Brad Setser

Follow the Money

Cross border flows, with a bit of macroeconomics

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Maybe Airbus will make the A350 in America?

by Brad Setser
November 23, 2004

Airbus seems to be planning to update the A330 to compete with the Boeing 7E7. Civilian aircraft are (or perhaps were, Airbus is certainly gaining) the United States’ leading export. Maybe Airbus should consider following the advice of the Deputy Governor of the People’s Bank of China, who seems to think the US will remain a competitve base for glocal aircraft production.

“They [the US] should concentrate on sectors like aerospace and then sell those things to us [China] and we would spend billions on this. We could easily balance the trade.”

One of my concerns about the trade deficit is that the US is borrowing tons of money from abroard, but not to invest in US export industries. Rather, we are selling Treasury bills to fund the government, securitized credit card debt (and other asset banked securities) to fund consumption, and agency debt (securitized mortgages) to fund investment in residential housing. If European capital wants to use US labor to produce for a global market, I am all for it …

After all, producing the A350 in the US would be one way for Airbus to hedge v. the Euro/$.

1 Comment

  • Posted by boz

    Is there any way to know the nationality of the purchasers of securitized credit card debt? I love the image of dollars churning from my neighbor’s Providian account to Walmart to Walmart’s sweatshop in China to the Chinese government to a brokerage that buys securitized debt from Providian. Seems like there’s a bit of friction in the system; some of the currency gets skimmed off for Kazakh and Angolan oil. Some goes to new BMW roadsters for the guys in dark suits. But a lot of it just churns, churns, churns. Or am I missing something? I’m just a dumb journalist.