Softpanorama

Home Switchboard Unix Administration Red Hat TCP/IP Networks Neoliberalism Toxic Managers
May the source be with you, but remember the KISS principle ;-)
Skepticism and critical thinking is not panacea, but can help to understand the world better

Anti-globalization movement and US-china trade war

News Neoliberalism Recommended Links Blowback against neoliberal globalization TTP, NAFTA and other supernational trade treates Brexit revisited: Ethno-linguistic and "Cultural" Nationalism as antidote to Neoliberalism Attempt to suppress Huawei using security as the pretext
Anti-globalization movement US-China trade war Brexit as the start of the reversal of neoliberal globalization National Security State National Socialism and Military Keysianism Media-Military-Industrial Complex American Exceptionalism
American Imperialism, Transnational Capitalist Class and Globalization of Capitalism Technological imperialism Judicial Imperialism Cultural imperialism Neocons as USA neo-fascists Gangster Capitalism: The United States and the Globalization of Organized Crime Neocolonialism as Financial Imperialism
Pope Francis on danger of neoliberalism Predator state Disaster capitalism Ethno-lingustic Nationalism Neoliberal debt slavery Resurgence of neo-fascism as reaction on crisis of  neoliberalism Etc

From Wikipedia:

Many critics of trade liberalization, such as Noam Chomsky, Tariq Ali, Susan George, and Naomi Klein, see the Washington Consensus as a way to open the labor market of underdeveloped economies to exploitation by companies from more developed economies. The prescribed reductions in tariffs and other trade barriers allow the free movement of goods across borders according to market forces, but labor is not permitted to move freely due to the requirements of a visa or a work permit. This creates an economic climate where goods are manufactured using cheap labor in underdeveloped economies and then exported to rich First World economies for sale at what the critics argue are huge markups, with the balance of the markup said to accrue to large multinational corporations. The criticism is that workers in the Third World economy nevertheless remain poor, as any pay raises they may have received over what they made before trade liberalization are said to be offset by inflation, whereas workers in the First World country become unemployed, while the wealthy owners of the multinational grow even more wealthy.

Anti-globalization critics further claim that First World countries impose what the critics describe as the consensus's neoliberal policies on economically vulnerable countries through organizations such as the World Bank and the International Monetary Fund and by political pressure and bribery. They argue that the Washington Consensus has not, in fact, led to any great economic boom in Latin America, but rather to severe economic crises and the accumulation of crippling external debts that render the target country beholden to the First World.

Many of the policy prescriptions (e.g., the privatization of state industries, tax reform, and deregulation) are criticized as mechanisms for ensuring the development of a small, wealthy, indigenous elite in the Third World who will rise to political power and also have a vested interest in maintaining the local status quo of labor exploitation.

Some specific factual premises of the critique as phrased above (especially on the macroeconomic side) are not accepted by defenders, or indeed all critics, of the Washington Consensus. To take a few examples,[29] inflation in many developing countries is now at its lowest levels for many decades (low single figures for very much of Latin America). Workers in factories created by foreign investment are found typically to receive higher wages and better working conditions than are standard in their own countries' domestically-owned workplaces. Economic growth in much of Latin America in the last few years has been at historically high rates, and debt levels, relative to the size of these economies, are on average significantly lower than they were several years ago.

Despite these macroeconomic advances, poverty and inequality remain at high levels in Latin America. About one of every three people - 165 million in total- still live on less than $2 a day. Roughly a third of the population has no access to electricity or basic sanitation, and an estimated 10 million children suffer from malnutrition. These problems are not, however, new: Latin America was the most economically unequal region in the world in 1950, and has continued to be so ever since, during periods both of state-directed import-substitution and (subsequently) of market-oriented liberalization.[30]

Some socialist political leaders in Latin America are vocal and well-known critics of the Washington Consensus, such as Venezuelan President Hugo Chávez, Cuban ex-President Fidel Castro, Bolivian President Evo Morales, and Rafael Correa, President of Ecuador. In Argentina, too, the recent Peronist party government of Néstor Kirchner undertook policy measures which represented a repudiation of at least some Consensus policies (see Continuing Controversy below). However, with the exception of Castro, these leaders have maintained and expanded some successful policies commonly associated with the Washington Consensus, such as macroeconomic stability and property rights protection.

Others on the Latin American left take a different approach. Governments led by the Socialist Party of Chile, by Alan García in Peru, by Tabaré Vázquez in Uruguay, and by Luiz Inácio Lula da Silva in Brazil, have in practice maintained a high degree of continuity with the economic policies described under the Washington Consensus (debt-paying, protection to foreign investment, financial reforms, etc.). But governments of this type have simultaneously sought to supplement these policies by measures directly targeted at improving productivity and helping the poor, such as education reforms and subsidies to poor families conditioned on their children staying in school.


Top Visited
Switchboard
Latest
Past week
Past month

NEWS CONTENTS

Old News ;-)

[Sep 14, 2019] How to lose 100 millions trying to enter the USA subway cars mar anne ,

Sep 14, 2019 | economistsview.typepad.com

https://www.nytimes.com/2019/09/14/business/chinese-train-national-security.html

September 14, 2019

Fearing 'Spy Trains,' Congress May Ban a Chinese Maker of Subway Cars
By Ana Swanson

CHICAGO -- America's next fight with China is unfolding at a glistening new factory in Chicago, which stands empty except for the shells of two subway cars and space for future business that is unlikely to come.

A Chinese state-owned company called CRRC Corporation, the world's largest train maker, completed the $100 million facility this year in the hopes of winning contracts to build subway cars and other passenger trains for American cities like Chicago and Washington.

But growing fears about China's economic ambitions and its potential to track and spy on Americans are about to quash those plans. Congress is soon expected to approve legislation that would effectively bar the company from competing for new contracts in the United States, citing national security and economic concerns. The White House has expressed its support for the effort.

Washington's attempt to block a Chinese company from selling train cars inside America is the latest escalation in a trade war that has quickly expanded from a spat over tariffs and intellectual property to a broader fight over economic and national security.

President Trump and lawmakers from both parties are increasingly anxious about the economic and technological ambitions of China, which has built cutting-edge global industries, including those that produce advanced surveillance technology. Those fears have prompted Washington to take an expansive view of potential risks, moving beyond simply trying to curtail Chinese imports.

In addition to slapping tariffs on $360 billion worth of Chinese products, the administration has banned Chinese companies like Huawei, the telecom giant, from buying sensitive American technology. It is moving to curb the ability of firms to export technology like artificial intelligence and quantum computing from the United States to China. And Congress has given the administration expansive power to block Chinese investment on national security grounds.

Now lawmakers have added a provision to a military spending bill that would prevent the use of federal grants to buy subway trains from state-owned or state-controlled companies, a measure that would effectively block CRRC's business.

The bill has gained bipartisan support from lawmakers who say companies like CRRC pose a threat to the United States. Part of the concern is economic: Flush with cash from its rapid growth, China has pumped money into building globally competitive businesses, often creating overcapacity in markets like steel, solar panels and trains.

That has lowered prices for consumers -- including American taxpayers who pay for subway cars. While a subway car has not been manufactured solely by an American company in decades, CRRC's low prices have raised concerns among American freight train companies that the company could ultimately move into -- and demolish -- their business.

CRRC has consistently underbid its competitors, winning over urban transit agencies that are saddled with aging infrastructure and tight budgets. For the Chicago L, CRRC's Chicago subsidiary bid $1.55 million per car, compared with a bid of $1.82 million per car by Bombardier, the Canadian manufacturer. And CRRC also proposed to build the Chicago facility and create 170 new jobs.

Legislators argue that Chinese state-owned companies are not pursuing profit, but the policy aims of the Chinese government to dominate key global industries like electric cars, robotics and rail.

"When you can subsidize, when you can wholly own an enterprise like China does, you can create a wholly unlevel playing field," said Senator Tammy Baldwin, a Wisconsin Democrat who is a co-sponsor of the legislation. "We're used to that unlevel playing field existing between the U.S. and China, but now it's happening in our own backyard."

Another more nefarious worry is also at play. Lawmakers -- along with CRRC's competitors -- say they are concerned that subway cars made by a Chinese company might make it easier for Beijing to spy on Americans and could pose a sabotage threat to American infrastructure, though CRRC says it surrenders control of all technology in the cars to its buyers. Nonetheless, critics speculate that the Chinese firm could incorporate technology into the cars that would allow CRRC -- and the Chinese government -- to track the faces, movement, conversations or phone calls of passengers through the train's cameras or Wi-Fi.

Scott Paul, the president of the Alliance for American Manufacturing, which represents manufacturers and the United Steelworkers, said the risks of giving a Chinese company the ability to monitor or control American infrastructure could not be understated given recent laws requiring Chinese companies to turn over data to Beijing upon request.

"I just think it would be irresponsible to assume the Chinese government to which this firm must answer would be a reliable security partner, given its well documented track record," Mr. Paul said.

Whether those fears are justified remains uncertain. Proponents of the bill have not made clear how subway cars manufactured by a Chinese company would pose a greater espionage threat than everything else that China makes and sells in the United States, including laptops, phones and home appliances.

Dave Smolensky, a spokesman for CRRC, said the company was being unfairly targeted by companies that wanted to legislate a competitor out of business under the guise of national security. He said the firm was a victim to "an aggressive multimillion-dollar media disinformation campaign," funded mostly by domestic freight train companies, intended to play on popular fears about China's rise.

Employees at the Chicago factory also dismissed the concerns, saying they had not seen any evidence that they were working to construct "spy trains."

"I haven't seen any secret wires yet," said Perry Nobles, an electrician for CRRC who was rigging wires in the interior of the trains. "With the world full of cellphones and computers, I'd think there's an easier way to get information."

Rising fears of China's ambitions in Washington have prompted officials to adopt an unsparing view, with policymakers and national security officials warning domestic and foreign governments not to trust Chinese equipment.

American officials have waged a global offensive against Huawei, telling other countries that allowing a Chinese company to build the world's next generation of wireless networks would be akin to handing national secrets to a foreign agent.

Like CRRC, the fear surrounding Huawei is largely based on concerns about technological dominance by China's authoritarian government. No one has yet disclosed finding a backdoor in Huawei's products that would allow it to snoop -- but officials say by the time one is discovered, it may be too late.

"The Chinese are working to put their systems in networks all across the world so they can steal your information and my information," Secretary of State Mike Pompeo said in an interview in May. "This administration is prepared to take this on."

As Senator John Cornyn, Republican of Texas, introduced the provision in March, he said, "China poses a clear and present danger to our national security and has already infiltrated our rail and bus manufacturing industries."

Representative Kevin McCarthy, a Republican whose California district is home to a Chinese bus maker, BYD, had opposed a version of the provision that would apply to buses as well as trains. House lawmakers dropped the bus provision, but the Senate bill would apply to both. Congress will take the issue up again in the coming weeks as part of the annual defense bill.

The legislation would not affect the thousands of American subway cars that CRRC previously won contracts to build, including an 846-car order for the Chicago L. But it would block the company from future contracts, such as those under consideration by the Chicago Metra and the Washington Metro.

The Chicago facility is the company's second in the United States. A factory in Massachusetts that employs more than 150 people is already building trains for Boston, Los Angeles and Philadelphia, prompting concerns that the company plans to expand rapidly in the United States as it has in other foreign markets.

Like many Chinese state enterprises, CRRC is guided by Beijing's Made in China 2025 plan, which lays out an agenda to dominate key industries.

In its 2018 annual report, Liu Hualong, the company's chairman and party secretary, pledged to pursue the dual goals of "Party construction as well as developing into a world-leading company with global competitiveness."

"We conscientiously followed the important instructions of General Secretary Xi Jinping," the report said, referring to the Chinese president and Communist Party leader.

The last American firm to make passenger rail cars, the Pullman Company, produced its final car in 1981. Since then, major American cities have bought subway cars from Bombardier and Japanese manufacturers like Kawasaki, Hyundai and Hitachi.

But American manufacturers of freight rail cars, including the Greenbrier Companies and TrinityRail, which is based in Mr. Cornyn's home state of Texas, say CRRC could use its footing in the United States to steal its business. Together with unions and others, they have mounted a lobbying campaign against CRRC under an umbrella group known as the Rail Security Alliance.

The group says American taxpayer dollars should not be spent in China, where the empty rail cars are made before being shipped to the United States for further work at the company's facilities in Illinois or Massachusetts.

"We think those dollars should stay here," said Erik Olson, the vice president of the Rail Security Alliance.

CRRC sends over experts from its giant headquarters in Qingdao, China, to plants in other countries. In Chicago, the American employees call these Chinese citizens "shifu," a polite term for a skilled worker meaning "master" or "teacher."

On a sunny day in July, the company break room was split between shifus, wearing white jumpsuits and eating stuffed buns, and American workers, many of whom had joined the company in the last few months. The gleaming concrete factory floor was bare, save for a few dozen people installing wiring, air ducts and other components into the empty shells of two rail cars.

"We are a little concerned because it's our livelihood," said Mr. Nobles, who was hired in March from a previous factory job making frames for the Ford Explorer.

This summer, CRRC replaced the Chinese flag outside the factory with a Chicago flag. It has also retained two Washington lobbying firms, Squire Patton Boggs and Crossroads Strategies, to plead its case in Congress.

It may be too late. Senator Sherrod Brown, Democrat of Ohio, said he helped sponsor the bill to prevent the American transit system from being "controlled by a foreign country that is not particularly friendly to us."

"They spell out in black and white they're going to use foreign investment as a weapon, and we're taking action to defend ourselves," Mr. Brown said.

[Sep 14, 2019] Women in theocratic state are usually slaves but the degree of oppression varies beween different states. One extreme definitely is Saudi Arabia but how far Iran is form it is unclear

Sep 14, 2019 | www.zerohedge.com

See Women's rights in Iran - Wikipedia . Iran ranked 116 out of the 153 countries in terms of legal discrimination against women. 90% of women in Iran use cellphones and have "access to financial accounts" in Iran. In other South Asian regions, "less than 2 in 5" have this access, and a similar high share of women using cellphones

Under Reza Shah women were banned the wearing of the Islamic hijab in public. It was announced that in the beginning of 2018, women would no longer be arrested for wearing 'bad hijab' in public. In August 2019, Iranian civil rights activist Saba Kord Afshari was sentenced to 24 years behind bars, including a 15-year term for taking off her hijab in public, which Iranian authorities say promoted "corruption and prostitution." [30] [31]

WTFUD , 8 minutes ago link

You're Crackers!

Persian women are FREE. Saudi women are SLAVES.

Einstein101 , 6 minutes ago link

Persian women are FREE

I heard Persian women are not allowed to attend stadium sports events, like soccer games. Is this true?

[Sep 14, 2019] The End of Israel by Gilad Atzmon

Theocratic of neo-theocratic states do not last long. So Gilad Atzmon is probably right. The writing for theocratic Israel might well be on the wall, much like it was for the USSR. At some point the majority of population just became sick and tied of the theocratic elite and stops believing the official propaganda. .
Trump strong connecting and deference to Zionists means that he will lose certain strata of voters that previously voted for him. Will money form Zionist billionaire donors outweigh this factor is difficult to say.
Sep 14, 2019 | www.unz.com

This conflict at the heart of Israeli politics is a window into the Jewish state and its fears. Israel is rapidly becoming an Orthodox Jewish state. Israel's Orthodox Jews are the fastest growing group in the country. They are also the country's poorest population, 45 percent live below the poverty line in segregated communities. Ordinarily, one would expect the poor to support the left, but Israeli Torah Jews are rabid nationalists and openly lend their support to Benjamin Netanyahu and his party.

Prof. Dan Ben-David of Tel Aviv University warned recently that Israel could cease to exist in a couple of generations. He pointed to the astonishingly high birth rate among ultra Orthodox Jews and predicted that, based on current trends, they will comprise 49% of Israel's population by 2065. The ultra Orthodox parties are destined to dominate the Knesset within a generation or less. Ben David predicts that their dependence on Israel's welfare system will lead to a rapid decline is Israel's economy. This is economically damaging enough and is made worse by the refusal of most rabbinical schools to incorporate standard Western subjects such as mathematics, science and English into their core curriculum. Consequently, Israel is educating a growing percentage of its population in a fashion that fails to equip them to contribute to the needs of a hi-tech society that is immersed in a conflict for survival.

The picture that comes across is peculiar. As Israel becomes increasingly Jewish and fundamentalist in its nationalist and religious ethos, it has also become more divided on everything else. The Russian immigrants find it impossible to live alongside the ultra Orthodox and vice versa. The secular enclave in Tel Aviv is committed to seeing their metropolis as an extension of NY.

The Israeli Left has morphed into an LGBT hasbara unit. It has practically removed itself from the Israeli/Palestinian conflict. Jewish settlers adhere to the concept of a 'Two Jewish States Solution.' They want to see the West Bank become a Jewish land. Orthodox Jews are barely concerned with any of these political issues. They well know that the future of the Jewish state belongs to them. All they need to do is sustain a productive secular Jewish minority to serve as their milk cow. On top of all of that we face Bibi's survival wars that threaten to escalate any minute into a world conflict.


Altai , says: September 12, 2019 at 8:49 pm GMT

This is why I'm more optimistic the more Trump embraces Israel. He seems to have clearly decided not to get caught in Syria and so has to keep them off his back in some other way, moving the embassy and presumably giving Netanyahu the greenlight for annexation of more of the West Bank is a good thing.

It means Israel incorporates more and more Palestinians that it can't disengage from by keeping within it's existing borders and it means damaging the bi-partisan consensus with Trump's polarising association.

Everything Netanyahu does is just pulling back the sinews for the final reckoning. Instead of staying within reasonable borders and seeking a reconciliation with neighbours, Israel just gets more demanding, more unreasonable, breaks more promises and makes itself impossible to negotiate with and runs headlong into more and more Palestinian citizens.

What's unfortunate is that Europe and the US will be forced to put up with the millions of vagrant Sabras when it all goes kaput. Instead of becoming less anti-social, the Sabra became a magnificent compilation of every annoying and anti-social habit of the nations. Israelis make Sicilians look like Swedes.

Priss Factor , says: Website September 12, 2019 at 9:53 pm GMT
@Robert Dolan Israeli power is the consequence of Jewish-American Power.

It's like the princeling brat can romp around and make all kinds of trouble because his father is the king.

The King of Jewish Power is the hold over America.

Gilad Atzmon , says: September 12, 2019 at 9:56 pm GMT
@Altai I agree Altai . at the end of the day this entire mess will fall on Europe and The USA but if I read the map correctly the tolerance and empathy to the primacy of Jewish suffering is running out..the situation is getting complicated
Gilad Atzmon , says: September 12, 2019 at 9:56 pm GMT
@Altai I agree Altai . at the end of the day this entire mess will fall on Europe and The USA but if I read the map correctly the tolerance and empathy to the primacy of Jewish suffering is running out..the situation is getting complicated
niteranger , says: September 13, 2019 at 1:41 am GMT
@Robert Dolan Absolutely correct. If not for the US and it's Jewish Controlled Congress that never met a money bill for the Magic Jews Israel would be under water already. Our infrastructure is collapsing but we continue to find money for Israel no matter that we have cities with thousands of homeless people with the threat of disease and Middle Age plagues on our door step. Orthodox Jews are like Muslims in many ways because they love the "Welfare State" and they stay on it forever. Sections of New York are saturated with these Orthodox Welfare Jews and idiots like DeBlasio caters to them.

