Trump's trade war is economic suicide

[bostonangler]

By

RobertSchroeder

White House reporter

 

President Donald Trump on Wednesday bashed the Federal Reserve over interest-rate policy and defended tariffs, as U.S. stocks fell across the board. In a pair of tweets, Trump said the Fed was "very, very late" in cutting interest rates, repeating his steady criticism of the central bank. He also approvingly quoted a Fox Business News host who said tariffs hadn't hurt the economy, and added "And we are taking in $Billions!" The Dow Jones Industrial Average DJIA, -2.93% fell more than 600 points after a series of worrying data on global economic growth, and after the yield on the 10-year U.S. Treasury note fell below that of the 2-year note.

See Full Story

Edited August 14, 2019 by bostonangler

[bostonangler]

CBO warns tariffs could hurt economic growth

The Congressional Budget Office said on Wednesday it expects federal deficits to grow much more than previously expected —adding that ongoing U.S.-China trade tensions could slow economic growth.

In a new report, the CBO said over the next decade, the federal government’s red ink will flow much deeper than forecast — primarily because of the bipartisan budget deal passed last month.

But as America spars with its major trading partners over trade, the nonpartisan budget watchdog added that because of tariffs, U.S. growth will likely be 0.3% smaller than it otherwise would have been by 2020.

“Tariffs reduce domestic GDP mostly by raising domestic prices, thereby reducing the purchasing power of consumers and increasing the cost of business investment,” the CBO said in a blog post.

“Tariffs also affect business investment by increasing businesses’ uncertainty about future barriers to trade and thus their perceptions of risks associated with investment in the United States and abroad,” it added.

‘Significant changes’ needed

According to the CBO’s report, the U.S. budget deficit is now expected to reach $960 billion in 2019 — $63 billion more than the last projection in May.

Meanwhile, the new budget deal reached between Congress and the White House will add around $1.7 trillion to the cumulative deficits between 2020 and 2029, the agency said.

The expected jump will partly offset by a drop in interest costs, helped by interest rates that have sunk to record lows in recent days. Those savings translate into a $1.1 trillion net reduction in the CBO’s projections over the following 10 years, the agency said.

Still, the deficit is now expected to average $1.2 trillion per year between 2020-2029. Over the next ten years, the deficit is expected to expand by $809 billion more than previously projected.

The federal debt held by the public is expected to grow from 79% of GDP in 2019 to 95% of GDP in 2029 — the highest level of debt since the end of World War II, according to the report.

The CBO says federal debt is on an unsustainable course and will rise even higher after 2029, because of the aging population, growth in health care and rising interest costs.

“To put it on a sustainable course, lawmakers will have to make significant changes to tax and spending policies—making revenues larger than they would be under current law, reducing spending below projected amounts, or adopting some combination of those approaches,” said the report.

https://www.yahoo.com/finance/news/cbo-warns-on-soaring-deficits-says-trade-war-to-trim-growth-160844098.html

 

 

More debt.... These crooks just laugh at us while the party on...

B/A

[bostonangler]

Thanks negmiester... We should all be negging these economic policies and budgets as they continue to sink America... Too bad people are so easily conned.

 

B/A

[MyLadiesDaddy]

14 minutes ago, bostonangler said:

Too bad people are so easily conned

Yes it is, on every side of the aisle. 

 

[yota691]

 Fake News Legacy Media Meltdown - "Russia, Racism, Recession"

[bostonangler]

2 minutes ago, ladyGrace'sDaddy said:

Yes it is, on every side of the aisle. 

 

 

Yup.... Like I was say.... Term limits and third party... Those are the only chance to break up the cabal.

 

B/A

[bostonangler]

Just now, yota691 said:

 Fake News Legacy Media Meltdown - "Russia, Racism, Recession"

 

This is just preaching to the choir. He is a swamp dweller.

 

B/A

[MyLadiesDaddy]

5 minutes ago, bostonangler said:

 

Yup.... Like I was say.... Term limits and third party... Those are the only chance to break up the cabal.

 

B/A

I have come to realize there's a MUCH bigger picture. 

[bostonangler]

1 minute ago, ladyGrace'sDaddy said:

I have come to realize there's a MUCH bigger picture. 

 

I'm sure the agenda is much more complicated and devious than any of us can imagine.

 

B/A

[MyLadiesDaddy]

2 minutes ago, bostonangler said:

 

I'm sure the agenda is much more complicated and devious than any of us can imagine.

