

Quote[/b] ]Notice the "*At market exchange rate"?  So you see that you can indeed do a market price conversion rather than a three-year average.

Maybe the describtion is incomplete. The metod of calculation then is simply wrong. The logic is clear, since the global exchange rate fluctuations are much heavier than the annual increase in GDP of a country any statistic would rather be a statistic on "exchange rate" than "GDP development".

But the GDP is not just a term, it is intended to reflect production power, spendings and investments. And to keep the expressive power of a GDP statistic as authentic as possible it must be protected from outside effects (such as currency fluctuations). which could falsify the results.

When talking about GDP what we usually found on top of  the statistics was "Atlas method", which is the method used by the World Bank.

where et* is the Atlas conversion factor (national currency to the U.S. dollar) for year t, et is the average annual exchange rate (national currency to the U.S. dollar) for year t, pt is the GDP deflator for year t, pt S$ is the SDR deflator in U.S. dollar terms for year t, Yt $ is the Atlas GNI per capita in U.S. dollars in year t, Yt is current GNI (local currency) for year t, and Nt is the midyear population for year t.

(you see the (t-1) and (t-2) down there in the formula. Those two are the wanna be airbags that are "supposed" to protect the final result of the GDP calculation from the exchange rate fluctuations.  

Quote[/b] ]World Bank Atlas method

In calculating gross national income (GNI—formerly referred to as GNP) and GNI per capita in U.S. dollars for certain operational purposes, the World Bank uses the Atlas conversion factor. The purpose of the Atlas conversion factor is to reduce the impact of exchange rate fluctuations in the cross-country comparison of national incomes.

The Atlas conversion factor for any year is the average of a country’s exchange rate (or alternative conversion factor) for that year and its exchange rates for the two preceding years,

I am not arguing, maybe it is nice for the one or other to see how GDP is realy calculated! Maybe Denoir is right, maybe the exchange rate should be considered more intensively. Isnt the EXCHANGE RATE also a result of investment?   I would say yes. But in the conservative GDP, GNI, GNP calculations it is actively surpressed.

[Schoeler 0]

i am falling asleep reading all this again lol. and btw dont bash the one guy who supported bush (who i dont really like anyway but...) just because he didnt have an arguement. hard to bring up an arguement when your in the middle of a discussion over GDP discussing figures and terms and stuff that i dont know, the average american voter doesnt care about, and which really lacks a point ( i cant exactly see the point of all this GDP stuff??? its no longer an arguement pro- or against anyone its just discussion of it lol. at least make your point of how it is connected to the election each time you post. i know you ppl are really sluggin it out with the GDP stuff but...ah well whatever lol ill come back when the post is back on topic dont really matter anyway)

note: i hope i didnt kill this thread

Though this may not make very much sense to you, it has a lot to do with the actions of President Bush. Our economy is in the shitter thanks in large part to the tax incentives and free trade agreements he has supported that allow jobs to be exported and the large tax cut for the rich he handed out to his campaign financiers like candy.

[Tex -USMC- 0]

I beg to differ on this one. In fact, of all of his current policies, Dubya's economic policy is the least vulnerable to attack. The massive economic stimulus of the last three years has finally started taking effect, productivity is up, and the capital investment of the late 1990's is beginning to pay big dividends. Last fiscal quarter our GDP expanded by a rate of over 8%, and this quarter we're on track for an equally solid but not quite as alarming 4%. Most estimates of GDP growth for the coming year lie between 4-5%. Although job creation is still nil, unemployment did drop a quarter of a percent last quarter, suggesting that our current unemployment problems are more due to structural and frictional unemployment rather than the more worrying cyclical unemployment.

Not that there aren't weaknesses, of course. Depending on your perspective, the increased outsourcing of American jobs is either a good or bad thing- ironically enough the current round of outsourcing is actually contributing to our current economic uptick. The jobs being outsourced, such as call centers and basic industrial production, can be done cheaper and just as well overseas- American workers are simply no longer competitive in these markets. There are only two alternatives to going with the structural shift that this outsourcing represents. One is pursuing protectionist policies such as tariffs and tax incentives that have been shown, especially in the case of the steel industry during the last quarter of the 20th century, to only delay the inevitable. The other is forcing the American market to be competitive, but this is clearly an unacceptable solution, because to become competitive would require American workers to take huge salary cuts- something Americas don't take well. Of course, there is one more possibility: in the case of the back-office services that have become the most publicized instance of outsourcing in the past few years, this exporting of jobs may be just a temporary phenomenon. Take for instance, basic IT and tech support services. Right now, humans are still needed for these jobs, and the humans offering their services at the cheapest rates don't live in America. However, advances in high-tech IT is creating a situation in the very near future where those jobs will be done even more cheaply by a combination of a couple hundred code writers and a few server farms situated in Washington. In other words, the jobs that we are currently complaining about being lost are probably going to dissapear altogether in the next 20 years anyways. To use a crude analogy, what does the job market for blacksmiths look like these days?

