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24 August 2019

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confusedponderer

walrus,
re china product quality - depends on what you want.

China can be excellent, but the cheaper stuff is good enough at a rather fair price. I am serious. Sure, of course there is a lot of lower pay price crap stuff, often sold online.

I have two chinese pocket knives. They are ok and do the job, but excellence ... is something else. 10 $ price, so-so-made and sent once about all over the world.

But, anyway, I also have a one hand auto opening knife from Gerber. Excellent and from a different league in quality.

I have also have two chinese Celestron binoculars, an 8x40 allrounder and a 15x70 star glass. The point? They do their job pretty good - especially for the price.

Now, they are not excellent but, again, good enough and only cost a fraction of the prices asked for Nikon, Steiner, Swarovski, Leica (their 8x42 are excellent) and Zeiss (another fav, especially an 8x56).

For an excellent new Leica 8x42 I can pay about up to almost 2000 €. That would have been nice but was not in the budget. In contrast the Celestron 8x40 cost me iirc 65 €. The star glass was about iirc 75 €.

Harlan Easley

It would take a comprehensive plan of some sort as you described. The problem is Trump is it and once he is gone the Washington Consensus of Global "Free Trade"(Jack correctly states never existed) will resume.

And the continue slide into Third World poverty will continue for a large portion of the population. Populism resurgence is part culture but a bigger part economic in my opinion. The Yellow Vest came out due to a Carbon tax.

You can't lose 1/3 of your manufacturing capacity and retain the "American Dream". Which is dead. The dream referred to a large and growing middle class. That is no longer the case.

And with 7 billion plus people "American" companies will always find lower cost abroad.

China is mercantilist to their core and this model will prevail in the 21st Century if the Nation State is to survive. I wouldn't bet against the Globalist they have the Prince of this World on their side. At least for a time.

blue peacock

Barbara Ann

Excellent post!

I find it really amazing how much has changed over the past 18 months. Importantly, the contrary viewpoint of China and specifically the CCP has entered our discourse. This view had been previously suppressed in our media and the CCP perspective was what was packaged under "free trade" and parroted by the Chamber of Commerce, Wall St mavens, many think-tanks and our establishment politicians. Our MSM also was on that bandwagon.

What is most interesting is the success Trump has had in injecting the counter-narrative into our discourse and how even folks like Chuck Schumer & Marco Rubio are beginning to sing from a similar song sheet.

IMO, when Trump called China an "enemy" recently it crossed the rubicon from just a trade dispute to something larger. As you point out the CCP may have calculated that it is best to wait him out. But, what happens if he wins re-election?

As it is playing out right now, Trump has increased tariffs on Chinese goods and they have likewise done the same on our products. I haven't looked at it recently but I believe we may be on tariff parity on many goods as Chinese tariffs were significantly higher relative to ours prior to the tariff war. In the case of China, it is not just tariffs, they have had significant non-tariff barriers and they have even outright banned some US companies from operating there for sometime. Considering our acquiescence for all these years they were IMO very surprised at Trump's action and Lighthizer's negotiating stance. This has been a change of dynamic that has caught them unprepared and they don't have the necessary consensus at the highest levels of the CCP on how to respond.

I believe the US has a much stronger hand in this dispute and that strength is being masked by the NeverTrump media that is painting a much more dire picture. His stance of a more balanced trading relationship is being obscured in the reaction to his tweet storms.

One thing to keep in mind is that the top echelons of the CCP have spirited and stashed their kleptocratic gains in the west. While Xi may seem invincible and in absolute control of the CCP today, if that "wealth" is seriously in jeopardy there could be an internal coup. We're talking hundreds of billions of dollars!

Another issue is the situation in HK. If & when the CCP decide to crack down violently which seems inevitable, we could see a significant escalation with a coordinated move by the US, UK & EU to sanction the top CCP officials, effectively freezing their assets in the west. This must be a significant bone of contention currently in the deliberations among the CCP politburo and among the various CCP factions.

