Large Scale Central

GE to sell 101 year old appliance business

General Discussion
#41
Ken Brunt said:
Ralph, the money coming back in is the money we spent on "stuff" we bought from outside the US. It's not 'Borrowed", it's invested in our businesses. It's like buying a house. The money goes out, but it becomes an asset to us. It makes more money in the long run. Granted we spend a lot to keep it up, but that's our choice.If I did absolutely nothing to improve it would still be worth more than when I bought it. If I 'improved" it and made it into an apartment, it would make even more eventually. You keep saying the money goes out and doesn't come back. It does come back. As an Investment. It isn't coming back as something tangible like a TV, but it's still comes back here. What difference does it make if they only buy part of a business with so many shares of stock or the whole thing. They didn't buy it to loose money on it. It's not going to disappear. It's still here. It has a different owner. He's not going to tear it down and take it with him back to whatever country he lives in. He going to employ the same people who have been making money on his investment so he does make money on it. It's been happening since man invented money. The trade deficit measures the the amount of TV's coming into this country against the amount going out. Sure we have a deficit, we don't make TV's anymore. But I and a lot of other Americans have stock in the companies that do. We're not spending more than we're bringing in. The money comes back in as an investment.
So if I had to sell my house because for years I spent more money than I made, you would call it an investment? The house isn't going anywhere, but it wouldn't be mine.

“We’re not spending more than we’re bringing in.”

That is exactly what we are doing. It’s not TV’s. It’s oil ,goods, services and everything else.
We buy more goods and services than we sell every year.

We are spending billions of borrowed money in the Middle East to fight terrorism. Meanwhile we are selling them our companies.
Ralph

#42

For 34 of the last 37 years we’ve run a trade deficit. The only years we didn’t run one was because we were in a recession.

Quote:
So if I had to sell my house because for years I spent more money than I made, you would call it an investment? The house isn't going anywhere, but it wouldn't be mine.
No, I would call that bankruptcy. I would call that exactly what is happening in the housing market today. People who bought more house than they can afford and lending company's giving out high risk loans because the gov't was backing them.

Ralph, I can see where you’re coming from. I’m, by far, no economist. I’ve read a few opinions on 'trade deficit’s", good and bad. The good out weighed the bad. Maybe I’m an optimist. and maybe my way of trying to explain what I’ve read about how it works doesn’t make sense to you. It makes sense to me, and I lost it in the translation, that’s all I can say.

Now, we can either start calling each other names and… etc etc…:wink:

#43

Ken,
I just am not comfortable with foreigners owning all our companies. Most of the major oil companies are now foreign owned. Most of banks have sold major percentages to foreigners. The Budweiser sale just went down. GE sold its plastics division to a Saudi company.
Our grandchildren will be working for people who do not have the same vested interest in our country or our well being.
Ralph

#44

So what’s new? We have a gov’t that doesn’t seem to have a vested interest in this country either.

The Japanese were doing that same thing not long ago. It cycles around. There are majority interests in major overseas firms that are owned by Americans. It’s just a matter of putting your money where it makes the most .

Those companies were icons of american industry, so seeing them being bought by a foreign group doesn’t sit well. They make the news, but for every one of those being sold hundreds more american businesses start up. Millions more are thriving. Companies are bought and sold all the time. They divest themselves of divisions that are loosing money for them to concentrate on the divisions that are.

#45
Ken Brunt said:
So what's new? We have a gov't that doesn't seem to have a vested interest in this country either.

The Japanese were doing that same thing not long ago. It cycles around. There are majority interests in major overseas firms that are owned by Americans. It’s just a matter of putting your money where it makes the most .

Those companies were icons of american industry, so seeing them being bought by a foreign group doesn’t sit well. They make the news, but for every one of those being sold hundreds more american businesses start up. Millions more are thriving. Companies are bought and sold all the time. They divest themselves of divisions that are loosing money for them to concentrate on the divisions that are.


