ECONOMIC ANALYSIS:

Thinking About Benchmarks

by Fred Cederholm

The FED and the Administration see more liquidity as the solution—not the problem. The US citizenry is being treated like mushrooms; kept in the dark and fed PR (public relations). Correction: make that another two-letter acronym.

I’ve been thinking about benchmarks. Actually I’ve been thinking about the December 2007 trade numbers, the recession, our trade deficits, our energy deficits, a line drawn in the water, and mushrooms. The “official” numbers for our energy imports and our trade deficit(s) for this past December, and the cumulative trade deficit(s) for the calendar year just ended, were released last week. There are some real eye-openers in the figures. These should be filed away for comparison, because 2008 is already shaping up for this to be a year of many changes in the U.S. – mostly downward!

You see, financial pundits (me included) are looking to the year ahead as a year of downturns. Some have already postulated that the dreaded R-word of recession actually began in the final months of 2007. Others predict its beginnings in the first or second quarter of 2008. Because this is a presidential election year, the government will pull out all the stops to put forth a smiley face during the third quarter before the November election. We’ve heard their mantra of “don’t worry, be happy (and spend)” before. Congress and the Bush Administration already have approved a $150 Billion rebate package, giving tax-paying citizenry a spring windfall to soften coming downturns. This means, of course, a supplementary bump in our National Debt by the same amount. All coming downturns should be reflected in our consumption of goods and energy. Dollar slide will continue.

Our eight largest trade deficits for the month of December 2007 (and 2007 Year to Date) are as follows:

China $18.792 Billion ($256.269 Billion YTD),
Japan $6.593 Billion ($82.799 Billion YTD),
Mexico $6.511 Billion ($74.258 Billion YTD),
Canada $4.656 Billion, ($64.674 Billion YTD),
Germany $3.874 Billion ($44.712 Billion YTD),
Venezuela $3.651 Billion ($29.697 Billion YTD),
Nigeria $3.431 Billion ($29.984 Billion YTD), and
Saudi Arabia $2.704 Billion ($25.227 Billion YTD).

Considering that our hands-down overall biggest dollar-denominated imports are for crude oil and petroleum distillates, just WHAT all are we hocking our souls for in what we are getting from China, Japan, and Germany? As an aside... our biggest trade surpluses are with the Dutch, with a December surplus of $1.513 Billion and a YTD surplus of $14.566 Billion.

The top eight sources of Uncle $ugar’s crude oil imports for December 2007 were:

Canada (1.780 Million barrels per DAY--MBPD),
Saudi Arabia (1.675 MBPD),
Venezuela (1.246 MBPD),
Mexico (1.234 MBPD),
Nigeria (1.210 MBPD),
Angola (0.439 MBPD),
Iraq (0.378 MBPD), and
Algeria (0.348 MBPD).

Uncle $ugar’s top eight sources of total petroleum imports for April 2007 were:

Canada (2.326 MILLION barrels per DAY--MBPD),
Saudi Arabia (1.686 MBPD),
Venezuela (1.382 MBPD),
Mexico (1.322 MBPD),
Nigeria (1.271 MBPD),
Algeria (0.600 MBPD),
Angola (0.439 MBPD) and
Iraq (0.378 MBPD).

The December import value of crude oil ($24.9 Billion) and the December import average price per barrel of crude oil ($82.76) were records. Despite all the December saber-rattling between Washington and Caracas, Venezuela regained its historic slot as our overall number-three energy provider. Mexican production/sales to the U.S. continued to decline.

U.S. economic reporting has been spun, hyped, or even eliminated altogether. We stopped getting the M-3 money supply data last March, and more economic reporting by Uncle $ugar is scheduled for elimination this March.

How we fare in 2008 should be reflected in the numbers presented to the public. In the recent past, such reporting has been spun, hyped, or even eliminated altogether. We stopped getting the M-3 money supply data last March, and more economic reporting by Uncle $ugar is scheduled for elimination this March. The FED and the Administration have drawn their line in the water, seeing more liquidity as the solution—not the problem. The US citizenry is being treated like mushrooms; kept in the dark and fed PR (public relations). Correction: make that another two-letter acronym.

I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.

Copyright 2008 Questions, Inc. All rights reserved. Fred Cederholm is a CPA/CFE, a forensic accountant, and writer. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at asklet@rochelle.net.

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This story was published on February 25, 2008.