 

B/A

Yes it is 

[bostonangler]

 

 

✔ @realDonaldTrump

 

 

The Dow is down 573 points perhaps on the news that Representative Seth Moulton, whoever that may be, has dropped out of the 2020 Presidential Race!

 

41K

 

 

 

Talk about deflection...LOL

B/A

3:01 PM - Aug 23, 2019

[bostonangler]

Trump slaps retaliatory tariffs on Chinese goods

President Donald Trump announced in a series of Twitter posts Friday that he would be imposing a higher rate of tariffs on some Chinese imports, after China earlier in the day said it would be slapping tariffs on another $75 billion worth of U.S. goods.

The additional levies are set to roll out in two tranches. The $300 billion worth of imports from China that were set to be taxed at a 10% rate on September 1 will now be taxed at a 15% rate. And starting October 1, the $250 billion worth of Chinese imports currently taxed at 25% will be taxed at a rate of 30%, Trump said.

The Office of the U.S. Trade Representative followed up with a press release reiterating Trump’s new tariff announcements shortly after the Twitter posts.

Trump’s announcement came about an hour after market close Friday. Earlier in the session, the Dow fell more than 700 points on an intraday basis after Trump wrote in Twitter post that he was ordering U.S. companies to “immediately start looking for an alternative to China” for their business operations. In the same Twitter thread, he also said he was ordering carriers including FedEx (FDX), Amazon (AMZN) and UPS (UPS) to “search & refuse” Chinese packages containing the drug fentanyl.

The Twitter storm Friday came as Federal Reserve officials gathered in Jackson Hole for the central bank’s annual symposium. During the summit, central bankers and global economists alike called out the economic threat posed by the rapidly intensifying trade war.

Fed Chair Jerome Powell described the difficulty central bankers were having in modeling the economic outlook, given that there were “no recent precedents” to guide monetary policy in the throes of the escalating trade war. Powell reiterated the Fed’s commitment to “act as appropriate” to support the current economic expansion, adding that the U.S. economy was in a “favorable place” despite “significant” lingering risks

https://finance.yahoo.com/news/trump-slaps-retaliatory-tariffs-on-chinese-goods-210533036.html

 

 

 

Thank goodness he waited until the markets closed or he might of held a new record.... The biggest one day drop in market history.

B/A

[bostonangler]

Among their many complaints, President Trump’s critics insist he’s not normal. Sour grapes, mostly.

But Trump’s commentary and behavior are becoming more erratic, in ways that matter. On the economy, Trump has now personalized his trade war with China and amplified policies that are the political equivalent of a brat’s temper-tantrum. He has also now branded the head of the Federal Reserve an “enemy,” ramping up his attacks on a central bank that refuses to politicize its policy for Trump’s political gain.

After a week of outbursts and more self-defeating tariffs, serious analysts are now questioning Trump’s lucidity. “There’s a growing sense that Trump is spinning out of control,” Greg Valliere, chief strategist for AGF Investments, wrote to clients recently. “This is not normal behavior, especially for someone who holds the nuclear codes.” Valliere, like others, has revived speculation about whether Trump can be removed under the 25th Amendment to the Constitution, which provides procedures for doing so. The outlook, for now: It would be tough.

But Trump is helping build the case. He Twitter-raged against China this week, raised tariffs yet again, and like a mad king declared, “Our great American companies are hereby ordered to immediately start looking for an alternative to China.” That single tweet drove the Dow Jones stock average down 400 points, or 1.5%.

Whether Trump is losing his grip on reality or not, his trade war is becoming a costly quagmire, while he demonstrates the strategic agility of a log. For these reasons, the Trump-o-meter registers another poor grade this week: FAILING, the second-lowest.

Source: Yahoo Finance

Trade may end up being Trump’s undoing as president. On Aug. 23, China announced it was raising tariffs on $75 billion worth of U.S. imports, a highly expected ***-for-tat response to the new tariffs Trump imposed on Chinese imports earlier in the month.

How dare they!

Later the same day, Trump raised his own tariffs on Chinese imports by five percentage points, effective September 1, October 1 and December 15 for various classes of products. “We don’t need China,” Trump sneered on Twitter. He also asked whether Fed Chair Jerome Powell is a bigger enemy than Chinese president Xi Jinping.

Tariff meltdown

It’s all loony. The Fed chair is nobody’s enemy, and Powell is more important to the stability of the U.S. economy than Trump will ever be. And Trump can’t order U.S. companies out of any given country. All he can do is, well, what he’s doing—impose tariffs, raise costs for everybody and cause chaos.

Trump’s tariff meltdown may be explained by his growing anxiety over a slowing economy that threatens his reelection odds. In the space of just two days, Trump said he was considering a new tax cut to stimulate growth, then said we don’t need a tax cut because the economy’s so strong. That’s the incoherence of a Tariff Man who thinks “trade wars … are easy to win” and can’t understand why the real economy and the stock market don’t agree with him.

This all happened in the same week Trump declared himself the “chosen one” and endorsed a claim that he is “King of Israel.” He enraged Jews everywhere by insisting they’re disloyal to Israel if they support Democrats. Oh, and he snubbed the prime minister of Denmark—ordinarily, a tight U.S. ally—because she won’t sell him Greenland. Maybe Trump will order her to do it.

https://www.yahoo.com/finance/news/this-week-in-trumponomics-you-okay-man-184532669.html

 

 

 

He does seem to be having a meltdown....

B/A

[umbertino]

 

Thanks , B/A....Time will soon  tell...........

[yota691]

2 hours ago, bostonangler said:

Thank goodness he waited until the markets closed

Doesn't matter, it still higher then Barrack Hussein Obama  could get it 2. Claiming it Obama economy. What did O say, Oh Yea his lips move, everyone ears heard he stated (not gonna mention his name) what he gonna do wave a magic wand, this is the norm, those jobs aren't coming back. almost 3 years later now the sky is fallen Recession Recession Recession. You folks are the 3 R's. Russia, Racist,  now it Recession... What next?  

[MyLadiesDaddy]

MUST READ… TRUMP IS RIGHT! China Is In Terrible Economic Condition; Cannot Afford to Lose the US Market

 

President Trump yesterday announced that the US will increase tariffs on China and then ordered all US firms to begin seeking alternatives to doing business with China!

The Chinese regime is in a lethal position and has only two choices.

The regime can either give the US what it wants or perish.

President Trump recognizes that China is in an all out war with the US in regards to information and economics.  For years Western leaders have done nothing but negotiate into weak positions, never standing up to the Communist regime.  Former US Presidents treated China like they did Russia 50 years ago, as their superior always giving them what they wanted and never standing up to their abuse and criminal acts.

It is different with President Trump. 

The President knows he has the authority and ability

to inflict a fatal blow to the Chinese economy. 

The US is arguably in its best economic period in history while China’s economy is its weakest in 30 years. 

 

The President knows that now is the time.  China cannot handle the US tariffs while their economy implodes.

 They are on the brink of a massive economic collapse, so colossal that the regime is in danger of being dethroned!

The President retweeted the following post bringing attention to his action to designate China as a currency manipulator, further challenging the regime:

 

 

Less than 24 hours ago the President tweeted the following, noting he is putting more pressure on the regime with more tariffs in response to the regime’s actions:

 

 

Donald J. Trump

 

✔@realDonaldTrump

 

....Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer. As President, I can no longer allow this to happen! In the spirit of achieving Fair Trade, we must Balance this very....

 

26.3K

4:00 PM - Aug 23, 2019

 

Donald J. Trump

 

✔@realDonaldTrump

 · 20h

 

Replying to @realDonaldTrump

...unfair Trading Relationship. China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!). Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%...

Donald J. Trump

 

✔@realDonaldTrump

 

...Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%. Thank you for your attention to this matter!

 

67.3K

4:00 PM - Aug 23, 2019

 

 

The President also tweeted out orders for American firms “to immediately start looking for an alternative to China”.

President Trump knows that China needs the US now more than ever but the US doesn’t need China .

 

 

Donald J. Trump

 

✔@realDonaldTrump

 · Aug 23, 2019

 

Our Country has lost, stupidly, Trillions of Dollars with China over many years. They have stolen our Intellectual Property at a rate of Hundreds of Billions of Dollars a year, & they want to continue. I won’t let that happen! We don’t need China and, frankly, would be far....

Donald J. Trump

 

✔@realDonaldTrump

 

....better off without them. The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP. Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing..

 

Donald J. Trump

 

✔@realDonaldTrump

 · Aug 23, 2019

 

Replying to @realDonaldTrump

....your companies HOME and making your products in the USA. I will be responding to China’s Tariffs this afternoon. This is a GREAT opportunity for the United States. Also, I am ordering all carriers, including Fed Ex, Amazon, UPS and the Post Office, to SEARCH FOR & REFUSE,....

Donald J. Trump

 

✔@realDonaldTrump

 

....all deliveries of Fentanyl from China (or anywhere else!). Fentanyl kills 100,000 Americans a year. President Xi said this would stop - it didn’t. Our Economy, because of our gains in the last 2 1/2 years, is MUCH larger than that of China. We will keep it that way!

 

88.2K

9:59 AM - Aug 23, 2019

Two weeks ago we posted a presentation that former Trump Chief Strategist Steve Bannon gave regarding China.

 

Steve Bannon’s talk was historic. He discussed how China is at economic war with the US. He said America was losing until President Trump. Then he added this:

Well here’s the game and right now we are converging on a point and they understand this. We could take the whole thing down. We can take, the whole thing’s built on a house of sand…

If they [China] devalue their currency they are just going to flood more out. They got $3 trillion of reserves and trust me, in a New York second that thing would flood out in a second. That’s what their own people think about their economy. We’ve allowed these guys to push us around. We’ve allowed these guys to take the South China Sea…

This trade war is going to end in victory and what you’re going to see is a reorientation of the entire supply chain out of China…

Bannon is right. We reported in May that just like the US in 2008,

a perfect storm is building in China.

The excessive and extravagant construction projects, cash-flow challenges and lack of demand in China all could combine for a major financial disaster. Trump is right – now is the time to make a deal with China.

 

As the movie The Big Short showed, in 2008 few individuals saw the US sub-prime crisis before it raised its head.

The cause of the 2008 sub-prime crisis is discussed in Falling Eagle, Rising Tigers:

Politicians would have you believe that the 2008 financial meltdown was related to the more recent actions of one party or the other, but the roots of the 2008 housing market crisis really began in the 1930s with the creation of the Federal Housing Administration (FHA), which guaranteed banks’ mortgage risks and the Federal National Mortgage Association (FNMA), which effectively insured mortgages by purchasing mortgages from lenders. Both shifted risks from the lenders to the US taxpayers. Then in 1977, the Community Reinvestment Act (CRA) was signed into law by President Jimmy Carter. This law was designed to promote home ownership for minorities by prohibiting banks from refusing mortgages in poor areas due to the loan’s high risk. In addition, mortgage lenders were required under the 1975 Home Mortgage Disclosure Act (HMDA) to provide data about who they lent to. Then in 1991, HMDA rules were tightened and included specific demands for racial equality in the institution’s lending.

Credit-worthiness was no longer relevant in the US and the volume of subprime loans exploded. The government had inserted itself in the mortgage business. Like most government initiatives, their plans were doomed. Americans lacking the ability to pay for mortgages were provided mortgages at teaser rates that when fully adjusted would never be paid. This ultimately climaxed in 2008 with the subprime crisis that sent shock waves around the world and put financial markets in a tailspin.

A financial meltdown is in the works in China

Over the past few decades, China opened its borders and corporations around the world fled to China due to its cheap capital and meager payroll costs. As a result, China’s economy exploded. Again, from Falling Eagle, Rising Tigers:

While the US is moving more and more towards a welfare state, China is moving more and more towards prosperity. “Since the launch of economic reform in 1978 more people (in China) have been made materially better off in a shorter span of time than ever before in human history.”

China’s rise out of poverty has been dramatic. For example, considering a consumption threshold of $1 a day using the 1993 Power Purchasing Parities (PPP), the World Bank tracked a reduction of poverty from 652 million Chinese people in 1981 to 135 million in 2004. China’s anti-poverty performance is even remarkable with a standard of $1.25 a day at 2005 PPP. “The numbers in poverty by this measure dropped from 848 million in 1981 to 351 million in 2004. This denotes that there were 517 ($1 standard) or 497 million ($1.25 standard) people who had escaped from absolute poverty during 1981-2004.” A half a billion Chinese citizens have risen out of poverty due to China’s changing policies!

The Chinese were relentless in their efforts to obtain Western technology and grow their economy. They set up trade barriers and manipulated their currency in ways that helped China. The US was at a disadvantage in trade resulting in massive deficits in the billions.

Along comes the Trump Administration, the first administration to address China’s unfair trade advantage. The timing of Trump’s tariffs is not good for China as there are more pressing issues that must be addressed. President Trump is a shrewd negotiator and he obviously believes now is the time to encourage China to make changes to their trade barriers with the US. China may have no choice but to go with what the US offers to keep its economy afloat.

The more pressing issues for China surround real estate, in a manner similar to the US in 2008. As China grew, it invested in its infrastructure and in addition, it invested in large housing projects throughout the country. These efforts helped bolster China’s already fast growing economy.

The problem is that China over invested in these random properties all over China and these properties today remain empty.

(See below pictures of real estate projects the middle of China (Hubei Province) – massive but mostly empty.)

There simply are not enough people in the area where these massive complexes were built that make enough money to afford living in these communities. It appears that the Chinese communists misunderstanding of supply and demand economics may be their downfall.

Some say, no problem, China will just move all the peasants to these massive complexes.  This will be devastating.  First of all China needs to feed them.  Secondly, as we have learned in the US, people on the dole with no work tend to get involved in drugs and crime.  The human spirit needs a purpose – idle hands are the devil’s workshop!

These many properties throughout China sit unoccupied, and there is a cost to this. Bloomberg reported in September 2018 –

Cash-to-short-term debt levels at more than 80 publicly traded real estate companies tracked by Bloomberg were 133 percent on average in the first half, the worst since the first six months of 2015 and down from 297 percent a year earlier. Almost a quarter of developers sport a ratio below 50 percent.

In addition, Bloomberg noted:

But while business has been booming, developers have also been piling on the debt. Firms have been selling more bonds in the domestic market — and at the cheapest rates as investors shrug off default concerns. Those with dollar-denominated obligations, meanwhile, face higher borrowing costs as the U.S. Federal Reserves continues on its tightening path.

The amount of debt related to China’s over development is massive. The total amount is unknown with S&P estimating the amount not reported by local communities and banks being over $6 trillion:

China may be sitting on a hidden debt pile of as much as 40 trillion yuan ($6 trillion), concealed off-balance-sheet by the country’s local governments, according to research from S&P Global Ratings.

Many local governments in China raise debt and hold it off their balance sheet, in order to avoid lending limits imposed by central authorities. S&P says that this is a growing problem within the country, and that the amount of debt held this way has likely ballooned in recent years.

The government may have to take over these debts as they become insolvent –

Not only is the level of hidden debt held by local governments in the world’s second largest economy rising, but so too is the risk of those debts being defaulted on. Much of the debt is held by so-called local government financing vehicles (LGFVs), and S&P reports that central government may be willing to let these vehicles file for bankruptcy in the future.

“Default risk of LGFVs is on the rise. China has opened up the possibility of insolvent LGFVs filing for bankruptcy, but managing the default aftermath is a formidable task for top leadership,” the report noted….

The country’s total non-financial sector debt, which includes household, corporate and government debt, will surge to almost 300% of GDP by 2022, up from 242% in 2016. Fears abound that if this debt pile continues to grow, a spectacular blow up could be imminent.

China’s financial crash may make the 2008 crash in the US look small. The implications will no doubt impact the entire world. This is why China can’t afford to mess around with President Trump and must put together a treaty as soon as possible.

As China falls the US economy will be the one the world runs to and so the impact to the US will be a massive inflow of money resulting in rising markets due to capital infusions.

President Trump is right. Now is the time to deal with China. China is the country that can’t wait it out.  President Trump knows it!

 

 

 

[Synopsis]

Hey, Yota, WHAT, pray tell, is ONE of YOUR MAIDS "keyboard" "combatants" GOING TO "say" "about" YOUR FANTASTICALLY ACCURATE "article" ABOVE???!!!

 

 

YOU The MAN (of course), Yota, AND ALL The Very Best!!!

 

      

 

THANK YOU, Yota!!!

 

      

 

[MyLadiesDaddy]

11 minutes ago, Synopsis said:

Hey, Yota, WHAT, pray tell, is ONE of YOUR MAIDS "keyboard" "combatants" GOING TO "say" "about" YOUR FANTASTICALLY ACCURATE "article" ABOVE???!!!

 

 

YOU The MAN (of course), Yota, AND ALL The Very Best!!!

 

      

 

THANK YOU, Yota!!!

 

      

 

Not that we don't appreciate Master Yota's superior intellect,  but that's my article above. 

[Synopsis]

Just now, ladyGrace'sDaddy said:

Not that we don't appreciate Master Yota's superior intellect,  but that's my article above. 

 

13 minutes ago, Synopsis said:

Hey, Yota, WHAT, pray tell, is ONE of YOUR MAIDS "keyboard" "combatants" GOING TO "say" "about" YOUR FANTASTICALLY ACCURATE "article" ABOVE???!!!

 

      

 

MY (NOTE: MY) MISTAKE, LadyGrace'sDaddy, AND MY (NOTE: MY) Apologies!!!

 

NO Apologies (of course) TO Yota!!!

 

      

 

Well, OK, KIND SIR, LadyGrace'sDaddy, PLEASE Allow ME (NOTE: ME) TO "rephrase" MY (NOTE: MY) "originating" "post"!!!

 

      

 

Hey, LadyGrace'sDaddy, WHAT, pray tell, is ONE of YOUR MAIDS "keyboard" "combatants" GOING TO "say" "about" YOUR FANTASTICALLY ACCURATE "article" ABOVE???!!!

 

YOU The MAN (of course), LadyGrace'sDaddy, AND ALL The Very Best!!!

 

      

 

THANK YOU, LadyGrace'sDaddy!!!

 

      

[64jaguar]

43 minutes ago, ladyGrace'sDaddy said:

MUST READ… TRUMP IS RIGHT! China Is In Terrible Economic Condition; Cannot Afford to Lose the US Market

 

President Trump yesterday announced that the US will increase tariffs on China and then ordered all US firms to begin seeking alternatives to doing business with China!

The Chinese regime is in a lethal position and has only two choices.

The regime can either give the US what it wants or perish.

President Trump recognizes that China is in an all out war with the US in regards to information and economics.  For years Western leaders have done nothing but negotiate into weak positions, never standing up to the Communist regime.  Former US Presidents treated China like they did Russia 50 years ago, as their superior always giving them what they wanted and never standing up to their abuse and criminal acts.

It is different with President Trump. 

The President knows he has the authority and ability

to inflict a fatal blow to the Chinese economy. 

The US is arguably in its best economic period in history while China’s economy is its weakest in 30 years. 

 

The President knows that now is the time.  China cannot handle the US tariffs while their economy implodes.

 They are on the brink of a massive economic collapse, so colossal that the regime is in danger of being dethroned!

The President retweeted the following post bringing attention to his action to designate China as a currency manipulator, further challenging the regime:

 

 

Less than 24 hours ago the President tweeted the following, noting he is putting more pressure on the regime with more tariffs in response to the regime’s actions:

 

 

Donald J. Trump

 

✔@realDonaldTrump

 

....Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer. As President, I can no longer allow this to happen! In the spirit of achieving Fair Trade, we must Balance this very....

 

26.3K

4:00 PM - Aug 23, 2019

 

Donald J. Trump

 

✔@realDonaldTrump

 · 20h

 

Replying to @realDonaldTrump

...unfair Trading Relationship. China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!). Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%...

Donald J. Trump

 

✔@realDonaldTrump

 

...Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%. Thank you for your attention to this matter!

 

67.3K

4:00 PM - Aug 23, 2019

 

 

The President also tweeted out orders for American firms “to immediately start looking for an alternative to China”.

President Trump knows that China needs the US now more than ever but the US doesn’t need China .

 

 

Donald J. Trump

 

✔@realDonaldTrump

 · Aug 23, 2019

 

Our Country has lost, stupidly, Trillions of Dollars with China over many years. They have stolen our Intellectual Property at a rate of Hundreds of Billions of Dollars a year, & they want to continue. I won’t let that happen! We don’t need China and, frankly, would be far....

Donald J. Trump

 

✔@realDonaldTrump

 

....better off without them. The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP. Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing..

 

Donald J. Trump

 

✔@realDonaldTrump

 · Aug 23, 2019

 

Replying to @realDonaldTrump

....your companies HOME and making your products in the USA. I will be responding to China’s Tariffs this afternoon. This is a GREAT opportunity for the United States. Also, I am ordering all carriers, including Fed Ex, Amazon, UPS and the Post Office, to SEARCH FOR & REFUSE,....

Donald J. Trump

 

✔@realDonaldTrump

 

....all deliveries of Fentanyl from China (or anywhere else!). Fentanyl kills 100,000 Americans a year. President Xi said this would stop - it didn’t. Our Economy, because of our gains in the last 2 1/2 years, is MUCH larger than that of China. We will keep it that way!

 

88.2K

9:59 AM - Aug 23, 2019

Two weeks ago we posted a presentation that former Trump Chief Strategist Steve Bannon gave regarding China.

 

Steve Bannon’s talk was historic. He discussed how China is at economic war with the US. He said America was losing until President Trump. Then he added this:

Well here’s the game and right now we are converging on a point and they understand this. We could take the whole thing down. We can take, the whole thing’s built on a house of sand…

If they [China] devalue their currency they are just going to flood more out. They got $3 trillion of reserves and trust me, in a New York second that thing would flood out in a second. That’s what their own people think about their economy. We’ve allowed these guys to push us around. We’ve allowed these guys to take the South China Sea…

This trade war is going to end in victory and what you’re going to see is a reorientation of the entire supply chain out of China…

Bannon is right. We reported in May that just like the US in 2008,

a perfect storm is building in China.

The excessive and extravagant construction projects, cash-flow challenges and lack of demand in China all could combine for a major financial disaster. Trump is right – now is the time to make a deal with China.