There is now a backlash by both blacks who hate them and want to kill them for their business practices in real estate and upper middle class residents that refuse to allow them to build their so called "Jewish Orthodox Communes" and take over the areas.

Israel may have overplayed their hand but that doesn't mean they will just disappear. They are sick enough to take mankind with them with their eternal wars. Hopefully Netanyahu is crazy enough to start a conflict with Iran who will bomb the shit out of them and then Hezabollah will destroy the wimp military the IDF.

We can only hope and perhaps mankind will have a chance .

Dennis Gannon , says: September 13, 2019 at 2:27 am GMT
It is more accurate to call them Talmudists. They are not "Jews". Jew is a recent abbreviation of Judean. The Ashkenazi came from Asia. They don't follow the Old Testament. They follow the Talmud, which is Maciavellian to the core. Pure evil. Since God made the man Jesus to be Lord, eventually, their works will be judged, they are headed for destruction morally, you reap what you sew. Israel is the most anti-Semitic country on earth. Which makes them hypocrites. The Arabs and Palestinians are a Semitic people and no one hates and kills them more that Israel.
Gilad Atzmon , says: Website September 13, 2019 at 4:10 am GMT
@Colin Wright As you may know Zionism was born as a reaction to antisemitsm and this fact alone suggests that people including Jews were aware of the problem before Israel was formed
Giuseppe , says: September 13, 2019 at 4:34 am GMT
@Gilad Atzmon

I don't want to ruin the party but as far as I can tell Israel is not the problem it is just a symptom of the problem peculiarly, Israel was born to fix the problem

Interesting point of view, actually, one of the most profound things I have ever read. If this is their calling, and I too somehow believe it is, they need to turn around, because they are kind of falling down on the job. So I look forward to that great day of turning. However, when they call you names, anti-Semite, self-hating Jew, or whatever else they might dig up, they greatly err, because you are a watchman on the wall.

Frankie P , says: September 13, 2019 at 4:57 am GMT
@Saggy Gilad has expressed his views on this topic many, many times. The early Zionists desired a Jewish State to make Jews human. By this, I mean that they were well aware of the Jewish Question and the repeated bad behavior of Jews in host societies, both Muslim and Christian. They were conscious of the economic role of powerful Jews, particularly with their usurious financial practices, but also as tax collectors and enforcers for the aristocracy. This, along with their tilted ethnocentric business practices, favoring their own while fleecing the goyim, invariably led to their control of what were traditionally local businesses, creating a growing resentment in local societies that reached critical mass. What followed were pogroms and expulsion. This occurred in both Muslim and Christian lands, but were especially pronouncrd in Christian Europe, which took more aggressive protective actions to shield itself.

The early Zionists wanted to be the midwives of a Jewish State that would solve the JQ by making a nation of Jews, in which Jews carried out all of the work, took all the jobs, from garbage collecting to farming, from street cleaner to bank president. They wanted to stop the pogroms and expulsions, but at the same time they were keenly aware that these were effects of Jewish behavior and actions, not senseless anti-Semitism of the goyim. So, yes Israel was conceived and born to solve the problem.

It didn't.

refl , says: September 13, 2019 at 6:10 am GMT
@Gilad Atzmon

As you may know Zionism was born as a reaction to antisemitsm and this fact alone suggests that people including Jews were aware of the problem before Israel was formed

Was it? Or was antisemitism the solution by the jewish leadership to the dissolution of their community in modern arreligious society? Was antisemitism the virtual ghetto wall?
Tell the people within that those outside want to kill them, at the same time having a small faction of very cunning Jews who go outside and produce trouble that then by necessity falls back on the whole community?

I find it quite astonishing when I read how privileged certain Jews were in European states, compared to what was the norm for regular Christian folks.
And indeed, also Christians were butchered, expelled etc in more religious times.

mena , says: September 13, 2019 at 7:50 am GMT
peculiarly, Israel was born to fix the problem

I have heard you say this before and remain surprised that you seem to believe this. The whole " people like any other people" hasbara may have been a sales approach tailored to a particular audience at some point, but any sincerity behind it has been demonstrably beside the point. Israel has been a projection of raw power from the start.

sally , says: September 13, 2019 at 8:16 am GMT
@niteranger Are you sure => "we continue to find money for Israel" <=unless you are among the elected 527 that run the USA you probably are not included in the WE.. did you vote (either yes or no) to send money to Israel?

Three votes (one to select a person to fill one of (1/425) jobs in the house of representatives, and 1 vote to select each of 2 persons to fill two senate jobs (2/100) does not make most Americans into deciding members of the USA. Not only that, at election time, American votes for President or VP do not count, because the electoral college vote decides who shall be President or vice President? So why do the candidates spend billions on the presidential elections?

350,000,000 Americans are governed by 527 salaried persons, who are elected to work at the USA.

Israel is a product of the bankers and their corporations; it began in earnest in 1897 in Switzerland.

The great success of Zionism (not racially or religiously connected) has been its networking ability. It can identify and intercept opposing forces, transport resources($, and people) in invisible ways, to/from multi many places, to focus on and to support a target project (local, regional, national or international) . The network that facilitates this "always win intention" works like a newspaper on one side, keeping all elements informed, and on the other side, like a powerful, but invisible government; seeking or willing to invade, protect or promote a place, project or person on the other side.

The network can concentrate fire power, vote power, impose political pressure, control the media, and develop the means to take advantage of, or put down, situation or opportunity or it can protect a friend in need. In a few days, a local situation or a massive opportunity can be "crowd funded" or "petition protected" via the network. For hypothetical example, say the NYT comes up for sale, in a short while a person with meager credit, tenders a multi-billion dollar offer backed with financing sufficient to acquire the opportunity? So how did the credit come to make this possible?

Its not Israel per se..that the USA congress supports: its the banking establishments and their powerful multi nation corporations, seeking to control the middle east, seeking to use "in the course of commerce" as their excuse for invisible weapon, mind control, and spy technology development. Its Economic Zionism that explains the foreign nation state support for Israel. IMO except for the propaganda value, race or religion has little to do with it.

Germanicus , says: September 13, 2019 at 8:28 am GMT
@Gilad Atzmon Why not infuse Israel with the tons of fanatical leftist(godless) Jews we have in Germany and Europe? They could counter the orthodox leeching by providing work force, and could additionally work their bottoms off on "racism", transform settlements in gay discos and do all the other professional complaints they make in Europe, like open borders.
The Jews in Europe are always scared, if Netanyahu calls them to Israel due to "anti-semitism". If a non Jew says something similar, its evil and "anti-semitic" of course.

It is quite interesting to note, that Israel develops in a theocracy(always has been in my view), while the Jews outside Israel seek to disprove/kill god and are in rebellion against god, nature, more or less play god.

Antares , says: September 13, 2019 at 8:45 am GMT
@FvS "It is the patriotic duty of all American Jews to relocate to Israel and help their nation thrive. Remember the holocaust. Also, democracy is garbage."

You could be an American patriot who doesn't want to pay 3.8 billion per year.

gotmituns , says: September 13, 2019 at 9:22 am GMT
Theodor Herzl said, "Where there is no anti Semitism, there are no Jews."
Lol , says: September 13, 2019 at 9:25 am GMT
@Gilad Atzmon The issue is that regular Europeans have diminishing rates of sympathy for Jews and the only reason European politics don't trash Israel is largely vassalage to America and not having an independent foreign policy.

With Americans ruining their relations with everyone, this will most likely change since there's no real reason for Europeans to source military equipment from outside the EU, have sanctions on Iran or Russia instead of backing their infrastructure projects, not back China in the Pacific if it offers a better deal etc.

Essentially, Jews will be America's problem and rightfully so considering right wing Americans can't seem to stop sucking Jewish dick.

Lol , says: September 13, 2019 at 9:34 am GMT
@A123 The only realistic plan would probably involve Israel not violating the fourth Geneva convention anymore which would mean the Jewish settlements on territories outside the pre-1967 borders will cease to exist as Jewish in any way.

Once you reject international law, you can't appeal to it anymore, but you must be Jewish if you think you can pick and choose what suits you. Lol

Johnny Walker Read , says: September 13, 2019 at 12:19 pm GMT
@Rational The "Holy Hook" is being exposed on a level never imagined. Charles Giuliani has a great series out exposing the "Tribe". This is one of my favorites:
http://www.renegadebroadcasting.com/truth-hertz-pimp-daddy-abrahams-adventures-in-egypt-6-17-19/
Greg Bacon , says: Website September 13, 2019 at 12:24 pm GMT
The loonie Avi Lieberman is salivating at the thought being Israeli PM, and the loonie Nuttyahoo is salivating at the thought of staying PM and using that power to keep his sorry ass out of prison.

Presented with those two choices is like a robber asking its victim, "Do you want to be stabbed with a knife or shot with a gun?"

Johnny Walker Read , says: September 13, 2019 at 12:25 pm GMT
@Robert Dolan America will never be shed of this parasite until the fundamentalist Christian Zionist/NeoCons are swept from power. They are every bit as insane as the radicalized Muslims. You tell me which country this clown truly servers!!

https://www.youtube.com/embed/UYEF8y7IZYc?feature=oembed

anonymous [420] Disclaimer , says: September 13, 2019 at 12:29 pm GMT
@Anon

Few goyim will make the leap to figure out the modern implications of the Moses mythology.

You should discuss that with @ Dennis Gannon, who appears to be tangled in a ball of misunderstanding or ignorance, especially of Machiavelli, evident when he wrote:

The Ashkenazi came from Asia. They don't follow the Old Testament. They follow the Talmud, which is Maciavellian to the core. Pure evil.

Crack open The Prince: Machiavelli "figured out the modern implications of the Moses mythology." Of three candidates Machiavelli considered, he selected Moses as the model Prince. Certain "evil" behavior that became necessary to save his beloved city, Florence, and make it a Republic of and for the people of Florence, was acceptable, inasmuch as Moses, whose chief counselor was god himself, used whatever means necessary to achieve the wellbeing of the conquerors of Canaan.

If only the people of the USA had a Prince as evil, and as dedicated to the wellbeing of the American people, as Machiavelli was to Florence.

Frankie P , says: September 13, 2019 at 12:50 pm GMT
@Brewer "Zionism was born as a reaction to antisemitism." Gilad is correct, but I believe that implicit in his statement is the understanding that the "antisemitism" is reactionary: it is born out of the anti gentile behavior and actions of Jews in gentile host societies. Gilad, please correct me if I've misrepresented you.
DESERT FOX , says: September 13, 2019 at 12:59 pm GMT
Israel is a terrorist state ran by terrorists for terrorists and its goal is to destroy the mideast for its greater Israel agenda and with the help of the zionist controlled zio/US government and the American taxpayers funding of these wars and providing the military muscle the zionists are now their way to armageddon!
Twodees Partain , says: September 13, 2019 at 1:45 pm GMT
@Brewer My definition of antisemitism is any pushback against crimes of the Ashkenazi.
Charles Pewitt , says: September 13, 2019 at 2:06 pm GMT
Israel is not an ally of the United States of America.

Israel is a client-state millstone of the American Empire that uses diasporan Jews such as Shelly Adelson to buy off politicians such as President Trump.

Andrew Jackson and George Washington would immediately sever all ties to Israel and they would make sure that diasporan Jews that put the interests of Israel over and ahead of the interests of the USA were strongly encouraged to permanently leave the USA. Those Jews who put the interests of Israel over and ahead of the interests of the USA should be disallowed from gaining entry into any other European Christian nation such as Canada, Australia, Germany, France, England, Italy, Spain etc.

It would also be a no-go Blavatsky for these diasporan Jews who put the interests of Israel ahead of the interests of the USA to go to South America or Asia or anywhere else. Israel must be made into a receptacle that will contain and constrain the ability of diasporan Jews and Israeli Jews from interfering in the governmental affairs of any other nation.

One of the reasons I will not vote for Trump and the Republican Party is that Trump and the Republicans put the interests of Israel over and ahead of the interests of the United States of America.

Trump seems to get the fact that the American Empire is a completely and totally separate entity from the United States of America. Trump seems to understand that resistance to Shelly Adelson's demands about foreign policy decisions regarding Israel is the best way to show patriotism to the USA.

The JEW/WASP ruling class of the American Empire is a clear and present threat to the safety, security and sovereignty of the United States of America

THE UNITED STATES OF AMERICA FIRST!

Charles Pewitt , says: September 13, 2019 at 2:18 pm GMT
Jew billionaire Shelly Adelson puts the interests of Israel ahead of the interests of the USA.

Jew billionaire Shelly Adelson has donated hundreds of millions of dollars to President Trump and the Republican Party over the years.

What has all that loot bought for diasporan Jew Adelson?

Is Adelson buying the foreign policy of the USA?

How come that dumb boob Chris Christie used the word "occupied" in front of Adelson when Christie was trying to pry some loot out of Adelson's checkbook? DUMMY!

Tweet from 2015:

Charles Pewitt , says: September 13, 2019 at 2:21 pm GMT
The ruling class in Israel wants to continue to use the US military as muscle to fight wars on behalf of Israel.

The ADL puts the interests of Israel ahead of the interests of the United States of America.

The ADL is an evil and immoral JEW PRESSURE GROUP that pushes mass legal immigration and mass illegal immigration and REFUGEE OVERLOAD and ASYLUM SEEKER INUNDATION and multicultural mayhem and all manner of other anti-White crud.

DESERT FOX , says: September 13, 2019 at 2:34 pm GMT
@Charles Pewitt Agree, the zionists have controlled the American people since 1913 when they fastened their privately owned central bank aka the FED and IRS on to the American people and then came the foreign wars and debt and total control of the American people by the zionists and their banking kabal.

Nathan Rothschild infamously said; I care not what puppet is place on the throne of England for the man who controls the money supply controls the British Empire, and I am that man!

The same holds true here in the zio/US the zionists have control of the money supply via the FED and we are slaves on the zionist plantation aka America, and a central bank and the income tax are 2 of the 10 planks of the communist manifesto, and zionism = communism!

Anonymous Snanonymous , says: September 13, 2019 at 3:05 pm GMT
So the Orthodox will turn Israel into a big shtetl within the span of next fifty years with the financial help of the "secular" Jews in the West and then they would want to do away with the LGBTQ crowd out of Tel Aviv you reap what you sow!
Wally , says: September 13, 2019 at 4:07 pm GMT
@J said:
"Under all that noise there is country growing and strengthening very fast"

Dream on.
Without US taxpayers money "that shitty little country" wouldn't last a month.

The True Cost of Parasite Israel
Forced US taxpayers money to Israel goes far beyond the official numbers
.
http://www.theamericanconservative.com/articles/the-true-cost-of-israel/

How Zionist Israel Is Robbing America Blind !:
http://www.unz.com/gatzmon/how-zionist-israel-is-robbing-america-blind/

[Sep 10, 2019] Trade Wars Are a Fool's Game -- Strategic Culture

Sep 10, 2019 | www.strategic-culture.org

Eric MARGOLIS

According to the great military thinker, Maj. Gen. J.F.C. Fuller, 'the object of war is not victory. It is to achieve political goals.'

Too bad President Donald Trump does not read books. He has started economic wars against China, Russia, Iran, Cuba and Venezuela without any clear strategic objective beyond inflating his ego as the world's premier warlord and punishing them for disobedience.

Trump's wars are economic. They deploy the huge economic and financial might of the United States to steamroll other nations that fail to comply with orders from Washington. Washington's motto is 'obey me or else!' Economic wars are not bloodless. Imperial Germany and the Central Powers were starved into surrender in 1918 by a crushing British naval blockade.

Trade sanctions are not making America great, as Trump claims. They are making America detested around the globe as a crude bully. Trump's efforts to undermine the European Union and intimidate Canada add to this ugly, brutal image.

Worse, Trump's tariff war against China has damaged the economy of both nations, the world's leading economic powers, and raised tensions in Asia. The world is facing recession in large part due to Trump's ill-advised wars. All to prove Trump's power and glory.

Trump and his advisors are right about China's often questionable trade practices. I did 15 years of business in China and saw a kaleidoscope of chicanery, double-dealing, and corruption. A favorite Chinese trick was to leave imports baking in the sun on the docks, or long delaying them by 'losing' paperwork.

I saw every kind of craziness in the Wild East Chinese market. But remember that it's a 'new' market in which western-style capitalism is only one generation old. Besides, China learned many of its fishy trade practices from France, that mother of mercantilism.

China indeed steals technical and military information on a mass scale. But so does the US, whose spy agencies suck up information across the world. America's claims to be a victim are pretty rich.

What Trump & Co don't understand is that China was allowed into America's Greater Asia Co-Prosperity Sphere by the clever President Nixon to bring it under US influence – just as Japan and South Korea were in the 1950's. China's trade surplus with the US is its dividend for playing by Washington's rules. If China's trade bonus is stripped away, so will China's half-hearted acceptance of US policies. Military tensions will rise sharply.

In China's view, the US is repeating what Great Britain did in the 19th century by declaring war to force opium grown in British-ruled Burma onto China's increasingly addicted people. Today the trade crop is soya beans and wretched pigs.

Trump's ultimate objective, as China clearly knows, is to whip up a world crisis over trade, then dramatically end it – of course, before next year's elections. Trump has become a master dictator of US financial markets, rising or lowering them by surprise tweets. No president should ever have such power, but Trump has seized it.

There is no telling how much money his minions have made in short or long selling on the stock market thanks to insider information. America's trillion dollar markets have come to depend on how Trump feels when he wakes up in the morning and watches Fox news, the Mother of Misinformation.

It staggers the imagination to believe that Trump and his minions actually believe that they can intimidate China into bending the knee. China withstood mass devastation and at least 14 million deaths in World War II in order to fight off Japanese domination. Does the White House really think Beijing will cave in over soya beans and semi-conductors in a daft war directed by a former beauty contest and casino operator? China's new emperor, Xi Jinping, is highly unlikely to lose face in a trade war with the US. Dictators cannot afford to retreat. Xi can wait it out until more balanced minds again occupy the White House.

Trade wars rarely produce any benefits for either side. They are the equivalent of sending tens of thousands of soldiers to be mowed down by machine guns on the blood-soaked Somme battlefield in WWI. Glory for the stupid generals; death and misery for the common soldiers

This fool's war of big egos will inevitably end in a face-saving compromise between Washington and Beijing. Get on with it.

ericmargolis.com

[Sep 10, 2019] 'The New Normal' Trump's 'China Bind' Can Be Iran's Opportunity by Alastair Crooke

Notable quotes:
"... The old adage that the 'sea is always the sea' holds true for US foreign policy. And Iran repeating the same old routines, whilst expecting different outcomes is, of course, one definition of madness. A new US Administration will inherit the same genes as the last. ..."
"... And in any case, the US is institutionally incapable of making a substantive deal with Iran. A US President – any President – cannot lift Congressional sanctions on Iran. The American multitudinous sanctions on Iran have become a decades' long knot of interpenetrating legislation: a vast rhizome of tangled, root-legislation that not even Alexander the Great might disentangle: that is why the JCPOA was constructed around a core of US Presidential 'waivers' needing to be renewed each six months. Whatever might be agreed in the future, the sanctions – 'waived' or not – are, as it were, 'forever'. ..."
"... "[So] decoupling is already in motion. Like the shift of tectonic plates, the move towards a new tech alignment with China increases the potential for sudden, destabilizing convulsions in the global economy and supply chains. To defend America's technology leadership, policymakers must upgrade their toolkit to ensure that US technology leadership can withstand the aftershocks. ..."
"... "The key driver of this shift has not been the President's tariffs, but a changing consensus among rank-and-file policymakers about what constitutes national security. This expansive new conception of national security is sensitive to a broad array of potential threats, including to the economic livelihood of the United States, the integrity of its citizens personal data, and the country's technological advantage". ..."
"... A Quinnipiac University survey last week found for the first time in Trump's presidency, more voters now say the economy is getting worse rather than better, by a 37-31 percent margin – and by 41-37 percent, voters say the president's policies are hurting the economy. ..."
"... This is hugely significant. If Trump is experiencing a crisis of public confidence in respect to his assertive policies towards China, the last thing that he needs in the run-up to an election is an oil crisis, on top of a tariff/tech war crisis with China. A wrong move with Iran, and global oil supplies easily can go awry. Markets would not be happy. (So Trump's China 'bind' can also be Iran's opportunity ). ..."
Sep 09, 2019 | www.strategic-culture.org

There is consensus amongst the Washington foreign policy élite that all factions in Iran understand that – ultimately – a deal with Washington on the nuclear issue must ensue. It somehow is inevitable. They view Iran simply as 'playing out the clock', until the advent of a new Administration makes a 'deal' possible again. And then Iran surely will be back at the table, they affirm.

