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1998 - $233.4 billion deficit
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BALANCE-OF-PAYMENTS CURRENT ACCOUNT is an indicator of a countries economic health. It includes among other things, investment flows and foreign aid payments (see below).
One way of defining the current account balance:
1. The sum of a country's TRADE SURPLUS/DEFICIT, the INVESTMENT INCOME paid to OR received from foreigners, and net transfers (such as money sent home by migrant workers).
2. The difference between a country's saving and its investment. A country that invests more than it saves must obtain resources from abroad, meaning that it has to run a current-account deficit. A country that saves more than it invests will export resources, meaning that it has to run a current-account surplus.
3. The addition to or reduction of a country's claims on the rest of the world.
A country that continually runs a current-account deficit will become ever more indebted to foreigners.
(reference: Figures to fret about, Finance and Economics, The Economist, July 11th, 1998, page 76).
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From the above, lets look at:
1. The sum of a country's TRADE SURPLUS/DEFICIT, the INVESTMENT INCOME paid to OR received from foreigners, and net transfers (such as money sent home by migrant workers).
More specifically:
1. The sum of a country's TRADE SURPLUS/DEFICIT...
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Again from the above, lets look at:
1. The sum of a country's TRADE SURPLUS/DEFICIT, the INVESTMENT INCOME paid to OR received from foreigners, and net transfers (such as money sent home by migrant workers).
More specifically:
1. ...the INVESTMENT INCOME paid to OR received from foreigners...
Lets see now - if a foreign company such as Honda, Toyota, Fuji, Daimler-Benz, etc. invest in the United States - say they build a plant(s) - the profits generated from that/those plant(s) go back to the country where that company is based.
For those of you who have worked in industry, did you ever hear that a specific plant was very profitable? It was a money maker?
So, after they pay their U. S. employees and other bills, the profits go to Japan, German, etc. If you know anything about business, you know that you want to keep the profits in this country. The profits are significant. Yet our government never reports these figures.
To simplify this a little, I'll use the example of an automobile dealership. After the owner pays all of his employees and other expenses, he keeps the profits. Have you ever been to the house of an individual who owns an auto dealership(s)? Who is richer, the employees or the owner?
Who is getting richer, Japan, Germany or the United States?
Who's the real loser here? The United States and its citizens?
I'm all for foreign trade - but lets not give away the country - we need the MONEY in the good old USA (to pay for bridges, dams, disability benefits, hospitals/health care, government pork spending, pensions/retirement programs, roads, schools, social security, unemployment benefits, etc.).
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Japan's Trade: Japan's trade surplus surged nearly 39% in 1998 to a record high, further diminishing hopes that Asia's largest economy will act as a buyer of last resort for goods produced in Asia. Japan's current account surplus, the broadest measure of trade, soared TO $139 billion in 1998, the Finance Ministry said Monday.
(reference: MONEYLINE; Japan's Trade:, USA Today, February 16, 1999, page 1B).
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From the above, lets look at:
3. The addition to or reduction of a country's claims on the rest of the world.
The U.S. government had agreed to forgive the bulk of the $5,700,000,000.00 debt owed by 36 countries on loans for humanitarian aid and commercial development. Clinton pledged on Wednesday to forgive the entire debt.
The money needed to fund the additional debt relief announced by Clinton on Wednesday was included in a $970 million four-year budget appropriation request the White House sent to Congress last week. The proposal has broad, bipartisan support.
Reference: Debt relief for poorest nations pledged, USA Today, September 25, 1999, page 7A
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 drobac@mailcity.com |
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