4/09/2018

The Real US Problem: Multilateral Trade Deficits - Part 2

Basically Donald Trump looks like an economics noop or perhaps simply trying to bluff his way through.

He acts as if there is no single able economist in the US to provide him any advice on how to solve the US trade deficit problem, beginning with going after China with all kinds of dubious excuses in an attempt to reduce bilateral trade deficit.

Any trained economist would surely see through the holes in such a stance. The Americans real problem is their multilateral trade deficits with the world and not the bilateral trade deficit with China. Even if China accepts Donald Trump's unreasonable demand and unilaterally import another US$100 billion of their oil or aircrafts, such measure hardly solves or improves US economy overall or in the long term. In fact it may even cause more harm in the long run by making such US industries even more inefficient and addicted to such measures to enable exports to foreign markets.

And for the 1,300 products worth US$60 billion slapped with 25% tariffs, how is it going to solve the US trade deficit problems when importers can turn to other sources to import such goods?

Under free trade agreement signed with trading partners, such protectionist measure is known as trade diversion and to so called divert trade revenues from other countries to trade partners within the FTA grouping. But in this case, probably the US could end up importing many of the 1,300 Chinese tariffs targeted products from many other non-FTA countries and create jobs in those countries instead of the US, meanwhile making cost of living worst off and higher for the average US consumers through paying more for similar products from elsewhere.

Faced with an unhinged bully, China's counter moves so far have been measured but firm, otherwise it would probably invite further unabated aggression from the antogoniser who smells blood in any weak response or weakness and further rain countless blows and inflict untold injuries on the hapless victim.

Many international experts find Donald Trump's trade arguments confused and befuddling and would ultumately worsen than solve the Americans domestic economic problems. Doubling down last Thur 5 Apr on intention of hitting another US$100 billion worth of Chinese products with tariffs may be more of a sign of an unravelled binged gambling addict at the casino table who has lost his head and mind and desperately trying to recoup his losses and in the process ends up eventually in an unsalvageable situation for himself. Unfortunately, at this moment, there seems no one able to rein in on the muddled protectionist trade war measures taken by Donald Trump thus far.

Leo81

17 comments:

Anonymous said...

DT is a smart businessman and all his moves will have been thoroughly calculated. We will have to see who will blink first, USA or China.

Cranium said...

Businessmen, whther good or bad, think of profits. They think of deals. They use their cunnningness to win a deal over their opponents / competitors.

In a Trade War beween nations, it is not the same.

Running a business and running a country is not the same.Their @re parameters at national strategic levels and foreeign diplomay that have to taken into account.

Running a business empire owned by self without others to interfere and running a country with a Congress and Senate to answer to, with a Deep State Gang and a Shadow Government in the background are two different animals altogether.

Moreover, USA is an open economy while China is a close economy. US government cannot dictate to her people what to do in many economic situations. Chinese government can dictate to the people what to do even for economic matters such as to boycott US or Japanese goods, or stop shopping at French supermarts.

Lastly, when prices of goods go up, the consumers' pockets are hit. It is the common people who will suffer. They half to tighten their belt. Who can tighten their belt better? This is one factor that no matter how smart Donald Trump is, he cannot predict the outcome.

Virgo 49 said...

China just Austerity on her people. We have to overcome an Adversary that is USA. We have to fight to the bitter end.

The PRCs will comply readily. The Americans hit by rising cost of living will hit the streets with riots and protests.

Burn the cities down. The Democrats will stir shits for political gains.

That is the difference.

Leo81 said...

Virgo49 9.33am
//That is the difference.//


Interesting insights ...

Leo81 said...

Part 3 - The Intent to Force "Modern Opium" On China

The illicit push of opium into China by military force in the mid 19th century by the British Empire was arguably the single most destructive factor during that era in undermining the social fabric and security of the Chinese people. It caused China then under the Qing Dynastic rule to suffer untold bullying by foreigners, humiliation, massacre, rape, rappage, looting of priceless treasures and countless other destruction and harm to the Chinese society and its people, both tangible and intangible. So, what is Donald Trump attempting this time?