Maybe. But maybe that is entirely wrong. Maybe the Iranian leadership no longer believes in 'deals' with Washington. Maybe they simply have had enough of western regime change antics (from the 1953 coup to the Iraq war waged on Iran at the western behest, to the present attempt at Iran's economic strangulation). They are quitting that failed paradigm for something new, something different.

The pages to that chapter have been shut. This does not imply some rabid anti-Americanism, but simply the experience that that path is pointless. If there is a 'clock being played out', it is that of the tic-toc of western political and economic hegemony in the Middle East is running down, and not the 'clock' of US domestic politics. The old adage that the 'sea is always the sea' holds true for US foreign policy. And Iran repeating the same old routines, whilst expecting different outcomes is, of course, one definition of madness. A new US Administration will inherit the same genes as the last.

And in any case, the US is institutionally incapable of making a substantive deal with Iran. A US President – any President – cannot lift Congressional sanctions on Iran. The American multitudinous sanctions on Iran have become a decades' long knot of interpenetrating legislation: a vast rhizome of tangled, root-legislation that not even Alexander the Great might disentangle: that is why the JCPOA was constructed around a core of US Presidential 'waivers' needing to be renewed each six months. Whatever might be agreed in the future, the sanctions – 'waived' or not – are, as it were, 'forever'.

If recent history has taught the Iranians anything, it is that such flimsy 'process' in the hands of a mercurial US President can simply be blown away like old dead leaves. Yes, the US has a systemic problem: US sanctions are a one-way valve: so easy to flow out, but once poured forth, there is no return inlet (beyond uncertain waivers issued at the pleasure of an incumbent President).

But more than just a long chapter reaching its inevitable end, Iran is seeing another path opening out. Trump is in a 'China bind': a trade deal with China now looks "tough to improbable", according to White House officials, in the context of the fast deteriorating environment of security tensions between Washington and Beijing. Defense One spells it out:

"It came without a breaking news alert or presidential tweet, but the technological competition with China entered a new phase last month. Several developments quietly heralded this shift: Cross-border investments between the United States and China plunged to their lowest levels since 2014, with the tech sector suffering the most precipitous drop. US chip giants Intel and AMD abruptly ended or declined to extend important partnerships with Chinese entities. The Department of Commerce halved the number of licenses that let US companies assign Chinese nationals to sensitive technology and engineering projects.

"[So] decoupling is already in motion. Like the shift of tectonic plates, the move towards a new tech alignment with China increases the potential for sudden, destabilizing convulsions in the global economy and supply chains. To defend America's technology leadership, policymakers must upgrade their toolkit to ensure that US technology leadership can withstand the aftershocks.

"The key driver of this shift has not been the President's tariffs, but a changing consensus among rank-and-file policymakers about what constitutes national security. This expansive new conception of national security is sensitive to a broad array of potential threats, including to the economic livelihood of the United States, the integrity of its citizens personal data, and the country's technological advantage".

Trump's China 'bind' is this: A trade deal with China has long been viewed by the White House as a major tool for 'goosing' the US stock market upwards, during the crucial pre-election period. But as that is now said to be "tough to improbable" – and as US national security consensus metamorphoses, the consequent de-coupling, combined with tariffs, is beginning to bite. The effects are eating away at President Trump's prime political asset: the public confidence in his handling of the economy: A Quinnipiac University survey last week found for the first time in Trump's presidency, more voters now say the economy is getting worse rather than better, by a 37-31 percent margin – and by 41-37 percent, voters say the president's policies are hurting the economy.

This is hugely significant. If Trump is experiencing a crisis of public confidence in respect to his assertive policies towards China, the last thing that he needs in the run-up to an election is an oil crisis, on top of a tariff/tech war crisis with China. A wrong move with Iran, and global oil supplies easily can go awry. Markets would not be happy. (So Trump's China 'bind' can also be Iran's opportunity ).

No wonder Pompeo acted with such alacrity to put a tourniquet on the brewing 'war' in the Middle East, sparked by Israel's simultaneous air attacks last month in Iraq, inside Beirut, and in Syria (killing two Hizbullah soldiers). It is pretty clear that Washington did not want this 'war', at least not now. America, as Defense One noted , is becoming acutely sensitive to any risks to the global financial system from "sudden, destabilizing convulsions in the global economy".

The recent Israeli military operations coincided with Iranian FM Zarif's sudden summons to Biarritz (during the G7), exacerbating fears within the Israeli Security Cabinet that Trump might meet with President Rouhani in NY at the UN General Assembly – thus threatening Netanyahu's anti-Iran, political 'identity' . The fear was that Trump could begin a 'bromance' with the Iranian President (on the Kim Jong Un lines). And hence the Israeli provocations intended to stir some Iranian (over)-reaction (which never came). Subsequently it became clear to Israel that Iran's leadership had absolutely no intention to meet with Trump – and the whole episode subsided.

Trump's Iran 'bind' therefore is somehow similar to his China 'bind': With China, he initially wanted an easy trade achievement, but it has proved to be 'anything but'. With Iran, Trump wanted a razzmatazz meeting with Rohani – even if that did not lead to a new 'deal' (much as the Trump – Kim Jung Un TV spectaculars that caught the American imagination so vividly, he may have hoped for a similar response to a Rohani handshake, or he may have even aspired to an Oval Office spectacular).

Trump simply cannot understand why the Iranians won't do this, and he is peeved by the snub. Iran is unfathomable to Team Trump.

Well, maybe the Iranians just don't want to do it. Firstly, they don't need to: the Iranian Rial has been recovering steadily over the last four months and manufacturing output has steadied. China's General Administration of Customs (GAC) detailing the country's oil imports data shows that China has not cut its Iranian supply after the US waiver program ended on 2 May, but rather, it has steadily increased Iranian crude imports since the official end of the waiver extension, up from May and June levels. The new GAC data shows China imported over 900,000 barrels per day (bpd) of crude oil from Iran in July, which is up 4.7% from the month before.

And a new path is opening in front of Iran. After Biarritz, Zarif flew directly to Beijing where he discussed a huge, multi-hundred billion (according to one report ), twenty-five-year oil and gas investment, (and a separate) 'Road and Belt' transport plan. Though the details are not disclosed, it is plain that China – unlike America – sees Iran as a key future strategic partner, and China seems perfectly able to fathom out the Iranians, too.

But here is the really substantive US shift taking place. It is that which is termed "a new normal" now taking a hold in Washington:

"To defend America's technology leadership, policymakers [are] upgrading their toolkit to ensure that US technology leadership can withstand the aftershocks Unlike the President's trade war, support for this new, expansive definition of national security and technology is largely bipartisan, and likely here to stay.

with many of the president's top advisers viewing China first and foremost as a national security threat, rather than as an economic partner – it's poised to affect huge parts of American life, from the cost of many consumer goods to the nature of this country's relationship with the government of Taiwan.

"Trump himself still views China primarily through an economic prism. But the angrier he gets with Beijing, the more receptive he is to his advisers' hawkish stances toward China that go well beyond trade."

"The angrier he gets with Beijing" Well, here is the key point: Washington seems to have lost the ability to summon the resources to try to fathom either China, or the Iranian 'closed book', let alone a 'Byzantine' Russia. It is a colossal attenuation of consciousness in Washington; a loss of conscious 'vitality' to the grip of some 'irrefutable logic' that allows no empathy, no outreach, to 'otherness'. Washington (and some European élites) have retreated into their 'niche' consciousness, their mental enclave, gated and protected, from having to understand – or engage – with wider human experience.

To compensate for these lacunae, Washington looks rather, to an engineering and technological solution: If we cannot summon empathy, or understand Xi or the Iranian Supreme Leader, we can muster artificial intelligence to substitute – a 'toolkit' in which the US intends to be global leader.

This type of solution – from the US perspective – maybe works for China, but not so much for Iran; and Trump is not keen on a full war with Iran in the lead up to elections. Is this why Trump seems to be losing interest in the Middle East? He doesn't understand it; he hasn't the interest or the means to fathom it; and he doesn't want to bomb it. And the China 'bind' is going to be all absorbing for him, for the meantime.

[Sep 10, 2019] Neoliberal Capitalism at a Dead End by Utsa Patnaik and Prabhat Patnaik

Highly recommended!
This is a Marxist critique of neoliberalism. Not necessary right but they his some relevant points.
Notable quotes:
"... The ideology of neoliberal capitalism was the promise of growth. But with neoliberal capitalism reaching a dead end, this promise disappears and so does this ideological prop. ..."
"... The ex ante tendency toward overproduction arises because the vector of real wages across countries does not increase noticeably over time in the world economy, while the vector of labor productivities does, typically resulting in a rise in the share of surplus in world output. ..."
"... While the rise in the vector of labor productivities across countries, a ubiquitous phenomenon under capitalism that also characterizes neoliberal capitalism, scarcely requires an explanation, why does the vector of real wages remain virtually stagnant in the world economy? The answer lies in the sui generis character of contemporary globalization that, for the first time in the history of capitalism, has led to a relocation of activity from the metropolis to third world countries in order to take advantage of the lower wages prevailing in the latter and meet global demand. ..."
"... The current globalization broke with this. The movement of capital from the metropolis to the third world, especially to East, South, and Southeast Asia to relocate plants there and take advantage of their lower wages for meeting global demand, has led to a desegmentation of the world economy, subjecting metropolitan wages to the restraining effect exercised by the third world's labor reserves. Not surprisingly, as Joseph Stiglitz has pointed out, the real-wage rate of an average male U.S. worker in 2011 was no higher -- indeed, it was marginally lower -- than it had been in 1968. 5 ..."
"... This ever-present opposition becomes decisive within a regime of globalization. As long as finance capital remains national -- that is, nation-based -- and the state is a nation-state, the latter can override this opposition under certain circumstances, such as in the post-Second World War period when capitalism was facing an existential crisis. But when finance capital is globalized, meaning, when it is free to move across country borders while the state remains a nation-state, its opposition to fiscal deficits becomes decisive. If the state does run large fiscal deficits against its wishes, then it would simply leave that country en masse , causing a financial crisis. ..."
"... The state therefore capitulates to the demands of globalized finance capital and eschews direct fiscal intervention for increasing demand. It resorts to monetary policy instead since that operates through wealth holders' decisions, and hence does not undermine their social position. But, precisely for this reason, monetary policy is an ineffective instrument, as was evident in the United States in the aftermath of the 2007–09 crisis when even the pushing of interest rates down to zero scarcely revived activity. 6 ..."
"... If Trump's protectionism, which recalls the Smoot-Hawley tariff of 1931 and amounts to a beggar-my-neighbor policy, does lead to a significant export of unemployment from the United States, then it will invite retaliation and trigger a trade war that will only worsen the crisis for the world economy as a whole by dampening global investment. Indeed, since the United States has been targeting China in particular, some retaliatory measures have already appeared. But if U.S. protectionism does not invite generalized retaliation, it would only be because the export of unemployment from the United States is insubstantial, keeping unemployment everywhere, including in the United States, as precarious as it is now. However we look at it, the world would henceforth face higher levels of unemployment. ..."
"... The second implication of this dead end is that the era of export-led growth is by and large over for third world economies. The slowing down of world economic growth, together with protectionism in the United States against successful third world exporters, which could even spread to other metropolitan economies, suggests that the strategy of relying on the world market to generate domestic growth has run out of steam. Third world economies, including the ones that have been very successful at exporting, would now have to rely much more on their home market ..."
"... In other words, we shall now have an intensification of the imperialist stranglehold over third world economies, especially those pushed into unsustainable balance-of-payments deficits in the new situation. By imperialism , here we do not mean the imperialism of this or that major power, but the imperialism of international finance capital, with which even domestic big bourgeoisies are integrated, directed against their own working people ..."
"... In short, the ideology of neoliberal capitalism was the promise of growth. But with neoliberal capitalism reaching a dead end, this promise disappears and so does this ideological prop. To sustain itself, neoliberal capitalism starts looking for some other ideological prop and finds fascism. ..."
"... The first is the so-called spontaneous method of capital flight. Any political formation that seeks to take the country out of the neoliberal regime will witness capital flight even before it has been elected to office, bringing the country to a financial crisis and thereby denting its electoral prospects. And if perchance it still gets elected, the outflow will only increase, even before it assumes office. The inevitable difficulties faced by the people may well make the government back down at that stage. The sheer difficulty of transition away from a neoliberal regime could be enough to bring even a government based on the support of workers and peasants to its knees, precisely to save them short-term distress or to avoid losing their support. ..."
"... The third weapon consists in carrying out so-called democratic or parliamentary coups of the sort that Latin America has been experiencing. Coups in the old days were effected through the local armed forces and necessarily meant the imposition of military dictatorships in lieu of civilian, democratically elected governments. Now, taking advantage of the disaffection generated within countries by the hardships caused by capital flight and imposed sanctions, imperialism promotes coups through fascist or fascist-sympathizing middle-class political elements in the name of restoring democracy, which is synonymous with the pursuit of neoliberalism. ..."
"... And if all these measures fail, there is always the possibility of resorting to economic warfare (such as destroying Venezuela's electricity supply), and eventually to military warfare. Venezuela today provides a classic example of what imperialist intervention in a third world country is going to look like in the era of decline of neoliberal capitalism, when revolts are going to characterize such countries more and more. ..."
"... Despite this opposition, neoliberal capitalism cannot ward off the challenge it is facing for long. It has no vision for reinventing itself. Interestingly, in the period after the First World War, when capitalism was on the verge of sinking into a crisis, the idea of state intervention as a way of its revival had already been mooted, though its coming into vogue only occurred at the end of the Second World War. 11 Today, neoliberal capitalism does not even have an idea of how it can recover and revitalize itself. And weapons like domestic fascism in the third world and direct imperialist intervention cannot for long save it from the anger of the masses that is building up against it. ..."
Aug 25, 2019 | portside.org
Originally from: Monthly Review printer friendly
The ideology of neoliberal capitalism was the promise of growth. But with neoliberal capitalism reaching a dead end, this promise disappears and so does this ideological prop.

Harry Magdoff's The Age of Imperialism is a classic work that shows how postwar political decolonization does not negate the phenomenon of imperialism. The book has two distinct aspects. On the one hand, it follows in V. I. Lenin's footsteps in providing a comprehensive account of how capitalism at the time operated globally. On the other hand, it raises a question that is less frequently discussed in Marxist literature -- namely, the need for imperialism. Here, Magdoff not only highlighted the crucial importance, among other things, of the third world's raw materials for metropolitan capital, but also refuted the argument that the declining share of raw-material value in gross manufacturing output somehow reduced this importance, making the simple point that there can be no manufacturing at all without raw materials. 1

Magdoff's focus was on a period when imperialism was severely resisting economic decolonization in the third world, with newly independent third world countries taking control over their own resources. He highlighted the entire armory of weapons used by imperialism. But he was writing in a period that predated the onset of neoliberalism. Today, we not only have decades of neoliberalism behind us, but the neoliberal regime itself has reached a dead end. Contemporary imperialism has to be discussed within this setting.

Globalization and Economic Crisis

There are two reasons why the regime of neoliberal globalization has run into a dead end. The first is an ex ante tendency toward global overproduction; the second is that the only possible counter to this tendency within the regime is the formation of asset-price bubbles, which cannot be conjured up at will and whose collapse, if they do appear, plunges the economy back into crisis. In short, to use the words of British economic historian Samuel Berrick Saul, there are no "markets on tap" for contemporary metropolitan capitalism, such as had been provided by colonialism prior to the First World War and by state expenditure in the post-Second World War period of dirigisme . 2

The ex ante tendency toward overproduction arises because the vector of real wages across countries does not increase noticeably over time in the world economy, while the vector of labor productivities does, typically resulting in a rise in the share of surplus in world output. As Paul Baran and Paul Sweezy argued in Monopoly Capital , following the lead of Michał Kalecki and Josef Steindl, such a rise in the share of economic surplus, or a shift from wages to surplus, has the effect of reducing aggregate demand since the ratio of consumption to income is higher on average for wage earners than for those living off the surplus. 3 Therefore, assuming a given level of investment associated with any period, such a shift would tend to reduce consumption demand and hence aggregate demand, output, and capacity utilization. In turn, reduced capacity utilization would lower investment over time, further aggravating the demand-reducing effect arising from the consumption side.

While the rise in the vector of labor productivities across countries, a ubiquitous phenomenon under capitalism that also characterizes neoliberal capitalism, scarcely requires an explanation, why does the vector of real wages remain virtually stagnant in the world economy? The answer lies in the sui generis character of contemporary globalization that, for the first time in the history of capitalism, has led to a relocation of activity from the metropolis to third world countries in order to take advantage of the lower wages prevailing in the latter and meet global demand.

Historically, while labor has not been, and is still not, free to migrate from the third world to the metropolis, capital, though juridically free to move from the latter to the former, did not actually do so , except to sectors like mines and plantations, which only strengthened, rather than broke, the colonial pattern of the international division of labor. 4 This segmentation of the world economy meant that wages in the metropolis increased with labor productivity, unrestrained by the vast labor reserves of the third world, which themselves had been caused by the displacement of manufactures through the twin processes of deindustrialization (competition from metropolitan goods) and the drain of surplus (the siphoning off of a large part of the economic surplus, through taxes on peasants that are no longer spent on local artisan products but finance gratis primary commodity exports to the metropolis instead).

The current globalization broke with this. The movement of capital from the metropolis to the third world, especially to East, South, and Southeast Asia to relocate plants there and take advantage of their lower wages for meeting global demand, has led to a desegmentation of the world economy, subjecting metropolitan wages to the restraining effect exercised by the third world's labor reserves. Not surprisingly, as Joseph Stiglitz has pointed out, the real-wage rate of an average male U.S. worker in 2011 was no higher -- indeed, it was marginally lower -- than it had been in 1968. 5

At the same time, such relocation of activities, despite causing impressive growth rates of gross domestic product (GDP) in many third world countries, does not lead to the exhaustion of the third world's labor reserves. This is because of another feature of contemporary globalization: the unleashing of a process of primitive accumulation of capital against petty producers, including peasant agriculturists in the third world, who had earlier been protected, to an extent, from the encroachment of big capital (both domestic and foreign) by the postcolonial dirigiste regimes in these countries. Under neoliberalism, such protection is withdrawn, causing an income squeeze on these producers and often their outright dispossession from their land, which is then used by big capital for its various so-called development projects. The increase in employment, even in countries with impressive GDP growth rates in the third world, falls way short of the natural growth of the workforce, let alone absorbing the additional job seekers coming from the ranks of displaced petty producers. The labor reserves therefore never get used up. Indeed, on the contrary, they are augmented further, because real wages continue to remain tied to a subsistence level, even as metropolitan wages too are restrained. The vector of real wages in the world economy as a whole therefore remains restrained.

