Are the Europeans crazy to be enraged by Obama's steel industry americanism?
I read with interest the article 'Barack Obama to dilute 'Buy American' plan after Europe threatens US with trade war' ( http://www.telegraph.co.uk/news/worldnews/northamerica/usa/barackobama/4414202/Barack-Obama-to-dilute-Buy-American-plan-after-Europe-threatens-US-with-trade-war.html ).
I find it hard to understand, how it is that these european nations, are apparently not able to seriously consider the possibility, that the US reducing its 'Net international investment position' (NIIP) deficit might serve the national self-interest of these European nations despite the result being some reduction of US imports of EU products. National self-interest should be seen as not just economic but as having psychological, cultural, emotional, social, and psychological components. If the US takes steps to strengthen itself economically this could eventually lead to increased long term US demand for EU products, more US tourists visiting the EU. The US and the EU have alot in common, genetically, and culturally; yet you have the EU acting as if the best thing for the EU situation in the world would be the US disappearing from the face of the earth.
Then again maybe the EU is just pretending to be offended by US attempts to normalize its trade outlook.
Foolish indeed it is, IMHO, that ivory-tower academic-theorists should contradict reality by religiously (blind faith) adhering to a free-trade economic doctrine that basically demands that: nations that are weak in terms of per capita possession of natural resources that are in demand world-wide, should commit economic suicide worshipping the false deity named Freetrade.
It all comes down to 'Net international investment position' (NIIP):
It is surprising that the revered 'Nationmaster'
( http://www.nationmaster.com/graph/eco_pub_deb-economy-public-debt ) website would provide 'public debt' data for the world's nations, defining this as 'the cumulative total of all government borrowings less repayments that are denominated in a country's home currency'-- this definition is too hard to understand, why would repayments denominated in the home currency be ignored as debt?. 'Total public and private debt owed to non-residents repayable in foreign currency, goods, or services' is provided by the venerable Nationmaster site ( http://www.nationmaster.com/graph/eco_deb_ext_pergdp-economy-debt-external-per-gdp ) which obtained the data from the 'CIA World Factbook' site; problem is that this external debt is meaningless without taking into account the reverse, what one could call 'external credit', how much foreign nations have borrowed from the nation in question. In general it appears that the world suffers from a foolish inability to understand the importance of net international investment position. I using Google could not even find what Germany's NIIP is now. The world is obviously tripping over its delusion that persons who are hard to understand are especially clever. Actually clever people are adept at making themselves easy to understand.
A couple of the best sites of the sites I visited today are described in the notes below.
Notes
Current Account Fact and Fiction (2006)
http://pages.stern.nyu.edu/~dbackus/CA/BHLT%20latest.pdf
html version http://74.125.47.132/search?q=cache:2kB5H68btZMJ:pages.stern.nyu.edu/~dbackus/CA/BHLT%2520latest.pdf+germany+france+uk+eu+%22net+international+investment%22&hl=en&ct=clnk&cd=25&gl=us
'Figure 3 US Net International Investment Position' is of interest here, it shows how from 1980 to 2000 the US NIIP changed from +1.0 trillion to -2.0 trillion. Continued decline at this rate is IMHO disastrous.
Key para here: "The US (NIIP) deficit is matched, of course, by surpluses elsewhere, but the numbers vary substantially across countries; see Table 1. The largest surpluses are Japan ($172b, 3.7% of GDP), Germany ($104b, 3.8%), China ($69b, 4.2%), Russia ($60b, 10.3%), Saudi Arabia ($52b, 20.5%), Switzerland ($43b, 12.0%), and Norway ($$34b, 13.5%). The de¯cit
countries include Spain ($55b, 5.3%), the UK ($42b, 2.0%), and Australia ($40b, 6.4%). Panel (c) shows us that advanced economies, in aggregate, accounted for a little more than half the US deficit. Emerging economies accounted for about a third, split evenly between the Middle East and Asia. What's left (the \world de¯cit" of $86b) remains a mystery;
our measures of current account balances do not balance worldwide, as they should. The major oil producing countries (the Middle East, Russia, and Norway) collectively account for about a third of the US deficit."
----------
A tale of Two 'Globalizations': Capital FLows from Rich to Poor in Two Eras of Global Finance (2006)
http://www.jfki.fu-berlin.de/faculty/economics/persons/schularick/schularick_tale_of_two.pdf
html version
http://74.125.47.132/search?q=cache:b8QFZb-JHdMJ:www.jfki.fu-berlin.de/faculty/economics/persons/schularick/schularick_tale_of_two.pdf+germany+france+uk+eu+%22net+international+investment%22&hl=en&ct=clnk&cd=13&gl=us
'Table 6 Foreign Capital Stocks of Individual Countries in % of GDP' is interesting here, it shows how much the world had invested into various nations, in 1913 and in 2000; by 'foreign capital stocks' what is meant is how much the world invested in a given nation, NOT how much the given nation invested in the world.
'Table 9 Net International Investment Positions 1914 vs 2000 % of GDP' is also interesting--even though the accompanying text and the column headings in the table are too difficult to understand, the table displays properly in the pdf version not in the Google cache. This table shows that in the year 2000, if you look at the US UK Germany France Switzerland Netherlands Italy and Canada as a group, the Net International Investment Position of all these nations combined, was negative, negative 1% of their GDP.
