Here is your test of the legitimacy of the US Trade balance number.
I have been discussing with you the fact that the huge aircraft contracts booked into the US Trade Balance as credits were pieces of paper without down payments that were not solid in the sense that they could not be canceled and had large dollars involved.
This is quite clear from the article recently carried in the Financial Times concerning Air Canada canceling its USD$6 billion aircraft order for 32 wide body jets from Boeing. The reason given for the cancellation was that the airline's pilots rejected changes in wages and working conditions to fly the planes.
Why do I have this vision of the head of the pilot's union in the CEO's office getting instructions on how the union might vote if everyone really wanted to stay employed?
Now keep in mind that the Indian press said they were bullied into a major purchase of US built commercial passenger aircraft in the many billions which is also cancelable.
Will the Bureau of Statistics debit the trade balance for Air Canada's order in the same month that new contracts have been made on aircraft sales at the Paris air show? What do you think?"
From Jim Sinclair's MineSet website. ================================ Comment:
Apparently a multi billion dollar order for aircraft is included as an export and reduces the US trade deficit, even though no cash has changed hands at the time of the order, which can be cancelled.
But if that same order is then cancelled the US trade deficit is not increased to take account of that fact!!!
