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Thursday, August 16, 2018

Trump has Red China reeling

Omarosa. The show trial for Paul Manafort. These are the things CNN chipmunks chattered about endlessly the last few days. But CNN has no news judgment because it is run by a moron with a Harvard degree and a Napoleon Complex.

To find the news, I read the South China Morning Post, which is worried spitless that the Red Chinese economy will tank like its stock market has.

(Its stocks overall have declined in value by 40% in the last three years. Our stocks are up 33% since we elected Trump. In the eight years from Obama's election to Trump's, the Dow rose by 33%.) Wrong. I apologize.

The newspaper is running a series of columns by panicked investors and experts.

Aidan Yao is senior emerging Asia economist at AXA Investment Managers.

Yao wrote, "China needs to put its house in order as the trade war goes from bad to worse."

He pointed out, "In contrast with the progress seen in United States-European Union negotiations, there are no signs of trade talks resuming between the US and China since the breakdown of negotiations in June."

There are 375 billion reasons this is bad for Red China. That is the number of dollars its profit was from exports to the United States last year.

Xu Yimiao is an independent China-based researcher.

Xu wrote, "China should cut its losses in the trade war by conceding defeat to Donald Trump."

He spared not Chairman Xi's regime.

"Beijing’s strategy of a tit-for-tat retaliation over tariffs has clearly failed. In fact, this strategy escalated the conflict. The direct retaliation after the US announced the first batch of 25 per cent tariffs on US$50 billion in Chinese goods (with the increase from US$34 billion just finalised and coming into effect on August 23) brought few benefits for China. If anything, it gave the US an excuse to plan for a new batch of tariffs covering US$200 billion in Chinese goods. To be fair, it is possible that the US would have escalated the conflict even if China had not retaliated, but whatever the case may be, China’s strategy did not work," Xu wrote.

Here's the problem, we buy roughly $500 billion of their stuff. They buy only $125 billion or so of our stuff. We have four times as much to tariff as they do.

Xu ended his piece, "To get out of this predicament, Beijing probably needs to deal with Trump directly, figure out what he needs to declare a win and create conditions for that. Of course, allowing Trump to declare victory might be tough and even embarrassing for Beijing, but sometimes it is the best choice to stop losses in one trade and hope to profit at another time."

Reporters Wendy Wu and Kristin Huang wrote, "Did China think Donald Trump was bluffing on trade? How Beijing got it wrong."

This happens when your intelligence consists of spying on Dianne Feinstein and watching CNN.

Fraser Howie is co-author of "Red Capitalism, The Fragile Financial Foundations of China’s Extraordinary Rise."

Howie wrote, "China has no idea how to play Trump, and it is doing what it always does when it smells trouble."

Thanks, Red China.

Predictability plays right into President Trump's hands.

"Beijing may be shocked by how things have played out for the moment, but they haven’t lost control of levers of power in the economy, nor are they going to stand by as pressure mounts. A coordinated monetary and fiscal policy can indeed avert short-term impacts, but China hasn’t even cleaned up the post-financial crisis stimulus and is now embarking on another as the outlook becomes ever more complicated," Howie wrote.

"Yet again, China is facing a very delicate balancing act. In November, America will see midterm elections which could change the dynamic again, but the possibility of a second term for Trump should not be discounted. China will continue to be in Trump’s crosshairs. Pumping more money into an already bloated economy may have worked in the past, but the Chinese may find out that indeed this time really is different."

It is brutal. The money men are not pleased with Chairman Xi. That may explain, in part, this last story from Bloomberg News.

"Asian stocks pared losses and Treasury yields ticked higher after China said its vice commerce minister will visit the U.S. for trade talks in late August. The dollar slipped along with the yen," Bloomberg reported.

He will bring the white flag. How do you say "no mas" in Mandarin?

Oh, the press will play this as a big win for Red China. When was the last time the press got President Trump right?


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    1. Oh, and 13.9. ROLL THAT TRAIN, BIG D!! ROLL IT!!!

    2. Here's that train:
      SP 4449. It's Orange too..

  2. Get back to me when the Chi-Comms are not just reelin’, but reelin' and a-rockin', rollin' till the break of dawn.

  3. You know one day the media will get around to removing it head from its posterior and get something right, but I don't think it will be in the near future. The hate is to high for rational thinking, so they will continue to embarrassment themselves.