Although contemporary globalization thus gives rise to an ex ante tendency toward overproduction, state expenditure that could provide a counter to this (and had provided a counter through military spending in the United States, according to Baran and Sweezy) can no longer do so under the current regime. Finance is usually opposed to direct state intervention through larger spending as a way of increasing employment. This opposition expresses itself through an opposition not just to larger taxes on capitalists, but also to a larger fiscal deficit for financing such spending. Obviously, if larger state spending is financed by taxes on workers, then it hardly adds to aggregate demand, for workers spend the bulk of their incomes anyway, so the state taking this income and spending it instead does not add any extra demand. Hence, larger state spending can increase employment only if it is financed either through a fiscal deficit or through taxes on capitalists who keep a part of their income unspent or saved. But these are precisely the two modes of financing state expenditure that finance capital opposes.

Its opposing larger taxes on capitalists is understandable, but why is it so opposed to a larger fiscal deficit? Even within a capitalist economy, there are no sound economic theoretical reasons that should preclude a fiscal deficit under all circumstances. The root of the opposition therefore lies in deeper social considerations: if the capitalist economic system becomes dependent on the state to promote employment directly , then this fact undermines the social legitimacy of capitalism. The need for the state to boost the animal spirits of the capitalists disappears and a perspective on the system that is epistemically exterior to it is provided to the people, making it possible for them to ask: If the state can do the job of providing employment, then why do we need the capitalists at all? It is an instinctive appreciation of this potential danger that underlies the opposition of capital, especially of finance, to any direct effort by the state to generate employment.

This ever-present opposition becomes decisive within a regime of globalization. As long as finance capital remains national -- that is, nation-based -- and the state is a nation-state, the latter can override this opposition under certain circumstances, such as in the post-Second World War period when capitalism was facing an existential crisis. But when finance capital is globalized, meaning, when it is free to move across country borders while the state remains a nation-state, its opposition to fiscal deficits becomes decisive. If the state does run large fiscal deficits against its wishes, then it would simply leave that country en masse , causing a financial crisis.

The state therefore capitulates to the demands of globalized finance capital and eschews direct fiscal intervention for increasing demand. It resorts to monetary policy instead since that operates through wealth holders' decisions, and hence does not undermine their social position. But, precisely for this reason, monetary policy is an ineffective instrument, as was evident in the United States in the aftermath of the 2007–09 crisis when even the pushing of interest rates down to zero scarcely revived activity. 6

It may be thought that this compulsion on the part of the state to accede to the demand of finance to eschew fiscal intervention for enlarging employment should not hold for the United States. Its currency being considered by the world's wealth holders to be "as good as gold" should make it immune to capital flight. But there is an additional factor operating in the case of the United States: that the demand generated by a bigger U.S. fiscal deficit would substantially leak abroad in a neoliberal setting, which would increase its external debt (since, unlike Britain in its heyday, it does not have access to any unrequited colonial transfers) for the sake of generating employment elsewhere. This fact deters any fiscal effort even in the United States to boost demand within a neoliberal setting. 7

Therefore, it follows that state spending cannot provide a counter to the ex ante tendency toward global overproduction within a regime of neoliberal globalization, which makes the world economy precariously dependent on occasional asset-price bubbles, primarily in the U.S. economy, for obtaining, at best, some temporary relief from the crisis. It is this fact that underlies the dead end that neoliberal capitalism has reached. Indeed, Donald Trump's resort to protectionism in the United States to alleviate unemployment is a clear recognition of the system having reached this cul-de-sac. The fact that the mightiest capitalist economy in the world has to move away from the rules of the neoliberal game in an attempt to alleviate its crisis of unemployment/underemployment -- while compensating capitalists adversely affected by this move through tax cuts, as well as carefully ensuring that no restraints are imposed on free cross-border financial flows -- shows that these rules are no longer viable in their pristine form.

Some Implications of This Dead End

There are at least four important implications of this dead end of neoliberalism. The first is that the world economy will now be afflicted by much higher levels of unemployment than it was in the last decade of the twentieth century and the early years of the twenty-first, when the dot-com and the housing bubbles in the United States had, sequentially, a pronounced impact. It is true that the U.S. unemployment rate today appears to be at a historic low, but this is misleading: the labor-force participation rate in the United States today is lower than it was in 2008, which reflects the discouraged-worker effect . Adjusting for this lower participation, the U.S. unemployment rate is considerable -- around 8 percent. Indeed, Trump would not be imposing protection in the United States if unemployment was actually as low as 4 percent, which is the official figure. Elsewhere in the world, of course, unemployment post-2008 continues to be evidently higher than before. Indeed, the severity of the current problem of below-full-employment production in the U.S. economy is best illustrated by capacity utilization figures in manufacturing. The weakness of the U.S. recovery from the Great Recession is indicated by the fact that the current extended recovery represents the first decade in the entire post-Second World War period in which capacity utilization in manufacturing has never risen as high as 80 percent in a single quarter, with the resulting stagnation of investment. 8

If Trump's protectionism, which recalls the Smoot-Hawley tariff of 1931 and amounts to a beggar-my-neighbor policy, does lead to a significant export of unemployment from the United States, then it will invite retaliation and trigger a trade war that will only worsen the crisis for the world economy as a whole by dampening global investment. Indeed, since the United States has been targeting China in particular, some retaliatory measures have already appeared. But if U.S. protectionism does not invite generalized retaliation, it would only be because the export of unemployment from the United States is insubstantial, keeping unemployment everywhere, including in the United States, as precarious as it is now. However we look at it, the world would henceforth face higher levels of unemployment.

There has been some discussion on how global value chains would be affected by Trump's protectionism. But the fact that global macroeconomics in the early twenty-first century will look altogether different compared to earlier has not been much discussed.

In light of the preceding discussion, one could say that if, instead of individual nation-states whose writ cannot possibly run against globalized finance capital, there was a global state or a set of major nation-states acting in unison to override the objections of globalized finance and provide a coordinated fiscal stimulus to the world economy, then perhaps there could be recovery. Such a coordinated fiscal stimulus was suggested by a group of German trade unionists, as well as by John Maynard Keynes during the Great Depression in the 1930s. 9 While it was turned down then, in the present context it has not even been discussed.

The second implication of this dead end is that the era of export-led growth is by and large over for third world economies. The slowing down of world economic growth, together with protectionism in the United States against successful third world exporters, which could even spread to other metropolitan economies, suggests that the strategy of relying on the world market to generate domestic growth has run out of steam. Third world economies, including the ones that have been very successful at exporting, would now have to rely much more on their home market.

Such a transition will not be easy; it will require promoting domestic peasant agriculture, defending petty production, moving toward cooperative forms of production, and ensuring greater equality in income distribution, all of which need major structural shifts. For smaller economies, it would also require their coming together with other economies to provide a minimum size to the domestic market. In short, the dead end of neoliberalism also means the need for a shift away from the so-called neoliberal development strategy that has held sway until now.

The third implication is the imminent engulfing of a whole range of third world economies in serious balance-of-payments difficulties. This is because, while their exports will be sluggish in the new situation, this very fact will also discourage financial inflows into their economies, whose easy availability had enabled them to maintain current account deficits on their balance of payments earlier. In such a situation, within the existing neoliberal paradigm, they would be forced to adopt austerity measures that would impose income deflation on their people, make the conditions of their people significantly worse, lead to a further handing over of their national assets and resources to international capital, and prevent precisely any possible transition to an alternative strategy of home market-based growth.

In other words, we shall now have an intensification of the imperialist stranglehold over third world economies, especially those pushed into unsustainable balance-of-payments deficits in the new situation. By imperialism , here we do not mean the imperialism of this or that major power, but the imperialism of international finance capital, with which even domestic big bourgeoisies are integrated, directed against their own working people.

The fourth implication is the worldwide upsurge of fascism. Neoliberal capitalism even before it reached a dead end, even in the period when it achieved reasonable growth and employment rates, had pushed the world into greater hunger and poverty. For instance, the world per-capita cereal output was 355 kilograms for 1980 (triennium average for 1979–81 divided by mid–triennium population) and fell to 343 in 2000, leveling at 344.9 in 2016 -- and a substantial amount of this last figure went into ethanol production. Clearly, in a period of growth of the world economy, per-capita cereal absorption should be expanding, especially since we are talking here not just of direct absorption but of direct and indirect absorption, the latter through processed foods and feed grains in animal products. The fact that there was an absolute decline in per-capita output, which no doubt caused a decline in per-capita absorption, suggests an absolute worsening in the nutritional level of a substantial segment of the world's population.

But this growing hunger and nutritional poverty did not immediately arouse any significant resistance, both because such resistance itself becomes more difficult under neoliberalism (since the very globalization of capital makes it an elusive target) and also because higher GDP growth rates provided a hope that distress might be overcome in the course of time. Peasants in distress, for instance, entertained the hope that their children would live better in the years to come if given a modicum of education and accepted their fate.

In short, the ideology of neoliberal capitalism was the promise of growth. But with neoliberal capitalism reaching a dead end, this promise disappears and so does this ideological prop. To sustain itself, neoliberal capitalism starts looking for some other ideological prop and finds fascism. This changes the discourse away from the material conditions of people's lives to the so-called threat to the nation, placing the blame for people's distress not on the failure of the system, but on ethnic, linguistic, and religious minority groups, the other that is portrayed as an enemy. It projects a so-called messiah whose sheer muscularity can somehow magically overcome all problems; it promotes a culture of unreason so that both the vilification of the other and the magical powers of the supposed leader can be placed beyond any intellectual questioning; it uses a combination of state repression and street-level vigilantism by fascist thugs to terrorize opponents; and it forges a close relationship with big business, or, in Kalecki's words, "a partnership of big business and fascist upstarts." 10

Fascist groups of one kind or another exist in all modern societies. They move center stage and even into power only on certain occasions when they get the backing of big business. And these occasions arise when three conditions are satisfied: when there is an economic crisis so the system cannot simply go on as before; when the usual liberal establishment is manifestly incapable of resolving the crisis; and when the left is not strong enough to provide an alternative to the people in order to move out of the conjuncture.

This last point may appear odd at first, since many see the big bourgeoisie's recourse to fascism as a counter to the growth of the left's strength in the context of a capitalist crisis. But when the left poses a serious threat, the response of the big bourgeoisie typically is to attempt to split it by offering concessions. It uses fascism to prop itself up only when the left is weakened. Walter Benjamin's remark that "behind every fascism there is a failed revolution" points in this direction.

Fascism Then and Now

Contemporary fascism, however, differs in crucial respects from its 1930s counterpart, which is why many are reluctant to call the current phenomenon a fascist upsurge. But historical parallels, if carefully drawn, can be useful. While in some aforementioned respects contemporary fascism does resemble the phenomenon of the 1930s, there are serious differences between the two that must also be noted.

First, we must note that while the current fascist upsurge has put fascist elements in power in many countries, there are no fascist states of the 1930s kind as of yet. Even if the fascist elements in power try to push the country toward a fascist state, it is not clear that they will succeed. There are many reasons for this, but an important one is that fascists in power today cannot overcome the crisis of neoliberalism, since they accept the regime of globalization of finance. This includes Trump, despite his protectionism. In the 1930s, however, this was not the case. The horrors associated with the institution of a fascist state in the 1930s had been camouflaged to an extent by the ability of the fascists in power to overcome mass unemployment and end the Depression through larger military spending, financed by government borrowing. Contemporary fascism, by contrast, lacks the ability to overcome the opposition of international finance capital to fiscal activism on the part of the government to generate larger demand, output, and employment, even via military spending.

Such activism, as discussed earlier, required larger government spending financed either through taxes on capitalists or through a fiscal deficit. Finance capital was opposed to both of these measures and it being globalized made this opposition decisive . The decisiveness of this opposition remains even if the government happens to be one composed of fascist elements. Hence, contemporary fascism, straitjacketed by "fiscal rectitude," cannot possibly alleviate even temporarily the economic crises facing people and cannot provide any cover for a transition to a fascist state akin to the ones of the 1930s, which makes such a transition that much more unlikely.

Another difference is also related to the phenomenon of the globalization of finance. The 1930s were marked by what Lenin had earlier called "interimperialist rivalry." The military expenditures incurred by fascist governments, even though they pulled countries out of the Depression and unemployment, inevitably led to wars for "repartitioning an already partitioned world." Fascism was the progenitor of war and burned itself out through war at, needless to say, great cost to humankind.

Contemporary fascism, however, operates in a world where interimperialist rivalry is far more muted. Some have seen in this muting a vindication of Karl Kautsky's vision of an "ultraimperialism" as against Lenin's emphasis on the permanence of interimperialist rivalry, but this is wrong. Both Kautsky and Lenin were talking about a world where finance capital and the financial oligarchy were essentially national -- that is, German, French, or British. And while Kautsky talked about the possibility of truces among the rival oligarchies, Lenin saw such truces only as transient phenomena punctuating the ubiquity of rivalry.

In contrast, what we have today is not nation-based finance capitals, but international finance capital into whose corpus the finance capitals drawn from particular countries are integrated. This globalized finance capital does not want the world to be partitioned into economic territories of rival powers ; on the contrary, it wants the entire globe to be open to its own unrestricted movement. The muting of rivalry between major powers, therefore, is not because they prefer truce to war, or peaceful partitioning of the world to forcible repartitioning, but because the material conditions themselves have changed so that it is no longer a matter of such choices. The world has gone beyond both Lenin and Kautsky, as well as their debates.

Not only are we not going to have wars between major powers in this era of fascist upsurge (of course, as will be discussed, we shall have other wars), but, by the same token, this fascist upsurge will not burn out through any cataclysmic war. What we are likely to see is a lingering fascism of less murderous intensity , which, when in power, does not necessarily do away with all the forms of bourgeois democracy, does not necessarily physically annihilate the opposition, and may even allow itself to get voted out of power occasionally. But since its successor government, as long as it remains within the confines of the neoliberal strategy, will also be incapable of alleviating the crisis, the fascist elements are likely to return to power as well. And whether the fascist elements are in or out of power, they will remain a potent force working toward the fascification of the society and the polity, even while promoting corporate interests within a regime of globalization of finance, and hence permanently maintaining the "partnership between big business and fascist upstarts."

Put differently, since the contemporary fascist upsurge is not likely to burn itself out as the earlier one did, it has to be overcome by transcending the very conjuncture that produced it: neoliberal capitalism at a dead end. A class mobilization of working people around an alternative set of transitional demands that do not necessarily directly target neoliberal capitalism, but which are immanently unrealizable within the regime of neoliberal capitalism, can provide an initial way out of this conjuncture and lead to its eventual transcendence.

Such a class mobilization in the third world context would not mean making no truces with liberal bourgeois elements against the fascists. On the contrary, since the liberal bourgeois elements too are getting marginalized through a discourse of jingoistic nationalism typically manufactured by the fascists, they too would like to shift the discourse toward the material conditions of people's lives, no doubt claiming that an improvement in these conditions is possible within the neoliberal economic regime itself. Such a shift in discourse is in itself a major antifascist act . Experience will teach that the agenda advanced as part of this changed discourse is unrealizable under neoliberalism, providing the scope for dialectical intervention by the left to transcend neoliberal capitalism.

Imperialist Interventions

Even though fascism will have a lingering presence in this conjuncture of "neoliberalism at a dead end," with the backing of domestic corporate-financial interests that are themselves integrated into the corpus of international finance capital, the working people in the third world will increasingly demand better material conditions of life and thereby rupture the fascist discourse of jingoistic nationalism (that ironically in a third world context is not anti-imperialist).

In fact, neoliberalism reaching a dead end and having to rely on fascist elements revives meaningful political activity, which the heyday of neoliberalism had precluded, because most political formations then had been trapped within an identical neoliberal agenda that appeared promising. (Latin America had a somewhat different history because neoliberalism arrived in that continent through military dictatorships, not through its more or less tacit acceptance by most political formations.)

Such revived political activity will necessarily throw up challenges to neoliberal capitalism in particular countries. Imperialism, by which we mean the entire economic and political arrangement sustaining the hegemony of international finance capital, will deal with these challenges in at least four different ways.

The first is the so-called spontaneous method of capital flight. Any political formation that seeks to take the country out of the neoliberal regime will witness capital flight even before it has been elected to office, bringing the country to a financial crisis and thereby denting its electoral prospects. And if perchance it still gets elected, the outflow will only increase, even before it assumes office. The inevitable difficulties faced by the people may well make the government back down at that stage. The sheer difficulty of transition away from a neoliberal regime could be enough to bring even a government based on the support of workers and peasants to its knees, precisely to save them short-term distress or to avoid losing their support.

Even if capital controls are put in place, where there are current account deficits, financing such deficits would pose a problem, necessitating some trade controls. But this is where the second instrument of imperialism comes into play: the imposition of trade sanctions by the metropolitan states, which then cajole other countries to stop buying from the sanctioned country that is trying to break away from thralldom to globalized finance capital. Even if the latter would have otherwise succeeded in stabilizing its economy despite its attempt to break away, the imposition of sanctions becomes an additional blow.

The third weapon consists in carrying out so-called democratic or parliamentary coups of the sort that Latin America has been experiencing. Coups in the old days were effected through the local armed forces and necessarily meant the imposition of military dictatorships in lieu of civilian, democratically elected governments. Now, taking advantage of the disaffection generated within countries by the hardships caused by capital flight and imposed sanctions, imperialism promotes coups through fascist or fascist-sympathizing middle-class political elements in the name of restoring democracy, which is synonymous with the pursuit of neoliberalism.

And if all these measures fail, there is always the possibility of resorting to economic warfare (such as destroying Venezuela's electricity supply), and eventually to military warfare. Venezuela today provides a classic example of what imperialist intervention in a third world country is going to look like in the era of decline of neoliberal capitalism, when revolts are going to characterize such countries more and more.

Two aspects of such intervention are striking. One is the virtual unanimity among the metropolitan states, which only underscores the muting of interimperialist rivalry in the era of hegemony of global finance capital. The other is the extent of support that such intervention commands within metropolitan countries, from the right to even the liberal segments.

Despite this opposition, neoliberal capitalism cannot ward off the challenge it is facing for long. It has no vision for reinventing itself. Interestingly, in the period after the First World War, when capitalism was on the verge of sinking into a crisis, the idea of state intervention as a way of its revival had already been mooted, though its coming into vogue only occurred at the end of the Second World War. 11 Today, neoliberal capitalism does not even have an idea of how it can recover and revitalize itself. And weapons like domestic fascism in the third world and direct imperialist intervention cannot for long save it from the anger of the masses that is building up against it.

