The Only Real Issue That Hurts Republicans in 2004

[MarkDel]

I'm sure most of you out there will disagree with me, but there is only one issue out there that could prevent George W. Bush from easily winning a second term...

JOBS!!!

Forget the idiocy the Democrats keep talking about Weapons of Mass Destruction, Vietnam-like quagmires, George Bush is AWOL, blah, blah, blah...all of that means NOTHING.

As the 2002 midterm elections proved, the average American LIKES George Bush, and likes MOST of the Republican policies relating to international relations and economics. Also, most Americans do not approve of the way the modern Democratic Party behaves...see Paul Wellstone's funeral...see comments of George Soros...see comments of Michael Moore, etc, etc....

But where we (Republicans) are vulnerable is on the issue of jobs in general, and more specfically, the loss of manufacturing and quasi-service jobs (telemarketing, tech support, etc..) to foreign workers. I know most of my fellow Republicans will disagree with me, but the truth is that NAFTA and other similiar trade policies have been a short term disaster for the United States economy. Sure, Wall Street has been humming along and the second half of the 1990's featured a boom economy, but the truth is that the growth of the 1990's was built on a house of cards. Most of the growth was based on high tech, internet based business that proved to be non-profitable, and the jobs it produced are already gone and will NOT be coming back.

Now, I'm as educated as most of you and I certainly understand the theoretical basis behind free trade...in fact I was a strong proponent of NAFTA myself, but the fact remains that this nation has lost too many good paying jobs that are NEVER coming back.

So, it's my contention that the average American will be highly suspectible to the rhetoric of Democrats (like John Edwards or Dick Gephardt once one of them becomes the VP candidate to Kerry) who rail against the loss of jobs to foreign workers. I still think Bush is a solid favorite to win, but this Jobs/Trade issue could prove to be the Holy Grail to a Democratic Party which seemingly had ZERO message from 2000 to 2003.

What do you guys think?

[M]

Unemployment's down to 5.6 and shrinking. Not as low as people thought it might go, but that's good because the Fed won't mess with the bond rate. The economy is on the way up. Eventually we should reach a boom, probably early next year.

The issue I'm most worried about is WMD. Bush is now saying that we might have been wrong in Iraq, but he didn't do it purposefully if so, and there were still perfectly good reasons to go to war (better ones actually, Saddam supported terror, was a monstrous dictator who had to go as soon as possible, and his fall could spur a democratic outburst acroos the Mideast.) This is actually a decent argument and if it is the major issue, Bush will win reelection. BUT though it is not a real political problem, it could be a policy problem. Say the ayatollahs are on the verge of acquiring a warhead. Bush says we must consider military options, and the media and the libs will go, "fool me twice, shame on me". Effectively it could make it politically impossible for the USA to save the Middle East from becoming so much radioactive slag.

[MarkDel]

M,

You're right about the WMD issue being a potential long term policy problem, but I'm talking strictly about the politics of the 2004 Election.

And even the dropping unemployment you pointed out may not save us from this issue. Even some of the people who have found jobs recently have not found the same QUALITY of job they once had. What you're finding, is people settling for ANY job rather than continuing to wait around for the good job they once had or were educated to do. Do you agree?

[M]

Sure, you're right it's a problem now. But firms historically start hiring bigtime in the spring. And the best indicator is how people feel about the economy in the future. For the first time in a long time, the economic is looking rosy to most Americans. BTW, current unemployment is the lowest since October 2001, to give you some perspective.)

[Gustaf]

Well, i think you're exaggeriting, but jobs will probably be the most important issue, that's true. But we don't know what will happen in the coming 6 moths or so and change evrything.

This was a really badly spellt post, but I am too tired to correct my mistakes right now...

[Dave from Michigan]

This issue could really hurt him the national unemployment numbers may be 5.6% but it is higher in some states like in Michigan it's 7.2% .

[opebo]

This issue could really hurt him the national unemployment numbers may be 5.6% but it is higher in some states like in Michigan it's 7.2% .

Yeah, I don't think unemployment will be that much of an issue nationally by election time, as it will be plummeting.  Problem is if the reduction is concentrated in hopelessly Dem states or solidly Republican states.  MA is going Dem even with 0% unemployment, and I believe Texas would go for Bush with 10%.  But its in OH, MI, PA, and IL that its an issue.

http://www.bls.gov/web/laumstcm.htm

[jaichind]

Unemployment's down to 5.6 and shrinking. Not as low as people thought it might go, but that's good because the Fed won't mess with the bond rate. The economy is on the way up. Eventually we should reach a boom, probably early next year.

