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.

The Economy, Stupid!

The markets have had wild swings for about a year now….but with that the profits roll on for the corporations…..the president’s lack of economic knowledge and the wild lies of something good is just making things worse.

And this past week it has come to a head (as they say)…..it happened in the bond markets……

An economic alarm bell has sounded in the US, sending warnings of a possible recession ahead—and sending the Dow plunging 800 points by the end of the day. Yields on 2-year and 10-year Treasury notes inverted early Wednesday, a market phenomenon that shows investors want more in return for short-term government bonds than for long-term bonds. It’s an indication that investors have lost faith in the soundness of the US economy, the AP reports. What appeared to be a slight thaw in trade relations between the US and China that had sent markets sharply higher Tuesday was quickly forgotten, with the Dow opening down 400 points. By 12:30pm ET it was down nearly 650 points; a half-hour later it had plunged 737 points, or 2.6%, reports CNBC. By end of day it was down 800, the S&P 500 was down 86, and the Nasdaq was down 242, per Marketwatch.

CNBC notes that bank stocks like Bank of America and Citigroup have been the big losers today, down 5% and 5.2% respectively, as “it gets tougher for [them] to make a profit lending money in such an environment.” The yield on the benchmark 10-year Treasury note hit 1.622%, falling below the yield of a 2-year, which was 1.634%. The last inversion of this part of the yield curve was in December 2005, two years before a recession brought on by the financial crisis hit. An inversion like the one taking place Wednesday has preceded the last nine recessions dating back to 1955. When a recession might hit, if it does, is a little hazier. Months or even years have passed after an inversion takes place, and before economists can connect the two. Marketwatch notes Wednesday was the Dow’s worst day this year.

Here comes the “R” word…. a “recession”…..some are running worried….

Then there are the multiple lies about China and tariffs….remember when he said China would pay for the tariffs not the American people?  That was the same lie as Mexico would pay for that damn silly border wall.  Don’t forget the lie about all the billions flowing into the coffers of the nation…that was a lie as well…..

If China was gonna to pay and the pain would all be on someone else then why did Trump decide to postpone tariffs until mid-December?

U.S. President Donald Trump on Tuesday backed off his Sept. 1 deadline for 10% tariffs on remaining Chinese imports, delaying duties on cellphones, laptops and other consumer goods, in the hopes of blunting their impact on U.S. holiday sales.

https://uk.reuters.com/article/uk-usa-trade-china-tariff/trump-backs-off-china-tariff-plan-with-delays-for-cellphones-laptops-idUKKCN1V31CR

Would “impact US holiday sales”…..that should tell you everything you need to know about these pseudo-economic solutions….even if you are not a genius like our Supreme Leader Trump.

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Closing Thought–17Jul19

Every time Trump or his knuckle draggers open their mouths we hear how successful this damn silly Trump trade war is….but just because he says something does not make it so….regardless what the drooling 30% thinks.

Despite the somewhat positive news that Trump would refrain from slapping new duties on an additional $300 billion worth of Chinese goods – which would have sparked a full-blown trade war. Americans have recently become irritated with Trump’s tariffs and his self-proclaimed label as Tariff Man, new IBD/TIPP polling shows, and first reported by Investor’s Business Daily.

The IBD/TIPP Poll covered 900 responses from June 20-27, 16% of respondents said Trump should increase tariffs if there’s no China trade deal this summer. Another 33% said Trump should remove all tariffs on China, even if a near-term agreement can’t be reached, while 44% said Trump should leave the duties in place.

While the President continues to insist that China pays the tariffs, Americans are starting to become more spectacle that he could be deceiving them

https://www.zerohedge.com/news/2019-06-29/new-poll-shows-almost-half-americans-think-trumps-trade-war-bad

Corporate media will not report the real story of Trump’s trade policies….instead they will tell the nation what is rosy and what is total manure.

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Those Damn Drug Prices!

While I prepared for the Storm Barry to show up I checked my supplies and my meds to be sure I had enough to last 2 weeks in case the storm was more dangerous than predicted….and this had me thinking…..

I admit that the older I get the more drugs I seem to need to keep going….and those prices are so damn high that all us old farts are bitching about the prices.