@2009 David Virgil Hobbs
I find it hard to understand, how it is that these european nations, are apparently not able to seriously consider the possibility, that the US reducing its 'Net international investment position' (NIIP) deficit might serve the national self-interest of these European nations despite the result being some reduction of US imports of EU products. National self-interest should be seen as not just economic but as having psychological, cultural, emotional, social, and psychological components. If the US takes steps to strengthen itself economically this could eventually lead to increased long term US demand for EU products, more US tourists visiting the EU. The US and the EU have alot in common, genetically, and culturally; yet you have the EU acting as if the best thing for the EU situation in the world would be the US disappearing from the face of the earth.
Then again maybe the EU is just pretending to be offended by US attempts to normalize its trade outlook.
Foolish indeed it is, IMHO, that ivory-tower academic-theorists should contradict reality by religiously (blind faith) adhering to a free-trade economic doctrine that basically demands that: nations that are weak in terms of per capita possession of natural resources that are in demand world-wide, should commit economic suicide worshipping the false deity named Freetrade.
It all comes down to 'Net international investment position' (NIIP):
"A country's international investment position (IIP) is a financial statement setting out the value and composition of that country's external financial assets and liabilities. The IIP is one component of the capital account of a country's balance of payments, containing for example stock of companies, real estate, financial instruments, and so on. By comparison, imports and exports of goods and services are part of the current account. ...The difference between a country's external financial assets and liabilities is the net international investment position (NIIP)."-- http://en.wikipedia.org/wiki/Net_international_investment_position
It is surprising that the revered 'Nationmaster'
( http://www.nationmaster.com/graph/eco_pub_deb-economy-public-debt ) website would provide 'public debt' data for the world's nations, defining this as 'the cumulative total of all government borrowings less repayments that are denominated in a country's home currency'-- this definition is too hard to understand, why would repayments denominated in the home currency be ignored as debt?. 'Total public and private debt owed to non-residents repayable in foreign currency, goods, or services' is provided by the venerable Nationmaster site ( http://www.nationmaster.com/graph/eco_deb_ext_pergdp-economy-debt-external-per-gdp ) which obtained the data from the 'CIA World Factbook' site; problem is that this external debt is meaningless without taking into account the reverse, what one could call 'external credit', how much foreign nations have borrowed from the nation in question. In general it appears that the world suffers from a foolish inability to understand the importance of net international investment position. I using Google could not even find what Germany's NIIP is now. The world is obviously tripping over its delusion that persons who are hard to understand are especially clever. Actually clever people are adept at making themselves easy to understand.
A couple of the best sites of the sites I visited today are described in the notes below.
Notes
Current Account Fact and Fiction (2006)
http://pages.stern.nyu.edu/~dbackus/CA/BHLT%20latest.pdf
html version http://74.125.47.132/search?q=cache:2kB5H68btZMJ:pages.stern.nyu.edu/~dbackus/CA/BHLT%2520latest.pdf+germany+france+uk+eu+%22net+international+investment%22&hl=en&ct=clnk&cd=25&gl=us
'Figure 3 US Net International Investment Position' is of interest here, it shows how from 1980 to 2000 the US NIIP changed from +1.0 trillion to -2.0 trillion. Continued decline at this rate is IMHO disastrous.
Key para here: "The US (NIIP) deficit is matched, of course, by surpluses elsewhere, but the numbers vary substantially across countries; see Table 1. The largest surpluses are Japan ($172b, 3.7% of GDP), Germany ($104b, 3.8%), China ($69b, 4.2%), Russia ($60b, 10.3%), Saudi Arabia ($52b, 20.5%), Switzerland ($43b, 12.0%), and Norway ($$34b, 13.5%). The de¯cit
countries include Spain ($55b, 5.3%), the UK ($42b, 2.0%), and Australia ($40b, 6.4%). Panel (c) shows us that advanced economies, in aggregate, accounted for a little more than half the US deficit. Emerging economies accounted for about a third, split evenly between the Middle East and Asia. What's left (the \world de¯cit" of $86b) remains a mystery;
our measures of current account balances do not balance worldwide, as they should. The major oil producing countries (the Middle East, Russia, and Norway) collectively account for about a third of the US deficit."
----------
A tale of Two 'Globalizations': Capital FLows from Rich to Poor in Two Eras of Global Finance (2006)
http://www.jfki.fu-berlin.de/faculty/economics/persons/schularick/schularick_tale_of_two.pdf
html version
http://74.125.47.132/search?q=cache:b8QFZb-JHdMJ:www.jfki.fu-berlin.de/faculty/economics/persons/schularick/schularick_tale_of_two.pdf+germany+france+uk+eu+%22net+international+investment%22&hl=en&ct=clnk&cd=13&gl=us
'Table 6 Foreign Capital Stocks of Individual Countries in % of GDP' is interesting here, it shows how much the world had invested into various nations, in 1913 and in 2000; by 'foreign capital stocks' what is meant is how much the world invested in a given nation, NOT how much the given nation invested in the world.
'Table 9 Net International Investment Positions 1914 vs 2000 % of GDP' is also interesting--even though the accompanying text and the column headings in the table are too difficult to understand, the table displays properly in the pdf version not in the Google cache. This table shows that in the year 2000, if you look at the US UK Germany France Switzerland Netherlands Italy and Canada as a group, the Net International Investment Position of all these nations combined, was negative, negative 1% of their GDP.
@2009 David Virgil Hobbs
Labels: obama steel american europe free trade protectionism
posted by David Virgil at 12:07 AM
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