International Trade and Finance Speech
Economics Paper 5 International Trade and Finance Speech Financial Pitfalls 2 Ladies and Gentlemen of the House, good afternoon to you all. I would like to thank you for the opportunity to speak to you this today on such an important topic – our economy. Our economy is in crises mode. To say that our economy has slowed down would be an understatement. The economy, to date, has taken a step backwards and the direction we are heading will take us from a record long-lasting recession to an all-out financial depression. Americans consume far more goods than we produce on a monthly basis.
What that means, simply put, is that we continue to build more debt and get poorer with every passing month.
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Think of it like this – the average person goes through a certain amount of managed stress each day. When outside stress, or variables are added to daily stress it places more pressure on the body and mind. If this outside stress isn’t dealt with or managed, and as more is added, the body will either explode or shut down. Our economy is like the average person’s body. Most of us do not understand the current economic state of affairs.
Not that we wouldn’t be able to comprehend the status, but most are unaware, as the media and national political heads are sheltering Americans from the truth and not diving in to the true issues at hand. We currently have a surplus of imports in our great nation. This should be of no surprise to us – countries that we currently hold the largest amount of deficit through imports are: •China •Mexico •Japan Financial Pitfalls 3 With the Chinese enjoying a spike in export capital over nearly past ten years, they have become a giant on the global economic scene.
On a closer level, one that strikes the heart of every American man and woman, the impact of this surplus is being felt in our automotive industry – the true backbone of this great country. China has grown into an auto-parts monster as they have increased over 900 percent in exports since the beginning of the century. How are they doing this? By producing quality parts at a cheaper rate is nothing new but the Chinese are being criticized by many for benefitting from illegal currency manipulation which leads to unfair trade policies.
These policies pose a real threat to American automotive jobs in the near future. International trade has a significant effect on the Gross Domestic Product. The GDP is the true market worth of officially recognized goods or services produced in a country. Think about this for a moment – if you were to go into a department store and found two shirts that were identical in color, material and stitch but one was priced ten dollars higher than the other. Which one would you choose? Easily you would pick the cheaper product and that is the issue American consumer’s face each day.
Larger corporations have the ability to mass-produce products and pay their workers far less than those here in the states. They do this across the globe in what is called slave labor. As a result, there are fewer jobs available in the United States, more across the globe, and more goods being imported into the country and a more dramatic effect on our economy. Financial Pitfalls 4 We have exhausted our means to generate additional income for our nation through tariffs and sanctions on goods being brought into the country.
The taxes levied on goods and the limits placed on incoming products and goods can impact and possibly obstruct international trade. This may also increase production costs and the possibly have an effect on the foreign exchange market. Exchange rates are driven for the most part by the amount of currency bought and sold either through speculation or international asset transactions in either services or goods. There are two types of exchange rates: short-term and long-term. The short-term exchange rates swing from minute to minute and are caused through changes in supply and demand for money as it is being sold from one country to another.
Long-term rates are more directly affected through national monetary policies created by global governments. This has a global effect on economics. With our current national election trail heating up and the nation’s economic state of affairs in the center of discussion, there will be promises made by each candidate. The focus will not only be today’s economy but how we will move out of the red and back into the black. There are many ideas but in my mind it is simple as an old saying – you must spend money to make money. For us o make money and become financially independent, better yet, a global leader in economics, we must learn from our past. Financial Pitfalls 5 As President Bill Clinton discussed in a recent interview with Fortune Magazine, he laid out the three keys to bring our economy back – •Unleash the large amount of capital that is being held but not invested •Accelerate the resolution of the home mortgage crisis •Bring back manufacturing Sounds easy but it isn’t – this is not a short fix to a growing crisis but will take time for us to work together to climb back to the top.