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Friendly reminder that trade deficits are not inherently bad. https://www.investopedia.com/articles/investing/051515/pros-cons-trade-deficit.asp https://www.inv

by stewx 4y ago

Friendly reminder that trade deficits are not inherently bad. https://www.investopedia.com/articles/investing/051515/pros-cons-trade-deficit.asp https://www.investopedia.com/articles/investing/051515/pros-...

concinds 4y ago
This is deeply ideological, and wrong. You're using arguments levied at Trump years ago that applied to the US, a mostly services-based economy, and applying them to Germany. Except Germany is a manufacturing- and export-based economy. Take that away, and you have a recipe for economic collapse. Read the FT's article, which includes much more statements from politicians and economists. https://www.ft.com/content/6f325773-bf8a-4e28-9fc1-6bc986ee90fa https://www.ft.com/content/6f325773-bf8a-4e28-9fc1-6bc986ee9... Use the Bypass Paywalls Clean extension if you need to. Or, read what Stratfor (if you have a subscription) has been predicting for a decade now: Germany's slow decline, to be replaced as Europe's power center by Poland. Germany was already facing a worker shortage and inflation. Now the government is discussing rationing gas allocated to German businesses. Beyond the ideological arguments, it's clear that this is going to be a crisis for Germany, and for all Eurozone economies; and their reactions will determine "how bad it gets". We are looking at a probable recession across Europe. By the way, I warned months ago that sanctions against Russia would have a backfire effect: Russia is mostly unscathed, their oil and gas revenues are soaring; meanwhile Germany is talking about rationing. Sanctions don't work in an interconnected economy.
- RC_ITR 4y ago
  > This is deeply ideological, and wrong. Ok so what is correct then? I’m not seeing the reason trade deficits are inherently bad anywhere in your comment.
  - concinds 4y ago
    Trade deficits are bad for an economy whose entire strength relies on exports. edit: Germany's exports are 48% of GDP for context. And this trade deficit reflects increased import costs, which will hurt businesses since Germany is poor in raw resources. I.e., this is a problem for both the German government & German businesses, and for their whole economy.
- 0xfaded 4y ago
  Mark Blyth, who I find to be a cynical but entertaining economist, would say (paraphrasing): An export-based economy just means you let someone else consume the excess you produce. In exchange, you receive an increment to an arbitrary number stored in a computer somewhere. This might be a reasonable model for a household, but governments can print money making the value of said number somewhat fluffy. In a sense, the US got away with QE (for as long as it did) because other countries exercised tight fiscal policy. In the aftermath of 2008, the ECB was as conservative as ever and Europe relied on American $'s for liquidity. Or another way of thinking of it: so long and thanks for all the BMW's :) https://en.wikipedia.org/wiki/Mark_Blyth https://en.wikipedia.org/wiki/Mark_Blyth
  - olivermarks 4y ago
    I'm a Blyth fan but you are missing out a critical component of the right to print money, which is that the US dollar is the reserve currency of the planet. The petro dollar (offshore) is not backed by the FDIC the onshore US dollar is. The vast US military is arguably primarily to protect the right to print the world's currency. (The day Iraq started to sell oil in euros the US attacked it for example) As Blyth knows and talks about the ECB is in dire straits versus the reserve currency dollar. The EU has a difficult road ahead having completely screwed up their energy policy and are now creating food shortages in Holland and elsewhere to add to the global inflation nightmare. It's hard to tell if the US federal (it's not, it's private banks) reserve (they don't have any) are willfully incompetent or master tactical strategists...
    - Vinnl 4y ago
      Wait, what do you mean by food shortages in Holland, and especially ones caused by the EU?
      - olivermarks 4y ago
        https://www.dw.com/en/dutch-farmers-block-food-distribution-centers-over-new-environmental-rules/a-62356217 https://www.dw.com/en/dutch-farmers-block-food-distribution-... etc. dutch farmers are spraying manure at the bureaucrats buildings
- mmarq 4y ago
  > Or, read what Stratfor (if you have a subscription) has been predicting for a decade now: Germany's slow decline, to be replaced as Europe's power center by Poland. The Polish GDP per capita is 30-40% lower than the German. Assuming it will ever happen, it will take decades for Poland to replace Germany.
  - sveme 4y ago
    And it‘s half Germany‘s heads as well.
    - reducesuffering 4y ago
      German GDP is ~$3.8T to Poland's ~$600B, a roughly 6x difference. And there is hardly any trajectory change in the last 15 years, so color me skeptical Poland will overtake Germany economically anywhere in the next 50 years.
  - YarickR2 4y ago
    Germany'd GDP per capita could be halved much faster
- srvmshr 4y ago
