27-04-2005 23:23									#1
	When the Dollar Bill Comes Due Got spare money?

There's an interesting OP-ED piece in the NYT this morning by Catherine L. Mann and Katharina Pluck.

The short version of it is that import prices for consumer goods have not increased much thus far because the US has a low "pass-through-rate." That means that changes in the exchange rates do not cause significant changes in the price of imports.

So exporters to the US are not raising their prices because the dollar is falling. This can't go on forever though because further decrease in the exchange rate will put further strain on the profits of exporters.

The main reason that exporters to the US are hesitant to raise their prices is that they don't want to lose market share in the US. But it's really cost/benefit analysis and sooner or later the costs are going to add up and the **** will hit the fan.

	27-04-2005 23:37									#2
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whats wrong with that? then people will buy more american made stuff. isnt that what you want? then your overpriced workers in the manufacturing sector can keep their jobs. this is no burger king, you cant have it both ways. either lower priced imports are good, or they are bad. they cant be both. figure out which they are, and then stay consistent.

	27-04-2005 23:39									#3
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It's going to start with inflation. Filling the gap with US products isn't a given.

	27-04-2005 23:42									#4
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of couse its a given. you just said that all import PRICES go UP, so higher priced home market prices get RELATIVELY CHEAPER, so people buy america. its a given.

so sell bonds if theres inflation.

	28-04-2005 01:18									#5
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quote: Originally posted by Lawrence of Arabia of couse its a given. you just said that all import PRICES go UP, so higher priced home market prices get RELATIVELY CHEAPER, so people buy america. its a given. so sell bonds if theres inflation.

Of course it's a given. Everything is a given according to your little models. Go on with your little fantasy world and don't worry about anything. The free market always takes care of everything. In fact, that's all you have to say.

	28-04-2005 01:21									#6
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quote: Originally posted by Lawrence of Arabia of couse its a given. you just said that all import PRICES go UP, so higher priced home market prices get RELATIVELY CHEAPER, so people buy america. its a given.

Bingo. If import prices go up, American goods' prices look cheaper and thus people will buy them more.

This is common sense, Kid, not even detailed economic theory. Of course if its common sense, no surprise you don't get it.

	28-04-2005 01:23									#7
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aight, im done here. the fastest resolved argument ever. 6 posts. comon Imran, lets go get a beer.

	28-04-2005 01:26									#8
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Of course LoA, because both you and Imran know that it doesn't take much time to build a factory.

	28-04-2005 01:48									#9
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quote: Originally posted by Lawrence of Arabia of couse its a given. you just said that all import PRICES go UP, so higher priced home market prices get RELATIVELY CHEAPER, so people buy america. its a given. so sell bonds if theres inflation.

only if there is a substitute good available. If there isn't the imports are still more expensive but people have to just deal with that.

	28-04-2005 02:31									#10
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Usually there is... and if there isn't, there soon will be (in order to capitalize on the imbalance).

	28-04-2005 02:38									#11
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quote: Originally posted by Imran Siddiqui Usually there is... and if there isn't, there soon will be (in order to capitalize on the imbalance).

With what resources Imran? Resources aren't just sitting around. Have you ever heard of "scarce resources?"

	28-04-2005 02:45									#12
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quote: Originally posted by Imran Siddiqui Usually there is... and if there isn't, there soon will be (in order to capitalize on the imbalance).

The trade deficit and the fall of the dollar belie that statement. The dollar has plummetted 30% and that deficit continues to rise. Most of what I've read on the matter would seem to support DanS's position that this is a long term fix.

	28-04-2005 03:06									#13
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quote: Originally posted by Kidicious With what resources Imran? Resources aren't just sitting around. Have you ever heard of "scarce resources?"

So if, say, Japanese cars become more expensive, you don't think American cars will sell more? Come on... the resources are there to be utilized, however, because of relative prices, it isn't worth it.

	28-04-2005 03:32									#14
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yeah but that would be logical.



btw, scarce resources dont mean that they arnt around, it means that there is a limit, and that you need to pay more the scarcer they are.

