Remember when you were a kid and you thought if you could dig a hole deep enough you'd get all the way to China? Well, that's exactly what we're doing now -- financially speaking. We're digging a huge hole of debt -- and it won't be surprising if the next generation finds itself at the mercy of the Chinese, who will be our creditors.
Headline: U.S. Records $199.8 Billion Second Quarter Current Account Deficit! This week's report on the current account deficit might have seemed just another one of those huge MEGO numbers. (MEGO stands for My Eyes Glaze Over.) But the $190.8 billion deficit for just the second quarter of this year means that we are even more indebted to foreigners who accept our dollars -- and then make choices about what to do with all that money we are sending them in exchange for imported goods. The biggest use of those dollars is to lend us money -- buying our Treasury securities and corporate bonds. Only a small portion -- about 12% -- goes into buying U.S. productive assets. The Chinese have a third use for the dollars we send them; they buy things like petroleum, or even Venezuelan oil wells. Although the current account statistic includes services and investments, the imbalance is mostly about cheap imports. And mostly that means imports from China. Sure, we import a lot of other things -- notably oil, which is costing us ever more. But oil is a freely traded global commodity. Stuff made in China, by contrast, is priced artificially low because the Chinese currency -- the yuan -- is "tied" to the dollar.Featured Photo Galleries
-
House prices fall again in August
BBC
-
Greenpeace rig activists arrested
BBC
-
SEC Probes Canceled Trades
The Wall Street Journal.
-
Child’s Ordeal Shows Risks of Psychosis Drugs for Young
New York Times
-
Maker of Botox Settles Inquiry
New York Times
-
Samsung Unveils iPad Rival
The Wall Street Journal.
-
Malaysia Rally May Pause After Evening Star: Technical Analysis
BusinessWeek Online
-
New mortgage applications at a trickle
Los Angeles Times
-
Allscripts CEO On New Merger
Forbes.com: Business News
-
Major investor drops out of Miramax deal
Los Angeles Times
TheStreet Premium Services
Jim Cramer's Action Alerts PLUS:
Now any level of investorRealMoney Silver:
Get Doug Kass's exclusive trading diary + 5 of TheStreet's top premium services including Action Alerts PLUS and RealMoney — all on one streamlined page. Learn MoreStocks Under $10:
Break into the market with small- and mid-cap stocks... all $10 or less! David Peltier tells you exactly which low-priced stocks he's buying and selling. Learn MoreOptionsProfits:
Get 50+ trade ideas a week from the industry's top options experts. Plus — exclusive commentary on market trends and essential trading tools. Learn MoreBreakout Stocks:
Find tomorrow's household names today. Bryan Ashenberg finds hidden gems in exciting up-and-coming markets that he believes are ready to break out! Learn MoreWe've launched a new commenting tool, Disqus. To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see
here for more details.
blog comments powered by Disqus
| Dow Jones | S&P 500 | NASDAQ | 10-Year Note | |
|---|---|---|---|---|
| 10,280.75 | 1,082.62 | 2,187.37 | 26.21 |
Oil *
75.41
|
|
UP
11.28 |
UP
2.33 |
UP
10.53 |
UP
0.39 |
10 Yr
2.62%
SPDR Gold
122.07
|
|
+0.11%
|
+0.22%
|
+0.48%
|
+1.51%
|
Data delayed 20 minutes |

Connect with TheStreet