The soaring Trade Deficit is no surprise.
The US is still importing like mad, but now with a weaker dollar!
Hence, the increase in the dollar value of the import deficit.
If something is priced in Yen or Euros and it's brought by an American with dollars, the weak dollar means you PAY MORE!
IT'S NO DIFFERENT THAT THOSE HOTEL ROOMS IN PARIS OR ROME! THEY SIMPLY COST AMERICANS MORE NOW THAT THE DOLLAR IS WEAK!
OR, PUT ANOTHER WAY;
NOTHING HAS CHANGED BUT THE VALUE OF THE DOLLAR.
More troubling is the decline in exports. After all, the weak dollar was supposed to help US exports. The problem is that so little is actually produced in the US anymore! And, just "exporting" scrap metal and paper pulp to Asia is pretty low value added. And, it doesn't look like aerospace/aviation is going to help this time around.
HERE'S A NIGHTMARE SCENARIO TO WORRY ABOUT:
WHAT IF THE WEAKER DOLLAR ACTUALLY INCREASES THE TRADE DEFICIT LONG TERM INSTEAD OF LOWERING IT, AS THE TEXTBOOKS PREDICT?
ANYONE FOR EURO AT 200?
YEN AT 50?
COULD THE US ECONOMY REALLY BE THAT SICK?