The issue I'm most worried about is WMD. Bush is now saying that we might have been wrong in Iraq, but he didn't do it purposefully if so, and there were still perfectly good reasons to go to war (better ones actually, Saddam supported terror, was a monstrous dictator who had to go as soon as possible, and his fall could spur a democratic outburst acroos the Mideast.) This is actually a decent argument and if it is the major issue, Bush will win reelection. BUT though it is not a real political problem, it could be a policy problem. Say the ayatollahs are on the verge of acquiring a warhead. Bush says we must consider military options, and the media and the libs will go, "fool me twice, shame on me". Effectively it could make it politically impossible for the USA to save the Middle East from becoming so much radioactive slag.

Bush can talk about the decrease in unemployment rate to 5.6% all he wants but the fact is that total labor participation rate is still just 66.1%, no higher than most of last year.  While 112,000 jobs were added, about 76,000 of it are in the retail industry.  Due to a weak retail holiday season late last year, not as much retail employment did not increase much late last year and as a result the increase in retail employement in January 2004 is artifical as less surplus retail employees are laid off.  Besides, most of these jobs are low paying service jobs and reflect the fact that the structural economic problems in the US economy are unresolved.  While these problems are not the result of the actions of the Bush administration, it has do nothing to solve them and in fact make them worse on the long run.  The fact is the Bush administration is the first administration to have a net negative change in employment since the Hoover administration.

[MarkDel]

Jaichind,

Much of what you say is true, but much of what you say is also incorrect or misleading. Here's where you are right and wrong:

YOU WERE RIGHT:

1. The drop of the unemployment rate from 6.3 to 5.6 IS misleading because many of the people who dropped off that list simply ran out of unemployment benefits and are still not working.

2. Most of the new jobs created were low paying retail and service jobs.

3. There are currently profound and fundamental structural problems with the U.S. economy.

4. These prolems are NOT the result of actions by the Bush administration.

YOU WERE WRONG

1. You said Bush has done nothing to try and solve these problems, but you ignore massive tax cuts which HAVE acted as a stimulant to the economy.

2. The comparison to the Hoover administration was quite silly in light of the overall economic picture. I believe you'll find that the economy was FAR worse under Carter than Bush, for example.

3. In your assessment of the unemployment figures, you fail to point out the massive increase in self-employment over the past few years, and that these numbers are NOT properly reflected when new job creation is calculated. This is a CRUCIAL point, because traditional job creation statistics do not reflect the modern trend towards the startup of small business and the tendency of many to act as independent contractors rather than employees.

[Gustaf]

Jaichind,

Much of what you say is true, but much of what you say is also incorrect or misleading. Here's where you are right and wrong:

YOU WERE RIGHT:

1. The drop of the unemployment rate from 6.3 to 5.6 IS misleading because many of the people who dropped off that list simply ran out of unemployment benefits and are still not working.

2. Most of the new jobs created were low paying retail and service jobs.

3. There are currently profound and fundamental structural problems with the U.S. economy.

4. These prolems are NOT the result of actions by the Bush administration.

YOU WERE WRONG

1. You said Bush has done nothing to try and solve these problems, but you ignore massive tax cuts which HAVE acted as a stimulant to the economy.

2. The comparison to the Hoover administration was quite silly in light of the overall economic picture. I believe you'll find that the economy was FAR worse under Carter than Bush, for example.

3. In your assessment of the unemployment figures, you fail to point out the massive increase in self-employment over the past few years, and that these numbers are NOT properly reflected when new job creation is calculated. This is a CRUCIAL point, because traditional job creation statistics do not reflect the modern trend towards the startup of small business and the tendency of many to act as independent contractors rather than employees.

I am reminded by a great quote, only lessened by the fact that it's fake: "No goverment has done as much as we have to lower unemployment numbers." - Swedish minister of finance, Gösta Bohman

Not the actual unemployment, mind you, but the statistics.

[jaichind]

Jaichind,

Much of what you say is true, but much of what you say is also incorrect or misleading. Here's where you are right and wrong:

YOU WERE RIGHT:

1. The drop of the unemployment rate from 6.3 to 5.6 IS misleading because many of the people who dropped off that list simply ran out of unemployment benefits and are still not working.