Hey Ken,
If someone feels invincible it is most probably the first one to die. With other words if we do not care, we most likely lose it faster. From other countries I know that trade deficit is seen as a total negative thing, other countries try hard to balance it, using the import tax as a tool. Pleas do not tell me that all the other countries are wrong, and by the way I belief that ignorance is just another way to call for trouble.
In other countries you have to pay import tax, even if you just import a $10 toy. Here in the USA, i imported $2000 trains from Europe, i never ever had to pay any import tax. The fact that i never have to pay any import tax or custom tax, means to me that no one cares, someone does not his job.

think global Pius

#46
Ken Brunt said:
So what's new? We have a gov't that doesn't seem to have a vested interest in this country either.
Very true. The executives selling out for the short term profit suffer from the same malady. Ralph
#47

I found some figures and some reasons for it. Now this was in 2005 : I haven’t found the % for 2008.

“In the second quarter of this year, the deficit hit $195.7 billion, or about 6.3% of GDP, up 17% from $166.6 billion a year earlier. For all of this year, it’s on pace to reach $788.8 billion, up from $113 billion just a decade ago.”

And an example for the reasons for it:

“To begin with, most of the deficit isn’t really a deficit at all; it’s trade within companies. For instance, when U.S.-based IBM makes a computer part in China and then turns around and sells it in the U.S. as part of a computer, it counts as an import. A big part of our imports - by some estimates, more than half - are made up of such items.
As such, a soaring import bill doesn’t mean we’re ““living beyond our means.”” It means our economy is growing. The flip side of this is that, as our trade deficit grows, so does foreign investment. It has to. In accounting, that’s how we finance a trade deficit - by long-term flows of capital into the U.S.”

Now, the way I’m reading it is that the part made in China and the whole computer made in the US still counts an an import. And since the whole computer is worth more than the part, naturally the deficit seems high. But, even if I’m wrong and if the whole computer is made overseas by IBM, it’s still considered an import. But once it reaches the US it’s worth much more than what IBM paid for it. The money is going to an American based co. It seems it’s the same way with our trains. They’re made in another country for a US based Co and shipped to the US as an import worth such and such an amount. In actuality, they’re worth a lot more once they arrive in the US.

#48
Ken Brunt said:
I found some figures and some reasons for it. Now this was in 2005 : I haven't found the % for 2008.

“In the second quarter of this year, the deficit hit $195.7 billion, or about 6.3% of GDP, up 17% from $166.6 billion a year earlier. For all of this year, it’s on pace to reach $788.8 billion, up from $113 billion just a decade ago.”

And an example for the reasons for it:

“To begin with, most of the deficit isn’t really a deficit at all; it’s trade within companies. For instance, when U.S.-based IBM makes a computer part in China and then turns around and sells it in the U.S. as part of a computer, it counts as an import. A big part of our imports - by some estimates, more than half - are made up of such items.
As such, a soaring import bill doesn’t mean we’re ““living beyond our means.”” It means our economy is growing. The flip side of this is that, as our trade deficit grows, so does foreign investment. It has to. In accounting, that’s how we finance a trade deficit - by long-term flows of capital into the U.S.”


Ken,
It is a deficit, it really is.
If you import a $50 computer part…they do not count the entire cost of the computer toward the deficit.
Furthermore, if you import a $500 computer and sell it in the US for $1000…it counts as $500 toward the deficit, not $1000.

"To begin with, most of the deficit isn’t really a deficit at all; it’s trade within companies. "
This is what I mean by the “Spin Doctors” playing very loose with the truth.
Exxon may be taking possession of the oil overseas and shipping it here. It is still a very real part of the deficit.
Same if Ford builds a car in Mexico. Just because it is an American company doing the importing does not mean the money leaving the country is not real.
Ralph

#49

Sure, it counts as a deficit, but the money is going from Ford motor company to Ford motor co. The only money staying in Mexico are the paychecks of the Mexican workers. If the car were made in Texas and shipped to Michigan it would be the same thing. The money is changing hands within the same company. The product changing hands is within the same company. The money leaving the country is still going into an American bank. Ford owns the plant in Mexico.IBM owns the plant in China. There’s no spin here. It’s the same thing as if you were in another country and had your bank wire you money,sure the money leaves the country, but it’s still going into your pocket.

It’s not as if we’re oweing the money to somebody else. It’s money we owe ourselves. If XYZ owns the productiuon facilities overseas, yea, the money is going over seas, but it’s going to XYZ, not to some foriegn entity. What they made overseas and shipped back is counted as an import, but it still belongs to XYZ.

