VHeadline.com's roving commentarist Fred Cederholm writes: I’ve been thinking about dependence ... about our deficits with oil, manufactured goods, capital, and China. The forthcoming July 4 holiday was supposed to be a celebration of American Independence.

The self-sufficient America of bygone days has devolved from a "production engine" to a "consumption sump" for the world’s energy, goods and capital.

• The world’s greatest creditor nation has become the largest debtor nation. Freedom of choices and actions at home (and abroad) are now governed by these our dependencies.

You see, when you are "dependent," the options to choose that are open to you become constrained and colored by the very nature of the dependency. It was just one year ago that I first wrote about Dependence on Independence Day ... in these past weeks/months, I’ve seen a resurgence of weblinks and I’ve gotten several emails asking for updates. What a difference a year has made! Or … has it?

We are more dependent on foreign oil, but with a slightly different percentage mix of suppliers. The US Department of Energy just provided the April figures on June 24, 2005. The top seven sources of Uncle $ugar’s crude oil imports for April 2005 were: Canada (1.676 million barrels per day (MBPD), Mexico (1.566 MBPD), Saudi Arabia (1.449 MBPD), Venezuela (1.391 MBPD), Nigeria (1.130 MBPD), Iraq (0.542 MBPD), and Russia (0.464 MBPD).

This compares with: Canada (1.596 MBPD), Mexico (1.541 MBPD), Saudi Arabia (1.161 MBPD), Venezuela (1.372 MBPD), Nigeria (1.044 MBPD), Iraq (0.755 MBPD), and Russia (0.193 MBPD) for April 2004.

The biggest drop in oil from Iraq (down 28.2%) was more than picked up major increases from the Saudis (up 24.8%) and the Russians (up 140.4%). Think about what two national leaders were entertained at the Crawford, Texas ranch. Our total oil imports were up; plus… the price per barrel of imported oil doubled in the past year.

We are more dependent on foreign manufactured goods. Think about how many more US companies have downsized domestically and out-sourced production abroad in the past twelve months. Our current USA (monthly trade) deficits increased as well. The monthly trade deficit for April 2005 was $56.963 million, for April 2004 was $48.511 million, and for April 2003 was $41.971 million. This holds true for the other eleven months. See any trends?

We are dependent on foreign capital. At June 30, 2005, our national debt stood at $ 7.827 trillion while at June 30, 2004 our national debt was $7.274 trillion -- an increase of $553 billion in one year. Our May 2005 M3 money supply stood at $ 9.651 trillion while at June 2004 the M3 money supply was $9.294 trillion -- an increase (in addition to the national debt increase already noted) of $357 billion in newly printed bucks (US Notes) over eleven months. Considering that US households are now saving less than 40 cents out of every $100 of earnings, just guess who is holding and/or picking up this new debt?

The Japanese are still the "hands down" largest holders of Uncle $ugar’s obligations, but it’s the Chinese who are accumulating the greatest amount of current "deficit dollars." In 2005, the Chinese will sell US/us some $200 billion more of their goods and products than they buy of whatever it is that we still make/sell. We buy their chotchkies, and they buy our companies.

In the past twelve months, China’s Lenovo bought IBM’s personal computer business for $1.25 billion, China’s Haier bid $1.28 billion for Maytag, and China’s CNOOC bid $18.5 billion for Unocal. That still leaves them with $178.97 billion of the 2005 deficit spread to spend. How much for General Motors? How much for Ford? For Microsoft? For Halliburton?

• Lenovo PC’s might still carry the IBM moniker. Maytag, once the symbol of American reliability in appliances, will now be built like "the Great Wall of China" instead.

Will Unocal’s "Spirit of ‘76" which commemorates our July 4, 1776 become CNOOC’s "Spirit of ‘49" which commemorates their October 1, 1949?

Isn’t it ironic how we celebrate Independence Day with fireworks from…?

Fred Cederholm
asklet@rochelle.net

More VHeadline.com commentaries by Fred Cederholm

To "Audit" this column, and to learn more about the subjects discussed; please check out:

• Thinking about Dependence on Independence Day (JULY 2004 column)
• Crude Oil and Total Petroleum Imports (from Top 15 Providers)
• Comparative Crude Oil Prices 2005/2004/2003 in Dollars per Barrel (in PDF format)
• Trade Ticker - the web's only up-to-the-second counter for the US Trade Deficit. (Presents monthly trade deficits Since January 2003).
• The AmericanEconomicAlert.org News Article portal provides fresh news reports every day from across the globe.
• The Daily History of the Debt
• TABLE 1 M1, M2, AND M3 BILLIONS OF DOLLARS
• MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES (in billions of dollars)