Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from Term Paper:
4 trillion to about $5 trillion dollars at the end of 2008 to support a rise in U.S. net external debt from $3.3 trillion to $7.4 trillion. (Ibid. 6) Continued financing of the U.S. trade deficits by the rest of the world is also not without its long-term problems: the U.S. would accumulate so much debt over time that the ultimate cost of adjustment would become too high for the U.S. economy. Hence, all indicators regarding the sustainability of the U.S. trade deficit are blinking red, despite the brave face that the Bush administration puts on the issue.
Is China the Source of the Deficit Problem?
The U.S. administration believes that the alleged under-valuation of the Chinese Yuan is the source of its deficit problems since there is a huge and growing trade imbalance between the U.S. exports and imports to China. The U.S. Senate recently passed a bill, threatening to slap a 27.5% tariff on Chinese imports if China does not revalue its currency within 180 days. ("Yuan Revaluation no help..." 2005) Most independent analysts as well as Chinese officials disagree with the contention that a revaluation of the Chinese currency would solve the U.S. deficit problem. China accounts for only 10% of the United State's total trade, so if there were a 10% revaluation of the Yuan, it would reduce the dollar's value by just 1%. ("Cock-a-Doodle Doo" 2005)
Possible Solutions to the Trade Deficit Problem fall in the value of the dollar is not enough for reducing the U.S. trade deficit sufficiently. The American government needs to borrow less by reducing its budget deficit and household savings in the U.S., which are among the lowest in the world, need to improve. The best way out according to most analysts is a gradual reduction in the U.S. trade deficit to sustain the U.S. And global growth rates. Roubini and Setser, in a recent paper, estimate that a measured reduction of the trade deficit by 0.5% annually would eliminate the deficit by 2015. (p. 6)
Conclusion general rule of economics holds that a persistent trade deficit results in depreciation in a country's currency. The U.S. has shown a persistent and rising trade deficit for the last several years, which has now reached alarming proportions. Although the U.S. economy and the dollar have been able to sustain the deficit due to status of the dollar as the sole global reserve currency and the need of export-oriented economies to support the American demand, strains are beginning to show. The dollar is losing value and the U.S. foreign debt is now almost 30% of its GDP. These are alarming signals for the U.S. And the world economies. Clearly, it is time to reverse the trend of the fast rising trade deficit by the adoption of appropriate policies.
Balance of Trade." (2005). [Online]. Wikipedia the Free Encyclopedia. Available from: http://en.wikipedia.org/wiki/Trade_deficit[19 April 2005]
Beck, B. (12 April 2005). "It's more than the deficit, stupid!" [Online]. Political gateway. Available from: http://www.politicalgateway.com/main/columns/read.html?col=334[19 April 2005]
Cock-a-doodle-doo" (3 Feb 2005). [Online]. The Economist. Available from: http://internationalecon.com/MyCourses/News%20Stories/Economist_com%20%20China's%20exchange%20rate.htm[19 April 2005]
Mann, C.L. (1999). Is the U.S. Trade Deficit Sustainable? Washington D.C: Institute for International Economics
Moffatt, M. (n.d.) "The Trade Deficit and Exchange Rates." [Online]. Your Guide to Economics. Available from: http://economics.about.com/cs/analysis/a/trade_deficit.htm[19 April 2005]
The Passing of the Buck?" (2 Dec 2004) [Online]. The Economist. Available from: http://www.economist.com/finance/displaystory.cfm?story_id=3445928[19 April 2005]
Roubini, N. And Setser, B. (Nov 2004). "The U.S. As a Net Debtor: The Sustainability of the U.S. External Imbalances." [Online]. Available from: http://pages.stern.nyu.edu/~nroubini/papers/Roubini-Setser-U.S.-External-Imbalances.pdf[19 April 2005]
Ruby, D.A. (2003). "The Balance of Payments." [Online] Digital Economist. Available from http://www.digitaleconomist.com/bop_4020.html[19 April 2005]
Siddiqi, M. (April 2003). "Pressure Mounts on Dollar." African Business: 18+
Yuan revaluation no help to U.S. trade deficit problem." (10 April 2005). [Online]. People's Daily Online. Available from http://english.people.com.cn/200504/10/eng20050410_180317.html[19 April 2005]
or for that matter even a large, persistent trade surplus could be a sign of trouble
Due to a persistent positive balance of payments at the time, Japan had large amounts of money, which led to questionable overseas investment by Japanese in areas such as real estate. It also led to a domestic price spiral triggered mainly due to the protectionist measures adopted to create the trade surplus in the first place
The U.S. dollar has depreciated by more than 30% over the last 3 years
The Foreign Exchange Reserves (running into billions of dollars) are held by most counties in the form of U.S. Treasury bonds, short-term securities and dollar-denominated cash, i.e. fixed-term bank deposits or certificates of deposit. (Siddiqi, 2003, p. 18)
Larry Summers, a Treasury secretary under President Clinton, calls this the "balance of financial terror"
About 65% of the global foreign exchange reserves are currently held in U.S. dollars.
A significant fall in the value of the dollar would also mean the end of it status as the reserve currency with all the attached implications
"U S Trade Balance & Exchange" (2005, April 21) Retrieved December 9, 2016, from http://www.paperdue.com/essay/us-trade-balance-amp-exchange-65309
"U S Trade Balance & Exchange" 21 April 2005. Web.9 December. 2016. <http://www.paperdue.com/essay/us-trade-balance-amp-exchange-65309>
"U S Trade Balance & Exchange", 21 April 2005, Accessed.9 December. 2016, http://www.paperdue.com/essay/us-trade-balance-amp-exchange-65309
Branding in Service Markets Amp Aim And Objectives Themes for AMP Characteristics Composing Branding Concept Branding Evolution S-D Logic and Service Markets Branding Challenges in Service Markets Considerations for Effective Service Branding Categories and Themes Branding Theory Evolution S-D Logic and Service Markets Branding Challenges in Service Markets Considerations for Effective Service Branding Branding Concept Characteristics Characteristics Composing Branding Concept Sampling of Studies Reviewed Evolution of Branding Theory Evolution of Marketing Service-Brand-Relationship-Value Triangle Brand Identity, Position & Image Just as marketing increasingly influences most aspects of the consumer's lives, brands
Executive Stock Option Plans "If the company does not do better than its competitors, but the stock market goes up, executives do very well from their stock options. This makes no sense." Discuss viewpoint. Can you think of alternatives to the usual executive option plan that take the viewpoint into account? Executive stock options are performance-based incentive plans that became popular in the 1950s and 1960s. They declined due to the stock
Direct to Consumer Advertising HISTORY OF DRUG ADVERTISING THE DTC ADVERTISING PHENOMENON CREATING DEMAND DECEPTIVE ADVERTISING - A WOLF IN SHEEP'S CLOTHING CAUSE OF DEATH PROFIT UTILIZATION, PRICING, AND DEMOGRAPHICS LEGISLATION, POLITICS AND PATENTS LEGISLATIVE INITIATIVES REGARDING DTC RECALLED and/or DEADLY DRUGS In order to provide the most efficient method of evaluation, the study will utilize existing stores of qualitative and quantitative data from reliable sources, such as U.S. Government statistical references, University studies, and the studies and publications of non-profit