U.S. deficit biggest since 1945
Obama administration closes the books on fiscal 2009: Falling revenue plus soaring spending leads to a $1.42 trillion deficit.
By Jeanne Sahadi, CNNMoney.com senior writer
Last Updated: October 16, 2009: 5:04 PM ET

NEW YORK (CNNMoney.com) — It’s officially official.

The Obama administration on Friday said the government ran a $1.42 trillion deficit in fiscal year 2009.

That made it the worst year on record since World War II, according to data from the Treasury and the White House Office of Management and Budget.

Tax receipts for the year fell 16.6% overall, while spending soared 18.2% compared to fiscal year 2008. The causes: rising unemployment, the economic slowdown and the extraordinary measures taken by lawmakers to stem the economic meltdown that hit in fall 2008.

Consequently, the annual deficit rose 212% to the record dollar amount of $1.42 trillion, from $455 billion a year earlier.

As a share of the economy, the deficit accounted for 10% of gross domestic product, up from 3.2% in 2008. As breath-taking as that may be, it’s still not in the same stratosphere as the 1945 deficit, which hit 21% of GDP.

http://jsmineset.com/

The relationship between China and the West is endlessly fascinating.

It's important to remember that Confucius was teaching philosophy in China when Rome was a mere village and that the Chinese invented gunpowder and astronomy while Europe was still mired in the dark ages. Kublai Khan ruled over one of the largest empires the World had ever seen while Europeans were still convinced the world was flat.

Misunderstandings between the West and China are virtually inevitable; the Obama Administration will have to take extraordinary care to make sure this relationship is managed correctly.

One thing is clear; for the time being at least, neither side will succeed at getting an advantage over the other. China and the United States are far too interdependent for that. Decisions that are made by China and the United States will either benefit both sides or harm both sides; the idea that the United States can gain an advantage at the expense of China (or vice versa)just isn't plausible.

From the time of the Opium Wars (1839-1860) when the British had the audacity to try to monopolize the sale of Opium grown in India to China; to the time of the Boxer Rebellion (1899-1901) when a small group of religiously motivated zealots thought they could defeat the combined forces of Great Britain, Japan, Russia, France, the United States, Germany and Italy; misunderstanding between China and the West has been more the rule than the exception.

In his book, "The Decline and Fall of the British Empire" Piers Brendon provides an interesting anecdote that I think provides a provocative metaphor for relations between China and the West today.

Brendon describes the reaction that the Chinese and British had for each other when they first reestablished contact in 1816 after several centuries.

"Mutual misunderstanding aggravated interracial contempt. The British were disgusted by the Chinese diet which included snakes, tortoises, dogs, cats, bats, newborn rats (known as "honey peepers") and raw monkey brains but were convinced they would readily buy tweed. The Chinese thought that the British looked like devils, stank like corpses and probably had webbed feet. They also reckoned that a ban on the export of Chinese Rhubarb from Canton would probably bring England to a halt via an epidemic of constipation."

Hopefully Obama and company will do a better job of managing relations with China than the British did.

"The 21st century belongs to China
According to Rogers, the 19th century was the era of the British
Empire and the 20th century was the U.S.’ heyday. But the 21st
century is China’s (though the rest of Asia is definitely going to
get a boost too).
The reasons for this are many, but some points brought up by
Rogers include the following:
The Chinese want to live like we do;
They are more eager to work;
They are better at saving;
There are 1.5 billion Chinese citizens (and 3 billion people in all
of Asia), and we owe them money. They are, according to
Rogers, “among the best capitalists in the world.”

from everything i read it seems that the chineese are ridding
themselves of the dollars in their coffers by writing up deals with
the rest of the world for the commodities that they will be
needing to develop the infrastructrure of their underdeveloped
country.

"China overtakes the US as Brazil’s largest trading partner
China has become Brazil’s most-important trading partner,
disrupting a relationship between the United States and the Latin
country that stretches back to the 1930s.
By Malcolm Moore in Shanghai
Last Updated: 9:57AM BST 10 May 2009
Welber Barral, the Brazilian trade minister, said total trade
between Brazil and China had amounted to $3.2bn (£2.14bn) in
April, representing a near twelve-fold increase since 2001.
The sum was greater than the $2.8 billion of imports and
exports to the US and represented the second consecutive
month that China had topped the trade table.
“It is a historic moment,” he said, adding that he expected China
to remain in pole position for the rest of the year because its
economy is still growing healthily. “China is now a platinum
account [for Brazil],” said Douglas Smith, a Latin American
economist for Standard Chartered bank.
The US has been Brazil’s principal trading partner for nearly 80
years, but a sudden surge in Chinese demand for Brazilian iron
ore in the first quarter of this year dislodged the Americans.
The news is the latest sign of China’s increasing challenge to US
hegemony in Latin America. China has been steadily increasing
its sphere of influence and has become particularly close to the
four “Red” South American countries: Venezuela, Bolivia, Ecuador
and Peru."

http://www.telegraph.co.uk/finance/economics/5296515/
China-overtakes-the-US-as-Brazils-largest-trading-
partner.html