Wrong Headline

A headline in a story in today’s NYT:

“Imports Rose in February, Building Hope for Recovery”

The headline should have read:

“Imports Rose in February, America Borrow More From Overseas”


“Imports Rose in February, America Sinks Deeper into Debt”


“Imports Rose in February, No Wonder Americans Are Having a Tough Time Finding Jobs”


  1. Hope exports rose in March.

  2. 7.9 million homeowners (10.2% of those with mortgages) arent making house payments so they can buy more trinkets from china…

    this isnt going to end well…

  3. You should try reading the actual article, Mike, rather than just the headline. First, a trade deficit doesn’t mean increased debt, it’s just an arbitrary summing up of supposed US goods that were sold abroad minus international goods sold here. That deficit is likely financed by income, not debt as lending is still down, so you are making a logical leap to attribute it to debt. A trade deficit is a meaningless figure, just as California’s trade deficit with Texas is irrelevant. Second, as the article notes, booming international markets mean more markets for the US to sell into. As this 60 minutes piece noted, the same “Buy American” clauses and tariffs that steel producers want, and have won to some degree, mean the loss of jobs in US companies like Caterpillar that sell into those markets, as other countries retaliate in a trade war. Ultimately in a recession like this, weak american industries bitch and whine and try and make silly arguments like you’re making, to try and get the rest of us to baby them and pay them more, rather than getting the same products cheaper from abroad. Please stop repeating their dumb arguments.

    • Mike Mandel says:


      Total U.S. debt to the rest of the world, now $7.8 trillion, is rising. Take a look at the federal reserve flow of funds accounts, Table L.107.

      What’s happening is that the federal government is borrowing big from overseas, and then spending the money, which is enabling the private sector to borrow less.

  4. Ajay – by definition, our net foreign indebtness rises when we have a trade deficit. But in the spirit of what the article and you may be saying here, Mike could have suggested an another alternative headline that captures the possibility that higher imports were the effect (not the cause) of US households consuming more. The headline is goofy in that it sort of reverses cause and effect.

  5. Mike, so foreign debt grew, so what? Globalization isn’t just for manufactured goods, it’s for finance also, particularly because of how mobile financial capital is. I see no reason to complain because foreign creditors are willing to loan us money, the problem is when they won’t, like what’s happening to Greece today. Besides, whether such debt is rising or not, you don’t know what it’s being used to buy. Americans might mostly use that debt to buy locally produced goods while using their cash to buy cheap foreign goods. Making a causal connection between that debt and the rise of imports is not just silly, it’s without any evidence. As for the federal govt borrowing big from overseas, my understanding is that the Chinese have stopped buying Treasuries, so that’s not what I’ve heard. Ultimately I’m saying that not only are these things not happening, but it wouldn’t matter if they were.

    pgl, I think you may be getting trade deficits confused with govt deficits. When the govt cannot pay for all its spending with revenues, there’s a budget deficit, which is made up by borrowing. However, a trade deficit simply means that Americans broadly speaking bought more foreign goods than they bought american goods. There is no real deficit or debt that needs to be made up as these are diverse individuals making solitary buying decisions, not a single entity with a single balance sheet. You are wrongly using similar terminology to describe completely different phenomena. The whole concept of such a deficit is silly, a relic of antiquated 19th century mercantilist theories that have been discredited for a century or more.

  6. The Fifth Horseman says:

    The non-oil trade deficit, as a % of GDP, has actually shrunk to a 10-year low. China has crossed a tipping point of domestic demand, that has greatly reduced their imbalance with America.

    It is OIL that is now 60% of the US trade deficit.

  7. I would like to nominate a word for the next decade. It is repudiation. From what I can see there is no alternative. Government debt and obligation is out of control across the developed countries (my own country, Australia, is one of the few exceptions – we are still in the earlier stage of private debt being out of control and getting rapidly worse). Inflation has run its course and any uptick in inflation would be like jamming a spanner in the machinery because it would force up interest rates on an already insurmountable pile of debt.
    As I see the future the piling on of public debt and obligations will gradually squeeze public administration until it is obvious to the meanest intelligence that something is badly wrong. At that point governments will be elected with the mandate to make to make the choice between paying teachers, police and firemen and caring for the old and sick, and honouring obligations to foreign governments and mutinational banking cartels.
    This will almost certainly be ugly, especially with the chief debtor being both the most powerful country on earth and the current ruling elite of the chief debtor being intimiately linked with the aformentioned cartels.
    Anyone who can see a way of getting this done without major human damage should be starting their run for the presidency right now.
    Finally a quote from one of the rattier web sites I visit that should serve as a warning for the multinational banking cartels:
    “1125 A.D. In this year before Christmas King Henry sent from Normandy to England and gave instructions that all moneyers … be deprived of their members … Bishop Roger of Salisbury commanded them all to assemble at Winchester by Christmas. When they came hither they were then taken one by one, and each deprived of the right hand and the testicles below. All this was done in twelve days between Christmas and Epiphany, and was entirely justified because they had ruined the whole country by the magnitude of their fraud which they paid for in full.” -The Laud Chronicle (E)


  8. Rycoka, there are a lot of apocalyptic visions running through peoples’ minds right now, no doubt precipitated by the current recession, but I’m fairly sanguine about most of what you mention. Teaching is an information service, the ranks of teachers, many working in public schools, will soon be decimated by online learning. Police and firemen will be replaced by private services, as people increasingly understand how they’re getting screwed by such govt services. As for banking cartels, there’s lots of wild-eyed conspiracy talk, not a lot of evidence. What happened to Lehman’s shareholders and creditors or Bear and Fannie/Freddie’s shareholders, they didn’t pay their dues to the cartel? This is the same boom-bust cycle that has repeated for millenia, spurred by the all too human stupidity of man, that is inevitably corrected by the world he lives in. Blaming bankers for the delusion of crowds is just silly, all they are are the facilitators who then pay the same price. The worst thing we can do now is run around like chickens, particularly when we are so rich. In the US, $15 trillion of govt debt is not insurmountable when compared to $54 trillion in household net worth, particularly as we’re about to rocket upwards with the boom of the information revolution. There will be a fight over who is responsible for the profligate behavior that led to that debt and who should pay for it, but some compromise will be reached and we’ll move on into our bright future. 🙂

  9. AJay,
    I guess there is a fairly broad range of possible outcomes still, some are just more probable than others. I don’t think the bankers are “evil”, just consumed in a lunatic groupthink that allows them to believe that the enormous burden they place on society is justified by their virtue and strategic importance. As for government debt, it is just the tip of the iceberg, the other obligations such as social security are far more interesting. And as for that $54T in household net worth it would be interesting to see how well it is spread and what it what sort of income generating potential it represents.

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