To provide a glimse of what this Donald Trump is up to, can be up to and capable of, the following excerpts from his 1987 autobiography "Trump - The Art of the Deal":
Quote
"The Commodore deal was basically a juggling act, but a much trickier one than I originally imagined. First, I had to keep Palmieri's people believing I was their best bet to buy the hotel, while trying to avoid, for as long as I could, putting down any cash. At the same time, I had to convince an experienced hotel operator to come in with me before I actually had a deal, knowing that such a partner would give me more credibility with the banks when I went to seek financing. And even a great partner wasn't enough. I also had to try to persuade city officials that it was in their interests to give me a totally unprecedented tax break. That savings, I knew, would make it far easier to prove to the banks that the numbers for my hotel made sense --- at a time when they were loathe to lend money even for projects in good neighbourhoods."
Unquote

Next, the following comment (this morning) from Anon 8.34am 9 Apr 2018:
Quote
"DT is a smart businessman and all his moves will have been thoroughly calculated. We will have to see who will blink first, USA or China."
Unquote

It is quite obvious that what Anon 8.34am wrote "...all his moves will have been thoroughly calculated." is exactly that and most likely MORE THAN THAT ... His calculativeness:

1) "First, I had to keep Palmieri's people believing I was their best bet to buy the hotel"; 2) " ...while trying to avoid, for as long as I could, putting down any cash ..."; 3) "At the same time, I had to convince an experienced hotel operator to come in with me before I actually had a deal,"; 4) "... such a partner would give me more credibility with the banks when I went to seek financing"; 5) "And even a great partner wasn't enough."; 6) "I also had to try to persuade city officials that it was in their interests to give me a totally unprecedented tax break."; 7) "That savings, I knew, would make it far easier to prove to the banks that the numbers for my hotel made sense"; 8) "... at a time when they were loathe to lend money even for projects in good neighbourhoods".

The PRETECTIONIST SALVOS Donald Trump has "fired" on China thus far:

(i) Invoking Section 201, 1974 US Trade Act, he targeted solar panels and washing machines from China; (ii) Way back in Aug 2017, his Trade Representative launched an investigation into China through Section 301 in intellectual property rights, innovation efforts and technological transfers; (iii) Using Section 232 under national security threat to target China's steel exports; (iv) Invoking Section 301 of the 1974 US Trade Act to target 1,300 Chinese products worth US$60 Billion; (v) Publicly announcing another potential Chinese imports target list worth US$100 Billion invoking Section 301 ...

Behind all this moves to INCREASE his bargaining chips at the negotiation table, what is the real motive (aka the "modern opium" to force upon China)? [Potentially an "opium" that can set China back another 150 years ...?]

PS: Mr Chua, above the 3rd article for your consideration to post in your social media site. Thank you.

Anonymous said...

Typo ..

"The PRETECTIONIST SALVOS Donald Trump has "fired" on China thus far:"

Should be spelt
"... PROTECTIONIST SALVOS ..."

Ⓜatilah $ingapura⚠️ said...

@Leo81:

"Trade Deficits" are a hotly debated topic among economists. Are they a "problem". In my untrained opinion NO.

For e.g.: I run sizable trade deficits with every good vegetarian restaurant in my area, and most of the filthiest strip clubs in the city. My annual trade deficit with SIA, Qantas, Scoot and others is huge too. As are the many fresh produce markets from which obtain the "raw materials of production" to produce vegan meals for my "consumption".

If you want a clearer picture you have to look at what is happening in the capital account...aka "Follow The Bloody Money".

China sells stuff to the US and gets paid in USD. It then buys Treasuries with the USDs left over after buying US imports. It buys a shit ton of Treasuries (less now, but still big customer) which are used to secure money printing so that the fat-entitled-cunts can borrow money for houses, cars, education, shiny new iPhones and sundry; made in China; paid for by credit cards.