#50
Ken Brunt said:
Sure, it counts as a deficit, but the money is going from Ford motor company to Ford motor co. The only money staying in Mexico are the paychecks of the Mexican workers. If the car were made in Texas and shipped to Michigan it would be the same thing. The money is changing hands within the same company. The product changing hands is within the same company. The money leaving the country is still going into an American bank. Ford owns the plant in Mexico.IBM owns the plant in China. There's no spin here. It's the same thing as if you were in another country and had your bank wire you money,sure the money leaves the country, but it's still going into your pocket.

It’s not as if we’re oweing the money to somebody else. It’s money we owe ourselves. If XYZ owns the productiuon facilities overseas, yea, the money is going over seas, but it’s going to XYZ, not to some foriegn entity. What they made overseas and shipped back is counted as an import, but it still belongs to XYZ.


Is Ford sending all the materials to Mexico from here to build the car?
And no, IBM most likely does not own the plant in China. Most, but not all, work in China is contracted.
Intel motherboards are not made by Intel.
Aristocraft probably does not own the factory making trains.
Ralph

#51

You’ll have to ask Ford. Most likely they’re shipped directly there from whoever they have providing the materials.

No Aristocraft doesn’t own the plant in China. But do they ship every item they have made there directly to their Warehouse in the US and then ship it to an overseas distributor or do they ship it directly from China to an overseas distributor? That makes the difference in the trade deficit.

Me thinks we are splitting hairs here Ralph.

All I’m trying to say is that don’t look at figures and become alarmed. American companies have plants overseas other than in China that they do own. The product they ship back to this country is still made by them. And when it’s shipped from there to yet another country for consumption, we don’t get an export credit for it. Del Monte imports tons of food into this country every year from South America. They own thousands of acres of farmland in South America. They have their own packing houses there. They take advantage of the opposite summer-winter weather. So during the winter they import tons of food from South America. They also pack and ship other companies products. That all shows up on the trade deficit. And when they ship their food products from SA to other countries we don’t get the export credit for it. It’s not entirely a case of “everything coming in and nothing going out” .

#52

Ken,
We just look at some things differently.
Ralph

#53

I guess we’ll just have too.

I do know this. If I was making something overseas for someone else overseas. I wouldn’t ship it to this country first, then ship it again overseas. Would you?

#54
Ken Brunt said:
I guess we'll just have too.

I do know this. If I was making something overseas for someone else overseas. I wouldn’t ship it to this country first, then ship it again overseas. Would you?


No, of course not.
But that does address the crux of the problem, we are not making enough of it here.
You mentioned much earlier that the Fed engineered the decline of the dollar. If so, then the President is responsible for the high price of oil and groceries in spite of his insistence there is nothing he can do about it.
Ralph

#55

Well, unfortunately you’re right, we don’t make enough of it here. And the reason is labor costs too much to make it here. Then again, I’m kinda glad that B’mann and Aristocraft do make their trains in China. If they didn’t I might not be able to afford to buy that many of them.

Ralph, I’m not sure how that works, engineering the decline of the dollar. But that’s only been very recent. Like I mentioned before in our discussion, that was done to try to lessen the trade deficit, which has already been proven doesn’t work or is such an evil thing. The price of oil has been going up ever since the 70’s. It stabilized a bit during the 80’s and 90’s but it still has been going up for a very long time. The price has been going up a lot faster ever since congress and the president put a ban on drilling in this country 20 years ago and other countries have become more industrialized and increased the demand. The President recently lifted the ban, but until Congress rescinds the law banning it, that was mostly symbolic. Now the dems are claiming that oil co’s had leases to all these places and never used them. They still want to point the finger elsewhere. well,at $70 a barrel it wasn’t profitable. At $140 a barrel it is. I guess when gas stations start charging for gas by the quart instead of the gallon,maybe that’s when they’ll pull their collective heads out of their asses!

Another factor is the gov’t’s insistence on Bio-fuel research. So farmers switch from food crops to bio-fuel crops, and that doesn’t help with food prices. The ironic part of all this is that while we try to find an alternative to petroleum based fuel by using a crop based fuel to “save the environment”, wetlands, forests and meadows are being plowed under to grow this stuff and it’s not been proven that bio-fuels are less polluting than oil. Or cheaper in the long run! But everyone wants to jump on the “Bio-fuel Bonanza”, the same way they jumped on the cheap home loan bonanza that the gov’t insisted on. They ought to pass a law of unintended consequences. Oh wait a minute, that’s already in place…:wink: