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Post by Old Badger on Aug 7, 2019 9:21:29 GMT -5
"U.S. stocks plunged at open Wednesday, signaling another day of volatility on Wall Street as investors absorbed a spate of overseas interest rate cuts amid continued uncertainty over the U.S. trade war with China. Central banks in India, Thailand and New Zealand announced greater-than-expected rate cuts Wednesday, following signals from the European Central Bank and the Federal Reserve toward monetary easing as policymakers around the globe try to mitigate the fallout from the trade war, which has bogged down two of the world’s most powerful economic engines and is threatening to stall global growth. The Dow Jones industrial average nosedived nearly 550 points after the Asian Pacific central banks announced their rate cuts. The Standard & Poor’s 500 was off about 1.5 percent and the tech-heavy Nasdaq was down about 1 percent in early trading." linkYep, another day, another blast of turmoil in the world's economy. The major cause: Donald J. Trump. Don't believe me, however, Believe his own advisors: "President Trump is increasingly acting based on his own intuition and analysis and not the advice of aides in the fraught trade war with China, five people briefed on the actions said, shattering a more cautious process that had yielded few positive results so far. Trump is convinced that the Chinese economy is suffering more than the U.S. economy from the conflict and that leaders will eventually back down. And he has felt validated that his hardball threats in other circumstances, including a recent tangle with Mexico over border security, seemed to get at least some results, even if they scared investors in the short term, said the people familiar with the matter." linkTrump thinks he can treat China like Mexico? Hmmm... “'We’re learning that maybe China has a higher pain threshold than we thought here,' said Stephen Moore, who was an economic adviser to Trump during the 2016 election and remains close to the White House. 'They don’t seem to care that this is having extreme negative effects on their economy.' ” Duh! Moore used to head the Cato Institute, home of Libertarianism, which means he takes seriously the homo economicus model of human behavior, in which all that counts is economic gain. Alas, this is not how the real world works. China's leaders are playing a long game of power projection, so short-term stimulus-and-response economic/financial decisions are not going to have nearly the impact that ivory-tower dwellers such as Moore imagine. And Trump acting on his "instincts" is just incapable of thinking long-term, so is prone to making disastrous mistakes in the short term. This fiasco is what happens when you put someone with the intellectual development of a 3 year-old in a position of power. We were warned.
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Post by Old Badger on Aug 9, 2019 16:06:00 GMT -5
A Noble Laureate economist explains why Trump is losing the Chinese Trade War:If you want to understand the developing trade war with China, the first thing you need to realize is that nothing Donald Trump is doing makes sense. His views on trade are incoherent. His demands are incomprehensible. And he vastly overrates his ability to inflict damage on China while underrating the damage China can do in return. The second thing you need to realize is that China’s response so far has been fairly modest and measured, at least considering the situation. The U.S. has implemented or announced tariffs on virtually everything China sells here, with average tariff rates not seen in generations. The Chinese, by contrast, have yet to deploy anything like the full range of tools at their disposal to offset Trump’s actions and hurt his political base. Why haven’t the Chinese gone all out? It looks to me as if they’re still trying to teach Trump some economics. What they’ve been saying through their actions, in effect, is: “You think you can bully us. But you can’t. We, on the other hand, can ruin your farmers and crash your stock market. Do you want to reconsider?” There is, however, no indication that this message is getting through. Instead, every time the Chinese pause and give Trump a chance to rethink, he takes it as vindication and pushes even harder. What this suggests, in turn, is that sooner or later the warning shots will turn into an all-out trade and currency war. About Trump’s views: His incoherence is on view almost every day, but one of his recent tweets was a perfect illustration. Remember, Trump has been complaining nonstop about the strength of the dollar, which he claims puts America at a competitive disadvantage. On Monday he got the Treasury Department to declare China a currency manipulator, which was true seven or eight years ago but isn’t true now. Yet the very next day he wrote triumphantly that “massive amounts of money from China and other parts of the world is pouring into the United States,” which he declared “a beautiful thing to see.” Um, what happens when “massive amounts of money” pour into your country? Your currency rises, which is exactly what Trump is complaining about. And if lots of money were flooding out of China, the yuan would be plunging, not experiencing the trivial (2 percent) decline that Treasury condemned. Oh well. I guess arithmetic is just a hoax perpetrated by the deep state. Still, even if Trump isn’t making sense, will China give in to his demands? The short answer is, “What demands?” Trump mainly seems exercised by China’s trade surplus with America, which has multiple causes and isn’t really under the Chinese government’s control. Others in his administration seem concerned by China’s push into high-technology industries, which could indeed threaten U.S. dominance. But China is both an economic superpower and relatively poor compared with the U.S.; it’s grossly unrealistic to imagine that such a country can be bullied into scaling back its technological ambitions. Which brings us to the question of how much power the U.S. really has in this situation. America is, of course, a major market for Chinese goods, and China buys relatively little in return, so the direct adverse effect of a tariff war is larger for the Chinese. But it’s important to have a sense of scale. China isn’t like Mexico, which sends 80 percent of its exports to the United States; the Chinese economy is less dependent on trade than smaller nations, and less than a fifth of its exports come to America. So while Trump’s tariffs certainly hurt the Chinese, Beijing is fairly well placed to counter their