Closing Thought–03Jan20

A new year, a new decade and a new trade agreement and this time it does not involve the US…..this agreement is between Japan, China and South Korea……a bloc that could challenge the US….on the trade front.

The trade ministers of China, Japan and South Korea agreed to work towards a regional trade pact and a trilateral free-trade deal on Sunday.

The agreement was reached despite the recent bitter quarrel between Tokyo and Seoul and the uncertainty caused by China’s ongoing trade negotiations with the United States, as well as the threat of North Korea resuming nuclear tests.

The ministers did not announce any concrete results after Sunday’s talks in Beijing, but they voiced their willingness to continue discussions on the
Regional Comprehensive Economic Partnership (RCEP)
– which also includes the Asean group of countries, Australia, India and New Zealand – as well as the three-way free-trade deal.
 
Will this trade bloc go unnoticed by Trump or will he use the power of sanctions (his preferred technique to punish other countries) to retaliate?
 
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Tariffs–Trump Weapon Of Choice

Most Americans know that Trump has decided that a good trade war is what this country and the world desperately…..

He expanded his “war” with tariffs…first on two South American countries…..

President Trump leaves for a NATO summit in London on Monday, but first he’s making headlines in regard to South America. In an early tweet, the president announced he is restoring tariffs on aluminum and steel shipped from Argentina and Brazil, reports the Wall Street Journal. Trump accused both countries of manipulating their currencies to hurt US farmers, and he paired his action with criticism of the Federal Reserve, notes Bloomberg, which sees the morning moves as significant. Trump says that by these and other nations deliberately devaluing their currencies, “this makes it very hard for our (manufacturers) & farmers to fairly export their goods,” he wrote. “Lower Rates & Loosen – Fed!”

This is the first time Trump has explicitly linked tariffs to currency moves, per Bloomberg, and “as such, it signifies a potential new phase in his trade wars in which foreign-exchange markets are the battleground.” The US initially exempted Brazil and Argentina from metal tariffs put into place in 2018, but that exemption is now being lifted. The New York Times notes that the two countries have benefited from the US trade war with China: Both have been shipping soybeans and other farm products to China, making up for the shortfall of US exports

France is next in the cross hairs….

The Trump administration is proposing tariffs on up to $2.4 billion worth of French imports—including Roquefort cheese, handbags, lipstick, and sparkling wine—in retaliation for France’s tax on American tech giants like Google, Amazon, and Facebook. The Office of the US Trade Representative charged Monday that France’s new digital services tax discriminates against US companies. The trade office will accept public comments on the tariffs, which could hit 100%, through Jan. 6. The French tax is designed to prevent tech companies from dodging taxes by putting headquarters in low-tax EU countries. It imposes a 3% annual levy on French revenues of digital companies with yearly global sales worth more than $830 million and French revenue exceeding $27.7 million.

The US also criticized the French tax for targeting companies’ revenue, not their profits, and for being retroactive, the AP reports. The decision to pursue tariffs “sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies,” US Trade Representative Robert Lighthizer said. He warned that the US is also looking into digital taxes introduced by Austria, Italy, and Turkey. The decision to target France got bipartisan endorsement from GOP Sen. Chuck Grassley and Democratic Sen. Ron Wyden. In a joint statement, they assailed the French digital tax as “unreasonable, protectionist and discriminatory.”

I have made my thoughts known on Trump’s sanctions and tariffs….(you can find them in IST archives under “tariffs”)….I believe there is a better way to deal with other countries than trying to punish them for perceived violations.

I Read, I Wrote, You Know

“Lego Ergo Scribo”

We Have a Deal!

Closing Thought–16Dec19

Just in time for the beginning of the process to pick our next president it has been announced that Xi and Trump have reached a deal on ending our trade war…..

Do not let the peasants dance just yet….they have agreed on only one phase of the deal…..

China and the U.S. agreed on the text of a phase one trade deal that includes the removal of tariffs on Chinese goods in stages, Vice Commerce Minister Wang Shouwen said, as President Donald Trump confirmed that some levies will be reduced and said the next round of talks will start immediately.

China will increase imports from the U.S. and other countries, Wang said at a briefing in Beijing Friday. Vice Chairman of the National Reform and Development Commission Ning Jizhe added that the specifics of agricultural purchases would be released later, as the text of the agreement is still under review.

The comments were China’s first response to a deal signed off by Trump on Thursday that would halt higher tariffs planned for Dec. 15 and represent the first phase in defusing the trade war that’s shaken the global economy.

https://outline.com/9fvXqt

Just in time to help the markets rise a bit and make the economy look better than it is……but the markets did bite this time from Trump….

