The USA’s Dependency on Foreign Imports of…

I bet you thought that the next word was going to be “oil”, right? Guess again Mr. Smartenheimer. The next words are “manufactured goods.”

In 2010, the USA imported $364.9 billion worth of goods from China.

That was more than our oil imports of $343 billion.

Staggering, no?

We are all worried about revolution in the Middle East cutting off our supply of oil, but what about a revolution in China cutting off our supply of electronics?

Libertarian economists brush off the fact that we have lost a huge number of manufacturing jobs by citing improvements in productivity. While I am sure that great strides have been made in manufacturing productivity, I have a question: If our workers are now so fabulously productive, why can’t they make the mountains of products that we import?

Riddle me that.

Yes, the USA is still the world’s largest manufacturing nation. But what is the trend?

Beating up on small countries like Iraq and Afghanistan is pretty easy for us. But what if we had to fight a prolonged land war with a real nation? Like China? We had plenty of trouble with the Chinese during the Korean War when we were a manufacturing titan and China was a nation of rice farmers in ruins after its civil war and Japanese invasion. The Chinese infantry inflicted heavy casualties on the US Marines.

Could we win a ground war in Korea today if the Chinese came in again, this time with tremendous industrial capacity?

Maybe if Mexico were on our side, and allowed us to use all the plants that we moved down there to make tanks and other weapons. But of course, Mexico has never been a US military ally. Maybe they will be nice to us in the future though. Keep your fingers crossed…

General MacArthur warned against getting into land wars in Asia. He wasn’t eager to take on Asia’s endless manpower. But now that manpower is backed-up with endless industrial capacity, which they have been able to build thanks to free access to our market.

Military experts say that the USA and South Korea could make short work of North Korea. But having American and South Korean troops on their border isn’t any more acceptable to the Chinese today than it was 60 years ago. Imagine if the Chinese sent in well-equipped ground forces while simultaneously embargoing our supply of electronics and rare-earth minerals?

MacArthur wouldn’t want anything to do with that, and neither would I. Remember the long delays in getting reinforced Humvees to Iraq? Making steel is a challenge for us now. Imagine if we were fighting a force armed with more than IEDs.

Note: To calculate oil imports for 2010, I got the total number of barrels imported from here, and multiplied it by the average price of oil (about $80) from here.

76 thoughts on “The USA’s Dependency on Foreign Imports of…

  1. Matt,

    That answers the question you asked previously if exporting our manufacturing is a threat to our national security. Looks like it is.

    I now realize why our governments and military need to be so big – because there are no jobs in the private sector to support them.

    I still believe we should outsource our wars.

  2. “Jobless claims tumble to 368,000; Labor costs fall 0.6%; productivity up 2.6%.” (Source: CNBC-RT)

    There you go. All’s right with the world.

  3. g

    looks like spx futures peaked into all that good news

    sold into the spike

    now only 10% long

    buying oil on any pullback… $146

  4. P

    SPY still has a long way to go to fill the gap down made on Feb 22nd. That’s around $134.10.

    My gap plays have done very well the past year. Some take a while to play out.

  5. g


    i see now that we will probably fill that upper gap

    sold too soon again

    holding a measly 10% long

  6. The Fibs on the 1344 to 1294 range are being respected nicely. SPX is just below the 61.8% level of 1325.28. If this market is going to try to take out 1332 or tag 1344 again, expect a bounce no later than the 1319ish area (50% fib). Although, it looks like a nice bull flag has been unfurled from the early peak from today on the 5 minute chart.

    Off to do other things today…GLTA.

  7. 2th

    are you amazed how spx jumps from .38 to .61 retrace ..its almost like its being manipulated…….nahhhhhhhh

  8. p,

    The top was called by Weiss last week. 🙂

    Fibs are a self-fulfilling thing. Everyone expects it to happen so they make it happen.

    Thanks JG. I hadn’t thought of looking at non-log scales. There could be some benefit to that type of chart.

    I’m also playing around with Three Line Break charts.

