[lbo-talk] The Declining Dollar?

[Wojtek Sokolowski]

Doug:
> Well not necessarily. A high euro could crush euroland exports,
> leading to stagnation or worse. A low dollar could impel the U.S. to
> get its foreign accounts back into balance, by making imports
> expensive and exports cheap. Who knows how it'll play out?

Two thoughts.  First increased export will affect states differently, but it
will be mostly "blue" states that benefit from it, with the exception of TX.
Seven "blue" states PA, NJ, NY, MA, IL, MI and CA account for nearly 34% of
all US exports - TX is 13.7%.  

See: http://www.census.gov/foreign-trade/www/index.html

The "red" states will not benefit as much because their share of exports is
minuscule.  So if Bush's election caused the weak $, it is mostly the blue
states that will get a windfall from it, while the red states will get
mainly moral satisfaction.  They will be also the ones screwed up the most
by more expensive exports. I can afford paying more for chardonnay and
camembert, and if it starts eating into my budget, I will simply drink less
wine and eat less cheese.  However, the red state trailer trash shopping for
China-made bargains at Wal-mart will have a harder landing.  

Second, the trade imbalance is in the vicinity of 2:1 so it will take a lot
of exports to compensate for more expensive imports.  Moreover, how likely
is it that these benefits from increased export will compensate for losses
of foreign investment?

Wojtek