The CCP have substantial strength too as they have financed many entities and personalities in the west. They represent voices who have much access especially to the NeverTrump megaphone. The only certainty I believe is that the lead up to our election over the next 15 months will see increasing volatility in financial markets & media hysteria.

blue peacock

Carney's speech exemplifies what Jack wrote about the Ph.D class. He once again trots out the Global Savings Glut canard which Bernanke used earlier. I recall Bernanke's "portfolio balance channel" transmission mechanism to the "wealth effect" which would increase "aggregate demand" sophistry. We've had the weakest economic growth globally after a recession despite the tens of trillions of monetary stimulus and now they say they need to do more. A carnival barker does a better job as a hustler.

fanto

Jan,
the intellectual property has some value which deteriorates with time, so you are right that in long run the secret of a production or a process once it is out, and proven as successful, many other people will know that it possible to do that, and over short or long time they will reproduce it even without stealing the secret by spies or for money. The time lag in which someone enjoys the monopoly on the secret is that valued time, and therefore money. Stealing intellectual secrets has possibly has an inhibitory effect on ones own creativity, by simply adopting someones else´s product.
As far as China dramatic development is concerned, it was predicted almost 100 years ago by a German writer, Colin Ross, in his book (I believe first edition in 1929!) Die Welt auf der Waage. He made an observation of the young chinese Intellectual class, which ´meant business` with progress, and people like Chou en Lai and Deng probably evolved from that movement.

Jack
“The foreign debt built up by Chinese companies is about a third bigger than official data show, adding to the pressure on the country’s currency reserves as a wave of repayment obligations approaches in 2020.

On top of the $2 trillion in liabilities to foreigners captured in official data, mainland Chinese firms have around another $650 billion in debts built up by subsidiaries overseas, according to Bloomberg calculations. About 70% of that debt is guaranteed by entities such as onshore parent companies and their subsidiaries, the data show. The amount of maturing debt will rise in coming quarters, with $63 billion due in the first half of 2020 alone.”

https://www.bloomberg.com/news/articles/2019-08-25/china-s-companies-have-unseen-foreign-debt-that-s-maturing-fast

Yeah, the nuclear option that so many write about how China will unload their Treasury holdings and crash the TBond market causing the Fed to buy it all. These Chinese companies are scrambling for dollars and will need much of those reserves. If we cut dollars going into China it will increase the pressure on CCP.

elaine

Speaking of "the farmers" China is buying up U.S. farm land at an accelerated pace. I wonder do they also benefit from subsidies to compensate
for the tariffs?

elaine

"re china product quality--depends what you want", so true. And if someone wants tons of fentanyl they seem to be the go to source, combined with Afghan heroin we're loosing thousands of mostly young people a year,
more dead kids than from our shooting wars, mass domestic shootings combined. Tariffs don't put a damper on that poison, all hopes rest solely on interdiction.

Ken Roberts

Good ideas, thanks. What I take from this ... Gradualism, not to make dramatic shifts, and especially not to depend upon whims of an executive office which shifts with prevailing wind. Some sort of tariff admin office. Avoiding sweeping agreements that disrupt the plans of entrepreneurs who have to make multi-year payback projects.

What about using the purchasing power of govt? What fraction of annual spending goes thru a govt office? 30 to 50 pct I guess. At a local level, I've seen a 10 pct advantage given to local suppliers. Why not something like that for state and federal purchasing? Maybe based upon percent of non-domestic content.

anon

I work with chinese tradesmen all the time.you have no clue as to there work conditions in china and abroad.You would not know if your a....... had been popped or riveted

https://www.npr.org/2019/03/30/707949897/chinas-global-construction-boom-puts-spotlight-on-questionable-labor-practices

John Minehan

The only way to build a manufacturing economy is by protecting local manufacturing; that concept was true in the early US and was also true in Japan after WWII and in the PRC after the late-1970s reforms.

However, after you develop a manufacturing base, you need to go to free-trade to protect the consumer, now the basis of your economy. there seems to be an inevitable "J-Curve" there, seen in Great Britain and the US.

John Minehan

Really tough question.

On one hand, if you build a better mousetrap, you want to protect (and profit from) that innovation.

On the other hand, good ideas only matter if they culminate in a better product or service and that is a messy thing.

There is a reason why George Lucas let so many people license his Star Wars Intellectual Property; it made his ideas pervasive and relevant.

I don't think we have heard the last of this issue.

John Minehan

But did that work? was China able to keep the production of Silk away from the Romaioi?

John Minehan

Ask the DPRK how well Junche has worked for them . . . .

John Minehan

Very true.

Barbara Ann

Do we have some sort of clueless Babak impersonator?

I would be interested to learn the location of these petroleum-bearing rocks. And oil if a leftover from the formation of the Solar System in the about the same way that I am.