In the early 70's when Nixon closed the "Gold Window", he sent fuckers to woo the dirty bastards of The House Of Saud---who "own" their own cuntry we know as "Saudi Arabia. Nevermind the "exorbitant privilege" awarded to the USD as the chosen global reserve currency...now enter the Petro Dollar. (Best Scam ever!)

Nixon's envoys said:

"Hey you goatfucking ragheads and sand-niggers, do we have a deal for you!! We will give you military aid---as much as you'd like to buy...if you sell us oil. We'll be your #1 customer, We come in peace to be your friend!
We will pay for the oil in USDs---Don't Worry it's got 'In God We Trust' on every note---which you can use to buy US Treasuries. We are the Federal Govt, we can tax those gullible motherfuckers---who are too busy drinking, fucking, shopping and watchin TV---so you know we're good for the money...So what do you think? Good deal or what??!??

Oh, by the way, do us a huge favour and price all your oil in USDs? In that way, every other cuntry which buys oil has to settle in USDs, which they have to buy from Uncle Sam! This will ensure a nice firm price for the USD, which is good for you because you'll be earning it! OK, OK, we'll throw in a few big titted blondies to suck your dick, tickle your balls and lick your asshole....DO WE HAVE A DEAL?"


And the corrupt cocksuckers in the House Of Saud fell for it hook, line and sinker.

...and the rest is history. Many years later, the domestic political consequences of the deal pissed off one Osama Bin Laden...who had to leave Saudi Arabia because he was saying shit that pissed off the House Of Saud.

Follow the money. The story is always about money...who will get money from whom, and what scam are they running?

Caveat emptor!

Leo81 said...

Typo

"It caused China then under the Qing Dynastic rule to suffer untold bullying by foreigners, humiliation, massacre, rape, rappage, looting of priceless treasures and countless other destruction and harm to the Chinese society and its people, both tangible and intangible."

"rappage" should be spelt "rampage"

Leo81 said...

Typo

"Behind all this moves to INCREASE his bargaining chips at the negotiation table, what is the real motive"

"... this moves ..." should be " ... these moves ..."

Anonymous said...

Trade deficits maybe of real concern to other nations economically. But for the USA in fact it is a free ride on the labour & resources of others as long as the US dollar is the global currency & medium of exchange. The US Fed needs to just print it and exchange for "things". DT either does not understand this basic or he is using this issue to disrupt China ascendancy into the largest economy in the world.

Ⓜatilah $ingapura⚠️ said...

@ 546

I think you need to listen to what Trump said at a 2011 Las Vegas Speech Time from 4:45..."Listen you motherfuckers, we're going to slap a 25% tax..."

Then he goes on to tell them to build their stuff in America. I still think that's his trajectory. He's not disrupting China's ascendancy. Trump is the most vocal critic on how his own cuntry was run. After all, his campaign slogan was to Make America Great Again, and right up til this day, he never misses an opportunity to slam previous administrations for fucking up America.

Trump got a lot of mileage from his "birther" movement---accusing Obama of being born elsewhere, so Obama's not a "true American" and thus is illegally the US President. When Obama slapped DJ in the face publicly with his US birth cert, then proceeded to humiliate The Donald, (Time: 2:51) that was the straw that broke the camel's back. DJ would run for president out of spite. His huge ego kena whack, he buay tahan.

Heartland Millennial 89 said...

@ 12.47pm 9 Apr Mati alias "World Best Trade Negotiator"
>>>Follow the money. The story is always about money...who will get money from whom, and what scam are they running?<<<



George Bush announced in Sept 2001, "either you are with us are against us"

To paraphrase him, "either you are talking sense or NONSENSE".

"Follow the money"?

How?

In this case, prove it otherwise u are just spewing "xxxsense"

Now, how about using another tact?

Follow the source or origin of the nickname "The Rocket Man" ... where did it originate from?

Was Dotard that witty and coined this term or did he borrow this term from someboLEE?

In 1985, after the founding PM spoke in the joint session of the US Congress in an attempt to avert a looming trade war then between the US and Japan, the term "The Missile Man" was coined in the Japanese media ... anyboLEE remembered? No? How about any oldies or PG? Angkor? Angtee? No?