Stocks are closing at more record highs as traders hope that the US and China can make enough progress on trade to avoid new tariffs kicking in over the weekend, the AP reports. Banks and technology companies led the gains. The S&P 500 rose 26 points, or 0.9%, to 3,168. The Dow Jones Industrial Average rose 220 points, or 0.8%, to 28,131. The Nasdaq rose 63 points, or 0.7%, to 8,717. The S&P 500 and Nasdaq are at record highs. Traders dumped safe-play investments like utilities and real estate companies and moved money into riskier assets. Bond prices also fell, sending yields sharply higher.

I still question the timing of this “deal”….not that Trump is doing anything different from any other president looking for a boost for the next round of voting.

Personally, I feel that we need a more “progressive” trade policy….we are giving too much a way to other nations…..

It is clear that these trade and investment policies no longer even benefit the signatory countries, but rather line the pockets of global elites at the expense of ordinary people and the planet we share. Backlash to these policies has peaked and waned, peaking 20 years ago with the fight against the MAI and the Seattle WTO protests, and again reemerging in the past decade, against the FTAA and, again, against the TPP more recently.

As the right has increasingly taken up opposition to trade policies from a protectionist and often xenophobic angle, the need to distinguish a left, internationalist critique of corporate globalization has never been more urgent. The chauvinist policies of the Trump administration and its imitators need to be strongly condemned. But if the progressive movement is simply reacting to the neoliberal trade agenda and its right-wing disruptors, it is unlikely to achieve meaningful change.

So, progressive politicians and policymakers — from AMLO to Elizabeth Warren and Bernie Sanders — must unify around a progressive vision of trade to guide an international system that places people and planet over profits. That is why a bold new vision for international economic cooperation and global development is so crucial.

https://www.commondreams.org/views/2019/12/12/we-need-progressive-alternative-trade-and-nafta-20-isnt-it

Trade should be our focus to save our family farms….and our industries as a whole….not some idle campaign slogan.

I Read, I Wrote, You Know

“Lego Ergo Scribo”

Closing Thought–11Dec19

The Dems wanted to prove that they did not go to DC justn to impeach the president…..plus they needed to give their members some cover in the close elections in 2020….for these reasons they helped pass the new NAFTA that Trump promised….

House Speaker Nancy Pelosi on Tuesday announced agreement on a modified North American trade pact, handing President Trump a major Capitol Hill win on the same day that Democrats announced impeachment charges against him, per the AP. Crediting Democratic negotiators for winning stronger provisions on enforcing the agreement, Pelosi said the revamped United States-Mexico-Canada Agreement is “much better” than the North American Free Trade Agreement and “infinitely better than what was initially proposed by the administration.” “This is the right thing to do for our trade situation, for our workers,” she said. In a tweet, Trump said the revamped trade pact—his top Capitol Hill priority along with funding for his long-sought border fence—”will be the best and most important trade deal ever made by the USA. Good for everybody – Farmers, Manufacturers, Energy, Unions.”

Marcelo Ebrard, Mexico’s foreign relations secretary, said the three countries’ negotiating teams would meet Tuesday “to announce the advances achieved.” NAFTA eliminated most tariffs and other trade barriers involving the US, Mexico, and Canada. Critics, including Trump, labor unions, and many Democratic lawmakers, branded the pact a job killer for the US because it encouraged factories to move south of the border, capitalize on low-wage Mexican workers, and ship products back to the US duty-free. Weeks of back-and-forth, closely monitored by Democratic labor allies such as the AFL-CIO, brought the two sides together, though Trump had accused Pelosi of being too wrapped up in impeachment. More protectionist and labor-friendly, USMCA contains provisions designed to nudge manufacturing back to the US.

This is nothing but a political gimme to the president…..just a way to help Dems in the states that depend on trade for their economy.

This is just NAFTA 2.0, as it has been labelled)…..it is weak…..

The revised U.S.—Mexico—Canada Agreement (USMCA), announced today by House Speaker Nancy Pelosi and endorsed by the AFL-CIO, represents a significant improvement on the draft agreement first released in 2017. Negotiators for labor and House Democrats strengthened the provisions on labor rights, environmental standards, and the enforcement of these rules, and also removed costly and egregious new protections for corporations, including giveaways by the Trump administration to pharmaceutical companies.

But the changes embodied in the USMCA still constitute Band-Aids on a fundamentally flawed agreement and process. Powerful multinational corporations have used and controlled the negotiation of trade and investment deals to facilitate offshoring and the deregulation of the U.S. and global economy, as noted by the Machinists Union, which has announced its opposition to the USMCA. The original North American Free Trade Agreement (NAFTA) resulted in the loss of at least 680,000 U.S. jobs due to growing trade deficits with Mexico alone. It also caused downward pressure on the wages of nearly 100 million U.S. workers and the devastation of manufacturing communities across the United States, especially in the industrial Midwest and battleground states—with far-reaching social and electoral consequences.

https://www.commondreams.org/views/2019/12/10/us-mexico-canada-agreement-weak-tea-best

Like I wrote…this is a weak piece of manure that does little but give Dems some cover for their upcoming elections back home.

