Euric, you keep saying that nothing is made in America, yet I keep hearing about European companies that want to move production here, Volvo being the latest. Also, from what I can see, US manufacturing is in about the same state as in Europe. Does Nokia make it's phones in Europe? Does Braun make it's coffee makers in Europe? How is European industry in better shape than America's? Europe's steel industry is subsidized, as is it's aerospace industry. All that comes out of the EU's collective treasuries.
Talk is cheap. When these companies actually move then we will cross that bridge and wonder what effect, if any, it will have. Keep in mind, if Volvo does come, they will follow the Pattern of BMW and open in the non-union south, with a minimum of workers as most of their processes will be automated. In Europe, it is still not legal in some countries to close down a factory and just move the work elsewhere. A business may close if it isn't doing well, which is not the same thing. Companies may expand and do so in a cheap labour market, and that is what you may be observing.
Subsidising works in the EU because the money comes from surpluses, not from the air. The US can't subsidise businesses unless it has real money to do it with. It can borrow, float bonds, but that just adds more to the deficit.
But in the US it is completely legal to close a factory and move it entirely to a new location with out any concern for the welfare of the former workers.
Quote:
Europe makes big, high margin stuff like cars, heavy machinery, etc. Guess what, so does America. Not much gets exported because the demand in America eats it all up. In Europe, same thing; why buy a Caterpillar earthmover when you can have one from Volvo. Oh yeah, I forgot, Volvo is talking about making them in America!
If it is all the same thing, they why does the US run up such high deficits and the EU does not? The US doesn't really have an export attitude when it come to manufacturing. Thus when sales are down, they just lay off and wait for the bust cycle to end.
BTW, how many years has Volvo been talking?
Quote:
To sum up, Europe has exported its low margin manufacturing to Asia just as America has. The whole world has become accustomed to cheap imports from Asia. In America, we are hip deep in them. Asia, Inc., has found out that if it's products go over a price level, demand drops way off. We buy a lot of cheap stuff from Asia because, well, it's cheap!
All fine and dandy. If that is the case, then maybe the Americans should start working for Chinese wages and then they can recapture all the jobs back and flood the world with cheap goods. Otherwise, the US will end up bankrupt and Americans wondering how they became so poor so fast. But, then it will be too late.
Joined: Oct 12, 2004 Posts: 599 Location: The Pit of Despair
Posted: Tue Dec 28, 2004 12:13 pm Post subject:
Euric wrote:
trespam wrote:
When the asians decided to stop buying treasuries, interest rates will go up, the US economy will slow, the US will stop buying as much from abroad,
Where will they buy from then?
The answer is simple: they won't. they won't buy those goods in the amounts that they previously had.
Euric wrote:
Plus their companies still must pay good salaries, with benefits. Something unheard of in China and the USA.
I don't think that makes sense with your statement that European economies are experiencing slower growth. Slower growth should mean that the salaries & benefits are not as good.
Euric wrote:
What could save them is a loss of the American market to the Chinese and China being forced to raise prices to make up for loss of business from the Americans.
I don't see how this makes sense, either. If the Americans aren't buying, why would they raise the price in other countries? They actually need to sell more product to those countries, assuming that their production remains flat, so I would see the price going down to stimulate demand.
Euric wrote:
trespam wrote:
A crisis could be encountered, there could be a run on the dollar, but I suspect the fed will focus on monetary stability over economic stability and therefore will jack up interest rates.
I wonder how they will acomplish such a feat! If they could they would have started some time ago, but they can't.
They have started jacking up interest rates already. I believe they've gone from 1.0% to 2.25%, and it is expecting that they will raise rates by .25% every time they meet for the foreseeable future.
Euric wrote:
Changing them to euros or other currencies is like cashing them in and the US treasory has to pay the bearer in something acceptable of value for that dollar exchanged. Since the government has distributed more notes then it can support, the government is really powerless to find something to exchange.
I thought US dollars were traded freely against other currencies, leading to the fluctuation in its value. For the right price, there will always be buyers of US dollars.
I understand your argument, but disagree with some of the details. Collapse is always possible, but I think I am in agreement with trespam that it is not very likely in the near future. The world is run by the wealthy, and the wealthiest nation is the US. I have read that the US dollar is the most widely held currency in the world. The value of the dollar may continue to fall, but its ramifications for the US economy are good in some aspects, and bad in others. It should help to shrink the US trade deficit, but it will also bring higher interest rates to borrowers, which could stifle GDP growth for the US.
Joined: Sep 29, 2004 Posts: 2330 Location: Pennsylvania, USA
Posted: Wed Dec 29, 2004 10:21 am Post subject:
Euric wrote:
If it is all the same thing, they why does the US run up such high deficits and the EU does not? The US doesn't really have an export attitude when it come to manufacturing. Thus when sales are down, they just lay off and wait for the bust cycle to end.
With a persistent strong Euro, Europe will face the same temptations unless trade barriers persist. With Euros in your pockets and a drop in trade barriers, Europeans could find themselves with a cornucopia of cheap, high quality goods from around the world. In comparison, domestically produced goods would be a hard sell. The question is, will Europe do the same thing the US has done long ago. Probably not, which will mean that the global economy will suffer. With the US forced to reduce consumption for financial reasons and a comparatively lackluster, slow growth market in Europe, Asia, Inc. will suffer.
All times are GMT - 6 Hours Goto page Previous1, 2
Page 2 of 2
You cannot post new topics in this forum You cannot reply to topics in this forum You cannot edit your posts in this forum You cannot delete your posts in this forum You cannot vote in polls in this forum
News
Discussions
Resources
Members
Forum FAQ
Search
Usergroups
Profile
Log in to check your private messages
Log in