There are many theories as to why this situation exists…..mine is that Congress just protects its handlers profits……but could there be another possible answer?

How about the US Trade policies?

Skyrocketing drug prices were a major issue in the 2016 US presidential campaign, and the Trump administration has since announced measures to bring them down. Why, then, is the administration also pushing for intellectual-property rules that give pharmaceutical giants even more price-gouging power?

Sharp price increases for essential and life-saving medicines have generated a political backlash against the pharmaceutical industry in the United States. In February, the US Senate Committee on Finance scolded industry representatives for pursuing policies that are “morally repugnant.” Since then, 44 US state governments have filed a lawsuit against Israel-based Teva Pharmaceuticals and 19 other companies, alleging conspiracy to stifle competition for generic drugs and illegal profiteering from over 100 different medicines.

For its part, US President Donald Trump’s administration has also announced that it will pursue measures to reduce the prices of drugs, especially those needed to treat America’s opioid epidemic. Yet the administration is also trying to export intellectual-property rules that are known to be associated with massive price increases abroad, making basic medicines unaffordable to millions of poor people in developing countries.

https://www.commondreams.org/views/2019/07/10/blame-us-trade-policy-sky-high-drug-prices

As much as I would love to be able to blame it all on Trump I just cannot….every president is just as guilty….it has NEVER been about the health of the people rather the profit of the corporations.

Pharma and insurance companies are panicking with the popularity of Medicare For All…I have even had a few come to IST and try to wish away the Medicare For All program…..but they will succeed because they have the cash to buy the Congress to get their way and the rest of us can just die if we do not like their plans.

Sorry about that a rant first thing on a Sunday.

Looks like we were fortunate and all we got here was rain and a bunch of wind…..one down and waiting for the next……0330 hrs and 93 degrees….getting back to normal…..

Tariffs–Winners And Losers And Economics

Our Trade War With China!  Who’s gonna win and who gonna lose?

With all the words flying around about this legal aspect or another…..the news on our trade war with China takes a back seat…..but I think it needs to be in the forefront……

I found an article that tells the winners and losers in this trade war (I am hoping that you will actually read the referenced article)…..areas of our economy like technology, agriculture, steel, etc……

U.S. companies in everything from computer chips to tractors have said President Donald Trump’s trade wars, including disputes with Beijing and global steel tariffs, have had an impact on them.

Even for some of the expected winners, such as steel companies, the benefits of the president’s tariffs are not entirely clear.

Trump said on May 5 he would raise tariffs on $200 billion (£159 billion) worth of Chinese goods from 10% to 25%, ratcheting up pressure on Beijing to agree to a deal.

https://uk.reuters.com/article/uk-usa-trade-china-winners-losers-factbo/winners-and-losers-in-trumps-trade-war-with-china-idUKKCN1TK1UM

And yet the markets have not tanked on the bad news for the bigger of our corporations…..

Is this a good thing…… these tariffs?

This “Booming Economy” that we hear about from Trump, the GOP and others is looking a lot like the economy……wait for it……under Obama…..

In some key ways, the Donald Trump economy, on fire last year but slowing this year, is starting to resemble the one he inherited from his predecessor .

There are the rock-bottom bond yields, plodding economic growth and, not to be understated, the Federal Reserve seemingly pulling all the strings, a role that was only exacerbated in the days since the financial crisis and Great Recession and continues to the present day.

Those similarities came into even sharper focus this week, when the benchmark 10-year Treasury note yield fell below 2% for the first time since Trump became president, and the Fed’s indication, if something just short of an outright promise, that it soon will be cutting rates about half a year since its most recent hike.

It wasn’t supposed to be this way: The 2017 tax cut and aggressive moves toward deregulation were supposed to pull the U.S. economy out of its glacial move higher. That happened in 2018, but policymakers and Wall Street pros are growing increasingly fearful that a slowdown if not outright recession is on the horizon, and the Fed is being asked again to ride to the rescue.

https://www.cnbc.com/2019/06/20/the-trump-economy-is-starting-to-look-more-and-more-like-the-obama-economy.html

Oh Snap!  All the comparisons to what Obama did…will this make the list for Supreme Beloved Leader?