  9. Back from tennis, about to shave and shower to head to a spring training baseball game, but wanted to check in. Got a fill on a small bit of March ITM SDS calls at the LOD so far. Stops in place of course, in case the top wants to pop off this thing, but it sure looks like the market is waiting for tomorrow’s employment data before it springs ahead or falls back. Thata is 2 cents a day, so I don’t plan on holding for long, just looking for a move to take out the lows below 1300.

    manipulated market Phil? surely you jest….I’m shocked, shocked I tell you to learn of manipulation in the market. G, I think it is the HFT machines and trading algorithms that make the Fibs get such respect. So many traders use them as their profit goals that they do become self-fulfilling, and if they program their computers to do the same…well, monkey see, monkey do!

    Weiss had to look good for a week so he could point back to silver and say, see, you could have made x.x% with my trade, even though he jumped in too late. Way too much dollar bearishness out there. Not sure what is going to turn the tide, but when everyone is on one side of the trade, some wise traders here told me to watch out!

  10. Phil, question, if you expect oil to do well, why wouldn’t silver do about the same, i figure its been “the same trade” so to speak for a long while…

    that said i wouldn’t at all quibble if one was selling silver to buy oil but probably wouldn’t quibble the other way around either…

    are you buying zsl ? -g-

  11. After:

    I’ll take a stab at the question for I think silver cools off too. Silver’s scarcity is related to the hoarding thereof. Oil scarcity is ample provocation to “spend” the hoard. Also, I am looking at GOLD and its historical propensity to rise when silver falls (pre United States). But really, it’s tough
    now with “signs” as currency. I got nothing on the central planners but assume they read the classics. Oh, and China, it’s a black box and in my mind presents a huuuuge blind spot. All roads led to Rome; all roads lead out of China.

    Hey After, what does -g- mean?

  12. Poo. I was hoping the gap to the upside would be filled first. Now that SPY is resting on the 15min 36MA support, it could take a bounce. Stranger things have happened.

  13. No support there G….could be some at 1321 though based upon the Fibs.

    I’m thinking after an “in line” number this AM that was whispered to be higher leads traders to want to focus on oil and M.E. unrest…not many want to be long going into the weekend, so may as well get out and lighten up now with a profit from yesterday’s rocket shot.

  14. On the inverse, SDS broke through its 36ma on the 15 min, retested it, and is headed higher (used it for support). I will keep an eye out for the 9/36 cross there to confirm the trend.

  15. Lose those SPY MM’s…screwing someone on the downside with a market order at 10:25 and then screwing someone else on the upside at 10:30 (looking at 5 min bars)… niiiiiice. Or, maybe they were trading on the iPhone and it “corrected” their number entry for them??? 🙂

  16. i see oil in diag triangle wave 5 of 3

    i am selling my oil etfs here and on any further spike

    i am buying stocks now and will add on any further plunge

  17. Bounce at 1313 was TWO Fib confluence areas: 1344 to 1294 AND 1332 to 1302. The strength of the bounce will let us know if things are going to really bounce, or if the recent lows are in jeopardy.

    Off to play tennis in the sunshine. Profit conditional orders are in place and “no lose” stops overhead in case of a hard reversal on my two open option plays. Look out folks, that’s two winning trades in a row…there must be a snowball sitting in Hell defying Beelzebub. Enjoy the day all. I have. 🙂

  18. phil says:
    March 4, 2011 at 1:54 pm


    look out ……anvil

    Tennis was wonderful. The market hasn’t moved much since I left…is it a Friday afternoon in the summer already?

    What do you mean by the comment referenced above Phil? I’m not sure I understand. I’m thinking you are referencing the Wily E. Coyote character where anvils FALL from the sky…but I’m not sure if you are referring to the market dropping like an anvil, or if I should look out because an anvil is headed to squash me like Wily?

    I’m looking for a triangle (wave 4 or B) with a smash down below 1290 to come, and have said that repeatedly. So far, so good.

  19. Stop triggered on the “profit” part of my week ago trade. made 20% on the capital at risk. The new trade from yesterday is already in for >20%, just a matter of how long the trade runs now and what triggers the sale(s).

    Thanks P for the explanation, I’ll keep my eyes on the sky. 🙂

  20. If SPY closes below $132.39, that will be another bearish engulfing candle with a corresponding increase in trading volume as well.