  I think what you're referring more concretely is the difference between Balance of trade vs. Balance of payments, the latter being the addition of tertiary/financial sector. For an export driven economy like Japan, Germany or China - balance of trade could be bad. How big is the German software & banking industry to offset some of this default in the long haul?
- odiroot 4y ago
  > Or, read what Stratfor (if you have a subscription) has been predicting for a decade now: Germany's slow decline, to be replaced as Europe's power center by Poland. As a Pole, I cannot help but laugh at that. Why would that ever be the case?
  - concinds 4y ago
    Feel free to read Stratfor's site (I named an extension that allows full free access) or George Friedman's "The Next 100 Years" book. Stratfor employs many ex-US-intelligence-agency people who use the same geopolitical analysis methods for a corporate audience (though without classified data) and their views are a close approximation of the thinking of the US's intelligence community; in that sense, they are significant.
    - mythrwy 4y ago
      Friedman sometimes has some interesting takes but is often dramatically and laughably wrong. I would hesitate to take much of what they say as having much predictive accuracy at all. They do state it with an air of authority and "high caliber top secret intelligence" but still laughable.
    - throw827474737 4y ago
      > close approximation of the thinking of the US's intelligence community; in that sense, they are significant Which means in that sense it will be very likely ridicously wrong?!
      - concinds 4y ago
        If you post nonsense replies you are just disincentivizing anyone thoughtful from posting here. To reply (though you were perfectly capable of this thought yourself): Obviously; but it gives us a frame to understand geopolitical behavior by the US as it happens, and before it happens. Edward Gibbon described “secret intrigues of the palace” (palace intrigue) as “those trifling but decisive causes which so often influence the fate of empires.” Stratfor is the Pentagon's palace intrigue (several steps removed). If you've ever read Stratfor you know they expect, and plan for, the disintegration of Russia and China into smaller republics; and you can tell I don't believe in that. It is merely an indication that the US likely now sees Germany as a second-rate ally, irrelevant to its geopolitical future; and therefore doesn't care about the sanctions' effect on Germany. That is the only reason I brought it up.
- littlestymaar 4y ago
  > to be replaced as Europe's power center by Poland Not gonna lie, you had me in the first half. Poland has had an anemic demography for years (1.38 child per woman in 2021, the lowest in Eastern Europe after Ukraine and Moldova), a massive brain (and workforce more generally) drain since the fall of the Eastern Block. Its GDP per capita is even 30% lower than Czech Republic and less than a third of German's GDP. German's economy is going to face troubles, but Poland isn't even remotely close to taking any kind of economic leadership. And it won't happen until Poland fixes their natality issue (and even then, it would take them another fifty years).
- imtringued 4y ago
  >Except Germany is a manufacturing- and export-based economy. Take that away, and you have a recipe for economic collapse. Yes, it is a recipe for collapse because imbalanced trade is inherently unsustainable.
baybal2 4y ago
> Friendly reminder that trade deficits are not inherently bad. Whether trade deficits are good, or bad depends on your monetary policy. In case of Germany, it was definitely bad after them having such low interest rates for so long. It was Germany's pride — it's manufacturing industry which took damage from low rates the most.
- imtringued 4y ago
  That is completely wrong. Germany exports by indebting other nations and the only way to further indebt other nations is by lending to them at even lower interest rates.
tonymet 4y ago
it’s an unhealthy habit to endorse a very complicated topic by referring to an introductory website . that’s a flimsier approach than most religions even
- avgcorrection 4y ago
  1. Trade deficits are inherently bad 2. Trade deficits are not inherently bad Which claim sounds more “flimsy”?
  - UweSchmidt 4y ago
    It would be better to articulate the gist of an on-topic thought in the confines of a HN post, rather than sending people off to go read something. If something in the article is wrong, let's address that exact thing in the comment. If you have understood your own beliefs well and can articulate them, then you can make great impact on a thread that way. "Just read this link" on a complex and controversial topic may be comparable to "Just read this religious tract".
    - avgcorrection 4y ago
      > "Just read this link" on a complex and controversial topic may be comparable to "Just read this religious tract". That’s a ridiculous and unhinged comparison.
      - nebulousthree 4y ago
        Economics in general is more akin to religion than it is to science. Seems pretty hinged to me
        avgcorrection 4y ago
        Incoherent response. tonymet (OP) protested that it was a “complicated topic”, not that economics itself is bunk. In fact saying that it is a complicated topic implies that one should respect the field. You can’t arbitrarily denigrate one side of the argument because economics is a religion when both sides take it as a given that economics is a rational field of study.

