[Congressional Record (Bound Edition), Volume 152 (2006), Part 8]
[House]
[Pages 11079-11080]
[From the U.S. 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 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

[[Page 11080]]

     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.


   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
------------------------------------------------------------------------

                                                                 

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