2. Most of the new jobs created were low paying retail and service jobs.

3. There are currently profound and fundamental structural problems with the U.S. economy.

4. These prolems are NOT the result of actions by the Bush administration.

YOU WERE WRONG

1. You said Bush has done nothing to try and solve these problems, but you ignore massive tax cuts which HAVE acted as a stimulant to the economy.

2. The comparison to the Hoover administration was quite silly in light of the overall economic picture. I believe you'll find that the economy was FAR worse under Carter than Bush, for example.

3. In your assessment of the unemployment figures, you fail to point out the massive increase in self-employment over the past few years, and that these numbers are NOT properly reflected when new job creation is calculated. This is a CRUCIAL point, because traditional job creation statistics do not reflect the modern trend towards the startup of small business and the tendency of many to act as independent contractors rather than employees.

I feel that the current structural problems in the USA are high and growing personal debt, real estate market bubble, over consumption leading to a high current account surplus, and surging budget deficit.  All this leads to a possible future dollar crisis.  Over the last few months foreign buyers of USA assets have dried up over the current account issue and the current account deficit is pretty much being financed by Japanese and PRC purcheses of US treasury debt in an attempt to hold down the value of their respective currencies.  The way out is the restructure the tax code to encourage savings and discourge consumption and higher interest rates to deflate the real estate bubble.  Both these solutions have the short-term affect of pushing up unemployment rates.  The Bush administration, instead of confronting these issues, has opted for an opportunistic Keynesian approach by cutting taxes, increasing spending in all areas to create a fiscal simulus which is the largest him USA history.  The fiscal balance swung from a surplus of 2% of GDP to a deficit of 4.5% of GDP within two years.  The purpose, of course, is to prevent a deep recession that USA deserves given the Clinton bubble and holding down unemployement so Bush can get re-elected.  Given the ammo the Bush administration wasted to keep unemployement down, the results are disappointing as the labor particpipation rate still remains low.  I have no problem with the Bush tax cut on its own.  If the choice was the Bush tax cut or nothing I would still opt for the Bush tax cut.  But I feel that the political capital Bush used to get it should have been spent on a restructing of the tax system to encourage savings and discourage consumption.  The fiscal surplus is now gone and we are looking a decificts for years to come and after 2008 the social security balance will fall into deficit.  Bush has demostrated that he has put his re-election ahead of solving basic economic issues.  He merely delays them and such delays make them worse.

I concur that the current state of the economy is not at all like that of the Hoover administration.  My point is that despite the largest fiscal simulus in USA history in a bid to keep employment high, the Bush record on net jobs is the worst since Hoover.  I personally do not measure economic success by the short-term number of jobs created or destroyed.  But the actions of the Bush administration seems to be using this as a critia.  By its own criteria, the Bush administration has failed on this count.

[opebo]

The economy is fantastic right now - low interest rates, extremely high growth, money to be made hand over fist.  However, it is true that high productivity growth and a certain amount of outsourcing of jobs overseas means relatively low employment growth.  What this really means is that the GDP growth can now be something like 5% per year without inflation instead of 3-3.5% as in the past.  Good news.  Of course all of this has little to do with the election since few voters have even a rudimentary understanding of economics.  

Bush has done everything right, and Kerry would do everything wrong or at least everything wrong that the Republican congress would allow him to do.  Alas, the Tax Cuts would expire under a Kerry veto, sending us into a nasty slump.

[NHPolitico]

I'm sure most of you out there will disagree with me, but there is only one issue out there that could prevent George W. Bush from easily winning a second term...

JOBS!!!

Forget the idiocy the Democrats keep talking about Weapons of Mass Destruction, Vietnam-like quagmires, George Bush is AWOL, blah, blah, blah...all of that means NOTHING.

As the 2002 midterm elections proved, the average American LIKES George Bush, and likes MOST of the Republican policies relating to international relations and economics. Also, most Americans do not approve of the way the modern Democratic Party behaves...see Paul Wellstone's funeral...see comments of George Soros...see comments of Michael Moore, etc, etc....

But where we (Republicans) are vulnerable is on the issue of jobs in general, and more specfically, the loss of manufacturing and quasi-service jobs (telemarketing, tech support, etc..) to foreign workers. I know most of my fellow Republicans will disagree with me, but the truth is that NAFTA and other similiar trade policies have been a short term disaster for the United States economy. Sure, Wall Street has been humming along and the second half of the 1990's featured a boom economy, but the truth is that the growth of the 1990's was built on a house of cards. Most of the growth was based on high tech, internet based business that proved to be non-profitable, and the jobs it produced are already gone and will NOT be coming back.