The fact is that our economy is evolving at a nearly unprecedented rate, and structural unemployment is going to happen- it's just inevitable. We can choose to protect our workers in the short term, which will most likely cripple our ability to compete in the long term (just like in the steel industry), or we can choose to embrace the evolution and endure the costs that are going to occur because of it. To be perfectly frank, the solutions to a significant portion of our employment problems lie on the individual level. In our current adjustment, most of the jobs being exported are semi-skilled and unskilled workers. This could be a blessing in disguise, because those unskilled workers can now use some of their new time off to attend a community college and become a skilled worker. Rather than trying to hold on to subpar jobs, in the interest of our future welfare we should be constantly raising the bar and attempting to nurture our workforce's abilities.

As for other problems, such as possible future inflation precipitated by onset growth and a weak dollar, those are issues that need to be addressed by the Federal Reserve, not the President. Overall, for this presidential race, it's not the economy, stupid.

[Schoeler 0]

And again, I'd have to disagree with you on this one Tex. While the basic economic theories of competition creating an increasingly more skilled and valuable workforce are all fine and dandy and make perfect sense on paper, the theories are just not showing up in the workforce. The jobs being lost are good paying jobs, the ones being created are largely in the retail and service industries.

The middle class is disapearing and the income gap between rich and poor is growing larger by the year. At some point we all have to take a collective breath and say enough is enough. While protectionist policies may not be the answer, there simply has to be a way to protect the per capita GDP of the average American and insure that there are good jobs available for our people and college grads.

I don't know about you, but I'll be monkey fucked before I go to college for four years so that I can get a job at the local Walmart.

[shinRaiden 0]

Markets-smarkets. Numbers can be spun anyway you want by whoever wants to, as has well been evidenced by all parties so far.

The president can beg 'pretty-please' to the Fed, but aside from that the only impact he can have on the international money markets is to play political suckup to invite foriegners to sell euro and buy dollar, or tax breaks for deep pockets to encourage the same.

Now what he can directly affect is regulation and dicisplinary control that more directly impacts the middle-lower guys.

One significant economic CF was the contrived artificial tech balloon. Problem was that real stuff was one-time capital investments or 20-year type of stuff, but everyone was spinning it as quarterly adventures. Do you need a router? Maybe. Do you need a new one every 3 months? Heck no - but the analysts were saying that you were going to anyway.

With the glorious reliability of the economics department, as well typified by the stellar performance of Arthur Anderson (rip) and numerous other CFO's I would like to see a smidgeon of credibilty out of the bean-counters - based on a sound foundation of logic and reason.

When people start paying this kind of attention to exchange rate wiggles, they pretend that they can shuffle long-term capital figgers around as pseudo-operating numbers. Worldcom tried that and nearly died sucking wind.

My present employer is (like many others) so focused on selling quantifiable results at the 'cheapest' quantifiable price, that have actually screwed their core accounts unwittingly. My previous employer lost major business accounts because they focused on quantity over quality. I understand the reason behind cutthroat business trafficking, but this has gone so far over into everyone screwing each other for CYA profiteering that the proverbial goose that lays the golden egg is getting gang-raped for the feathers.

[Tex -USMC- 0]

Unfortunately, many of those decisions were made long before Bush came into office. By tying our economy to the fortunes of multinational corporations, we have created our own deviant version of the old "What's good for corporations is good for America" mantra. The corporate office infrastructure, the traditional haven of middle class America, is being gutted by advances in IT- even middle management isn't safe anymore. From now on, if you work for a company, but don't actually have a hand in whatever the company creates in terms of goods and services (accounting and payroll are good examples of this), your job is going to become increasingly more at risk.

At the same time though, I'd reccomend patience. As you're well aware, economic adjustments are not a short term process, and it may take several years for the solution to our employment problems to present itself. I find it ironic that our transition from a goods to a services economy coincided with a leap in technology that seemed to encompass many of the new possible jobs created by the transition. As for the complaint that the jobs being created aren't good enough, the same complaint was levelled at the Clinton Administration's job creation efforts in the early and mid-90's, on the backside of the 1991 recession. Speaking from the position of being one of those jobs in the retail industry, the creation of jobs in that sector is a more modern manifestation of structural unemployment. Most of my coworkers are either between jobs in bigger and better arenas, or are using the retail jobs to finance their education or reeducation. The upshot of that is that, in conjunction with sustained economic growth, in 3 years or so we'll have a larger economy in need of educated workers, plus a fresh influx of graduates who want a bigger paycheck. It just doesn't happen overnight, though.

What I'm most worried about though is our alarming reliance on borrowing to finance our consumption. Just as an example, at the rate we're going, I simply do not see a way that the realty market isn't going to collapse on itself from spiralling costs and the correspondent burden on consumers who already saddle themselves with debt to make even modest property purchases. Consumer debt is skyrocketing, but consumption isn't responding like it should- it just keeps on rising like normal, even for durable goods. The sum of this is a worrying situation where people seem to ignore simple arithmetic. I'm entirely more worried about American consumers who are accustomed to a certain lifestyle than I am about a temporary employment adjustment.