 

As the movie The Big Short showed, in 2008 few individuals saw the US sub-prime crisis before it raised its head.

The cause of the 2008 sub-prime crisis is discussed in Falling Eagle, Rising Tigers:

Politicians would have you believe that the 2008 financial meltdown was related to the more recent actions of one party or the other, but the roots of the 2008 housing market crisis really began in the 1930s with the creation of the Federal Housing Administration (FHA), which guaranteed banks’ mortgage risks and the Federal National Mortgage Association (FNMA), which effectively insured mortgages by purchasing mortgages from lenders. Both shifted risks from the lenders to the US taxpayers. Then in 1977, the Community Reinvestment Act (CRA) was signed into law by President Jimmy Carter. This law was designed to promote home ownership for minorities by prohibiting banks from refusing mortgages in poor areas due to the loan’s high risk. In addition, mortgage lenders were required under the 1975 Home Mortgage Disclosure Act (HMDA) to provide data about who they lent to. Then in 1991, HMDA rules were tightened and included specific demands for racial equality in the institution’s lending.

Credit-worthiness was no longer relevant in the US and the volume of subprime loans exploded. The government had inserted itself in the mortgage business. Like most government initiatives, their plans were doomed. Americans lacking the ability to pay for mortgages were provided mortgages at teaser rates that when fully adjusted would never be paid. This ultimately climaxed in 2008 with the subprime crisis that sent shock waves around the world and put financial markets in a tailspin.

A financial meltdown is in the works in China

Over the past few decades, China opened its borders and corporations around the world fled to China due to its cheap capital and meager payroll costs. As a result, China’s economy exploded. Again, from Falling Eagle, Rising Tigers:

While the US is moving more and more towards a welfare state, China is moving more and more towards prosperity. “Since the launch of economic reform in 1978 more people (in China) have been made materially better off in a shorter span of time than ever before in human history.”

China’s rise out of poverty has been dramatic. For example, considering a consumption threshold of $1 a day using the 1993 Power Purchasing Parities (PPP), the World Bank tracked a reduction of poverty from 652 million Chinese people in 1981 to 135 million in 2004. China’s anti-poverty performance is even remarkable with a standard of $1.25 a day at 2005 PPP. “The numbers in poverty by this measure dropped from 848 million in 1981 to 351 million in 2004. This denotes that there were 517 ($1 standard) or 497 million ($1.25 standard) people who had escaped from absolute poverty during 1981-2004.” A half a billion Chinese citizens have risen out of poverty due to China’s changing policies!

The Chinese were relentless in their efforts to obtain Western technology and grow their economy. They set up trade barriers and manipulated their currency in ways that helped China. The US was at a disadvantage in trade resulting in massive deficits in the billions.

Along comes the Trump Administration, the first administration to address China’s unfair trade advantage. The timing of Trump’s tariffs is not good for China as there are more pressing issues that must be addressed. President Trump is a shrewd negotiator and he obviously believes now is the time to encourage China to make changes to their trade barriers with the US. China may have no choice but to go with what the US offers to keep its economy afloat.

The more pressing issues for China surround real estate, in a manner similar to the US in 2008. As China grew, it invested in its infrastructure and in addition, it invested in large housing projects throughout the country. These efforts helped bolster China’s already fast growing economy.

The problem is that China over invested in these random properties all over China and these properties today remain empty.

(See below pictures of real estate projects the middle of China (Hubei Province) – massive but mostly empty.)

There simply are not enough people in the area where these massive complexes were built that make enough money to afford living in these communities. It appears that the Chinese communists misunderstanding of supply and demand economics may be their downfall.

Some say, no problem, China will just move all the peasants to these massive complexes.  This will be devastating.  First of all China needs to feed them.  Secondly, as we have learned in the US, people on the dole with no work tend to get involved in drugs and crime.  The human spirit needs a purpose – idle hands are the devil’s workshop!

These many properties throughout China sit unoccupied, and there is a cost to this. Bloomberg reported in September 2018 –

Cash-to-short-term debt levels at more than 80 publicly traded real estate companies tracked by Bloomberg were 133 percent on average in the first half, the worst since the first six months of 2015 and down from 297 percent a year earlier. Almost a quarter of developers sport a ratio below 50 percent.

In addition, Bloomberg noted:

But while business has been booming, developers have also been piling on the debt. Firms have been selling more bonds in the domestic market — and at the cheapest rates as investors shrug off default concerns. Those with dollar-denominated obligations, meanwhile, face higher borrowing costs as the U.S. Federal Reserves continues on its tightening path.

