I was reading the news today and came across this article about the European Union and international debt's impact on the US economy. http://www.npr.org/templates/story/story.php?storyId=123603449
"One of the things we've been counting on to help our recovery is exports," Stiglitz says, and the crisis could affect exports in another way as well. If the euro weakens in relation to the dollar, U.S. goods will become far more expensive for Europeans, who likely will buy less.
That is so true. I didn't analyze the impacts that the collapse of the E.U. would have on countries over the world. It very frightening to think that the worst is yet to come. If the E.U. stops importing goods and services from the U.S., the economy will take much longer to recover. Other countries such as China will also face some of these ripple effects. I am at a standstill as to what the world leaders can do to alleviate this problem without dire consequences on the population. With these trade deficits, I hope the governments do something that is honest and worthwhile to improve their economies and not do some "shady" deals that will have worse effects on future generations.
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ReplyDeleteIf exports stop coming ffrom the U.S., even more will probably be brought in from counrties taht have cheap labor and cheap prices- China, for examople. This wil bring China even closer to becoming the biggest economy.
ReplyDeleteThe circular nature of the global economy is rather amusing to me. If the American or European consumer do not have the capital to consume, the factories in the third world have no money to receive, thus their new middle classes crumble and their laborers are ridden with massive unemployment. Following this, consumers have fewer and more expensive goods to buy, driving the cycle even more out of whack.
ReplyDeleteChina is lending us billions of dollars because they lose if the American economy collapses. Regardless of the money already lent, they need foreign capital to continue flowing in to their factories to keep them afloat. Some of the conservatives/libertarians here have complained about the highly successful Cash for Clunkers program, but I'm sure they're glad they don't live in a country that has loaned out billions of dollars directly to another to keep its own economy running. (I state this assuming that their is little real chance of the United States not going further into debt, let alone paying it off, within the next couple of decades)
If the United States is no longer able to export products because they cost too much for other nations to afford I don't see how we will be able to leave this depression. If we continue importing at the high rates that we do as Americans and have a significant decrease in exports because of the weakening of the euro we could have even worse problems economically than before. A
ReplyDeleteWow I never thought about the U.S never being able to export products. Like Preston said, I'm not really sure how we can get out of this recession or depression or whatever. I'm sure a lot of our profits is from exports alone.
ReplyDeleteThe idea that no one will buy our stuff is kind of ridiculous. The dollar is weak now, and we still have trade deficits, so I don't see how this could be any worse. Back in the 1990's when the dollar was strong, exports were booming. Furthermore, if the Euro becomes weak the US will invest more in Europe, allowing them to stimulate their economies, and therefore trading back with us. So although the value of your currency depends on trading, there are always new markets willing to trade with the US, especially in times of financial crisis.
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