	28-04-2005 04:02									#15
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quote: Originally posted by Whoha The trade deficit and the fall of the dollar belie that statement. The dollar has plummetted 30% and that deficit continues to rise. Most of what I've read on the matter would seem to support DanS's position that this is a long term fix.

In large part because the much of the deficit is for petroleum, which the US consumes in increasing but produces in decreasing amounts. Another factor is the general antipathy to "buying American" right now, despite the more advantageous prices.

The "free market" isn't really "free" in the sense of being perfectly rational. If it was, the French would be looking more closely at California wines, for instance.

	28-04-2005 04:04									#16
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they are being rational. the label 'french' is worth more to them then the difference in prices.

	28-04-2005 04:13									#17
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quote: Originally posted by Lawrence of Arabia they are being rational. the label 'french' is worth more to them then the difference in prices.

I think you need to look up the word "rational." It does not mean what you think. Valuing a word on a label in not rational, it is emotional (and understandable and part of my point).

	28-04-2005 04:17									#18
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I think you are using a different definiton of rational. In economic terms, rational means people will buy what they value more, whether it be because of prices or emotional reasons. So a rational actor may by Coke rather than RC Cola because 'Coke' has more value to him.

It's a different definition of rationality.

	28-04-2005 04:17									#19
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are you not talking about the field of economics definition of rational?

	28-04-2005 04:53									#20
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quote: Originally posted by Imran Siddiqui So if, say, Japanese cars become more expensive, you don't think American cars will sell more? Come on... the resources are there to be utilized, however, because of relative prices, it isn't worth it.

The resources are mostly already being used elsewhere. Some will be realocated to automobile manufacturing, but the overall effect is more inflation and not much overall production until the constraints are allieviated.

	28-04-2005 05:02									#21
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quote: Originally posted by grumbler I think you need to look up the word "rational." It does not mean what you think. Valuing a word on a label in not rational, it is emotional (and understandable and part of my point).

Rationality refers to what you do with your emotions. Your emotions are what provides the values for various choices between which you use your rationality to decide.

When you say someone's value on something is "irrational" you really mean "it's not the value I place on it"

	28-04-2005 05:03									#22
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Oh really... so where are these resources being used that they can't be diverted? You don't think car makers can quickly (like within 6 months) increase production if the market improves? What planet do you live on?

Look at the example of the Honda Odessey. When it first came out, it was impossible to get one in your color within 2 months of putting the order in. 6 months to a year later and they are all over the place to take advantage of greater than anticipated demand.

	28-04-2005 05:03									#23
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This is an econ thread folks. Use econ definitions. Rational is seeking pleasure and avoiding pain.

	28-04-2005 05:04									#24
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And pleasure is determined by emotions.

	28-04-2005 05:07									#25
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quote: Originally posted by Imran Siddiqui Oh really... so where are these resources being used that they can't be diverted? You don't think car makers can quickly (like within 6 months) increase production if the market improves? What planet do you live on?

We aren't just talking about one industry. We are talking about a general increase in import costs. Anyway, one industry isn't going to start building factories right away anyway. It takes almost six months to decide to build the factories alone. Companies don't react to short run prices like that. Expansion decisions are based on long range forecasts.

	28-04-2005 05:08									#26
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quote: Originally posted by Kuciwalker And pleasure is determined by emotions.

We don't care about emotions in econ though. We only care about "rational" as we define it.

	28-04-2005 05:10									#27
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And rationality is based on value is based on emotion. Ergo you do care about emotion.

	28-04-2005 05:11									#28
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quote: Originally posted by Imran Siddiqui Look at the example of the Honda Odessey. When it first came out, it was impossible to get one in your color within 2 months of putting the order in. 6 months to a year later and they are all over the place to take advantage of greater than anticipated demand.

That's different. That's a strategy that companies use to sell the maximum amount of product and to stimulate interest.

	28-04-2005 05:12									#29
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quote: Originally posted by Kuciwalker And rationality is based on value is based on emotion. Ergo you do care about emotion.

I'm not emotional about eating a Snickers bar. That's why we use the word "pleasure" not emotion.

	28-04-2005 05:13									#30
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quote: I'm not emotional about eating a Snickers bar.

Yes you are.

quote: That's why we use the word "pleasure" not emotion.

Pleasure is based on emotion.