Notes
  1. Harry Magdoff, The Age of Imperialism (New York: Monthly Review Press, 1969).
  2. Samuel Berrick Saul, Studies in British Overseas Trade, 1870–1914 (Liverpool: Liverpool University Press, 1960).
  3. Paul A. Baran and Paul M. Sweezy, Monopoly Capital (New York: Monthly Review Press, 1966).
  4. One of the first authors to recognize this fact and its significance was Paul Baran in The Political Economy of Growth (New York: Monthly Review Press, 1957).
  5. Joseph E. Stiglitz, " Inequality is Holding Back the Recovery ," New York Times , January 19, 2013.
  6. For a discussion of how even the recent euphoria about U.S. growth is vanishing, see C. P. Chandrasekhar and Jayati Ghosh, " Vanishing Green Shoots and the Possibility of Another Crisis ," The Hindu Business Line , April 8, 2019.
  7. For the role of such colonial transfers in sustaining the British balance of payments and the long Victorian and Edwardian boom, see Utsa Patnaik, "Revisiting the 'Drain,' or Transfers from India to Britain in the Context of Global Diffusion of Capitalism," in Agrarian and Other Histories: Essays for Binay Bhushan Chaudhuri , ed. Shubhra Chakrabarti and Utsa Patnaik (Delhi: Tulika, 2017), 277-317.
  8. Federal Reserve Board of Saint Louis Economic Research, FRED, "Capacity Utilization: Manufacturing," February 2019 (updated March 27, 2019), http://fred.stlouisfed.org .
  9. This issue is discussed by Charles P. Kindleberger in The World in Depression, 1929–1939 , 40th anniversary ed. (Oakland: University of California Press, 2013).
  10. Michał Kalecki, " Political Aspects of Full Employment ," Political Quarterly (1943), available at mronline.org.
  11. Joseph Schumpeter had seen Keynes's The Economic Consequences of the Peace as essentially advocating such state intervention in the new situation. See his essay, "John Maynard Keynes (1883–1946)," in Ten Great Economists (London: George Allen & Unwin, 1952).

Utsa Patnaik is Professor Emerita at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. Her books include Peasant Class Differentiation (1987), The Long Transition (1999), and The Republic of Hunger and Other Essays (2007). Prabhat Patnaik is Professor Emeritus at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. His books include Accumulation and Stability Under Capitalism (1997), The Value of Money(2009), and Re-envisioning Socialism(2011).

[Sep 08, 2019] https://twitter.com/DeanBaker13/status/1170197985168199680

Sep 08, 2019 | twitter.com

Dean Baker‏ @DeanBaker13

Hey #SchoolyardDonnie, China is not paying for the tariffs, the price of our imports from China are down just 1.6 percent over the last year

https://www.bls.gov/news.release/ximpim.t07.htm

Your tariffs are 10-25 percent, that means the great workers in the U.S. are paying the bill.

Donald J. Trump @realDonaldTrump

"China is eating the Tariffs." Billions pouring into USA. Targeted Patriot Farmers getting massive Dollars from the incoming Tariffs! Good Jobs Numbers, No Inflation (Fed). China having worst year in decades. Talks happening, good for all!

9:51 PM - 6 Sep 2019 Reply Saturday, September 07, 2019 at 10:06 AM

Plp said in reply to anne... Btw family farmers prefer high demand for their output

Not high subsidies

They know the difference between earned and unearned dollars Reply Saturday, September 07, 2019 at 10:22 AM

Fred C. Dobbs said... Fun fact:

Trump has a favorite number
when he makes big claims: 10,000
https://www.bostonglobe.com/news/politics/2019/09/06/trump-has-favorite-number-when-makes-big-claims/WpS2YPcnjeJQzQchHJLXhP/story.html?event=event25 via @BostonGlobe

Jordan Fabian - Bloomberg - September 6

When President Donald Trump wants to convey that something is a big deal, he often reaches for the same big number: 10,000.

He says it's the number of points the Dow Jones Industrial Average would be up had the Federal Reserve not raised interest rates. It's the number of people attending his rallies -- or the number forced to wait outside because they couldn't get in.

It's also the number of jobs a company plans to create, the headcount of captured Islamic State fighters, the number of migrants in a caravan headed to the U.S., and the Allied casualty count on D-Day.

Sometimes the number is accurate. Other times, it's a wild guess -- or wildly wrong.

Trump on Wednesday predicted the Dow would be up -- another 10,000 points -- if he hadn't embarked on a trade war with China.

"If I wanted to do nothing with China, my stock market -- our stock market -- would be 10,000 points higher than it is right now," Trump told reporters in the Oval Office.

That would be a dramatic rise. With the Dow closing at 26,728 on Thursday, another 10,000 points would represent a 37% increase.

Memorable Number

From a marketing standpoint, there's a great reason to use 10,000: It's memorable.

"He uses this round number in particular because it seems big," said Jonah Berger, marketing professor at the Wharton School of the University of Pennsylvania, which Trump often boasts of attending.

"He wants to convey something is a big problem, or something would be quite different, so he uses a big round number to try and sway his audience," said Berger, author of "Contagious: Why Things Catch On."

Trump has used the number since his 2016 campaign -- in speeches, remarks to reporters and one-on-one interviews -- but it could take on new significance as he seeks to burnish his record with the approach of the 2020 election.

The president has repeatedly sought to use 10,000 to his political advantage, even when it doesn't neatly match reality.

'Horrible People'

For instance, he said in January that Immigration and Customs Enforcement officers last year removed 10,000 known or suspected gang members whom he described as "horrible people." (The agency actually reported arresting that number but removing 5,872 known or suspected gang members in fiscal year 2018.)

The White House declined to comment on Trump's use of 10,000.

The president has other verbal habits. He has often cited self-imposed two week deadlines for major announcements.

While Trump is often faulted by fact-checkers for making false statements, his spokeswoman has said journalists take the president's words too literally.

"I think the president communicates in a way that some people, especially the media, aren't necessarily comfortable with," White House press secretary Stephanie Grisham told the Washington Post in a recent interview. "A lot of times they take him so literally. I know people will roll their eyes if I say he was just kidding or was speaking in hypotheticals, but sometimes he is."

'Truthful Hyperbole'

Trump defended his use of what he called "truthful hyperbole" in his 1987 book "The Art of the Deal," calling it an "innocent form of exaggeration."

"People may not always think big themselves, but they can still get very excited by those who do," Trump wrote. "People want to believe that something is the biggest and the greatest and the most spectacular."

Wittingly or not, Trump has taken to a number that comes up often in history, religion and culture.

The army of the Ten Thousand marched against Artaxerxes II of Persia. During the conquest of Mecca, Muhammad was said to have 10,000 soldiers. The King James Bible has dozens of references to 10,000. Minnesota's nickname is the Land of 10,000 Lakes. A television game show called "The $10,000 Pyramid" debuted in the U.S. in the early 1970s.

But Trump's references typically are rooted in current affairs.

The president used the number in July to talk about attendance at a North Carolina rally where his supporters chanted "Send her back!" after he invoked the name of Representative Ilhan Omar, a Minnesota Democrat.

"We had thousands and thousands of people that wanted to come, and we said, 'Please don't come,'" Trump said. "It held 10,000 people. It was packed. We could've sold that arena 10 times."

Authorities said 8,000 people got into the arena in Greenville, filling it to capacity, according to WITN-TV in North Carolina. About 2,000 were denied entry and between 750 and 1,000 were in an overflow area, the station said, citing police estimates.

Booing Ryan

In July, Trump used the number to attack former House Speaker Paul Ryan after the Wisconsin Republican was quoted in a book saying the president doesn't know how government works.

"I remember a day in Wisconsin -- a state that I won -- where I stood up and made a speech, and then I introduced him and they booed him off the stage -- 10,000 people," Trump told reporters at the White House.

The president appeared to be referring to a December 2016 post-election rally in West Allis, Wisconsin, where he publicly thanked Ryan, who was in the crowd. Audible, but not deafening, boos were heard as Trump tried to quiet his supporters by telling them that Ryan had improved "like a fine wine."

Then there's job creation -- a Cameron LNG liquefied natural gas export facility in Louisiana or an Intel Corp. semiconductor plant in Arizona.

In separate statements, Trump said they'd each create 10,000 jobs.

Bringing Credibility

Whether Trump's use of the number is accurate or not, the specificity can bring credibility to the president's claims, said Manoj Thomas, a behavioral scientist and marketing professor at Cornell University's SC Johnson College of Business.

"Using a number to quantify a claim -- even implausible numbers -- makes it more credible because numbers are concrete," Thomas said. "Claims without any numbers, for example, 'The Dow would be much higher if not for the trade war,' are more difficult for the human mind to instinctively process because the information is abstract and lacks specificity."

Trump could add even more credibility to his claim by making the number even more specific, Thomas said.

For instance, Thomas suggested: "The Dow would be 4,600 points higher if not for the trade war."


Reply Saturday, September 07, 2019 at 09:44 AM

[Sep 07, 2019] People familiar with Chinese economic policymaking have said in recent weeks that Chinese leaders remain interested in reaching a trade deal with the United States, but that they are wary of what appear to be ever-increasing demands from the United States and what they describe as frequent shifts in the American negotiating position.

Sep 07, 2019 | economistsview.typepad.com

Fred C. Dobbs , September 05, 2019 at 03:49 PM

Markets Soar on News of China Talks, but Hopes
for Progress Are Low https://nyti.ms/2LrdVwH
NYT - Ana Swanson and Matt Phillips - September 5

WASHINGTON -- President Trump's decision to renew talks with China in the coming weeks sent financial markets soaring on Thursday, as investors seized on the development as a sign that both sides could still find a way out of an economically damaging trade war.

The rally sent the S&P 500 up more than 1 percent, underscoring just how much financial markets are subsisting on hopes and fears about the trade war. Shares fell through most of August, as Mr. Trump escalated his fight with China and imposed more tariffs, only to snap back on Thursday after news of the talks.

But expectations for progress remain low, and many in the United States and China see the best outcome as a continued stalemate that would prevent a collapse in relations before the 2020 election. Both Mr. Trump and President Xi Jinping of China are under pressure from domestic audiences to stand tough, and the talks will happen after Mr. Trump's next round of punishing tariffs take effect on Oct. 1.

"Continuing to talk soothes markets a little bit," said Eswar Prasad, the former head of the China division at the International Monetary Fund. "But the political cost to making major concessions is, I think, too high for either side."

The skepticism stems in part from what is emerging as a familiar pattern for Mr. Trump, for whom China is both a source of leverage and a potential vulnerability heading into an election year. The president has so far imposed tariffs on more than $350 billion worth of Chinese goods and routinely shifts from blasting China and threatening additional punishment to trying to calm the waters in the face of jittery markets and negative economic news.

Over two weeks, Mr. Trump has called Mr. Xi an enemy of America, ordered companies to stop doing business in China and suggested the United States was in no rush to reach a trade deal. On Sunday, he moved ahead with his threat to eventually tax every golf club, shoe and computer China sends into the United States, placing tariffs on another $112 billion of Chinese goods.

Stock investors have zeroed in on the threat the trade war poses to the economy, buying and selling in tandem with Mr. Trump's trade whims. Thursday's rally was the fifth positive performance for the market in the past six sessions. It brought the S&P 500 to within striking distance -- less than 2 percent -- of its high of 3025.86, reached on July 26.

The coming weeks could result in more of the same, analysts say: tough words when the president wants to rally his base and a temporary cooling off when it seems to be hurting an economy that is one of his main arguments for re-election.

Mr. Trump and his advisers are wary of a potential challenge from Democrats who will try to paint the president as weak on China. Officials are cognizant that striking a deal based on the kind of limited concessions China is currently offering would most likely be a political liability in the president's bid for re-election. Democrats, along with some Republicans, have previously accused Mr. Trump of buckling on China after he reached a deal that allowed ZTE, the Chinese telecom company, to avoid tough American punishment.

Yet as collateral damage from the trade war increases, Mr. Trump is facing pressure to relent. The bond market has been flashing warning signs of a potential recession, and both consumer confidence and the manufacturing sector have slowed.

The trade war is also clearly weighing on the Chinese economy, which is growing at its slowest pace in more than two decades. But China has responded defiantly, imposing retaliatory tariffs on $75 billion worth of American goods. The country is preparing to celebrate the 70th anniversary of its founding on Oct. 1, and analysts say Beijing would be unlikely to make concessions at such a politically delicate moment.

People familiar with Chinese economic policymaking have said in recent weeks that Chinese leaders remain interested in reaching a trade deal with the United States, but that they are wary of what appear to be ever-increasing demands from the United States and what they describe as frequent shifts in the American negotiating position.

The Chinese government continues to insist that it will not accept any agreement that is unequal, or that prevents it from pursuing economic policies that it needs for continued growth.

While both countries have motivation to come to an agreement, each is still insisting the other will be the first to bend.

"China and the US announced new round of trade talks and will work to make substantial progress," Hu Xijin, the editor of the state-run Global Times, wrote on Twitter. "Personally I think the US, worn out by the trade war, may no longer hope for crushing China's will. There's more possibility of a breakthrough between the two sides." ...

[Sep 07, 2019] The number of murders and armed robberies committed by people addicted to methamphetamine is "truly frightening", Western Australia's Chief Justice says.

Sep 07, 2019 | economistsview.typepad.com

Joe , September 06, 2019 at 03:25 AM

Do Immigrants Threaten U.S. Public Safety? - Dallasfed.org


https://www.justice.gov/archive/ndic/pubs13/13853/trans.htm

Mexico. Mexican criminal groups based in Mexico smuggle bulk quantities of methamphetamine via couriers traveling in private and commercial vehicles, usually equipped with hidden compartments, or by foot through and between land POEs along the Southwest Border. These criminal groups also smuggle small shipments (2 kg to 4 kg) via couriers aboard commercial flights and via mail services. Methamphetamine shipments often are transported to stash sites and staging areas, primarily in California and Arizona, before the drug is distributed locally, regionally, or nationally.

Methamphetamine transported from production areas in Mexico to the Southwest Border typically has been smuggled through and between POEs in California; however, recent data indicate that more methamphetamine may now be smuggled through or between POEs in Arizona than other Southwest Border states. According to EPIC seizure data, the combined amount of methamphetamine seizures from 2001 through 2003 at or between POEs in California (1,725 kg) was much higher than the amount seized at or between POEs in Texas (1,145 kg), Arizona (1,120 kg), or New Mexico (60 kg). However, in 2003 the amount seized in Arizona (640 kg) surpassed seizures in the other Southwest Border states including California (593 kg), Texas (484 kg), and New Mexico (16 kg) possibly because of specific law enforcement operations conducted in Arizona (see Figure 11).
-------
Pick an index then call it something vague like crime.

Are these immigrants importing meth? Mostly, immigrants crossing back and forth across the border.

How much crime does meth cause?
---
https://www.abc.net.au/news/2015-02-25/wa-chief-justice-says-ice-problem-truly-frightening/6261310

The number of murders and armed robberies committed by people addicted to methamphetamine is "truly frightening", Western Australia's Chief Justice says.

Justice Wayne Martin said 95 per cent of armed robberies and up to half of all murders could be attributed to people taking methamphetamine, also known as ice or crystal meth.
---
The number I hear is about half of all crime.

So, sure, pick a particular index, generate the result you want, and if it meets the delusional demands of Economist View then it is printed.

I didn't even need to read it, I already know what result he engineered, otherwise it never would have appeared here.

[Sep 03, 2019] Wallerstein on China

Notable quotes:
"... Can China then depend on widening internal demand to maintain its global edge? There are two reasons why not. The present authorities worry that a widening middle stratum could jeopardize their political control and seek to limit it.[a] ..."
"... The second reason, more important, is that much of the internal demand is the result of reckless borrowing by regional banks, which are facing an inability to sustain their investments. If they collapse, even partially, this could end the entire economic edge[b] of China. ..."
Sep 03, 2019 | www.nakedcapitalism.com

From Wallerstein's site, " What About China? " (2017):

A structural crisis is chaotic. This means that instead of the normal standard set of combinations or alliances that were previously used to maintain the stability of the system, they constantly shift these alliances in search of short-term gains. This only makes the situation worse. We notice here a paradox – the certainty of the end of the existing system and the intrinsic uncertainty of what will eventually replace it and create thereby a new system (or new systems) to stabilize realities .

Now, let us look at China's role in what is going on. In terms of the present system, China seems to be gaining much advantage. To argue that this means the continuing functioning of capitalism as a system is basically to (re)assert the invalid point that systems are eternal and that China is replacing the United States in the same way as the United States replaced Great Britain as the hegemonic power. Were this true, in another 20-30 years China (or perhaps northeast Asia) would be able to set its rules for the capitalist world-system.

But is this really happening? First of all, China's economic edge, while still greater than that of the North, has been declining significantly. And this decline may well amplify soon, as political resistance to China's attempts to control neighboring countries and entice (that is, buy) the support of faraway countries grows, which seems to be occurring.

Can China then depend on widening internal demand to maintain its global edge? There are two reasons why not. The present authorities worry that a widening middle stratum could jeopardize their political control and seek to limit it.[a]

The second reason, more important, is that much of the internal demand is the result of reckless borrowing by regional banks, which are facing an inability to sustain their investments. If they collapse, even partially, this could end the entire economic edge[b] of China.

In addition, there have been, and will continue to be, wild swings in geopolitical alliances. In a sense, the key zones are not in the North, but in areas such as Russia, India, Iran, Turkey, and southeastern Europe, all of them pursuing their own roles by a game of swiftly and repeatedly changing sides. The bottom line is that, though China plays a very big role in the short run, it is not as big a role as China would wish and that some in the rest of the world-system fear. It is not possible for China to stop the disintegration of the capitalist system. It can only try to secure its place in a future world-system.

As far as Wallerstein's bottom line: The proof is in the pudding. That said, there seems to be a tendency to regard Xi as all-powerful. IMNSHO, that's by no means the case, not only because of China's middle class, but because of whatever China's equivalent of deplorables is. The "wild swings in geopolitical alliances" might play a role, too; oil, Africa's minerals.

NOTES [a] I haven't seen this point made elsewhere. [b] Crisis, certainly. "Ending the entire economic edge"? I'm not so sure.

[Sep 01, 2019] Iranian Women Fight for Freedom by Uzay Bulut

Sep 01, 2019 | www.gatestoneinstitute.org

• August 29, 2019 at 4:00 am

Three Iranian women held in Tehran's notorious Qarchak prison were sentenced recently to what could amount to more than 10 years in prison. Their "crime"? Failing to wear headscarves, thereby defying the country's Islamic dress code.

The women were apprehended after a video they posted online during International Women's Day went viral. In the clip, they are seen walking bear-headed on a Tehran metro and distributing flowers to female passengers.

"The day will come when women are not forced to struggle," one of them is heard saying, while another expresses hope that one day women in hijabs will be able to walk side-by-side with women who choose not to wear them.

The battle on behalf of a woman's right not to cover her head spurred Iranian-American journalist and award-winning activist Masih Alinejad – author, most recently, of The Wind in My Hair: My Fight for Freedom in Modern Iran -- to found a social-media movement called "My Stealthy Freedom."

[Aug 28, 2019] Are we being manipulated to eventually discard objective reality or at least the concept of it?

Aug 28, 2019 | www.moonofalabama.org

O , Aug 27 2019 17:09 utc | 178

Interesting James Corbett video.
https://www.corbettreport.com/deep-fakes-the-cias-mission-accomplished/

Are we being manipulated to eventually discard objective reality or at least the concept of it?

[Aug 28, 2019] there are far fewer manufacturing workers overall, with about 7.5 million jobs lost since 1980.

Aug 28, 2019 | www.moonofalabama.org

Don Bacon , Aug 27 2019 22:36 utc | 208

@ Formerly T-Bear 203

a farmer has at least 3 PhD qualifications just to contend in the business

No need for a tongue-in-cheek, you're on track, if manufacturing food is akin to other manufacturing.
. . .from last year

August 2018, The fall of employment in the manufacturing sector
Today's manufacturing output is at least 5 percent greater than it was in 2000, but it has become much more capital intensive and much less labor intensive. Accordingly, workers in the sector are more likely to have at least some college education than their counterparts of years past. But there are far fewer manufacturing workers overall, with about 7.5 million jobs lost since 1980.