I Read, I Wrote, You Know

“Lego Ergo Scribo”

Sanctions And Tariffs

Sanctions have been used as economic warfare for centuries…and in reality hurts NO one but the average person and consumer…..then a new president and a new way of economic warfare….Tariffs.

This president has two tools in his economic bag of tricks…..yep you guessed it….sanctions and tariffs.

I have studied 18th century economist Henry George and he has lots to say on tariffs…..

American economist Henry George is best known for his 1879 treatise Progress and Poverty, for which Albert Einstein designated George a “beautiful combination of intellectual keenness, artistic forum, and fervent love of justice” (George 1879, cover). Progress and Poverty became a huge success, and in 1886 George followed up with a far more obscure — but perhaps more significant — work on the nature of free trade as pertaining to the eradication of poverty: Protection or Free Trade: An Examination of the Tariff Question, With Especial Regard to the Interests of Labor (online at the Mises Institute).

The problem identified by Henry George, in Protection or Free Trade, is that of poverty, and more specifically, wages and unemployment. What follows from that is George’s systematic and all-embracing dissertation of the effects that protectionist and free-trade policies have on the wealth of a nation and its individuals. Naturally, he arrives at a conclusion that is decidedly in favor of free trade — as opposed to protective prescriptions — as a surefire solution to the ills of poverty.

https://mises.org/library/henry-george-and-tariff-question

Then there are sanctions…..and I have covered gthe problems with sanctions in previous post…..https://lobotero.com/2019/02/05/sanctions/

But if you prefer…..I have Henry Goerge’s thoughts on trade sanctions……

The American free trader Henry George (1839-1897) argued that trade sanctions against “our enemies” hurt domestic domestic consumers just like any other “protectionist” trade restriction:

Free trade consists simply in letting people buy and sell as they want to buy and sell. It is protection that requires force, for it consists in preventing people from doing what they want to do. Protective tariffs are as much applications of force as are blockading squadrons, and their object is the same—to prevent trade. The difference between the two is that blockading squadrons are a means whereby nations seek to prevent their enemies from trading; protective tariffs are a means whereby nations attempt to prevent their own people from trading. What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war.

https://oll.libertyfund.org/quotes/500

Sanctions and tariffs are a lazy person’s answers to any trade problems…..they are NOT solutions at all.

And now my cheese and wine will be much more expensive…….

The Trump administration plans to impose tariffs on $7.5 billion worth of European imports—from gouda cheese to single-malt whiskey to large aircraft—beginning Oct. 18 to retaliate against illegal European Union subsidies for aviation giant Airbus. The latest escalation in the administration’s tariffs will open a new chapter in the trade wars that are heightening fears of a global recession, the AP reports. The administration received a green light for its latest import taxes Wednesday from the World Trade Organization, which ruled that the US could impose the tariffs as retaliation for illegal aid that the 28-country EU gave to Airbus in its competition with its American rival Boeing.

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Trump’s Trade War

There are a wealth of effects of the trade war that dear leader has set his policies on…..like higher prices and Christmas on the way…..but the one number that Americans will pay attention to is the jobs numbers…..

A job count is depressing……….

President Trump says he is “winning big time, against China.” But his trade war is causing measurable damage to the U.S. economy, with the pain likely to worsen.

Forecasting firm Moody’s Analytics estimates that Trump’s trade war with China has already reduced U.S. employment by 300,000 jobs, compared with likely employment levels absent the trade war. That’s a combination of jobs eliminated by firms struggling with tariffs and other elements of the trade war, and jobs that would have been created but haven’t because of reduced economic activity.

The firm’s chief economist, Mark Zandi, told Yahoo Finance that the job toll from the trade war will hit about 450,000 by the end of the year, if there’s no change in policy. By the end of 2020, the trade war will have killed 900,000 jobs, on its current course. The hardest-hit sectors are manufacturing, warehousing, distribution and retail.

Other data back up the Moody’s Analytics numbers. Employers have created 1.3 million jobs so far this year, down from 1.9 million during the same period in 2018. The manufacturing sector has actually contracted, with many producers struggling with higher prices caused by Trump’s tariffs. Business investment is growing by the smallest amount since late 2016.

https://finance.yahoo.com/news/trumps-trade-war-has-killed-300000-jobs-194717808.html

Since this trade war will be a drag on Trump’s re-election hde had to come up with something to change the conversation……and he possibly has found his answer…..the problem is it will a deficit buster…..