by stewx 4y ago

concinds 4y ago

This is deeply ideological, and wrong. You're using arguments levied at Trump years ago that applied to the US, a mostly services-based economy, and applying them to Germany. Except Germany is a manufacturing- and export-based economy. Take that away, and you have a recipe for economic collapse. Read the FT's article, which includes much more statements from politicians and economists. https://www.ft.com/content/6f325773-bf8a-4e28-9fc1-6bc986ee90fa https://www.ft.com/content/6f325773-bf8a-4e28-9fc1-6bc986ee9... Use the Bypass Paywalls Clean extension if you need to. Or, read what Stratfor (if you have a subscription) has been predicting for a decade now: Germany's slow decline, to be replaced as Europe's power center by Poland. Germany was already facing a worker shortage and inflation. Now the government is discussing rationing gas allocated to German businesses. Beyond the ideological arguments, it's clear that this is going to be a crisis for Germany, and for all Eurozone economies; and their reactions will determine "how bad it gets". We are looking at a probable recession across Europe. By the way, I warned months ago that sanctions against Russia would have a backfire effect: Russia is mostly unscathed, their oil and gas revenues are soaring; meanwhile Germany is talking about rationing. Sanctions don't work in an interconnected economy.

RC_ITR 4y ago
> This is deeply ideological, and wrong. Ok so what is correct then? I’m not seeing the reason trade deficits are inherently bad anywhere in your comment.
- concinds 4y ago
  Trade deficits are bad for an economy whose entire strength relies on exports. edit: Germany's exports are 48% of GDP for context. And this trade deficit reflects increased import costs, which will hurt businesses since Germany is poor in raw resources. I.e., this is a problem for both the German government & German businesses, and for their whole economy.
0xfaded 4y ago
Mark Blyth, who I find to be a cynical but entertaining economist, would say (paraphrasing): An export-based economy just means you let someone else consume the excess you produce. In exchange, you receive an increment to an arbitrary number stored in a computer somewhere. This might be a reasonable model for a household, but governments can print money making the value of said number somewhat fluffy. In a sense, the US got away with QE (for as long as it did) because other countries exercised tight fiscal policy. In the aftermath of 2008, the ECB was as conservative as ever and Europe relied on American $'s for liquidity. Or another way of thinking of it: so long and thanks for all the BMW's :) https://en.wikipedia.org/wiki/Mark_Blyth https://en.wikipedia.org/wiki/Mark_Blyth
- olivermarks 4y ago
  I'm a Blyth fan but you are missing out a critical component of the right to print money, which is that the US dollar is the reserve currency of the planet. The petro dollar (offshore) is not backed by the FDIC the onshore US dollar is. The vast US military is arguably primarily to protect the right to print the world's currency. (The day Iraq started to sell oil in euros the US attacked it for example) As Blyth knows and talks about the ECB is in dire straits versus the reserve currency dollar. The EU has a difficult road ahead having completely screwed up their energy policy and are now creating food shortages in Holland and elsewhere to add to the global inflation nightmare. It's hard to tell if the US federal (it's not, it's private banks) reserve (they don't have any) are willfully incompetent or master tactical strategists...
  - Vinnl 4y ago
    Wait, what do you mean by food shortages in Holland, and especially ones caused by the EU?
    - olivermarks 4y ago
      https://www.dw.com/en/dutch-farmers-block-food-distribution-centers-over-new-environmental-rules/a-62356217 https://www.dw.com/en/dutch-farmers-block-food-distribution-... etc. dutch farmers are spraying manure at the bureaucrats buildings
mmarq 4y ago
> Or, read what Stratfor (if you have a subscription) has been predicting for a decade now: Germany's slow decline, to be replaced as Europe's power center by Poland. The Polish GDP per capita is 30-40% lower than the German. Assuming it will ever happen, it will take decades for Poland to replace Germany.
- sveme 4y ago
  And it‘s half Germany‘s heads as well.
  - reducesuffering 4y ago
    German GDP is ~$3.8T to Poland's ~$600B, a roughly 6x difference. And there is hardly any trajectory change in the last 15 years, so color me skeptical Poland will overtake Germany economically anywhere in the next 50 years.
- YarickR2 4y ago
  Germany'd GDP per capita could be halved much faster
srvmshr 4y ago
I think what you're referring more concretely is the difference between Balance of trade vs. Balance of payments, the latter being the addition of tertiary/financial sector. For an export driven economy like Japan, Germany or China - balance of trade could be bad. How big is the German software & banking industry to offset some of this default in the long haul?
odiroot 4y ago
> Or, read what Stratfor (if you have a subscription) has been predicting for a decade now: Germany's slow decline, to be replaced as Europe's power center by Poland. As a Pole, I cannot help but laugh at that. Why would that ever be the case?
- concinds 4y ago
  Feel free to read Stratfor's site (I named an extension that allows full free access) or George Friedman's "The Next 100 Years" book. Stratfor employs many ex-US-intelligence-agency people who use the same geopolitical analysis methods for a corporate audience (though without classified data) and their views are a close approximation of the thinking of the US's intelligence community; in that sense, they are significant.
  - mythrwy 4y ago
    Friedman sometimes has some interesting takes but is often dramatically and laughably wrong. I would hesitate to take much of what they say as having much predictive accuracy at all. They do state it with an air of authority and "high caliber top secret intelligence" but still laughable.
  - throw827474737 4y ago
    > close approximation of the thinking of the US's intelligence community; in that sense, they are significant Which means in that sense it will be very likely ridicously wrong?!
    - concinds 4y ago
      If you post nonsense replies you are just disincentivizing anyone thoughtful from posting here. To reply (though you were perfectly capable of this thought yourself): Obviously; but it gives us a frame to understand geopolitical behavior by the US as it happens, and before it happens. Edward Gibbon described “secret intrigues of the palace” (palace intrigue) as “those trifling but decisive causes which so often influence the fate of empires.” Stratfor is the Pentagon's palace intrigue (several steps removed). If you've ever read Stratfor you know they expect, and plan for, the disintegration of Russia and China into smaller republics; and you can tell I don't believe in that. It is merely an indication that the US likely now sees Germany as a second-rate ally, irrelevant to its geopolitical future; and therefore doesn't care about the sanctions' effect on Germany. That is the only reason I brought it up.
littlestymaar 4y ago
> to be replaced as Europe's power center by Poland Not gonna lie, you had me in the first half. Poland has had an anemic demography for years (1.38 child per woman in 2021, the lowest in Eastern Europe after Ukraine and Moldova), a massive brain (and workforce more generally) drain since the fall of the Eastern Block. Its GDP per capita is even 30% lower than Czech Republic and less than a third of German's GDP. German's economy is going to face troubles, but Poland isn't even remotely close to taking any kind of economic leadership. And it won't happen until Poland fixes their natality issue (and even then, it would take them another fifty years).
imtringued 4y ago
>Except Germany is a manufacturing- and export-based economy. Take that away, and you have a recipe for economic collapse. Yes, it is a recipe for collapse because imbalanced trade is inherently unsustainable.