What is most responsible for the manufacturing job losses? Rising trade with China is often cited as a possible culprit. But competition from China only accounts for about a fourth of the decline in manufacturing during the 2000s. This theory is further eroded by the fact that local markets that did not compete with Chinese imports also saw employment declines.
A skills mismatch -- the gap between the skills workers have and the skills employers need -- has also contributed to the decline of manufacturing employment.
Prime age men and women with less than a high school degree have been hit particularly hard by changes to manufacturing employment. As the manufacturing sector has shifted from low-skilled to high-skilled work, workers who possess higher skill levels (e.g., engineers, computer programmers, software developers, etc.) have become more sought after than before. . . here


And the US supply of STEM graduates for any technical profession seems to be wanting. Meanwhile we must recognize that employment is not directly tied to the economy, given mechanization.

[Aug 27, 2019] Trump s China Trade War Gaslighting Will There Eveh Be a Deal

Notable quotes:
"... That assumption looks to be incorrect. New Deal Democrat sent us the latest post from China Law Blog, written by lawyers who specialize in Chinese law with an eye to helping businesses get set up and operate in China. The post by Dan Harris is every bit as firm as its headline: Repeat After Me: There Will be No US-China Trade Deal . It also contains a good summary of key developments and detail on the various goods targeted. Key sections: ..."
"... But what should you make of President Trump's ordering US companies to immediately start looking for an alternative to China? He can't really do that, can he? No, but in many respects this is exactly what Trump has been doing since the U.S.-China trade war began. Trump cannot literally require American companies to pull out of China, but he can and has made it so difficult that they all but have to leave China. And this is what most of the international lawyers and international trade lawyers at my firm have come to believe has been Trump's plan all along. ..."
"... Every step of the way, Trump has made it all but impossible for China to make a trade deal with the United States, which is why this blog has been consistently clear that there will be no trade deal between the United States and China . If the US-China trade war/cold war were really about trade imbalances, it would have ended long ago with China buying more soybeans and Boeing airplanes from the United States. But from the very beginning, the U.S. has demanded China stop stealing IP and open its markets for foreign companies, and there is just no way China will agree to either of these things. Lead negotiator Robert Lighthizer is without a doubt smart enough to have known this all along. All this leads us to believe that the U.S. plan has always been to force a slow decoupling of the U.S. and China and then work to convince the rest of the democratic world (the EU, Australia, Canada, Latin America, Japan, etc.) to decouple from China, as well. In June, in Does China WANT a Second Decoupling? The Chinese Texts Say That it Does we wrote of how China wants this decoupling, as well. ..."
"... The fact that Trump issues this "order" amidst rising recession fears only highlights how ending U.S.-China trade is at the top of his to-do list. ..."
"... The critical part of the China Law Blog's reading is that the Trump Administration is deadly serious about its two big asks, intellectual property and market access. It's credible to attribute that to Trump's US Trade Representative, Lighthizer. As Lambert put it, Lighthizer is the closest thing this Administration has to a Jim Baker. Lighthizer started at Covington & Burling, then served in the Regan Administration as Deputy USTR before going to Skadden. Lighthizer is as fierce a China hawk as they come and has a long history of saying that the entry of China into the WTO was at the expense of US jobs (see here , for instance) and even making a full-throated defense of protectionism . ..."
"... In April, China made a concession to the US by designating all fetanyl products as controlled substances, in the hope that that would reduce shipments to the US. The DEA has stated that China is the main source of US fentanyl . Fentanyl accounted 18,000 overdose deaths in 2018, one fourth of the total. If you count all synthetic opioids, the toll rises to 28,000. China nevertheless claimed even then that fentanyl shipments to the US were "extremely limited" . ..."
"... Fentanyl featured in the escalation on Friday, and it could conceivably serve as the basis for a national emergency threat (even though, per the discussion earlier, it would have good odds of being overturned). One of Trump's four tweets urged US carriers to do more to halt shipments arriving from China or other destinations (Mexico is believed to be a route for the entry of Chinese fentanyl to the US). ..."
"... In May I had a conversation with a long-time friend. My friend works for a global manufacturer with a household name. He has helped oversee construction of plants around the world. He helps source components from around the world. He told me that "everybody's moving out" (of China). ..."
"... A few short years ago they had the Trans-Pacific Partnership being negotiated. This was nicknamed the "everybody but China" pact as that was its mission – to cut China out of the Pacific. Add to that the "Pivot to Asia" introduced by Obama which was to militarily threaten China and the writing was on the wall for China. They were to be boxed in and shut down. Trump may be the front man now for this effort but all the China-hawks have come out of the woodwork to be let loose in the government. ..."
"... I suppose that the plan is to force US companies to bail out of China and relocate to places like Vietnam, India, Bangladesh, etc. But the question is whether these countries have the infrastructure to support these new factories? ..."
"... I have mentioned before the idea of a multipolar world and I believe that we re seeing it now in action. The US and its vassals will be one pole and another one is forming around China, Iran and Russia. I doubt that the EU will be another as they are following what Trump orders even if reluctantly. There may be another factor. For centuries we have had an economy predicated on growth but I suspect that by the end of this century will will have one based on contraction due to climate change and depletion of resources. Better strap in. It could be a bumpy ride. ..."
Aug 26, 2019 | www.nakedcapitalism.com

Trump has been up to what he seems to like to do best: whipsawing those who might be affected by his plans. On Friday, he put Mr. Market and huge swathes of Corporate America in a tizzy by retaliating against China's tariff increases. China announced that it would impose new tariffs on $75 billion of US goods and the restart of tariffs on autos and auto parts. Trump tweeted that he would increase tariffs on Chinese goods already subject to tariffs: the $250 billion at 25% would go to 30% on October 1and the $300 billion at 10% would go to 15% in phases, on September 1 and December 1. Trump also "hereby ordered" US companies to pull out of China, suggesting that he'd rely on the International Emergency Economic Powers Act of 1977.

Then, as most of you have likely heard, Trump made remarks at the G-7 summit that we widely interpreted as an indicator that he'd back off again, by admitting to regrets about how the trade spat was going. When the press took up that line, Trump doubled down, with the White House releasing a statement that Trump's sole regret was not raising tariffs higher.

Needless to say, the all-too-typical Trump to-ing and fro-ing made for an easy target. From the Washington Post :

Former treasury secretary Lawrence Summers, a veteran of the Clinton and Obama administrations, said the White House's conflicting statements were just the latest in a string of mixed messages that had made it impossible for people to understand its agenda.

"Deeply misguided policy and strategy has been joined for some time by dubious negotiating tactics, with promises not kept and threats not carried out on a regular basis," Summers said in an interview. "We are at a new stage now with very erratic presidential behavior and frequent denials of obvious reality. I know of no U.S. historical precedent."

And despite rousing himself to make a show of his resolve, the Administration did back down on one part of Trump's Friday missives, that of "ordering" US companies to get out of Dodge, um, China. From the Wall Street Journal :

Aides to President Trump said Sunday he has no plans to invoke emergency powers and force companies to relocate operations from China

"What he is suggesting to American businesses," [economic adviser] Mr. [Larry] Kudlow said, is that "you ought to think about moving your operations and your supply chains away from China and secondly, we'd like you to come back home."

Treasury Secretary Steven Mnuchin also weighed in, telling "Fox News Sunday" that the president didn't have plans to invoke emergency powers to force U.S. companies out of China.

"I think what he was saying is he's ordering companies to start looking," Mr. Mnuchin said."

The Journal also pointed out that Trump might have trouble forcing companies to exit:

Both Messrs. Mnuchin and Kudlow said that the president could theoretically force U.S. companies to leave China by invoking a law known as the International Emergency Economic Powers Act of 1977, or IEEPA .

According to the Congressional Research Service, IEEPA can be used to deal with "any unusual and extraordinary threat" outside the U.S. "to the national security, foreign policy or economy of the United States, if the president declares a national emergency with respect to such threat."

The president is required "in every possible instance" to consult with Congress before exercising authorities granted by IEEPA, and to specify in a report to lawmakers why the circumstances constitute a threat and why the actions are necessary, CRS said in a briefing paper on the law issued earlier this year. The president must submit follow-up reports every six months .

Rod Hunter, a partner at Baker McKenzie and expert on international trade, said Mr. Trump could declare a state of emergency and issue the order, but that doesn't mean it will stand.

"Congress could effectively override such a decision, and private parties would certainly challenge the action as an unconstitutional takings, a violation of due process rights and beyond the statutory authority granted to the president by Congress," Mr. Hunter said in an email.

Mind you, just like Brexit, there is a way to do what Trump wants to do that would not be so destructive and shambolic. Trump's China policy appears to be intended to make American more economically self-sufficient so as to improve the prosperity of US workers, as well as curb a competing imperialist.

But as we've described at some length in earlier posts, restoring America's manufacturing capabilities isn't just a matter of weaning itself off cheap Chinese imports. The US has ceded a tremendous amount of know-how, from the factory floor on up. Getting that back is a generation-long undertaking, requiring commitment to a national strategy that would include significant government investment in fundamental research, renewed emphasis on education, including much cheaper higher education and vocational training for those that aren't suited or inclined to go to college, and a reorientation of government spending and subsidies to favor productive sectors over the connected. Not only would it be difficult to get any Administration to embrace open industrial policy, particularly one that would break a lot of rice bowls (such as in our hugely wasteful arms industry and our bloated financial sector), maintaining it beyond even a two-term Presidency would be an even taller order.

But where is the Trump tariff cage match likely to wind up? Given how often Trump has backed off when Mr. Market has had a hissy, most commentator appear to have assumed before Friday's tit for tat that Trump would back down, if nothing else, in the form of allowing a lot of exceptions, and the US and China would find a way for Trump to get enough concessions from China that he could declare peace with honor.

That assumption looks to be incorrect. New Deal Democrat sent us the latest post from China Law Blog, written by lawyers who specialize in Chinese law with an eye to helping businesses get set up and operate in China. The post by Dan Harris is every bit as firm as its headline: Repeat After Me: There Will be No US-China Trade Deal . It also contains a good summary of key developments and detail on the various goods targeted. Key sections:

The US-China Trade War Is and Will be the New Normal

I hate to say we told you so, but for nearly a year, WE TOLD YOU SO. Since October, 2018 we have been all but screaming at anyone and everyone who has product made in China and sold into the United States to get out of China fast, if at all possible. We say this and we set out the below timeline to prove this not so much to show that we have been right all along, but to try to convince you that we are right when we now say there will be no resolution to the US-China trade war for a very long time and you need to act accordingly.

The below is our timeline/proof of our having predicted a straight-line decline in US-China trade relations

But what should you make of President Trump's ordering US companies to immediately start looking for an alternative to China? He can't really do that, can he? No, but in many respects this is exactly what Trump has been doing since the U.S.-China trade war began. Trump cannot literally require American companies to pull out of China, but he can and has made it so difficult that they all but have to leave China. And this is what most of the international lawyers and international trade lawyers at my firm have come to believe has been Trump's plan all along.

Every step of the way, Trump has made it all but impossible for China to make a trade deal with the United States, which is why this blog has been consistently clear that there will be no trade deal between the United States and China . If the US-China trade war/cold war were really about trade imbalances, it would have ended long ago with China buying more soybeans and Boeing airplanes from the United States. But from the very beginning, the U.S. has demanded China stop stealing IP and open its markets for foreign companies, and there is just no way China will agree to either of these things. Lead negotiator Robert Lighthizer is without a doubt smart enough to have known this all along. All this leads us to believe that the U.S. plan has always been to force a slow decoupling of the U.S. and China and then work to convince the rest of the democratic world (the EU, Australia, Canada, Latin America, Japan, etc.) to decouple from China, as well. In June, in Does China WANT a Second Decoupling? The Chinese Texts Say That it Does we wrote of how China wants this decoupling, as well.

This latest Trump "order" does not have the force of law, so in that respect it is not an order at all. But in most other respects it is. This order indicates Trump's passionate desire to rid the United States of what he sees as the China scourge . More importantly, it is yet another clear signal that he will continue to escalate this war with China until such time as he considers the United States to be victorious. The fact that Trump issues this "order" amidst rising recession fears only highlights how ending U.S.-China trade is at the top of his to-do list.

So in terms of what this means for your business, it means that you must stop believing there will be a solution to the trade war that will allow you to go back to doing business with China the way you used to do business with China. You need to instead recognize that this situation is the New Normal as between the United States and China and that, if anything, things are way more likely to get worse than they are to get better.

I'm persuaded by this point of view because these writers have adopted the perspective that we've found to be very useful in other geopolitical negotiations, which is to look at the bargaining position of both sides and see if there is any overlap. If there isn't, there won't be an agreement unless one of both parties makes a significant concession.

One reason that other observers have likely missed what the China Law Blog discern is that there's an Anglo-American tendency to assume that differences can be settled and a deal can be had. But as Sir Ivan Rogers pointed out with Brexit, and you have similar dynamics with the US and China, there aren't precedents for trade deals where the two sides want to get further apart rather than closer. Sir Ivan is of the point of view that the desire to disengage makes it much harder to come to terms.

The critical part of the China Law Blog's reading is that the Trump Administration is deadly serious about its two big asks, intellectual property and market access. It's credible to attribute that to Trump's US Trade Representative, Lighthizer. As Lambert put it, Lighthizer is the closest thing this Administration has to a Jim Baker. Lighthizer started at Covington & Burling, then served in the Regan Administration as Deputy USTR before going to Skadden. Lighthizer is as fierce a China hawk as they come and has a long history of saying that the entry of China into the WTO was at the expense of US jobs (see here , for instance) and even making a full-throated defense of protectionism .

A part of the trade spat that hasn't gotten the attention it warrants and seems to confirm the China Law Blog's thesis is the arm-wrestling over China's fetanyl exports to the US. It's not hard to see that this is an inherently important issue, since as I understand it, fentanyl is so potent that it is very easy to overdose on it, making it markedly more dangerous than other addictive drugs. In other words, the high death rate of fentanyl may make reducing supply a more effective strategy than it normally is in "the war on drugs". Substitution with just about any other controlled substance would be less dangerous. And if Trump were to make a dent in this problem, it would serve as a PR offset to some of the costs of his China strategy, like lost soyabean exports.

In April, China made a concession to the US by designating all fetanyl products as controlled substances, in the hope that that would reduce shipments to the US. The DEA has stated that China is the main source of US fentanyl . Fentanyl accounted 18,000 overdose deaths in 2018, one fourth of the total. If you count all synthetic opioids, the toll rises to 28,000. China nevertheless claimed even then that fentanyl shipments to the US were "extremely limited" .

On August 2, Trump said Xi had welshed on his promise to halt fentanyl shipments . China objected, saying it had made "unprecedented efforts" and the US was to blame for its opioid crisis. On August 21, the US sanctioned three Chinese individuals it depicted as drug kingpins, eliciting more unhappy noises from China.

Fentanyl featured in the escalation on Friday, and it could conceivably serve as the basis for a national emergency threat (even though, per the discussion earlier, it would have good odds of being overturned). One of Trump's four tweets urged US carriers to do more to halt shipments arriving from China or other destinations (Mexico is believed to be a route for the entry of Chinese fentanyl to the US).

In other words, it's not clear where this row ends, but there doesn't seem to be a path to depressurization, much the less resolution.

Update 5:00 AM EDT: Just as this post went live, the Wall Street Journal reported Trump Says China Called U.S. to 'Get Back to the Table' After Latest Tariff Spat . Trump is still hostage to Mr. Market, so it's awfully useful for him to talk up negotiations. From the story:

President Trump said China called U.S. officials on Sunday evening and said "let's get back to the table," a day after the White House said the president regretted not escalating tariffs further on Chinese goods.

Speaking to reporters alongside Egyptian President Abdel Fattah Al Sisi, Mr. Trump called the discussions a "very positive development." .

The Chinese government didn't immediately respond to Mr. Trump's remarks or to requests to corroborate the president's account of a phone call having taken place. Chinese government officials have repeatedly said that Beijing wants to negotiate differences on trade. On Monday, Beijing's lead trade negotiator, Vice Premier Liu He, told a conference that China still wants to continue trade talks with the U.S. following heightened tensions in the past few days.


DSB , August 26, 2019 at 8:58 am

In May I had a conversation with a long-time friend. My friend works for a global manufacturer with a household name. He has helped oversee construction of plants around the world. He helps source components from around the world. He told me that "everybody's moving out" (of China).

The ones who can have not waited for Trump's message of Friday.

The Rev Kev , August 26, 2019 at 9:09 am

A few short years ago they had the Trans-Pacific Partnership being negotiated. This was nicknamed the "everybody but China" pact as that was its mission – to cut China out of the Pacific. Add to that the "Pivot to Asia" introduced by Obama which was to militarily threaten China and the writing was on the wall for China. They were to be boxed in and shut down. Trump may be the front man now for this effort but all the China-hawks have come out of the woodwork to be let loose in the government.

I suppose that the plan is to force US companies to bail out of China and relocate to places like Vietnam, India, Bangladesh, etc. But the question is whether these countries have the infrastructure to support these new factories? Do they have a trained, educated workforce to man these factories? Is there a will to move to such places? As far as those countries are concerned, these new companies could be seen as a two-edged sword. Yes they will bring investment and opportunities in those countries. But how will they know if a Trump or someone like him later on will not order those factories out if there is a dispute or if the US demands that those countries change their laws and open themselves up to financial exploitation? Trump is demanding the same of China right now. And will Trump demand that all the other western countries move out of China?

I have mentioned before the idea of a multipolar world and I believe that we re seeing it now in action. The US and its vassals will be one pole and another one is forming around China, Iran and Russia. I doubt that the EU will be another as they are following what Trump orders even if reluctantly. There may be another factor. For centuries we have had an economy predicated on growth but I suspect that by the end of this century will will have one based on contraction due to climate change and depletion of resources. Better strap in. It could be a bumpy ride.

Susan the other` , August 26, 2019 at 11:45 am

This is all pretty interesting. More theater than trade. And the reason is that there is no demand. Demographics has a lot to do with it as well. It might not make any difference now how much a company can cut costs by moving to SE Asia because nobody will be very eager to buy more crap anyway. And manufacturing cannot up and move cheaply if they have to reinvent and retool their processes to make them more environmentally acceptable. It's a sea change. And a tap-dance.

Ian Perkins , August 26, 2019 at 9:18 am

According to this article," The DEA has stated that China is the main source of US fentanyl. " I followed the link, and found "The DEA has said China is a main source of fentanyl and other synthetic opioids." Which I take as meaning that even if the US could totally shut down Chinese synthetic opioid production, someone will still be making and supplying it.

grizziz , August 26, 2019 at 11:42 am

So, if the facts as given above are reconfigured, all it would take is for the Chinese producers of synthetic opioids to pay the US patent holders their due. Problem solved! All kidding aside, the demands to get intellectual property paid for requires a very pliant judicial system to actually recognize that an idea should be rightfully owned by a person.

Individual agency is a product of 'enlightenment' thinking which opened the pathway for an idea to be the creation of a person who willed the idea into existence. A few steps later, a corporation becomes a person and then a group of people can somehow own a single idea and be able to rent that idea out. To think that the Chinese would accept this cockamamie/historically embedded/English common law idea would be to deny their own culturally based motivated reasoning.

