Trump cannot possibly 'win' this trade war!

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cassowary
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Re: Trump cannot possibly 'win' this trade war!

Post by cassowary » Wed Mar 28, 2018 9:15 pm

Neverfail,

It is unclear if Chinese sale of US T bonds will be as damaging as you think. We simply don't know. Prices will go down. This may attract other buyers who think they are cheap. Predicting financial market reactions is very difficult. A lot has to do with the confidence of millions of investors.

According to the IMF, the net debt as % of GDP for the US and Japan respectively are 88% and 134%. Japan is in worse shape than the US but the financial markets still have confidence in Japanese ability to pay their debts.

Is the US as creditworthy as Japan? If it is, then the US has a long way to go before financial markets panic. If the US is deemed by the markets to be as creditworthy as Japan, then Chinese sale of US T bonds will be bought up by other investors at cheap prices.

Sure, the US$ will decline but that means that Chinese exports to the US will suffer. This will give Trump what he wants - a cut in the trade deficit with China.

neverfail
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Re: Trump cannot possibly 'win' this trade war!

Post by neverfail » Thu Mar 29, 2018 5:40 pm

cassowary wrote:
Wed Mar 28, 2018 9:15 pm
Neverfail,

It is unclear if Chinese sale of US T bonds will be as damaging as you think. We simply don't know. Prices will go down. This may attract other buyers who think they are cheap. Predicting financial market reactions is very difficult. A lot has to do with the confidence of millions of investors.

According to the IMF, the net debt as % of GDP for the US and Japan respectively are 88% and 134%. Japan is in worse shape than the US but the financial markets still have confidence in Japanese ability to pay their debts.

Is the US as creditworthy as Japan? If it is, then the US has a long way to go before financial markets panic. If the US is deemed by the markets to be as creditworthy as Japan, then Chinese sale of US T bonds will be bought up by other investors at cheap prices.

Sure, the US$ will decline but that means that Chinese exports to the US will suffer. This will give Trump what he wants - a cut in the trade deficit with China.
Hi Cassowary,

First of all allow me to express my hope that you are enjoying a happy and holy Good Friday. Down here Good Friday is a public holiday: is it also one where you are?

Cass, might I say that reading your most recent post on this topic you almost had me convinced. Unfortunately for you before I read your post I had previously read David Goldman's latest offering published in the Asia Times. read what he has to say:

http://www.atimes.com/article/tech-bubb ... reckoning/

(quote)The tech bubble gets its (w)reckoning
US tech sector does a great job of exchanging photos and recipes and family photos, but it doesn’t do much for overall productivity, which is stagnant as investment goes into apps rather than plant and equipment


It gets worse as you read on:

(quote) The trouble is that American wages barely keep up with inflation, and the wage growth of part-time workers (according to the Atlanta Federal Reserve) was lower than the growth of the Consumer Price Index during the past year. The American savings rate, meanwhile, hovers near its all-time low. Beam all the targeted advertising you want to Facebook users and they still won’t buy if they don’t have the money.

Wages are stagnant because productivity is stagnant, and productivity is stagnant because American companies invest in apps rather than plant and equipment. Asia is the main reason for America’s shift away from capital-intensive investments to “capital light” investments such as software. The large Asian economies, China especially, subsidize capital-intensive investments. They view a chip fabrication plant or an auto assembly plant as a public good, and reduce the cost of capital for private companies, just as the US subsidizes sports stadiums and airports.


Cass, think about it! The US has enjoyed historically the lowest interest rates ever for years now along with miniscule inflation; yet investors still do not consider the returns they would get from investments in new productive capacity sufficiently lucrative to reward them for the unavoidable business risks involved. By contrast in the PRC the government there has apparently moved heaven and earth to ensure that their private sector investors get ample returns.....

(....and the PRC is supposed to have a Communist government - what a sick joke! :lol: )

The flip side of low interest rates to borrowers is virtually non-existent interest payments to savers who own bank accounts. So wonder US savings (as Spengler points out) are at an all time low. Americans are given no incentive to save money but (at least for those whom are still credit worthy) a big incentive to borrow.

An incentive to borrow but not to invest in anything that might add to their nation's productivity. So where does all the borrowed money go? Into non-productive speculative bubbles.