Now, I'm as educated as most of you and I certainly understand the theoretical basis behind free trade...in fact I was a strong proponent of NAFTA myself, but the fact remains that this nation has lost too many good paying jobs that are NEVER coming back.

So, it's my contention that the average American will be highly suspectible to the rhetoric of Democrats (like John Edwards or Dick Gephardt once one of them becomes the VP candidate to Kerry) who rail against the loss of jobs to foreign workers. I still think Bush is a solid favorite to win, but this Jobs/Trade issue could prove to be the Holy Grail to a Democratic Party which seemingly had ZERO message from 2000 to 2003.

What do you guys think?

George Washington refused to wear a coat cut of British cloth to his inauguration and signed the Tariff Act of 1789.

James Madison, Speaker of the House, led the efforts to pass the Tariff Act of 1789. It was signed into law by George Washington. American production of cloth--cut two-thirds by British dumping in 1816--grew an astonishing 1,650 percent within four years of Madison's tariff becoming law.

Alexander Hamilton wrote in his 1791 report as Treasury Secretary, "The wealth...independence and security of a Country, appear to be materially connected with the prosperity of manufactures. Every nation ought to endeavor to possess within itself all the essentials of national supply."

Henry Clay: "If the governing consideration were cheapness, if national independence were to weigh nothing; if honor nothing; why not subsidize foreign powers to defend us; why not hire Swiss or Hessian armies to protect us? Why not get our arms of all kinds, as we do, in part, the blankets and clothing of our soldiers, from abroad?"

Henry Clay: "Poverty befalls any nation that neglects and abandons the care of its own industry, leaving it exposed to the action of foreign powers--there is a remedy and that consists in --adopting a Genuine American System accomplished by the establishment of a tariff--with the view of promoting American industry--the cause is the cause of the country, and it must and it will prevail."

Abraham Lincoln: "Give me a tariff and I will give you the greatest nation on earth."

Abraham Lincoln, 1847: "Abandonment of the protective policy by the American Government must result in the increase of both useless labour, and idleness; and so, in proportion must produce want and ruin among our people."

Teddy Roosevelt wrote, "I thank God I am not a free trader."

"The prohibiting duties we lay on all articles of foreign manufacture which prudence requires us to establish at home, with the patriotic determination of every good citizen to use no foreign article which can be made within ourselves without regard to difference of price, secures us against a relapse into foreign dependency." --Thomas Jefferson to Jean Baptiste Say, 1815.

"...experience has now taught me that manufactures are now as necessary to our independence as to our comfort..." Thomas Jefferson, 1816

Daniel Webster: "Protection...of our own labor against the cheaper, ill-paid, half-fed, and pauper labor of Europe, is, in my opinion, a duty which the country owes to its own citizens."

[NHPolitico]

M,

You're right about the WMD issue being a potential long term policy problem, but I'm talking strictly about the politics of the 2004 Election.

And even the dropping unemployment you pointed out may not save us from this issue. Even some of the people who have found jobs recently have not found the same QUALITY of job they once had. What you're finding, is people settling for ANY job rather than continuing to wait around for the good job they once had or were educated to do. Do you agree?

Missing WMD is a credibility thing. That's the only way it plays into the race.

[NHPolitico]

Jaichind,

Much of what you say is true, but much of what you say is also incorrect or misleading. Here's where you are right and wrong:

YOU WERE RIGHT:

1. The drop of the unemployment rate from 6.3 to 5.6 IS misleading because many of the people who dropped off that list simply ran out of unemployment benefits and are still not working.

2. Most of the new jobs created were low paying retail and service jobs.

3. There are currently profound and fundamental structural problems with the U.S. economy.

4. These prolems are NOT the result of actions by the Bush administration.

YOU WERE WRONG

1. You said Bush has done nothing to try and solve these problems, but you ignore massive tax cuts which HAVE acted as a stimulant to the economy.

2. The comparison to the Hoover administration was quite silly in light of the overall economic picture. I believe you'll find that the economy was FAR worse under Carter than Bush, for example.