Now this is where the "danger" is lurking ... true?

Who is this "Missile Man" the Japanese media referred to in the mid 80s?

What was its origin?

The term "Rocket Man" coined by Dotard was not that original after all ...? It was "copied" from the Jap ... so much for invoking Section 301 to investigate China on IP etc ...? Did Dotard give credit to the original innovator who coined the term "The Missile Man"?

Now, who is this "Missile Man"?

What has he got to do with the current scheming behind Dotard's war "cries and threats" against China in the ongoing looming trade war?

AnyboLEE still remembered the 1985 "Plaza Accord" that led to the Japanese bubble and collapse of their economy?

Who spearheaded those Negotiations?

Where was the real origin of the term "The Missile Man"?

Is this man now orchestrating the entire battle plan in what is known as the "Thucydides Trap"?

The same guy who "floored" the Japanese economy in the 1985 "Plaza Accord" is behind Dotard's grand scheme?

The genuine "Rocket Man" ...?

Or rather "The (original) Missile Man"?

A formidable veteran in Ronald Reagan's trade negotiating team that dismantled the Japanese economy?

"Follow the money"?

Follow what money?

Follow the "Missile Man" lah, noob!

Anonymous said...

Karma is a bitch?

The good old days are gone?

Abusing power to fark others' spouses like Palmergate, Buttockgate, ... etc etc?

History is coming full circle soon?

It is too little too late le?

The karma is cast in stone (liao)?

Akan datang ...?

The Chinese have a saying:

"On top not straight below also same same"

Now what is the price?

Time will tell ...

It is not "if" but "when"?

Starting from those at the bottom, middle, top in a random toss ...?

As in another Chinese saying, "All parties under the sky ultimately will come to an END."

Desiree93 said...

President Donald J Trump alone would be more than a handful for his opponents. This time President Trump has assembled a team of top notch economists, lawyers, seasoned investors, trade negotiators, strategists etc to tackle the longstanding issues which some of which they have documented in various forms such as unfair trade practices, theft of IP rts ....... etc etc.

Compared to the team under Ronald Reagan which brought down the Japanese economy, this team is arguably countless times more formidable.

This time, President Donald J Trump and Co. seem out to get his opponents and whack them harder than Ronald Reagan did to the Japanese?

Many oldies will probably live to see the outcome of this trade war if things continue to move in the trajectory since the election of Donald J Trump as the 45th President of the United States of America --- the greatest economic and military power ever existed on earth.

President Donald Trump and his team is smart. They started steel tariffs invoking a rare national security clause aiming at many countries but in the end the real target was quite obvious. In the process, President Trump and his team cleverly galvanised many other trading partners to his side and isolate his opponent.

Taking on the greatest economic and military power - the United States of America is already more than a handful. To take on almost the whole world would probably spell disaster.

No wonder President Trump's opponent said they will "fight to bitter end" as if they knew what is coming ...?

Hope many sinkies oldies won't be too sad if reality hit.

When 2 elephants fight, there is nothing much others can do except await the eventual outcome ...

China Observer said...

Speaking at the annual Boao Forum in Hainan, China, PM said:

“More fundamentally, as economists point out, the focus on bilateral trade imbalance between the US and China is misplaced. What matters to a country is not its bilateral trade balance with a specific trading partner, but its overall trade balance with the rest of the world. Furthermore, the cause of a trade deficit is an imbalance in the domestic economy, in particular when a ....."

Ⓜatilah $ingapura⚠️ said...

Like I said, trade deficits are not a problem. All of us have trade deficits with apple, Google, every hawker who makes our food, SMRT, Comfort Del Group... Etc

If you're earning money, someone has a trade deficit with you. As long as everyone can pay for what they buy, the whole thing is in "balance"

Anonymous said...

Global supply chain makes nations trade statistics increasingly irrelevant esp for countries with MNCs like the USA. Apple phones made in China sold to USA...China record as exports but actually it is exports of Apple lah. So much of China exports are MNCs of USA, Germany, Japan, etc...