The amount of debt related to China’s over development is massive. The total amount is unknown with S&P estimating the amount not reported by local communities and banks being over $6 trillion:

China may be sitting on a hidden debt pile of as much as 40 trillion yuan ($6 trillion), concealed off-balance-sheet by the country’s local governments, according to research from S&P Global Ratings.

Many local governments in China raise debt and hold it off their balance sheet, in order to avoid lending limits imposed by central authorities. S&P says that this is a growing problem within the country, and that the amount of debt held this way has likely ballooned in recent years.

The government may have to take over these debts as they become insolvent –

Not only is the level of hidden debt held by local governments in the world’s second largest economy rising, but so too is the risk of those debts being defaulted on. Much of the debt is held by so-called local government financing vehicles (LGFVs), and S&P reports that central government may be willing to let these vehicles file for bankruptcy in the future.

“Default risk of LGFVs is on the rise. China has opened up the possibility of insolvent LGFVs filing for bankruptcy, but managing the default aftermath is a formidable task for top leadership,” the report noted….

The country’s total non-financial sector debt, which includes household, corporate and government debt, will surge to almost 300% of GDP by 2022, up from 242% in 2016. Fears abound that if this debt pile continues to grow, a spectacular blow up could be imminent.

China’s financial crash may make the 2008 crash in the US look small. The implications will no doubt impact the entire world. This is why China can’t afford to mess around with President Trump and must put together a treaty as soon as possible.

As China falls the US economy will be the one the world runs to and so the impact to the US will be a massive inflow of money resulting in rising markets due to capital infusions.

President Trump is right. Now is the time to deal with China. China is the country that can’t wait it out.  President Trump knows it!

 

 

 

 

Nice article LGD, some people would rather see the Chinese bulldoze us. Trump isn't going to let that happen! Sent over a trophy for ya!  Thanks!  

[umbertino]

On 8/6/2019 at 11:09 PM, bostonangler said:

I'm glad I'm old. We grew up in the greatest America. We have freedoms kids today can't imagine. We had the best music. The best cars. No social cesspool. Very few radicals and insane criminal types. We knew and enjoyed our neighbors. We could ride our bikes anywhere without fear. Our biggest crime as kids was stealing cigarettes and smoking them out back. When we were bullied, we had a fight and it was over. We could fish and hunt. Cops would give you a ride home if you had too much to drink. Now everything we do is illegal. Everywhere we go we are being watched. You can't speak your mind without an attack from haters. Yup we grew up in the best of times and I'm glad I'm old enough to have enjoyed it but still young enough to remember it!!!

 

B/A

 

 

Great post, B/A

[MyLadiesDaddy]

18 hours ago, Synopsis said:

 

 

      

 

MY (NOTE: MY) MISTAKE, LadyGrace'sDaddy, AND MY (NOTE: MY) Apologies!!!

 

NO Apologies (of course) TO Yota!!!

 

      

 

Well, OK, KIND SIR, LadyGrace'sDaddy, PLEASE Allow ME (NOTE: ME) TO "rephrase" MY (NOTE: MY) "originating" "post"!!!

 

      

 

Hey, LadyGrace'sDaddy, WHAT, pray tell, is ONE of YOUR MAIDS "keyboard" "combatants" GOING TO "say" "about" YOUR FANTASTICALLY ACCURATE "article" ABOVE???!!!

 

YOU The MAN (of course), LadyGrace'sDaddy, AND ALL The Very Best!!!

 

      

 

THANK YOU, LadyGrace'sDaddy!!!

 

      

LOL, My 'MAIDS' will most likely find some indiscriminate article written by a blithering  idiot from Yahoo chocked full of lies and self deprecating gobbledygook. 

 

 

18 hours ago, 64jaguar said:

 

Nice article LGD, some people would rather see the Chinese bulldoze us. Trump isn't going to let that happen! Sent over a trophy for ya!  Thanks!  

[MyLadiesDaddy]

Looks like we don't need China after all 

 

 

[MyLadiesDaddy]

 

The liberal mainstream media was pretty certain this would be a complete disaster and that the countries were at odds. This is what they reported for several days before the summit began.

Then President Trump dropped this wonderful news on Sunday.

President Trump announced a historic trade deal with Japan, America’s third largest international market.

The deal will open up billions in additional trade with Japan.  This is also a huge blow to the Chinese who refuse to deal with President Trump.

President Trump met with Japanese leader Shinzo Abe on Sunday to make the announcement.

[nstoolman1]

The ruby.