Horace

"China steals from us. We steal from China. Who cares?"

...forest for the trees. China is a symptom of the disease, not the disease itself. Pres. Trump is trying to destroy globalism without physically destroying globalists, in much the same way as Vlad Putin destroyed the Russian version, the so-called 'oligarchs' (who at one point reduced Russian male life expectancy to 55 years) without a pogrom.

Keeping in context that this is a fallen world and politics the most noxious of trades, Putin's achievement was a remarkable act of high morality. Trump's will be too, if he can pull it off. If he can't, this anti-white globalist empire is going to end badly.

confusedponderer

Fred,
you miss my point.

What I meant was that Trump can twitter his ass off with more arbitrary decrees, brainstorms, effects of severe over-golfing or severe over-ice-creaming - enthusiasm is not a suitable alternative to planning and especially thinking.

Imagine a big orange clown determined to prevent you from entering your living place by planting himself in his all his overstable overgeniousness in the entry of the place.

And what could do you do in this case? Think of it: Beat him up? Well there is that secret service staff around him ... Then, what else: Call the cops? Likely won't work. Call a vermin exterminator? Impolite and likely it's not going to work either.

So what else can you do? Well, incidentally there's a much more easy way:

You go to the neighbours estate, climb over the fence and enter your house through a window that you break or a backdoor that you open. Then you make yourself a coffee and whatch the clown from a comfortable chair freezing his ass off. Oh, it's snowing now, too! Ah well, too bad he had that idea in december ...

Likely that's about all the pity he gets from China here. Trump's problem here is that in thinking he can't get beyond his loved trade war song:

(down with) China!
(down with) China!
(down with) China!
(down with) China!
(down with) China!
... ahem ...
MAGA!
MAGA!
MAGA!
MAGA!
MAGA!

A simple song for a simple mind?

To get what he wanted - badly hurt China economically (a geostrategic and economic rival) with penal taxery - he would have had to penal tax the entire rest of the world for ... because Trump wanted so for whatever reason or impulse. Well, he didn't.

What Canada is doing is simply FREE TRADE (once theoretically something holy for the US), which is precisely what Trump's penal taxery is not.

Norbert M Salamon

The problem is not the existence or lack of existence of petroleum in the world, the problem is the cot of production, processing and distribution. At present the USA fracking business does not meet the return on invested capital [heavy monetary losses for total fracking industry since oil was $100.00/barrel to today, aka, a Ponzi scheme].

Conversely the total cost of exploration, production and distribution in terms of energy requirements must be considerably smaller than the total energy content for the final user. At present tar sands of Canada, some fracking plays in the USA barely meet the energy requirement [theoretically the net must be 3 times the input, while historically the original Texas plays returned over 100 times the energy needed for the process].
When the

Norbert M Salamon

The left started destroying educational standards wherever they could in the middle of the last century:
case study the decline of educational achievement in Hungary after US input for "educational quality". Similarly the USA has never met in the last 40 odd years the literacy level of earlier times.

Eric Newhill

It looks as though Trump is winning from this morning's news. China blinked.

Once again, all of the Chicken Little hysteria over Trump is quickly being revealed to be what it is.

Some people never learn.

John Minehan

Pre-WWII Japanese Forces were excellent; very well trained. There was some good equipment, notably the Mitsubishi A6M "Zero."

On the other hand, much of their equipment was **highly** sub-standard: the Arisaka was an undistinguished bolt-action rifle; their tanks and artillery were vastly inferior, they never really developed an effective sub-machine gun and their service pistols were almost pathetic.

The discipline, toughness and basic soldier-skills of their troops let them punch well above their weight.

John Minehan

"Stealing intellectual secrets has possibly has an inhibitory effect on ones own creativity, by simply adopting someones else´s product."

But it worked for Rome, which developed its naval technology from the Carthaginians; its metallurgy from the Celts; and the secret of silk from China.

Fred

Nice Orange Man bad rant. How's Merkel's EU free trade policy with China working? Don't have one because the EU has borders and importduties? I wonder why.

Canada's, to use your bolded term, "free trade", is simply a mechanism to aid US firms avoid taxes via fraud. The product origin is China, the Canadian value added is essentially zero. Trump has done something about that. Enjoy your free trade recession.

Fred

Norbert,

You mean diversity and immigration are not our strengths?

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