  21. Agree, P, if that pivot doesn’t hold, it’ll open up a little trap door to some downside action. About to test it now? 1314 as I write this.

  22. Phil, are you connecting your top wedge line in oil from the highs on the 23rd to the 2nd? Looks like we are above that all day today… Will oil go parabolic then–increasing slope of the wedges?

    Nice work playing the oil game Phil. The slippery Bond King–he’s all oiled up!

    Definitely testing the LOD on the SPX now…

  23. Remember, I said that 1313 is a Fib confluence zone from the 1344 and 1332 recent peaks. Also why it is being defended. Looks like the bulls held off the bear raid for the moment….film at 4 pm…

  24. I’m trying to learn from the best here on the board….thanks for your ideas, help, and encouragement. Have a good weekend.

  25. Nice 2th and Phil. I have company today so I couldn’t be as active. But I still have my inverse of SPY and SKF.

  26. glad you enjoyed your company..that is more important than anything else. That is why I take off to play tennis, golf, or hit the spring training games—it isn’t ALL about money. 🙂

    Phil can really trade ’em…. 🙂

  27. Thanks 2th… agree with the priorities.

    I see that SPY filled its gap it made on the 3rd, at least on a daily basis on the 60min. The financials did the same thing.

    If spy can maintain this new higher low, it will continue up to fill the upper gap.

  28. Yes, Phil can trade ’em. I do believe he has the instinct, the “gut feel” with the market. I appreciate his posts, for sure.

  29. I haven’t touched these lines of SPY’s daily consolidation I originally drew. Look at how price touched the upper horizontal line. Spooky. Inside day on Friday as far as I can tell.

    For sure it is an end of (up)trend and will break out one day, either way.

  30. Dang George! I don’t like the looks of that chart. Some folks are about to lose/make some $.

  31. Mitch,

    Yep, we’ve seen this many times before. I’m assuming the immediate uptrend is broken until proven otherwise. Basically, there isn’t a trend right now but still above the 36MA. The 9MA hasn’t turned up yet. It will take another day to the upside for that MA to catch up.

  32. Socialist drum-beating rearing its ugly head again.

    WSJ article sez SEC getting into the war to “control” what ‘they believe’ as excessive bonuses.

    The Fed should know what excesses are since they are setting the example: They certainly aren’t setting an example to curb their own excesses.

    File this under: “Don’t do as I do, do as I say.”

  33. George:

    Does sideways have any consequence to the primary bull trend? The market has moved this far with small doses of miniscule employment growth. Energy cost for commercial transportation probably was not factored in as another reason for the trend but its new cost may. But I hardly think so – other than an excuse to sell. The trend was not motivated by a belief in the recovery in jobs or the economy – seems it was pure market expectation of Fed easing. The economy recovering has been, in my mind, blown off or taken for granted.

    However, on the trends’ side is the trend itself and an economic pulse.

  34. G, that chart looks like it needs one more high price with a non-confirmation on the MACD to break the trend. Otherwise, it is just “buy the dip” baby and away we go….

  35. 2th,

    The 60min would be a good one to watch to see where the next move goes.

    Speaking of the economy, not bad here. I may have mentioned the Olive Garden that opened here over a month ago. It has had a waiting line for 90min since the doors opened.

    We went to Ruth’s Chris steakhouse last night and if you don’t have reservations you can’t get in; reservations need to be made about a week in advance for weekend dining. Talk about good steaks – and price! Three of us ate for $166 not including the tip!

    It was the best steak I’ve ever had. Partly due to the prime beef and the 1,600 degree broiling technique used to cook them.


  36. George:

    Same can be said of the economy of tobacco road. The six counties comprising the triangle grows on average 3300+ people a month. 25% of all growth happened this decade (+400K).

    The Ruth’s Chris in Cary closed but another fellow opened another steakhouse there and I hear his are just as good. I can be on NC State’s campus in 10 minutes – fairgrounds in nearly the same. We’ve had back to back to back weekends of shows. From home shows to gun shows and, of course, the Dixie Deer Classic. I picked up a little silver out there this weekend. A very pretty silver eagle. It took all the courage I could muster. : )

  37. Mitch,

    Growth here has been overwheaming until the last 18 months. Too fast.

    Enjoy the silver eagle!

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