Canada facing trade deficit: very bad

http://www.thestar.com/Business/article/308181

Sadly, no one ever even hears about the trade deficit, much less keep track of it.

What is it?

The trade deficit/surplus is a measure of how much money is flowing into (surplus) or out of (deficit) the country in the international market. It literally represents how much money we're making as a nation and is a good measure of how much wealth the country is keeping inside its borders.

Why is it important?

Unlike government surplus' that go into the federal debt, there is no reprieve for the trade deficit. Any dollar that leaves the country, somebody has to suffer for. So, the trade deficit can't directly be countered. Getting a nation out of trade degradation is hell all the way.

The softest immediate solution is to inject money into the private sector with government stimulus packages.

But, the packages have a hard time making it to the businesses who need it. This is because they require revisions of book keeping and financial processes. It's not too bad for a teeny-tiny company to change for stimulus requirements & procedures, but medium-large businesses have to pay teams of accountants to retrofit their budgets to account for it.

In fact, usually the only entities that benefit are multinationals who are already the biggest contributors to the trade deficit because they export their production to other countries (sending more money out of the country). Not only are stimulus packages band-aid solutions, they suffer from multinational exploitation.

The alternative solution (and one that works for sure) is to enforce even greater penalties on imports. But, this brings short-term devastation to the economy. It locks out optional markets, so that business' can't opt-out into an international market if need be. This makes the money in the economy less fluid and incurs more risk. Eventually, though, the private sector can adjust their infrastructure to be more responsible to their nation's income.

The case of the US

The real reason that the US is loosing money is because its people export all the work to third world countries. It might be easy to pay 3rd world countries to make all your products, but sooner or later you have to start making money as a country. This is why the country is in the hole, unemployment rates are through the roof, and the stimulus packages are not helping. You can't draw blood from a stone. Eventually, you have to prove that you have something to offer to the international community, or at least make sure you're not spending all your money in the international market.

...anyways, that's just my opinion. Feel free to correct me. I'm always glad when someone can either corroborate or correct my statements.