2004_Trade_Deficit

Man the Lifeboats

Billionaires & Bankers First

Now even Federal Reserve Chairman Allen Greenspan and money magnates Bill Gates and Warren Buffett are worried. On February 10, the U.S. Census Bureau released its latest foreign trade figures for December and 2004. The balance of trade picture continues to spiral out of control..

With the December trade deficit coming in at $56.4 billion, slightly less than the November revised number of $59.3 billion, the full year trade imbalance hit an astonishing $617.7 billion, up 24.4 percent over 2003.

"We now have the Grand Canyon of trade deficits," exclaimed Joel Naroff, leader of a Holland, PA forecasting firm. "Actually," he continued, "deficit is really a misnomer. Chasm, gorge, black hole, infinitely deep well all fit the description better."

The 2004 trade deficit with China escalated a whopping 30.5 percent over 2003 to end the year at another new record high of $162 billion.

As the U.S. consumer continues to buy everything Chinese, the Chinese communists continue to rapidly build the world's largest and best equipped military force, much of it with the billions in profits from the sales of goods to the United States and elsewhere.

At a banking conference in Frankfurt, Germany in late November, 2004 Greenspan expressed great concern for the ever rising U.S. trade deficit and the consequential fall in the value of the U.S. Dollar against world currencies. As the deficit swells and the dollar falls, Greenspan noted, foreign investors, who support America's ravenous appetite for more debt, might become more nervous and sell off their dollar-denominated investments in the U.S. If such a scenario developed, U.S. stock and bond markets would rapidly unravel.

Apparently, super money gurus, Bill Gates, Chairman of Microsoft and Warren Buffett, Chairman of Berkshire Hathaway, agree with Greenspan's assessment of the dollar's future.

"The ol' dollar, it's gonna go down," Gates has been quoted as saying recently. Both Gates and Buffett have "shorted" the U.S. dollar with billions of their dollar-denominated assets. And, no surprise, China also has divested itself of the U.S. dollar.

"The U.S. dollar is no longer -- in our opinion -- a stable currency and is devaluing all the time," stated Fan Gang, director of China's National Economic Research Institute in Beijing at the World Economic Forum in late January.

If the dollar continues to slide, big money movers like Gates and Buffett will make a financial killing while the average U.S. worker's retirement assets will be sent reeling.

With this dismal economic performance, along with rising interest rates and unstable crude oil prices, are we headed for another, but deeper recession?