The U.S. trade deficit is closing in on $800 billion per year, or about $3 billion per business day
By Stephen Roach
Newsweek International
March 20, 2006 issue – America is turning protectionist at just the time when its need for foreign capital has never been greater. China-bashing is on the rise again, and a political firestorm forced a Dubai company to give up its acquisition of U.S. shipping facilities last week. This backlash reflects a highly combustible mixture of bad economics and populist politics.
Notwithstanding heartfelt concerns over matters of national security in a post-9/11 world, there is a very basic point that has been overlooked in this debate: the United States no longer has the internal wherewithal to fund the rapid growth of its economy.
America’s net national saving rate—the combined saving of individuals, businesses and the government after adjusting for depreciation—fell into negative territory at minus 1.2 percent of national income in late 2005. That means the United States doesn’t save enough even to cover the replacement of worn-out plants and equipment. This is a first for America in the post-World War II era—and a first for any hegemonic power over a much longer span of world history.
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