This is an explanation of Warren Buffett's proposal to significantly decrease USA's trade deficits. His article entitled "squanderville" was published by Fortune magazine in October 2003.
If exporters of goods from the USA choose to pay a fee to defray US custom's expenses, their goods will be assessed and transferable IMPORT Certificates for that assessed value will be issued to them. (If exporters don't choose to pay, their goods leave the USA unassessed and thus no certificates are issued).
Importers would be required to surrender IMPORT Certificates for the assessed value of their goods entering the USA. Surrendered certificates are cancelled. The exporter's motivation is to profit from the sale, trade or use of the transferable IMPORT certificates.
Unlike a tax or tariff, the fees will not be a net source of government revenue. They're to fund the government's assessment and certificate issuing expenses. The market driven proposal grants government no discretion of policy. (Assessing the value of goods is a technical, not a policy decision). It will increase rather than decrease USA's aggregate sum of imports plus exports. It is fully self-funding. Decreasing USA's trade deficit would increase our GDP and median wage. Buffett's proposal would be a restriction upon pure free trade but it is certainly pure free enterprise.
USA consumers can continue to enjoy cheap (but not the absolute cheapest) imports and annual median wages that are (after adjustment for inflation) still significantly greater. I'm aware of no existing or proposed trade policy that could accomplish this with less government intervention or less increased prices of imported goods. The proposal's simple logic is irrefutable.
Jim Hightower said, "We should keep our factories here and import our CEO's. They'll perform the same tasks for less money ".
From the CIA Fact book, (2004), a United States Government publication: "(USA's economic) Long-term problems include inadequate investment in economic infrastructure, rapidly rising medical and pension costs of an aging population, sizable trade and budget deficits, and stagnation of family income in the lower economic groups"
For further information refer to
www.USA-Imports.Blogspot.com
Respectfully, Supposn
Mind Buffett, Don’t Panic
A year from now, stocks, the dollar and U.S. inflation will be higher, and oil, gold, the euro and the pound will be lower.
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Warren Buffett once said that being an investor is like being in business with a manic-depressive as a partner. There are times when your partner becomes wildly euphoric about the prospects for your business and wants to buy you out at almost any price. Then there are other times?when he is down in the dumps, frantic to sell. As a rational person, Buffett says, you should buy when he's depressed.
Currently the equity markets of the world could use some Prozac.?Gloom and doom are everywhere. The broad group of sentiment indicators we monitor register a very high degree of investor pessimism. Hedge funds in the United States and Europe are as defensive as they have been at major market bottoms, and the media are full of sour commentary.
The unwinding of structured finance centered in the U.S. subprime-mortgage market is causing an intensifying global credit crunch that threatens not only U.S. consumption but also consumer spending around the world. Already major banks, insurance companies and investment banks have confessed to huge write-downs of loans, which reduces their capability to extend credit and makes them risk-averse. The apparent cause is the continuing decline of home prices in America, but the real villains are greed and gullibility.?The mortgage brokers,?real-estate developers, banks and the investors who bought the paper were greedy. The?buyers who assumed mortgages they couldn't service were gullible and stupid.
As usual in such circumstances, the perma-bears are emboldened, raving about the biggest credit contraction in 70 years and the threat of a deep global recession. Some are even saying the rest of the world will go the way of Japan; in other words, 16 years and counting of stagnant growth and deflation. Japanese stock indexes today are still more than 50 percent below their 1989 highs. The bears point out that the U.S., European and developing-country markets have declined only 10 percent from their highs, so they could have a long way to fall. The pessimists foresee an engulfing tragedy, as the credit crisis spreads to take down highly leveraged companies, trillions in credit-default swaps, the junk-bond market and real-estate bubbles around the world.
The bears are prominent, intelligent people, and they have to be taken seriously. That said, I believe they are exaggerating the problem. The Federal Reserve began to raise interest rates three and a half years ago,?speculative activity in housing?peaked in mid-2005, and then a year later house prices began to fall.?In hot markets like California and Florida prices are now falling at about 7 percent year to year and are back to the levels of mid-2005.?When CNBC trumpets that "house prices?fell 7 percent in October," it is misleading: what really happened is that prices fell 7 percent from the level of October last year.
As the stimulus from buying new homes and remortgaging old ones fades, consumer spending (which is two thirds of the U.S. economy) will be affected. The experts we pay attention to expect that in the adjustment process spending?will lag income gains by 2 percent or so, but will still rise by 4 percent to 5 percent in nominal terms in the coming?year. The next leg down in housing will reduce spending gains to about 4 percent—a drag on growth but not the end of the world.
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