Me thinks this news will not see the light of day.

There is other news that is missed by the MSM……some economists are predicting a crash is coming…..but can Trump hold it off until after the election…..

If he times it right, Donald Trump might set back the Democratic Party for a generation or more; if he misses, he’ll go down in history along with Herbert Hoover as the guy who brought the nation an economic disaster.

Back in 2007 and early 2008, many of us were convinced that an economic crash was coming, and that George W. Bush and his Treasury secretary, Henry Paulson, and Fed chairman, Alan Greenspan, knew it.

And we also thought that they were doing everything they could to hold it off so it would happen after the 2008 election, so if a Democrat was elected they could say the crash was because people were “worried about the incoming Democrats,” and if McCain won it would be his problem, not Bush’s.

https://www.commondreams.org/views/2019/06/18/can-donald-trump-hold-economic-crash-until-election

What do you think?

Would a crash change your mind on voting this time around?

South Of The Border Down Mexico Way

When Trump issued his ultimatum to Mexico I at first was worried because Mexican Avocados are divine…..but after some thought I figured this was just a way to divert the news from Trump’s problems…….

In the beginning was the threat…..

President Trump has vowed to slap new tariffs on all goods from Mexico—and to keep increasing them until the country stops migrants coming to the US. On June 10, the US “will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP,” the president tweeted Thursday. “The Tariff will gradually increase until the Illegal Immigration problem is remedied at which time the Tariffs will be removed.” The White House says the tariffs will rise to 10% on July 1, then go up 5% each month after that until they hit 25% on Oct. 1, reports the Washington Post. Earlier Thursday, Trump told reporters he was going to make his biggest statement on the border so far.

Trump said in a statement that after October, the tariffs will remain at 25% “until Mexico substantially stops the illegal inflow of aliens coming through its territory.” The surprise announcement came on the day that Mexican President Andres Manuel Lopez Obrador began to ratify the USCMA trade deal with US and Canada, which could now be in jeopardy, reports Reuters. The tariffs could devastate Mexico’s economy, though experts including trade lawyer Daniel Ujczo suspect Trump will backtrack on the move, as he did with his threat to seal the border in March. “This seems more theater and tactics than a strategy to solve the migration crisis and rebalance North American trade,” Ujczo tells the AP.

And then just a day before the tariffs were to take effect…..we have a deal! (Go figure!)

“Indefinitely suspended.” That’s the fate of the tariffs President Trump had warned he’d levy against Mexico, per Trump himself, who tweeted Friday that a deal on immigration had been signed with our neighbors to the south, per Politico. Trump had previously signaled there was a “good chance” a deal was coming to stave off a progressively increasing tariffs hit on Mexico, and he crowed Friday night that had happened. “I am pleased to inform you that The United States of America has reached a signed agreement with Mexico,” he tweeted. “The Tariffs scheduled to be implemented by the U.S. on Monday, against Mexico, are hereby indefinitely suspended. Mexico, in turn, has agreed to take strong measures to stem the tide of Migration through Mexico, and to our Southern Border. This is being done to greatly reduce, or eliminate, Illegal Immigration coming from Mexico and into the United States.”

How fortuitous….a deal just in the nick of time……appears my first reaction was the correct one after all……this was a game to divert attention…and then he can claim a success for something that was already a success.

Turns out Friday’s big immigration deal between the US and Mexico—or at least most of it—had already been struck over the past few months, officials on both sides tell the New York Times. The new agreement states that Mexico will deploy “its National Guard throughout Mexico” to stop migrants, but Mexico made that promise to Kirstjen Nielsen, former secretary of homeland security, back in March. The agreement also expands a program for asylum-seekers to stay in Mexico while awaiting US legal confirmation, but that was struck in December and announced by Nielsen five days before Christmas. In the latest negotiations, US officials failed to add that America can reject asylum seekers if they hadn’t first tried refuge in Mexico.

I am glad we have a deal…..even if it was negotiated months ago…..but Trump did not doing anything most other presidents do…..take credit for successes.

My avocado affliction is safe….for now.

Since I am an old fart…..The title of this post made me think of an old Patsy Cline song…..