3. In your assessment of the unemployment figures, you fail to point out the massive increase in self-employment over the past few years, and that these numbers are NOT properly reflected when new job creation is calculated. This is a CRUCIAL point, because traditional job creation statistics do not reflect the modern trend towards the startup of small business and the tendency of many to act as independent contractors rather than employees.

I feel that the current structural problems in the USA are high and growing personal debt, real estate market bubble, over consumption leading to a high current account surplus, and surging budget deficit.  All this leads to a possible future dollar crisis.  Over the last few months foreign buyers of USA assets have dried up over the current account issue and the current account deficit is pretty much being financed by Japanese and PRC purcheses of US treasury debt in an attempt to hold down the value of their respective currencies.  The way out is the restructure the tax code to encourage savings and discourge consumption and higher interest rates to deflate the real estate bubble.  Both these solutions have the short-term affect of pushing up unemployment rates.  The Bush administration, instead of confronting these issues, has opted for an opportunistic Keynesian approach by cutting taxes, increasing spending in all areas to create a fiscal simulus which is the largest him USA history.  The fiscal balance swung from a surplus of 2% of GDP to a deficit of 4.5% of GDP within two years.  The purpose, of course, is to prevent a deep recession that USA deserves given the Clinton bubble and holding down unemployement so Bush can get re-elected.  Given the ammo the Bush administration wasted to keep unemployement down, the results are disappointing as the labor particpipation rate still remains low.  I have no problem with the Bush tax cut on its own.  If the choice was the Bush tax cut or nothing I would still opt for the Bush tax cut.  But I feel that the political capital Bush used to get it should have been spent on a restructing of the tax system to encourage savings and discourage consumption.  The fiscal surplus is now gone and we are looking a decificts for years to come and after 2008 the social security balance will fall into deficit.  Bush has demostrated that he has put his re-election ahead of solving basic economic issues.  He merely delays them and such delays make them worse.

I concur that the current state of the economy is not at all like that of the Hoover administration.  My point is that despite the largest fiscal simulus in USA history in a bid to keep employment high, the Bush record on net jobs is the worst since Hoover.  I personally do not measure economic success by the short-term number of jobs created or destroyed.  But the actions of the Bush administration seems to be using this as a critia.  By its own criteria, the Bush administration has failed on this count.

The main way a falling dollar hurts most people in a way they can really perceive is higher gas prices.  Even worse is that there is talk of basing oil on the Euro and not the dollar, which would be even worse-- much, much worse.

[NHPolitico]

The GOP used to be for fair trade...

Republican platform 1972: "We deplore the practice of locating plants in foreign countries solely to take advantage of low wage rates in order to produce goods primarily for sale in the United States. We will take action to discourage such unfair and disruptive practices that result in the loss of American jobs."



Grandpa Prescott Bush, Barry Goldwater, and Strom Thurmond fought JFK's free trade policies that marked the beginning of the end of American industrialization.

[Gustaf]

Jaichind,

Much of what you say is true, but much of what you say is also incorrect or misleading. Here's where you are right and wrong:

YOU WERE RIGHT:

1. The drop of the unemployment rate from 6.3 to 5.6 IS misleading because many of the people who dropped off that list simply ran out of unemployment benefits and are still not working.

2. Most of the new jobs created were low paying retail and service jobs.

3. There are currently profound and fundamental structural problems with the U.S. economy.

4. These prolems are NOT the result of actions by the Bush administration.

YOU WERE WRONG

1. You said Bush has done nothing to try and solve these problems, but you ignore massive tax cuts which HAVE acted as a stimulant to the economy.

2. The comparison to the Hoover administration was quite silly in light of the overall economic picture. I believe you'll find that the economy was FAR worse under Carter than Bush, for example.

3. In your assessment of the unemployment figures, you fail to point out the massive increase in self-employment over the past few years, and that these numbers are NOT properly reflected when new job creation is calculated. This is a CRUCIAL point, because traditional job creation statistics do not reflect the modern trend towards the startup of small business and the tendency of many to act as independent contractors rather than employees.