baybal2 4y ago

> Friendly reminder that trade deficits are not inherently bad. Whether trade deficits are good, or bad depends on your monetary policy. In case of Germany, it was definitely bad after them having such low interest rates for so long. It was Germany's pride — it's manufacturing industry which took damage from low rates the most.

imtringued 4y ago
That is completely wrong. Germany exports by indebting other nations and the only way to further indebt other nations is by lending to them at even lower interest rates.

tonymet 4y ago

it’s an unhealthy habit to endorse a very complicated topic by referring to an introductory website . that’s a flimsier approach than most religions even

avgcorrection 4y ago
1. Trade deficits are inherently bad 2. Trade deficits are not inherently bad Which claim sounds more “flimsy”?
- UweSchmidt 4y ago
  It would be better to articulate the gist of an on-topic thought in the confines of a HN post, rather than sending people off to go read something. If something in the article is wrong, let's address that exact thing in the comment. If you have understood your own beliefs well and can articulate them, then you can make great impact on a thread that way. "Just read this link" on a complex and controversial topic may be comparable to "Just read this religious tract".
  - avgcorrection 4y ago
    > "Just read this link" on a complex and controversial topic may be comparable to "Just read this religious tract". That’s a ridiculous and unhinged comparison.
    - nebulousthree 4y ago
      Economics in general is more akin to religion than it is to science. Seems pretty hinged to me
      - avgcorrection 4y ago
        Incoherent response. tonymet (OP) protested that it was a “complicated topic”, not that economics itself is bunk. In fact saying that it is a complicated topic implies that one should respect the field. You can’t arbitrarily denigrate one side of the argument because economics is a religion when both sides take it as a given that economics is a rational field of study.