President Donald Trump promised to unveil an “inspirational” middle class tax cut next year during a political retreat in Maryland late Thursday, just as the Treasury Department said the nation’s budget deficit topped the $1 trillion mark for only the second time on record. 

Trump told House Republicans in the state’s biggest city, Baltimore, that his “substantial” tax cut plans would be “very, very inspirational … for  middle-income folks, who work so hard,” and that details would be released early next year. Congress, however, would need to approve and pass any suggested tax reductions from the executive branch, setting up a potential election-defining fight with Democratic lawmakers heading into next year’s presidential elections.

The pledge will also add further pressure on the nation’s finances after the Treasury reported a $169 billion shortfall in revenues in August, taking the overall deficit for the 11 months ended in August, the government’s fiscal year, to $1.07 trillion. The last trillion-plus deficit was recorded in the three years that followed the 2008 global financial crisis. 

(thestreet.com)

Where are the deficit hawks?  The Fiscal Conservatives are a bunch of low life cowards.

This is just a promise like all his promise hollow and without merit.

A State Controlled Economy?

Do we still support free markets?

According to the president….HE controls our markets. He has gone so far as to “ORDER” American firms to find an alternate to China’s markets.

ORDERED is the key concept in his statement.

It’s another volatile day on Wall Street, with the Dow down about 500 points at midday. Renewed friction between the US and China is to blame, as President Trump unleashed a series of angry tweets on that subject as well as Fed chief Jerome “Jay” Powell. After Beijing said it would impose tariffs on an additional $75 billion worth of American goods, Trump tweeted that US companies are “hereby ordered” to immediately look for alternatives to China, including relocating operations, reports the Wall Street Journal. “We don’t need China and, frankly, would be far better off without them.” But Beijing was hardly Trump’s only target. After Powell failed to be assertive enough to Trump’s liking in a speech on cutting rates, Trump wrote: “As usual, the Fed did NOTHING!” But his next tweet drew the real attention: “My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?”

Trump’s reference to Xi as an “enemy” strikes CNBC as particularly bad news. It “suggests that the president’s personal relationship with Xi, which Trump has touted as the best route to completing a major trade deal uniting the world’s two largest economies, is at a low point,” writes Tucker Higgins. China’s decision to impose the new tariffs, which go into effect in phases on Sept. 1 and Dec. 15, are retaliation for new tariffs the US is imposing on China, notes the Journal. In another slam against Beijing, Trump wrote that he is ordering “all carriers, including Fed Ex, Amazon, UPS and the Post Office, to SEARCH FOR & REFUSE, all deliveries of Fentanyl from China” because he says the drug is killing Americans

Now if another president who shall remain un-named, had issued this statement the GOP would be having a stroke and going on aimlessly about socialism, communism and stuff like that.

Where are these voices today?

They are still there just aimed at rivals in the political arena…they do not have the inclination to see what their mindless leader is doing to the country and the world.

Let me help those DOLTS in the GOP that may not be aware of what a controlled economy may be…..

The short version……

A centrally planned economy is an economic system in which a single authority, such as a government, makes economic decisions regarding the manufacturing and the distribution of products. Centrally planned economies are the flip-side to market economies, in which such decisions are traditionally made by businesses and consumers, rather than by central authorities.

Is this Trumps “New Economic Policy”?

Do I need to explain this as well?  (it is late and I am tired…use Google)

Not to worry…the “Pussy” president is considering changing his mind on the trade war with China…….

President Donald Trump on Sunday signaled he might be having regrets about his deepening trade conflict with China, telling reporters less than 48 hours after he pledged to raise tariffs on Beijing that he has “second thoughts about everything.”

Asked during a bilateral meeting with Prime Minister Boris Johnson of Britain whether he was second-guessing his posture on China, Trump said: “Yeah, sure why not. Might as well. Might as well.”

The comments marked the president’s first public signal of regret about how he was fighting China through escalating tariffs. They attracted immediate attention across U.S. media because of the unusual nature of Trump’s remarks, leading White House officials to seek clarity from him in between bilateral sit-downs on Sunday morning. The president told aides, “You know what I meant,” according to a person familiar with the conversation.

About five hours later, White House Press Secretary Stephanie Grisham said Trump’s answer to a question about whether he had second thoughts on his approach with China had been “greatly misinterpreted.”

https://www.politico.com/story/2019/08/25/donald-trump-china-trade-war-1474382

Sounds to me like he is scared of the markets and his re-election….so he pussied out.

“Lego Ergo Scribo”