I feel that the current structural problems in the USA are high and growing personal debt, real estate market bubble, over consumption leading to a high current account surplus, and surging budget deficit.  All this leads to a possible future dollar crisis.  Over the last few months foreign buyers of USA assets have dried up over the current account issue and the current account deficit is pretty much being financed by Japanese and PRC purcheses of US treasury debt in an attempt to hold down the value of their respective currencies.  The way out is the restructure the tax code to encourage savings and discourge consumption and higher interest rates to deflate the real estate bubble.  Both these solutions have the short-term affect of pushing up unemployment rates.  The Bush administration, instead of confronting these issues, has opted for an opportunistic Keynesian approach by cutting taxes, increasing spending in all areas to create a fiscal simulus which is the largest him USA history.  The fiscal balance swung from a surplus of 2% of GDP to a deficit of 4.5% of GDP within two years.  The purpose, of course, is to prevent a deep recession that USA deserves given the Clinton bubble and holding down unemployement so Bush can get re-elected.  Given the ammo the Bush administration wasted to keep unemployement down, the results are disappointing as the labor particpipation rate still remains low.  I have no problem with the Bush tax cut on its own.  If the choice was the Bush tax cut or nothing I would still opt for the Bush tax cut.  But I feel that the political capital Bush used to get it should have been spent on a restructing of the tax system to encourage savings and discourage consumption.  The fiscal surplus is now gone and we are looking a decificts for years to come and after 2008 the social security balance will fall into deficit.  Bush has demostrated that he has put his re-election ahead of solving basic economic issues.  He merely delays them and such delays make them worse.

I concur that the current state of the economy is not at all like that of the Hoover administration.  My point is that despite the largest fiscal simulus in USA history in a bid to keep employment high, the Bush record on net jobs is the worst since Hoover.  I personally do not measure economic success by the short-term number of jobs created or destroyed.  But the actions of the Bush administration seems to be using this as a critia.  By its own criteria, the Bush administration has failed on this count.

The main way a falling dollar hurts most people in a way they can really perceive is higher gas prices.  Even worse is that there is talk of basing oil on the Euro and not the dollar, which would be even worse-- much, much worse.

Ehhh...what? A falling dollar means higher prices on all import products and also makes it more expensive to travel abroad. But how would setting oil prices in euros hurt the US economy?

[Gustaf]

The GOP used to be for fair trade...

Republican platform 1972: "We deplore the practice of locating plants in foreign countries solely to take advantage of low wage rates in order to produce goods primarily for sale in the United States. We will take action to discourage such unfair and disruptive practices that result in the loss of American jobs."



Grandpa Prescott Bush, Barry Goldwater, and Strom Thurmond fought JFK's free trade policies that marked the beginning of the end of American industrialization.

Well, I'm glad you've seen the light...

[jaichind]

Oil priced in Euros will hurt the US economy on the short-run.  The reason is the follows.  The USD is the reserve currency of the world and it follows that all major commodities are priced in USD.  This in turn means that all non-USD economies hold USD in reserve to pay for raw material imports, or any imports priced in USD for that matter.  This in turn means they have to hold securities priced in USD which in turn means holding US treasuries.  This has the affect of pushing down US intrest rates and subsidies US federal deficits and in turn overcomsumption of the USA consumer.  

If commodities were priced in euros, then reserve holdings would shift to euros and push up both short-term and long-term rates for USA treasuries.  This means US federal deficits and debt are less sustainable and cutbacks will be needed in federal spending.  This will hit the USA economy on the short-long in terms of growth and employment.  

With the obvious relative decline of USA economy vis-a-vis other economies over the next few decades as a forgone conclusion this might be a good thing on the long run as it would remove the situtation where the USA consumer borrows from the rest of the world to consume at an unsustainanble rate.  This hurts both the USA and the rest of the world on the long run and should be phased out over time.

[opebo]

The GOP used to be for fair trade...

Republican platform 1972: "We deplore the practice of locating plants in foreign countries solely to take advantage of low wage rates in order to produce goods primarily for sale in the United States. We will take action to discourage such unfair and disruptive practices that result in the loss of American jobs."



Grandpa Prescott Bush, Barry Goldwater, and Strom Thurmond fought JFK's free trade policies that marked the beginning of the end of American industrialization.

NHPolitico - you're  protectionist?!  I always find that bizarre in a Republican.   Even a little willfully irrational in a Democrat, but at least understandable there.

[Gustaf]

Oil priced in Euros will hurt the US economy on the short-run.  The reason is the follows.  The USD is the reserve currency of the world and it follows that all major commodities are priced in USD.  This in turn means that all non-USD economies hold USD in reserve to pay for raw material imports, or any imports priced in USD for that matter.  This in turn means they have to hold securities priced in USD which in turn means holding US treasuries.  This has the affect of pushing down US intrest rates and subsidies US federal deficits and in turn overcomsumption of the USA consumer.  