effects. China can pump up domestic spending with monetary and fiscal stimulus; it can boost its exports, to the world at large as well as to America, by letting the yuan fall. At the same time, China can inflict pain of its own. It can buy its soybeans elsewhere, hurting U.S. farmers. As we saw this week, even a mostly symbolic weakening of the yuan can send U.S. stocks plunging. And America’s ability to counter these moves is hindered by a combination of technical and political factors. The Fed can cut rates, but not very much given how low they are already. We could do a fiscal stimulus, but having rammed through a plutocrat-friendly tax cut in 2017, Trump would have to make real concessions to Democrats to get anything more — something he probably won’t do. What about a coordinated international response? That’s unlikely, both because it’s not clear what Trump wants from China and because his general belligerence (not to mention his racism) has left America with almost nobody willing to take its side in global disputes. So Trump is in a much weaker position than he imagines, and my guess is that China’s mini-devaluation of its currency was an attempt to educate him in that reality. But I very much doubt he has learned anything. His administration has been steadily hemorrhaging people who know anything about economics, and reports indicate that Trump isn’t even listening to the band of ignoramuses he has left. So this trade dispute will probably get much worse before it gets better. link
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Post by Old Badger on Aug 13, 2019 10:31:19 GMT -5
"The White House on Tuesday said it would delay imposing tariffs on Chinese imports of cellphones, laptop computers, video game consoles, and certain types of footwear and clothing until Dec. 15, significantly later than the Sept. 1 deadline President Trump had repeatedly threatened. The announcement, which came from the Office of the U.S. Trade Representative, likely ensures that Apple products and other major consumer goods would be shielded from the import tax until at least December, potentially keeping costs on these products down during the holiday shopping season. The White House did not give a full explanation as to why these items were being exempted, only saying in a short statement that it was part of USTR’s 'public comment and hearing process.'... "Trump has frequently threatened dramatic penalties, however, only to back away. His threat of imposing a 10 percent tariff on an additional $300 billion in Chinese imports starting next month spooked investors and many lawmakers, and it has led to a steady slide in the stock market in the past two weeks. Many businesses had worried that higher tariffs on consumer goods ahead of the Christmas shopping season could severely damage the economy at a time when some are warning that the risk of a recession next year has increased." linkAnyone think "President" Hothead is going to impose tariffs on these consumer goods at the start of the election year? I'm dubious. Once again Trump shot from the hip, discovered that China is not some mom-and-pop contractor he can frighten or bluff, and retreated. It's a constant pattern with him, and because he seems incapable of learning he just does the old wash-rinse-repeat cycle of failure over and over again. The stock markets breathed a sigh of relief (up 1 1/4 points as I write), but investors remain spooked. And his ad hoc, 19th Century trade policies have increased concerns among economists and business leaders that we're heading for a recession next year. For example, the WP reports: "There’s already been a noticeable decline in business investment as corporate leaders say Trump’s tariffs and unpredictability are creating too much uncertainty, dissuading them from spending large sums on new buildings or equipment. Now there are early signs that business leaders are beginning to pull back on hiring, too." link Fear of recession--and the electoral implications--almost certainly are behind the latest retreat from the trade war with China.
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Post by Old Badger on Aug 24, 2019 10:11:22 GMT -5
The EU warns Trump at the G-7 meetings; his stupid trade war is not going to be "short and easy to win" but long and costly: BIARRITZ, France — European Council President Donald Tusk on Saturday said escalating trade tensions between President Trump and other world leaders risk throwing the world into recession, bemoaning “senseless disputes” that had ripped countries apart. “This may be the last moment to restore our political community,” he told reporters at the beginning of the Group of Seven summit here. Tusk’s comments came one day after Trump and Chinese President Xi Jinping dramatically escalated a fierce trade war between the two countries. Tusk is attending the G-7 summit with Trump and leaders from France, Germany, the United Kingdom, Italy, Canada and Japan, and he said the summit comes at a perilous time. “Trade wars will lead to recession while trade deals will boost the economy,” he said. In response to a question, Tusk questioned Trump’s motivation in trade wars launched by the United States. “For me it’s absolutely clear that if someone, for example . . . the United States and President Trump, uses tariffs and taxation as a political instrument, tool for some different political reasons, it means that this confrontation can be really risky for the whole world, including the E.U.,” Tusk said. “This is why we need the G-7.” But in a sign that leaders are bracing for things to only get worse, Tusk said the E.U. was ready to retaliate against Trump if the U.S. leader followed through on some of his trade-related threats directed at France. Trump has said he will impose tariffs on French wine because France recently imposed taxes that impact U.S. technology companies. “If the U.S. imposes tariffs on France, the E.U. will [respond] in kind,” he said. Tusk also blasted Trump’s request to have Russia rejoin the G-7. Russian President Vladimir Putin has been excluded since 2014 after he invaded Ukraine and annexed Crimea. Europeans feel that welcoming him back would send a signal that they are ready to move on from the conflict. Tusk criticized Trump’s comments last year that Russia’s annexation of Crimea was somehow justified. “Under no condition can we agree with this logic,” Tusk said. www.washingtonpost.com/business/economy/senseless-disputes-eus-tusk-says-trumps-trade-wars-are-damaging-global-economy/2019/08/24/bc1f6502-c656-11e9-9986-1fb3e4397be4_story.html
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