http://www.msnbc.msn.com/id/16599329/

Government ran surplus in December; but rise still expected in 2007


WASHINGTON - The federal deficit has improved significantly in the first three months of the new budget year, helped by surging tax revenue.

In its monthly budget report, the Treasury Department said Friday that the deficit from October through December totaled $80.4 billion, the smallest imbalance for the first three months of a budget year since 2002. The budget year starts Oct. 1.

Tax collections are running 8.2 percent higher than a year ago, while government spending is up by just 0.7 percent. Last year's spending totals were boosted by significant payments to help the victims of the Gulf Coast hurricanes.

This is very good news for the American people but just who is going to get the blame for it not being better?

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An informed voter scares the Goverment lackeys.

An American first and always a Conservative.

So when does the value of the dollar come back overseas?

if it's not one thing it's another. You will never be happy. What are the benifits of a high exchange rate. PLease tell us why this is good for us.

A strong dollar makes imports cheaper; and with our current trade deficit, cheaper imports would be nice, although our artificially sustained dollar is hurting workers in manufacturing.
The dollar today isn't sustained by private investors, who are increasingly suspicious of our deficit, but by foreign governments buying US government assets : thank you China and Japan !




They need a relatively strong dollar so that we can buy their products. The situation is very artificial, however, and all the borrowed money isn't being invested in productive assets ; it's bad debt through and through, and only possible thanks to East Asia. A controlled decline of the dollar, to better reflect our current deficit, would force the government to raise taxes and cut the deficits or face growing inflation, and would ultimately stabilize the market. But this runaway deficit satisfies mostly everybody in the short run : low inflation, tax cuts, cheap goods. Workers in unprotected industries, however, are getting the short end of the stick : cheap imports cost us jobs, especially if there isn't any incentive to invest and increase productivity--that would require some public policy, i.e., good debt.
In the final analysis, the most troublesome aspect of our current arrangement is that all depends on the goodwill of China and other foreign governments.

According to Bureau of Labor Statistics, there were about 18,300,000 jobs in manufacturing in 2000. This number dropped to 14,260,000 in 2005. Now this loss isn't entirely due to the dollar's artificial resistance, but that manipulation definitely played a part. Basically, we're slowly sacrificing our manufacturing for cheap, overseas imports, and the trade deficit this practice entails is being financed by the very countries that are selling us their cheap goods.
As long as these countries fear that pulling out of the US capital market will result in a dollar crash that will hurt their foreign trade, they'll keep financing our deficit. If, however, they decide that strengthening their respective currencies will lead to a phase of strong, domestic growth that outweighs the costs of a dollar crash, they'll stop buying US government assets and kill the dollar (a 10, 20% fall? who know really).