If commodities were priced in euros, then reserve holdings would shift to euros and push up both short-term and long-term rates for USA treasuries.  This means US federal deficits and debt are less sustainable and cutbacks will be needed in federal spending.  This will hit the USA economy on the short-long in terms of growth and employment.  

With the obvious relative decline of USA economy vis-a-vis other economies over the next few decades as a forgone conclusion this might be a good thing on the long run as it would remove the situtation where the USA consumer borrows from the rest of the world to consume at an unsustainanble rate.  This hurts both the USA and the rest of the world on the long run and should be phased out over time.

Hmmm...but then the pricing of commodities is more a symptom than an indepedent factor, is it not?

[Filuwaúrdjan]

I'm in favour of fair trade (ie; tariffs on certain industrial goods and being nice to third world farmers) mostly as a result of my religious beliefs.

[Gustaf]

OK, I will start a thread for trade in the US general section.

[jaichind]

Oil priced in Euros will hurt the US economy on the short-run.  The reason is the follows.  The USD is the reserve currency of the world and it follows that all major commodities are priced in USD.  This in turn means that all non-USD economies hold USD in reserve to pay for raw material imports, or any imports priced in USD for that matter.  This in turn means they have to hold securities priced in USD which in turn means holding US treasuries.  This has the affect of pushing down US intrest rates and subsidies US federal deficits and in turn overcomsumption of the USA consumer.  

If commodities were priced in euros, then reserve holdings would shift to euros and push up both short-term and long-term rates for USA treasuries.  This means US federal deficits and debt are less sustainable and cutbacks will be needed in federal spending.  This will hit the USA economy on the short-long in terms of growth and employment.  

With the obvious relative decline of USA economy vis-a-vis other economies over the next few decades as a forgone conclusion this might be a good thing on the long run as it would remove the situtation where the USA consumer borrows from the rest of the world to consume at an unsustainanble rate.  This hurts both the USA and the rest of the world on the long run and should be phased out over time.

Hmmm...but then the pricing of commodities is more a symptom than an indepedent factor, is it not?

Not really.  If all trading economies other than the USA tomorrow agreed that they would only pay euros to OPEC for oil, then OPEC will, going forward, price its product in euros and not USD.  Since there is no written law somewhere that says USD HAD to be the reserve currency of the world, this action will decrease USD and increase euros as the reserve currency across the world.  Then what follows will take place exactly as what I stated earlier.  Right now the situation is dollar hegemony and USA is deriving, what I consider unfair and unsustainable benefits from it.  This current state of affairs, I feed, will pass, to the long-term benifit of all.

[Gustaf]

Oil priced in Euros will hurt the US economy on the short-run.  The reason is the follows.  The USD is the reserve currency of the world and it follows that all major commodities are priced in USD.  This in turn means that all non-USD economies hold USD in reserve to pay for raw material imports, or any imports priced in USD for that matter.  This in turn means they have to hold securities priced in USD which in turn means holding US treasuries.  This has the affect of pushing down US intrest rates and subsidies US federal deficits and in turn overcomsumption of the USA consumer.  

If commodities were priced in euros, then reserve holdings would shift to euros and push up both short-term and long-term rates for USA treasuries.  This means US federal deficits and debt are less sustainable and cutbacks will be needed in federal spending.  This will hit the USA economy on the short-long in terms of growth and employment.  

With the obvious relative decline of USA economy vis-a-vis other economies over the next few decades as a forgone conclusion this might be a good thing on the long run as it would remove the situtation where the USA consumer borrows from the rest of the world to consume at an unsustainanble rate.  This hurts both the USA and the rest of the world on the long run and should be phased out over time.

Hmmm...but then the pricing of commodities is more a symptom than an indepedent factor, is it not?

Not really.  If all trading economies other than the USA tomorrow agreed that they would only pay euros to OPEC for oil, then OPEC will, going forward, price its product in euros and not USD.  Since there is no written law somewhere that says USD HAD to be the reserve currency of the world, this action will decrease USD and increase euros as the reserve currency across the world.  Then what follows will take place exactly as what I stated earlier.  Right now the situation is dollar hegemony and USA is deriving, what I consider unfair and unsustainable benefits from it.  This current state of affairs, I feed, will pass, to the long-term benifit of all.

But these are short-term effects due to the current situation. Over time, I think it's better that the value of one's currency reflects real ecnomic factors.