I don't know how this situation will be resolved, but it is quite laughable that the diversion through tariffs of IP revenues which in US legal logic should be paid to Corporations is actually going to go to the US Treasury.

Ptb , August 26, 2019 at 9:46 am

"All this leads us to believe that the U.S. plan has always been to force a slow decoupling of the U.S. and China and then work to convince the rest of the democratic world (the EU, Australia, Canada, Latin America, Japan, etc.) to decouple from China, as well"

That is about right, and I do not doubt that this is the desire of Trump's negotiating team. Nor do I doubt that they can easily steer talks to fail as described (by asking for concessions on market access favorable to the US side, AND by refusing to back down on Huawei etc).

However, while effectively forcing a decoupling of China and US is straightforward, controlling its speed is not. Pull the plug too fast (which China can threaten to accelerate), and some big US companies eat it. While Lighthizer and friends may be willing to pay that price, it will make a lot of others very nervous.

Then, perhaps more importantly, is forcing the rest of the world to follow suit (or else there is no point). JP, ROK, DE (the high tech suppliers besides US) all trade at least as much with China as US. The world market buying Chinese made goods is also bigger than the US. It would take some skillful diplomacy to make it happen. This is not only beyond the level of the Trump admin, but I would say all US administrations since the year 2000, with the Iran deal maybe the only exception I can think of.

China will end up defending itself by getting the overly aggressive and self-discrediting Team Trump reelected. By openly provoking a small proxy conflict for example. Trump gets to do his Ronald Reagan act, which is what his audience wants. It will be a weird political symbiosis. (an oversized personality can't survive without a suitably inflated enemy, and Joe Biden is no Hillary Clinton. The media will play along – such drama is the only thing keeping them in business now.)

Anyway, if there is a counterbalancing force to prevent this, I would think it is wall street.

Frank Little , August 26, 2019 at 10:04 am

Apparently the US federal workers pension plan has started investing in index funds which include some Chinese companies that have been in Trump & Co's target list. From the FT this morning:

The letter -- a copy of which was seen by the Financial Times -- said an impending investment shift by the FRTIB would mean that about $50bn in US government pensions becomes exposed to the "severe and undisclosed" risks of being invested in selected Chinese companies.

The letter, dated August 26, was copied to senior US officials including Mike Pompeo, US secretary of state, and Steven Mnuchin, Treasury secretary.

"The Federal Retirement Thrift Investment Board made a short-sighted -- and foolish -- decision to effectively fund the Chinese government and Communist party's efforts to undermine US economic and national security with the retirement savings of members of the US Armed Services and other federal employees," Mr Rubio told the Financial Times.

One thing I remember from early on in this dispute was the US wanting more opportunities to invest in the Chinese market beyond just exports/manufacturing. If pension funds are getting involved I would think that private investors would like to do the same thing, which would make long-term decoupling more difficult, especially if US businesses also want to sell things to people in China even if those things are made elsewhere.

As always your post was very informative and helpful and I certainly believe that pulling the US out of China is the goal of this whole trade dispute. I just wonder if things like this will put a damper on their plans.

[Aug 26, 2019] The US accounts for only 10 per cent of global trade and 15 per cent of global GDP but half of trade invoices and two-thirds of global securities issuance

Aug 26, 2019 | www.moonofalabama.org

james , Aug 25 2019 22:00 utc | 39

@34 vk....

i just re-read all your posts on the last thread.. U.S. Decoupling From China Forces Others To Decouple From U.S. thanks for those posts.. they were very informative! there was no mention of usa going off gold in that same time frame - 1972 area.. i was mildly curious about your thoughts on that and gold in general.. it seems china, india and russia continue to acquire it...i am not a gold bug and don't want to detract from the many informative ideas you bring in the last thread..

here is a quote from your first link @34.. "The US accounts for only 10 per cent of global trade and 15 per cent of global GDP but half of trade invoices and two-thirds of global securities issuance, the BoE governor said. As a result, "while the world economy is being reordered, the US dollar remains as important as when Bretton Woods collapsed" in 1971." this is what i was trying to tell grieved in the previous thread... the usa mimics a bank and this is a lot of it's gdp and growth - in derivatives, currency exchange, and etc. etc. banking / wall st stuff.. the usa has also relied on the imf / world bank providing the loans in us$ thru wall st.. i think this game is coming to an end, as more and more see it for what it is..

i want to ask you what you think the way forward is here, given mark carney and trumps comments at this juncture... what do you envision as a way forward??

vk , Aug 25 2019 20:19 utc | 34

Why neither Trump's "decoupling" nor Carney's "SHC" strategies will work:

It's all going pear-shaped

Capitalism is the first system where wealth gains life, becomes a consicious subject. It doesn't matter which country produces what and which country prints what: all it matters is the profit rate. Since capitalism reduces all forms of social labor into an abstract substance called "value", they only difference it sees is quantitative: more or less value. Hence capitalism is a system that can be better illustrated as an unstoppable pump of labor and natural resources (labor is only labor when natural matter is transformed on the human image) -- it needs infinite growth to exist (as Marx demonstrated in book II).

Neither Trump's nor Carney's plans will solve capitalism's profitability crisis. Money doesn't have a race or gender, so just exchanging the nationality of the global elite and of the factory worker won't solve the problem.

Globalisation has grown to a halt after 2008 crisis ; what we're seeing now is a continuation of that crisis -- in a scenario very similar to the 1930s. Now, even the American alliance is crumbling, for the simple fact there's not enough for every capitalist nation . The 1929 crisis was only solved by WWII; however, this time we have ICBMs and nukes: total war won't solve capitalism's problems either.

[Aug 26, 2019] China Did Not Trick the US -- Trade Negotiators Served Corporate Interests

Aug 19, 2019 | economistsview.typepad.com

anne , August 23, 2019 at 12:37 PM

http://cepr.net/publications/op-eds-columns/china-did-not-trick-the-us-trade-negotiators-served-corporate-interests

August 19, 2019

China Did Not Trick the US -- Trade Negotiators Served Corporate Interests
By Dean Baker

The New York Times ran an article * last week with a headline saying that the 2020 Democratic presidential contenders faced a serious problem: "how to be tougher on trade than Trump." Serious readers might have struggled with the idea of getting "tough on trade." After all, trade is a tool, like a screwdriver. Is it possible to get tough on a screwdriver?

While the Times's headline may be especially egregious, it is characteristic of trade coverage which takes an almost entirely Trumpian view of the topic. The media portray the issue of some countries, most obviously China, benefiting at the expense of the United States. Nothing could be more completely at odds with reality.

China has a huge trade surplus with the United States, about $420 billion (2.1 percent of GDP) as of 2018. However, this doesn't mean that China is winning at the expense of the United States and because of "stupid" trade negotiators, as Trump puts it.

The U.S. trade deficit with China was not an accident. Both Republican and Democratic administrations signed trade deals that made it easy to manufacture goods in China and other countries, and then export them back to the United States.

In many cases, this meant that large U.S. corporations, like General Electric and Boeing, outsourced parts of their operations to China to take advantage of low-cost labor there. In other cases, retailers like Walmart set up low-cost supply chains so that they could undercut their competitors in the U.S. market.

General Electric, Boeing, Walmart and the rest did not lose from our trade deficit with China. In fact, the trade deficit was the result of their efforts to increase their profits. They have little reason to be unhappy with the trade deals negotiated over the last three decades.

It is a very different story for workers in the United States. As a result of the exploding trade deficit, we lost 3.4 million manufacturing jobs between 2000 and 2007, 20 percent of the workers in the sector. This is before the collapse of the housing bubble led to the Great Recession. We lost 40 percent of all unionized jobs in manufacturing.

This job loss not only reduced the pay of manufacturing workers, but as these displaced workers flooded into other sectors, it put downward pressure on the pay of less-educated workers generally. This is a pretty awful story, but it is not a story of China tricking our so-called stupid negotiators; it is a story of smart negotiators who served well the interest of corporations.

For some reason, the media always accept the Trumpian narrative that the large trade deficits the U.S. runs with China (and most of the rest of the world) were the result of other countries outsmarting our negotiators, or at least an accidental result of past trade deals. The media never say that large trade deficits were a predictable outcome of a trade policy designed to serve the wealthy.

The fact that trade is a story of winners and losers within countries, rather than between countries, is especially important now that our trade conflicts are entering a new phase, especially with China. While not generally endorsing Trump's reality TV show tactics, most reporting has taken the position that "we" in the U.S. have genuine grounds for complaint with China.

The complaints don't center on the under-valuation of China's currency, which is a problem for manufacturing workers. Rather, the issue that takes center stage is the supposed theft by China of our intellectual property.

While this sort of claim is routinely asserted, the overwhelming majority of people in the United States have never had any intellectual property stolen by China. It is companies like Boeing, GE, Pfizer and Merck that are upset about China not respecting their patent and copyright claims, and they want the rest of us to have a trade war to defend them.

If the goals of trade policies were put to a vote, these companies would be hugely outnumbered. However, they can count on the strong support of the media in both the opinion pages, and more importantly, the news pages. The issue is entirely framed in their favor, and dissenting voices are as likely to be heard as in the People's Republic of China.

There is a lot at stake in preserving the myth that ordinary workers were hurt as just an accidental byproduct of globalization. The story is that it just happens to be the case that hundreds of millions of people in the developing world are willing to do the same work as our manufacturing workers for a lot less money.

Yes, the loss of millions of manufacturing jobs is a sad story, but is just part of the picture. There are also millions of smart ambitious people in the developing world who are willing to do the same work as our doctors, dentists, lawyers and other professions for a lot less money.

But the people who design trade policy have made sure that these people don't have the opportunity to put the same downward pressure on our most highly paid workers, as did their counterparts working in families. And, for what it's worth, the trade model works the same when we're talking about doctors as manufacturing workers. Less pay for U.S. doctors means lower cost health care, just as lower pay for textile workers means cheaper clothes.

The key point is that winners in the global economy, along with the big corporations, got their good fortune because they rigged the process, not because of anything inherent in the nature of globalization. (This is the point of my book Rigged: How the Rules of Globalization and the Modern Economy Were Structured to Make the Rich Richer. ** )

On this basic point, the media have no more interest in truth than Donald Trump. Hence, we can expect further media parroting about being "tough" on trade.

* https://www.nytimes.com/2019/08/10/us/politics/democrats-trade-trump.html

** https://deanbaker.net/images/stories/documents/Rigged.pdf

[Aug 26, 2019] China's response so far has been fairly modest and measured, at least considering the situation

Notable quotes:
"... Still, even if Trump isn't making sense, will China give in to his demands? The short answer is, "What demands?" Trump mainly seems exercised by China's trade surplus with America, which has multiple causes and isn't really under the Chinese government's control. ..."
"... Others in his administration seem concerned by China's push into high-technology industries, which could indeed threaten U.S. dominance. But China is both an economic superpower and relatively poor compared with the U.S.; it's grossly unrealistic to imagine that such a country can be bullied into scaling back its technological ambitions ..."
"... Which brings us to the question of how much power the U.S. really has in this situation. ..."
"... So while Trump's tariffs certainly hurt the Chinese, Beijing is fairly well placed to counter their effects. China can pump up domestic spending with monetary and fiscal stimulus; it can boost its exports, to the world at large as well as to America, by letting the yuan fall. ..."
"... At the same time, China can inflict pain of its own. It can buy its soybeans elsewhere, hurting U.S. farmers. As we saw this week, even a mostly symbolic weakening of the yuan can send U.S. stocks plunging. ..."
"... And America's ability to counter these moves is hindered by a combination of technical and political factors. The Fed can cut rates, but not very much given how low they are already. We could do a fiscal stimulus, but having rammed through a plutocrat-friendly tax cut in 2017, Trump would have to make real concessions to Democrats to get anything more -- something he probably won't do. ..."
"... So Trump is in a much weaker position than he imagines, and my guess is that China's mini-devaluation of its currency was an attempt to educate him in that reality. But I very much doubt he has learned anything. His administration has been steadily hemorrhaging people who know anything about economics, and reports indicate that Trump isn't even listening to the band of ignoramuses he has left. ..."
Aug 26, 2019 | economistsview.typepad.com

anne , August 23, 2019 at 12:38 PM

https://www.nytimes.com/2019/08/08/opinion/trump-china-trade.html

August 8, 2019

China Tries to Teach Trump Economics
But he doesn't seem to be learning.
By Paul Krugman

If you want to understand the developing trade war with China, the first thing you need to realize is that nothing Donald Trump is doing makes sense. His views on trade are incoherent. His demands are incomprehensible. And he vastly overrates his ability to inflict damage on China while underrating the damage China can do in return.

The second thing you need to realize is that China's response so far has been fairly modest and measured, at least considering the situation. The U.S. has implemented or announced tariffs on virtually everything China sells here, with average tariff rates not seen in generations. The Chinese, by contrast, have yet to deploy anything like the full range of tools at their disposal to offset Trump's actions and hurt his political base.

Why haven't the Chinese gone all out? It looks to me as if they're still trying to teach Trump some economics. What they've been saying through their actions, in effect, is: "You think you can bully us. But you can't. We, on the other hand, can ruin your farmers and crash your stock market. Do you want to reconsider?"

There is, however, no indication that this message is getting through. Instead, every time the Chinese pause and give Trump a chance to rethink, he takes it as vindication and pushes even harder. What this suggests, in turn, is that sooner or later the warning shots will turn into an all-out trade and currency war.

About Trump's views: His incoherence is on view almost every day, but one of his recent tweets was a perfect illustration. Remember, Trump has been complaining nonstop about the strength of the dollar, which he claims puts America at a competitive disadvantage. On Monday he got the Treasury Department to declare China a currency manipulator, which was true seven or eight years ago but isn't true now. Yet the very next day he wrote triumphantly that "massive amounts of money from China and other parts of the world is pouring into the United States," which he declared "a beautiful thing to see."

Um, what happens when "massive amounts of money" pour into your country? Your currency rises, which is exactly what Trump is complaining about. And if lots of money were flooding out of China, the yuan would be plunging, not experiencing the trivial (2 percent) decline that Treasury condemned.

Oh well. I guess arithmetic is just a hoax perpetrated by the deep state.

Still, even if Trump isn't making sense, will China give in to his demands? The short answer is, "What demands?" Trump mainly seems exercised by China's trade surplus with America, which has multiple causes and isn't really under the Chinese government's control.

Others in his administration seem concerned by China's push into high-technology industries, which could indeed threaten U.S. dominance. But China is both an economic superpower and relatively poor compared with the U.S.; it's grossly unrealistic to imagine that such a country can be bullied into scaling back its technological ambitions .

Which brings us to the question of how much power the U.S. really has in this situation.

America is, of course, a major market for Chinese goods, and China buys relatively little in return, so the direct adverse effect of a tariff war is larger for the Chinese. But it's important to have a sense of scale. China isn't like Mexico, which sends 80 percent of its exports to the United States; the Chinese economy is less dependent on trade than smaller nations, and less than a fifth of its exports come to America.

So while Trump's tariffs certainly hurt the Chinese, Beijing is fairly well placed to counter their effects. China can pump up domestic spending with monetary and fiscal stimulus; it can boost its exports, to the world at large as well as to America, by letting the yuan fall.

At the same time, China can inflict pain of its own. It can buy its soybeans elsewhere, hurting U.S. farmers. As we saw this week, even a mostly symbolic weakening of the yuan can send U.S. stocks plunging.

And America's ability to counter these moves is hindered by a combination of technical and political factors. The Fed can cut rates, but not very much given how low they are already. We could do a fiscal stimulus, but having rammed through a plutocrat-friendly tax cut in 2017, Trump would have to make real concessions to Democrats to get anything more -- something he probably won't do.

What about a coordinated international response? That's unlikely, both because it's not clear what Trump wants from China and because his general belligerence (not to mention his racism) has left America with almost nobody willing to take its side in global disputes.

So Trump is in a much weaker position than he imagines, and my guess is that China's mini-devaluation of its currency was an attempt to educate him in that reality. But I very much doubt he has learned anything. His administration has been steadily hemorrhaging people who know anything about economics, and reports indicate that Trump isn't even listening to the band of ignoramuses he has left.

So this trade dispute will probably get much worse before it gets better.

Plp -> anne... , August 24, 2019 at 12:20 PM
As dean points out Liberals aren't learning from Chinese policy triumphs either

Denialism isn't just a reactionary character flaw

Plp -> Plp... , August 24, 2019 at 12:21 PM
Imagine communists party hacks running the most successful economic development op in human history
point -> Plp... , August 24, 2019 at 07:00 PM
but, but, that conclusion cannot be reached within the space spanned by our assumptions, therefore it cannot happen.
point -> point... , August 25, 2019 at 04:49 AM
:)
ilsm -> anne... , August 25, 2019 at 08:15 AM
Conscience of a "liberal"?

""You think you [Trump] can bully us [Xi]. But you can't. We, on the other hand, can ruin your farmers and crash your stock market. Do you want to reconsider?""

Krugman is putting his "liberal" thinking in to Xi's mind.

US farmers are the darling of the "liberal"? I suspect not so much unless to oppose Trump.

To see the mechanism that China could crash the stock market requires some thinking.

How could China do such a thing? Tariffs on $100B (in a $19,000B economy) in US exports is emotional to the exchanges. Dumping US debt would raise interest rates and make T Bills attractive over stocks, which is not a bad thing. The "liberals" know a 'deplorable' 36000 Dow is a dream. Then what does China do with all those USD?

The issue is a lot of "liberals" do not want Trump to succeed in efforts to reverse the MNC expulsion of labor from the US to developing countries.

I look forward to Trump asking the DNC select why he or she "wants Xi to win over labor in the US?"

The underlying loser in the Trump scheme are the MNC's so will the DNC go all in for MNC's at the expense of the worker?

Don't surprise me, none!

Paine -> ilsm... , August 26, 2019 at 05:06 AM
Trump has no considered
long range plan
Just goals and tactics
Both chosen largely
for show
And ameroca's great white hero story line
Paine -> Paine... , August 26, 2019 at 05:09 AM
The MNCs are not losing

It's global developments
they watch emerge
Largely
Create and eclectically react to

anne , August 23, 2019 at 12:41 PM
https://glineq.blogspot.com/2019/08/nostalgia-for-past-that-never-was-part.html

August 8, 2019

Nostalgia for a past that never was; Part 1 review of Paul Collier's "The future of capitalism"

Paul Collier's new book "The future of capitalism" is a very hard book to review. It is short (215 pages) but it covers an enormous area, from social and economic interpretation of the past seventy years in the West, to pleas for "ethical" companies, "ethical" families and even an "ethical" world, to a set of proposals for reform in advanced economies.

The most uncharitable assessment would be to say that, at times, the book comes close (I emphasize "close") to nationalism, "social eugenics", "family values" of the moral majority kind, and conservativism in the literal sense of the word because it posits an idealized past and exhorts us to return there. But one could also say that its diagnosis of the current ills is accurate and remarkably clear-sighted. Its recommendations are often compelling, sophisticated and yet common-sensical.

I have therefore decided to divide my review in two parts. In this part I will explain the points, mostly methodological and historical, on which I disagree with Collier. In the second part, I will discuss the diagnoses and recommendations on which I mostly agree.

Pragmatism. Collier positions himself as a "pragmatist" battling both (1) ideologues: Utilitarians, Rawlsian (who are accused, somewhat strangely, of having introduced identity politics) and Marxists; and (2) populists who have no ideology at all but simply play on people's emotions. All three kinds of ideologies are wrong because they follow their script which is inadequate for current problems while populists do not even care to make things better but only to rule and have a good time. It is only a pragmatic approach that, according to Collier, makes sense.

