[Congressional Record Volume 152, Number 75 (Tuesday, June 13, 2006)]
[House]
[Pages H3895-H3897]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
RED INK CONTINUES TO PILE UP
Ms. KAPTUR. Mr. Speaker, I ask unanimous consent to reclaim my time
and to address the House for 5 minutes.
The SPEAKER pro tempore. Without objection, the gentlewoman from Ohio
is recognized for 5 minutes.
There was no objection.
Ms. KAPTUR. Mr. Speaker, the red ink continues to pile up, both in
our budget deficit and in America's trade deficit. The Commerce
Department reported on Friday that the trade deficit is rising again,
pushed up by oil prices and a flood of more imports from China. With
oil imports over $70 a barrel, we know this trade deficit is going to
swell as the year proceeds. The Commerce Department reported that the
gap between what the United States sells abroad and what it imports
rose to $63.4 billion in April, 2.5 percent higher than the March
imbalance of $61.9 billion. We know that the trade deficit in both
February and March just fell a tad, but it had hit an all-time high
this January of $66.2 billion. And while economists noted that the
April deficit was smaller than the $65 billion that had been expected,
it is still the sixth largest trade deficit on record.
{time} 2230
This is a chart that takes a look at what has been happening ever
since this Congress unfortunately passed NAFTA back in the early 1990s,
followed by permanent normal trade relations with China, and what could
be normal about that? Every single year the red ink gets deeper.
Through the first 4 months of this year, the trade deficit is running
1.9 percent above the same period a year ago putting our country on
track to
[[Page H3896]]
run up a record deficit again for a fifth straight year. Last year's
deficit, as this chart indicates, was three-quarters of $1 trillion,
three-quarters of $1 trillion.
To cover this red ink, we have to borrow. We have to import capital
to offset what we are not exporting in goods. America is in uncharted
waters. We have never, ever experienced this situation before. Some
people have commented that our country is handing over $2 billion a day
to foreigners to cover this trade gap. The increase in the April trade
deficit reflected a .7 percent rise in imports which climbed to $179.1
billion, the second highest level on record. In other words, the trend
is in the wrong direction.
In addition to higher oil bills, imports of autos and auto parts were
up and shipments of consumer goods from China such as furniture,
televisions, video recorders and toys all rose. More imports coming in,
fewer imports going out. Major U.S. companies like La-Z-Boy are having
trouble in the market, because products are coming in from China where
workers make pennies a day.
We have lost our entire television industry. Not a single television
is made in this country any more. Companies in the automotive parts
industry like Delphi are trying to struggle to hang on.
We are living through the hollowing out of our country. We are
propping up this loss of real wealth and production capacity with
borrowed capital. We are in uncharted waters. America has never been
here before.
The markets are reflecting it. Today, in the New York Times, major
headline: Broad economic worries drive global sell-off. What is
happening is there are huge drops in the market. Standard & Poor 500
stock index fell 1.3 percent, erasing all of its gains for this year
and closing at its lowest level since November. The NASDAQ fell more
than 2 percent and the Dow Jones Industrial Average fell almost 1
percent. Damage was far worse in markets around the world.
American manufacturers claim, well, you know, the problem is just
with China that their currency is undervalued by as much as 40 percent.
But I can remember when they said that to me about Japan 16 years ago.
Marcy, when the yen-dollar relationship comes into balance, we will
have a trade surplus with Japan. No, no.
No trade surplus with Japan because they still have a closed market,
and we act like they don't. So we take their products, but they don't
take our products. So Japan has now become our largest financer, and
every day we pay them interest on their greater and greater loans to
us.
Mr. Speaker, America cannot continue on this course. In fact,
analysts are saying the deficit will set an even higher record this
year, probably close to $1 trillion, if we keep going at the rate that
we are going today. The deficit with Japan rose by 2.8 percent in April
to $7.8 billion.
The deficit with Canada rose 16.3 percent to $6.1 billion in April,
while our imbalances with Mexico, with Korea, well, gosh, with about
every other country in the whole world, just kept going up. The sad
thing for our country is it looks like this year will be the first year
in our history we will import more agricultural goods than we export.
This is not the America we should be leaving to our children and
grandchildren.
Let's elect people to this Congress and to this Presidency who will
put America's financial house in order and make us independent again.
[From the New York Times, June 13, 2006]
Broad Economic Worries Drive a Global Sell-Off
(By Vikas Bajaj and Jeremy W. Peters)
Fears about higher interest rates, rising inflation and a
slowing economy sent stocks sharply and broadly lower
yesterday, with emerging markets taking the biggest hit.
In the United States, the Standard & Poor's 500-stock index
fell 1.3 percent, erasing all of its gains for the year and
closing at its lowest level since November. The Nasdaq fell
more than 2 percent and the Dow Jones industrial average fell
almost 1 percent.
But the damage was far worse in some other parts of the
world. Trading at the Colombian stock exchange was briefly
halted after its benchmark index fell more than 10 percent.
Mexico's benchmark stock index fell 4.3 percent, its biggest
one-day decline in more than 3 years. Markets in India,
Brazil and Hungary also tumbled.
Emerging markets had enjoyed a strong surge in recent years
because low interest-rate policies around the world pumped
cheap money into the global economy, analysts said.
``Global liquidity has helped drive a lot of these risky
assets,'' said Larry Adam, chief investment strategist at
Deutsche Bank Alex Brown. ``And now you are seeing this
flight to quality,'' including cash and investments in
developed countries, he said.
At first glance, stocks in the United States and Western
Europe do not appear to have benefited from the emerging-
market retreat, but money coming out of emerging markets may
be helping to cushion the blow, Mr. Adam said.