  4. Several years back there were articles and pictures all over the net of ghost cities in China. Entire cities that had been built and never populated. This was all you needed to know that official policy was that of trade war. Instead of allowing Chinese billionaires to profit from overseas investment to the same degree that they were making profits, a lot of the money was forced to remain in China, and without anywhere to put it, the billionaires built these cities, hoping to make some kind of return in the long run. I would bet that they aren't allowed to buy land for simple speculation, but are allowed to hold it if something is built. Funny laws result in funny outcomes. Just like how the houses in New Orleans tended to be long, skinny affairs because they were taxed according to the amount of street frontage they covered. Another funny thing is how the press in the USA saw this as a loose money phenomenon like our housing bubble and tried to make analogies that didn't apply because no, the Chinese aren't us, and don't act and think with the same motivations. There are drivers of action that people of the west are not aware of.

    The simple adage that you will know them by their fruits applies here. And it looks like Trump is making his policy accordingly.

    1. "Just like how the houses in New Orleans tended to be long, skinny affairs because they were taxed according to the amount of street frontage they covered. "

      Same as in Amsterdam, The Netherlands, which explains why houses along the canals are very narrow and tall. Makes it hard to haul the grand piano up to the third floor of the apartment, which is why those houses have large hooks that protrude out of the front wall on the top floor of the building, for use as sort of winch. Because of all the weight to lift heavy items to the top floors, the buildings also tilt noticeably sideways.

      (For the chronically naive, that's a joke. Some buildings along the canals do tilt sideways because they were built on wooden piles that were sunk into the wet soil.)

    2. Amsterdam is built on mud like most of the reclaimed land in the Netherlands. They were still building houses like that when I was there in the '70's.

    3. I saw a report recently about buildings in Germany where the upper floors were larger than the ground floor. Taxation was based upon first floor area.

  5. In answer to your final questions, "NEVER." Even Fox (at least on the radio) doesn't really report enough of the news to really learn anything.

    1. In this instance, I don’t think PDJT is concerned about the media giving him credit.

      Allowing Xi to save face while we win the war will be enough. Saving face may be the most important outcome for Xi.

  6. It appears that all the big players are waiting for the midterm results before they act. China and Canada plus Iran for sure are trying to wait the Donald out. I suggest buying stocks now and bet on a red wave in the midterms. I forgot to mention Turkey as well. Once Iran caves, Turkey will have to or they will be bankrupt.

    1. Mullahs out by the Midterms..

  7. Trump said we would win a trade war. - GOC

  8. Of course the 4x impact of tariffs vs. ChiComms is why POTUS is correct in a frontal attack against trade manipulators as the Commies are.

  9. Between the total ineffectiveness of the Canadian negotiators and the China trade anguish, I'm running out of popcorn. The dumocrats have now banned straws, lost their leaders security clearance, called for increased taxes, and fired Struckyduck. Watching has been fun. But I need to run to the store.

  10. The genius of Trump is his ability to recognize and leverage the strengths of America, the very same attributes Obama considered to be our nation's weaknesses. This is what you get when you elect a man of the world as your leader instead of a left-wing credentialed community organizer who had never organized squat.

  11. Rollin'! Rollin'! Rollin' on thuh rivah!

  12. When you come to play poker with 500 pennies and the other player has 125 pennies - and you're a very good poker player - there's a good chance the other player with 125 pennies is going to lose everything on the first round. If nothing else, he better hope to heck that he wins a round or two ... and he'll be sweating the whole time.

  13. Aaaaargh, I hate this absolutely correct post.

    Every word of it applies to my country, Canada, except that our "leader" Justin Trudeau has no clue, not a tiny clue that he is getting his head pounded in by Trump, and me along with him.

    1. Well, you can hope he is sent packing in October 2019. But my guess is that as long as Trump is down here Trudeau will be up there. You guys had Harper when we had Obama so it seems like the crazy shifts north or south in turns.

  14. Don - China blinked yesterday.

    They are sending a team to negotiate an end to the 'trade war'.

  15. The Dow was up 33% from Nov 2008 to Nov 2016? I would double check that.
    I'm limping on a handheld so do check me but the Dow was around 8800 in Nov 2008, 13,000 in Nov 2012 and 19,000 in Nov 2016.

    1. Thanks. I was in error. I shall fix. I apologize.