Forget about Trump's (much trumpeted :) ) corporate tax cuts. Whilst these might provide a temporary fillip of activity to some American corporations; given the glaring structural imbalances these are not destined to put the US economy on the path to sustainable growth. If years of low interest rates in an environment of low inflation has not done it already then it is hard to see how the one-off boon of a round of tax cuts will achieve anything lasting.
....................................................................................................

Cass, Americans still like to boast that their national economy is the World's largest - as if mere quantity has anything to do with quality. If I had any spare money to wager then in a trade war between the USA and the PRC I would bet on the bigger of the two coming off second best. Why? Because whilst the USA does it all with deficits and debt the PRC does it with surpluses and accumulated credit.

Jim the Moron
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Re: Trump cannot possibly 'win' this trade war!

Post by Jim the Moron » Thu Mar 29, 2018 7:35 pm

"Stagnant" productivity is not a good thing, but at least it's stagnant at a high level:

"These Are the Most Productive Countries in the World"
http://www.time.com/4621185/worker-prod ... countries/

The same can probably be said of American innovation - rather stagnant, but at a high level.

neverfail
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Re: Trump cannot possibly 'win' this trade war!

Post by neverfail » Fri Mar 30, 2018 4:09 pm

Jim the Moron wrote:
Thu Mar 29, 2018 7:35 pm
"Stagnant" productivity is not a good thing, but at least it's stagnant at a high level:

"These Are the Most Productive Countries in the World"
http://www.time.com/4621185/worker-prod ... countries/

The same can probably be said of American innovation - rather stagnant, but at a high level.
I agree!

Sadly as Spengler ( David Goldman) points out: this "high level" is likely to prove a wasting asset as investors in the US are no longer investing in productive assets - but meantime others are.

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cassowary
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Re: Trump cannot possibly 'win' this trade war!

Post by cassowary » Sat Mar 31, 2018 6:18 am

Neverfail,


I wish you and all Christians a happy and holy Easter. I will reply when I am free.

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Alexis
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Re: Trump cannot possibly 'win' this trade war!

Post by Alexis » Sun Apr 01, 2018 12:43 am

cassowary wrote:
Sat Mar 31, 2018 6:18 am
Neverfail,


I wish you and all Christians a happy and holy Easter. I will reply when I am free.
Happy Easter to you Cassowary, and to all people on this board! :)

Jim the Moron
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Re: Trump cannot possibly 'win' this trade war!

Post by Jim the Moron » Sun Apr 01, 2018 1:02 am

- some Bach for Easter

neverfail
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Re: Trump cannot possibly 'win' this trade war!

Post by neverfail » Sun Apr 01, 2018 4:54 pm

That goes for you troo Jim! :D

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Sertorio
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Re: Trump cannot possibly 'win' this trade war!

Post by Sertorio » Mon Apr 02, 2018 6:53 am

neverfail wrote:
Tue Mar 27, 2018 6:58 pm
Sertorio wrote:
Tue Mar 27, 2018 4:21 pm

What is the point you are trying to make? Syria has a secular regime and most people do not care about their leader's religion. If the gulf states were interested in deposing al-Assad it wasn't because of his religion, but because they need their natural gas pipelines running through Syria and they couldn't get from al-Assad the conditions they wanted to have. You make up the most extraordinary arguments to try and give substance to your biased opinions.
OFFICIALLY, Syria has a secular (Baath) regime in government; but have you not learned by now that what is official and what it real are frequently two very different, even diametrically opposed, things?

Cassowary is right Sertorio. Syria is around 75% Sunni Muslim so the Assad hereditary dynasty of dictators (royal family in all but name?) seems to have based its fortunes on a formerly stable coalition of interested non-Sunni Moslem communities including his own Alawites; Shia Muslims; Christians and Druze.

Please take seriously that religious allegiances are still a very live issue in the Middle East (even though they might sound old fashoined/passe' as far as you are concerned). You can also dispense with your fantasies about American plots to control the Middle East and its oil: for underlying the conflict (and the one in Yemen too) is a latter-day recrudescence of the centuries old rivalry/conflict between the Shia' and Sunni wings of Islam - now building up towards the final life-and-death showdown.
Image

This is what it means Syria being a secular state. Without al-Assad I doubt we would continue seeing this is the streets of Syria.

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Re: Trump cannot possibly 'win' this trade war!

Post by SteveFoerster » Tue Apr 03, 2018 9:12 am

That was an excellent musical choice, Jim! Happy Eastertide to all! :D
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