Yesterday's sell-off started early and gathered pace
throughout the day. Some analysts suggested that a major
catalyst was a speech by the president of the Federal Reserve
Bank of Cleveland, Sandra Pianalto, in which she said that
inflation was higher than her ``comfort level.''
Ms. Pianalto was the latest Fed official to express
concerns about inflation in the last several days, a drumbeat
that many investors think is a not-so-subtle message that the
central bank will raise short-term interest rates, now at 5
percent, at its next meeting on June 29. Earlier, the Fed had
indicated that it might pause in its two-year campaign of
raising rates.
The Fed is ``adding to a little of this hysteria that is
building,'' said James W. Paulsen, chief investment
strategist at Wells Capital Management.
To be sure, Ms. Pianalto, who is one of the 11 officials
who vote on Fed's interest rate policies, said that
inflation, though worrisome, was not an ominous threat to the
economy.
``Measures of long-term inflation expectations have been
mixed lately, but, on the whole, I regard them as remaining
contained,'' she said to a gathering of the Broadcast Cable
Financial Management Association in Florida. The challenge of
Fed policy makers, she said, ``is to make sure that they stay
contained.''
The government will issue reports on wholesale and consumer
inflation today and Wednesday. Excluding energy and food
prices, economists expect both the producer price and
consumer price indexes to have risen 0.2 percent in May, a
rate considered to be modest by most experts.
The biggest loser yesterday, as in the last few weeks, was
the technology industry. Many large technology companies,
struggling to match past growth as they mature, have been
lowering their profit projections.
For the second quarter, the technology area's profits are
expected to to fall 2 percent from the same period last year
while the overall increase in the S.& P. 500 is expected to
be 10 percent, noted Howard Silverblatt, senior index analyst
at Standard & Poor's. ``This is supposed to be a growth
industry,'' he said.
The Nasdaq was led downward by Qualcomm, the maker of
wireless technology, which fell 5 percent yesterday after it
filed a complaint against its rival Nokia as part of a
lengthy patent fight.
Shares of Apple fell almost 4 percent, apparently
reflecting investors' concerns about efforts by some European
countries to force the company to open up its music software
to devices other than the iPod.
One of the few exceptions to yesterday's broad sell-off was
General Motors, which rose 43 cents, or 1.7 percent, to
$25.78. It was the Dow's biggest gainer. The shares moved
higher as the president of the United Automobile Workers, the
company's biggest union, told members that the union would
have to rethink its traditional positions to ensure the
domestic automobile industry's survival.
The stock also appeared to be reflecting investors reaction
to news of an agreement late Friday that could avert a costly
strike at G.M.'s largest supplier, Delphi.
Many market experts remain convinced that the recent
correction in stock prices will prove temporary and will be
contained to a few areas. They note that inflation, though
rising, remains low by historical standards.
But the market's volatility has intensified and will
probably remain high, analysts say.
``It is a retrenchment,'' Mr. Silverblatt said. But
``companies are still in good shape.''
The Dow fell 99.34 points, to close at 10,792.58, its
lowest level since Feb. 7. The S & P 500 declined 15.90
points, to 1,236.40. The Nasdaq fell 43.74 points, to
2,091.32. The Russell 2000 stock index of smaller-
capitalization companies, fell 18.2 points, or 2.6 percent,
to 683.19. Declining issues led advancing stocks by 3\1/2\ to
1 on the New York Stock Exchange.
Treasuries fell slightly. The price of the benchmark 10-
year note fell \1/32\, to \1014/32\. The yield, which moves
in the opposite direction of the price, rose to 4.98 percent,
from 4.97 on Friday.
Here are the results of yesterday's auction of three- and
six-month Treasury bills:
[000 omitted in dollar figures]
------------------------------------------------------------------------
3-Mo. Bills 6-Mo. Bills
------------------------------------------------------------------------
Price................................... 98.786 97.510
High Rate............................... 4.800 4.925
Investment Rate......................... 4.926 5.121
Low Rate................................ 4.760 4.880
Median Rate............................. 4.780 4.905
Total applied for....................... $39,754,505 $34,750,526
Accepted................................ $22,838,196 $20,264,834
Noncompetitive.......................... $2,150,786 $1,697,043
------------------------------------------------------------------------
Both issues are dated June 15, 2006. The three-month bills mature on
Sept. 14, 2006 and the six-month bills mature on Dec. 14, 2006.
[[Page H3897]]
THE FAVORITES--STOCKS HELD BY LARGEST NUMBER OF ACCOUNTS AT MERRILL
LYNCH
------------------------------------------------------------------------
Change (%)
Stock Close -----------------
Day 2006
------------------------------------------------------------------------
AT&T Inc..................................... 26.66 +0.2 +8.9
Avaya........................................ 11.31 -1.6 +6.0
BkofAm....................................... 48.41 -0.8 +4.9
Chevron...................................... 57.59 +0.1 +1.4
Cisco........................................ 19.48 -2.5 +13.8
Citigroup.................................... 49.33 -0.9 +1.6
Comcast...................................... 32.47 -0.6 +25.3
ExxonMob..................................... 58.24 -1.0 +3.7
GenElec...................................... 33.87 -0.6 -3.4
Home Dep..................................... 36.26 -1.9 -10.4
Intel........................................ 16.86 -1.7 -32.5
IBM.......................................... 77.02 -0.8 -6.3
JPMorgCh..................................... 41.60 -1.2 +4.8
JohnJn....................................... 61.38 * +2.1
Lucent....................................... 2.41 -1.6 -9.4
Microsft..................................... 21.71 -1.0 -17.0
Pfizer....................................... 23.29 -1.0 -0.1
ProctGam..................................... 54.31 -0.3 -6.2
TimeWarn..................................... 17.20 -0.9 -1.4
VerizonCm.................................... 31.33 -0.5 +4.0
------------------------------------------------------------------------
____________________