Pragmatism however is an ideology like any other. It is wrong to believe oneself exempt from ideological traps if one claims to be a "pragmatist". Pragmatism collects whatever are the ruling ideologies today and rearranges them: it provides an interpretative framework like any other ideology. Pragmatists are, as Keynes said in a similar context "practical men, who believe themselves to be quite exempt from any intellectual influences, [but] are usually the slaves of some defunct economist [or ideologue; my addition]."

Adam Smith. The second building block of Collier book is based on his interpretation of Adam Smith, which has become more popular recently and tries to "soften" the hard edge of the Adam Smith of the "Wealth of Nations" (self-interest, profit, and power) by a more congenial Smith from "The Theory of Moral Sentiments". This is an old debate that goes almost 200 years back ("Die Adam Smith Frage").

There are, I think, if not two Smiths, then one Smith for two sets of circumstances: in TMS, it is the Smith for our behavior with family, friends and community; in the WoN, it is the Smith of economic life, our behavior as "economic agents". I discuss this in "Capitalism, Alone". David Wootton in "Power, Pleasure and Profit" very persuasively makes the same point. And even Collier says exactly the same thing towards the end of his book, but in the early parts he argues that the Adam Smith of TMS applies to economics as well.

Now, for an economist only the Smith from the WoN matters. Economists do not claim (or should not claim) to have particularly valuable insights regarding how people behave outside of economics. So it is fully consistent for economists to use a model of Smith's homo economicus who is pursuing monetary gains only, or more broadly, his own utility only. That of course does not exclude, as Collier and some other writers (e.g., Peter Turchin) seem to believe, cooperation with others. It is obvious that many of our monetary objectives are better achieved through cooperation: I am better off cooperating with people at my university than setting my own university. But whether I do one or the other, I am pursuing my own selfish interest. I am not doing things for altruistic reasons -- which perhaps I might do in my interactions with family or friends.

My point in "Capitalism, Alone" is that under hyper-commercialized globalization Smith's economic sphere is rapidly expanding and "eating up" the sphere where the Smith of TMS applies. Commodification "invades" family relations and our leisure time. Both Collier and I agree on that. But while I think that this is an inherent feature of hyper-commercialized globalization, Collier believes that the clock can be turned back to an "ethical world" which existed in the past while somehow keeping globalization as it is now. This is an illusion and leads me to Collier's nostalgia.

Social-democracy. In Collier's view of the Golden Age (1945-75), social-democracy that brought it about did this for ethical reasons. In several places he repeats more of less this breathtaking sentence "[Roosevelt] was elected because people recognized the New Deal was ethical". He argues that the origin of social-democracy lies in a (nice) co-operative movement, not that the reforms in capitalism after WW1 and WW2 were the product of a century of often violent struggle of social democratic parties to improve workers' conditions. It is not because ethical leaders decided suddenly to make capitalism "nicer" but because the two world wars, the Bolshevik revolution, the growth of social-democratic and communist parties, and their links with powerful trade unions, exacted the change of course from bourgeoisie under the looming threat of social disorder and expropriation. So it is not through the benevolence of the right that capitalism was transformed, but because the upper classes, chastised by past experience, decided to follow their own enlightened self-interest: give up some in order to preserve more. (For similar interpretations, see Samuel Moyn, Avner Offer,)

This difference in the interpretations of history is important because Collier's view applied to today basically calls for ethical rulers -- to somehow appear. This is why at the end of the book he discusses how political leaders should be elected (not by party members or primaries, but by the elected representatives of their parties). My interpretation implies that unless there are strong social forces that would push back financial sector excesses, tax evasion, and high inequality nothing will be changed. What matters is not ethics or ethical leaders but group/class interest and relative power.

The facts. And finally the Arcadia of the trente glorieuses * when Collier holds that moral giants strode the Earth, companies cared about workers, families were "full" and "ethical", never really existed, at least not in the way it is described in the book. Yes, like many others I have pointed out that the trente glorieuses were very good years for the West both in terms of growth and surely in terms of narrowing of wealth and income inequalities. But they were no Arcadia and in many respects they were much worse than the present.

The period of Collier's "ethical family" in which "the husband was the head" when every member cared for each other, and several generations lived together, was a hierarchical patriarchy that even legally forbid any other types of family-formation. (I remember that in my high school in Belgium, only fathers were allowed to sign off on pupils' grades or school absences. Not mothers.)

In the USA, the Golden Age was the age of social mimicry and conservatism, widespread racial discrimination, and gender inequality. When it comes to politics, it is often forgotten that during the Golden Age, France was basically twice on the edge of a civil war: during the Algerian war and in 1968. Spain, Portugal, and Greece were ruled by quasi-fascist regimes. Terrorism of RAF and Brigate Rosse came in the 1970s. Finally, if these years were so good and "ethical" why did we have the universal 1968 rebellion, from Paris to Detroit?

That imagined world never was, and we are utterly unlikely to return to it; not only because it never was but because the current word is entirely different. Collier overlooks that the world of his youth to which he wants people to return was the world of enormous income differences between the rich world and the Third World. It is for that reason that the English working class could (as he writes) feel very proud and superior to the people in the rest of the world. They cannot feel so proud and superior now because other nations are catching up. Implicitly, regaining self-respect for the English working class requires a return to such worldwide stratification of incomes.

The book is thus built on the quicksand of a world that did not exist, will not exist, and on a methodology that I find wanting. 2020s will not be the imagined 1945, however loudly we clamor for it. But this does not mean that the analyses of current problems and the recommendations are wrong. Many of them are very good. So I will turn to them next.

* https://en.wikipedia.org/wiki/Trente_Glorieuses

-- Branko Milanovic

anne -> anne... , August 23, 2019 at 12:41 PM
https://glineq.blogspot.com/2019/08/how-to-create-ethical-county-if-not.html

August 10, 2019

How to create an ethical county, if not the world: Part 2 review of Paul Collier's "The future of capitalism"

This is the second part of my review of Paul Collier's "The future of capitalism". The first part is here. *

In this review of Collier's policy recommendations, I will break the discussion into three parts, following Collier's own approach: how to make companies more ethical, families stronger, and the world better.

Ethical firm. Collier argues that, in order for companies to be seen as ethical and to offer their workforce meaningful jobs, companies should include workers in management, give much more power to the middle-level management, and do profit-sharing. These are all well-taken recommendations, and I believe, like Collier, that they would increase companies' profitability in addition to providing "better" jobs. The question however is how many companies nowadays can afford to provide such meaningful and (relatively) stable jobs because of fast-evolving changes driven by globalization. Nevertheless the idea is correct.

Collier then moves to what may be the most intriguing recommendation in the book and that goes beyond the usual "let's have higher and more progressive taxes". He looks at the big divide between the successful global cities (like New York and London) and their left-behind hinterlands. The success of metropolises comes from economies of scale, specialization, and complementarity (gains of agglomeration). People can specialize because the demand for specialized skills is high (the best tax accountants are located in New York not in small dilapidated cities). Companies can enjoy economies of scale because the demand is high and specialized workers benefit from complementarity in skills from other workers with whom they are in close geographical and intellectual contact.

So who are the main winners from metropolises' success, asks Collier? People who own land and housing (as housing prices skyrocket) and highly skilled professionals who, after paying higher rents, still make more in global cities than elsewhere. Collier's suggestion then, based on his work with Tony Venables, is to tax heavily these two groups of people, i.e., to introduce supplemental taxes which would be geographical: tax housing and high income individuals living in London.

How to help hinterland catch up? Use the money collected in London or New York to give subsidies to large cluster-like companies (like Amazon) if they set they businesses in the left-behind cities like Sheffield or Detroit. One can quibble with this idea but the logic of the argument is, I think, quite compelling, and the taxation suggested by Collier has the advantage of going beyond the indiscriminate increase in taxes for all. We are talking here of targeted taxation and targeted subsidies. This is the lieu fort of Collier's book.

Ethical family. I am less enthusiastic about the suggestions in this area. Here Collier is at his most conservative although that social conservatism is masked under the cover of scientific studies that show that children living in "full" families with two heterosexual parents are doing much better than children living with one parent only.

Collier almost implies that (say) mothers should stay in unloving or abusive relationships so that there would be both parents present in the family. Such families should, according to Collier, be given support and for all children public pre-K and K education should be free (very reasonable). Collier also very persuasively describes manifold advantages that the children of the rich receive, not only through inheritance but through intangible capital of parental knowledge and connections. This type of social capital inheritance is not a well-researched topic and I hope this changes since its importance in real life is substantial.

Collier displays clear preference for "standard" families and even some "social eugenics" as when he criticizes UK policy that provides free housing and since 1999 extra benefits for single mothers to have encouraged "many women...to bear children who will not be raised well".

The argument that parents should sacrifice themselves (regardless of the psychic cost) for children is also dangerous. It leads us to a family formation of the 19th century when women often lived in terrible marriages because of social pressure not to be seen as abandoning or not caring for their children. This is neither a desirable nor a likely solution for today. An ethical family should consider interests of all members equally, not subjugate the happiness of some (mostly mothers) to that of others.

Ethical world. Collier has surprisingly little to say about the ethical world. His ethical world is a world largely closed to new migration which Collier rejects based on a not unreasonable view going back to Assar Lindbeck and George Borjas of cultural incompatibility between the migrants and the natives. Interestingly, Collier does not quote either of these two authors nor any others. (The book is directed at the general audience so the mentions of other authors are extremely rare except when it comes to Collier himself and a few of his co-authors).

It is slightly disconcerting that Collier who has spent more than three decades working on Africa has almost nothing to say about how Africa and African migration fits into this "ethical world". There are only two ways in which he addresses migration.

First, migrants or refugees should stay in countries that are geographically close to the source countries: Venezuelans in Colombia, Syrians in Lebanon and Turkey, Afghanis in Pakistan. Why the burden of migrants should be exclusively borne by the limitrophe countries ** that are often quite poor is never explained. Surely, an ethical world would require much more from the rich.

Second, he argues that the West should help good companies invest in poor countries in order to increase incomes there and reduce migration. But how is this to be achieved is never explained. It is mentioned almost as an afterthought and is considered deserving of two sentences only (in two different parts of the book). This is in contrast with a detailed explanation, discussed above, of how governments should encourage and subsidize large companies to relocate to second-tier cities. Could a similar scheme be designed for investments in Africa? Nothing is said.

Further, where does it leave African migrants crisscrossing the Mediterranean as I write? There are no geographically close countries where they could go (surely not to Libya) nor can they wait for years in Mali for the Western companies to bring them jobs. Again, nothing is said on that. It is not surprising that Collier is very supportive of Emmanuel Macron whose anti-immigration policy is quite obvious, and of Danish Social Democrats that are in the process of creating a kind of national social democracy with new laws that practically reduce immigration to a trickle. Collier favors Fortress Europe although he does not say so explicitly.

In keeping with his anti-immigration stance, Collier argues that migration is not an integral part of globalization. Why –in principle– goods, services and one factor of production (capital) should be allowed to move freely while another factor of production (labor) is to remain stuck is not clear. Surely, the fact that trade is driven by comparative advantage and migration by absolute is not the reason to be against migration. On exactly the same grounds, one could be against movement of capital too.

In conclusion, I think that the recommendations regarding the "ethical firm" and metropolis-hinterland divergence are spot on; the recommendations on "ethical family" are a combination of very perceptive and sensible points, and a view of the family that at times comes from a different age, and almost nothing is said about an "ethical world". This latter is a big omission in the era of globalization, but perhaps Collier was solely interested in how to improve nation-states.

* https://glineq.blogspot.com/2019/08/nostalgia-for-past-that-never-was-part.html

** Territories situated on a border or frontier. In a broad sense, it means border countries -- any group of neighbors of a given nation which border each other thus forming a rim around that country.

-- Branko Milanovic

[Aug 26, 2019] Trump ordering companies around about where they can invest is a form of national socialism

Notable quotes:
"... This strategy is not popular with US corporations and will earn Trump some more opposition. Former Rep. Joe Walsh (R-Ill.) on Sunday announced he would mount a primary challenge to President Trump ..."
Aug 26, 2019 | www.moonofalabama.org

Don Bacon , Aug 25 2019 17:08 utc | 20

Trump has put US companies on alert that he might force them to withdraw from China, where they have $256 billion invested. He says he is given this power by the 1977 law called the International Emergency Economic Powers Act, or IEEPA.

The Republican Party has spent over a century warning against government involvement in the private sector, but now their leader is doing it big time. Trump ordering companies around about where they can invest is a form of fascism or rightwing national socialism. Left socialism is about public sector economic activity for the good of people. National socialism is the state usurping economic resources on behalf of a small corporate and high-official elite.

Tara Golshan at Vox explained how Trump unilaterally raised China tariffs in the first place by 25% (he is threatening to go to 30%):

"Trump's White House cited Section 232 of the Trade Expansion Act of 1962, a provision that gives the secretary of commerce the authority to investigate and determine the impacts of any import on the national security of the United States -- and the president the power to adjust tariffs accordingly."

So one thing that is going on is that measures passed by Congress for limited and extreme situations are being misused by presidents for everyday policy-making. . . here

This strategy is not popular with US corporations and will earn Trump some more opposition. Former Rep. Joe Walsh (R-Ill.) on Sunday announced he would mount a primary challenge to President Trump . . . here

[Aug 26, 2019] Brexit and the USA UK trade deal

Notable quotes:
"... Brute facts tell us this. As part of the European Union, the UK and Germany have the same trading rules. Last year, however, Germany exported $134bn of goods to the US whereas the UK exported only $65.3bn. Per head of population, Germany's exports to the US were therefore 60% higher than the UK's. Much the same is true for other non-EU nations. Last year Germany exported $11.8bn to Australia whilst the UK exported just $5.9bn, a per capita difference of over 50%. German exports to Canada were $12bn whilst the UK's were $7.3bn, a 28% per capita difference. German exports to Japan, at $24.1bn were 2.2 times as great per head as the UK's. And German exports to China, at $109.9bn were three times as great per capita as the UK's $27.7bn. ..."
Aug 26, 2019 | economistsview.typepad.com

anne , August 23, 2019 at 04:50 PM

https://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2019/08/the-trade-deal-fetish.html

August 13, 2019

The trade deal fetish

John Bolton says the UK can strike a quick trade deal with the US. This reminds me of an under-appreciated fact – that it is not trade rules that are significantly holding back UK exports.

Brute facts tell us this. As part of the European Union, the UK and Germany have the same trading rules. Last year, however, Germany exported $134bn of goods to the US whereas the UK exported only $65.3bn. Per head of population, Germany's exports to the US were therefore 60% higher than the UK's. Much the same is true for other non-EU nations. Last year Germany exported $11.8bn to Australia whilst the UK exported just $5.9bn, a per capita difference of over 50%. German exports to Canada were $12bn whilst the UK's were $7.3bn, a 28% per capita difference. German exports to Japan, at $24.1bn were 2.2 times as great per head as the UK's. And German exports to China, at $109.9bn were three times as great per capita as the UK's $27.7bn.

Now, these numbers refer only to goods where Germany has a comparative advantage over the UK. But they tell us something important. Whatever else is holding back UK exports, it is not trade rules. Germany exports far more than the UK under the same rules.

As for what it is that is holding back exports, there are countless candidates – the same ones that help explain the UK's relative industrial weakness: poor management; a lack of vocational training; lack of finance or entrepreneurship; the diversion of talent from manufacturing to a bloated financial sector; the legacy of an overvalued exchange rate. And so on.

If we were serious about wanting to revive UK exports, we would be discussing what to do about issues such as these. Which poses the question: why, then, does the possibility of trade deals get so much more media attention?

One reason is that the right has for decades made a consistent error– a form of elasticity optimism whereby they over-estimate economic flexibility and dynamism. Back in the 80s, Patrick Minford thought, mostly wrongly, that unemployed coal miners and manufacturers would swiftly find jobs elsewhere as, I dunno, astronauts or lap-dancers. The Britannia Unchained crew think, again wrongly, that deregulation will create lots of jobs. And some Brexiters in 2016 thought sterling's fall would give a big boost to net exports.

In the same spirit, they think free trade deals will raise exports a lot. But they won't - and certainly not enough to offset the increased red tape of post-Brexit trade with the EU. Jobs and exports just aren't as responsive to stimuli as they think. The economy is more sclerotic, more path dependent, than that.

Secondly, the BBC has a bias against emergence. It overstates the extent to which outcomes such as real wages, share prices or government borrowing are the result of deliberate policy actions and understates the extent to which they are the emergent and largely unintended result of countless less obvious choices. In this spirit, it gets too excited about trade deals and neglects the real obstacles to higher exports.

But there's something else. Perhaps the purpose of free trade deals is not to boost exports at all. It is instead largely totemic. Such deals are one of the few things we'll be able to do after Brexit that we couldn't do before. They are therefore a symbol of our new-found sovereignty. They are, alas, largely just that – a symbol.

-- Chris Dillow

Joe -> anne... , August 23, 2019 at 09:35 PM
"John Bolton says the UK can strike a quick trade deal with the US. "
---
Clueless. The US and the UK do not need a trade deal, Brexit is happening because the UK decided it didn't need any trade deals, open market trading on whatever restrictions foreign government makes is fine with brexiters.

Way back when we were a smarter people, we assumed that trade deals are a restriction on trade. They exist to overcome protectionism which was there prior.

[Aug 26, 2019] A new assessment of the role of offshoring in the decline in US manufacturing employment

Notable quotes:
"... What has caused the rapid decline in US manufacturing employment in recent decades? This column uses novel data to investigate the role of US multinationals and finds that they were a key driver behind the job losses. Insights from a theoretical framework imply that a reduction in the costs of foreign sourcing led firms to increase offshoring, and to shed labour." [link above] ..."
"... It looks like 'free' trade fundamentalists like Krugman are going to have to revisit their ideology... ..."
"... How pathetic can Democrats get with thier anti-worker policies ..."
"... Late 90's US corporations went whole in to industrializing [extreme low wage] China... FOREX, federal deficits, ignoring the US worker, etc. were in the [sympathetic] mix. There is a chicken, which egg is not important. ..."
"... Personally, I think that Trump is exploiting the distress of the working stiff and not doing anything for him. Meanwhile, the Democratic leadership has shown callous indifference toward the working stiff so Trump gets their votes, because at least he will acknowledge that there's a problem unlike kurt and his ilk. ..."
Aug 26, 2019 | economistsview.typepad.com

JohnH , August 23, 2019 at 03:37 PM

"A new assessment of the role of offshoring in the decline in US manufacturing employment," by Christoph Boehm, Aaron Flaaen, Nitya Pandalai-Nayar 15 August 2019
What has caused the rapid decline in US manufacturing employment in recent decades? This column uses novel data to investigate the role of US multinationals and finds that they were a key driver behind the job losses. Insights from a theoretical framework imply that a reduction in the costs of foreign sourcing led firms to increase offshoring, and to shed labour." [link above]

It looks like 'free' trade fundamentalists like Krugman are going to have to revisit their ideology...

As for kurt, expect him to continue to deny the fact that 'free' trade has cost a significant number of jobs and caused enough economic disruption to tilt the election to Trump in 2016.

Further, expect the Democratic leadership to continue to tout the benefits of 'free' trade without acknowledging its severe adverse effects, both economically and politically. And of course, as long as they never acknowledge the adverse effects, they will never have to address it which will allow Trump to continue to bludgeon them on the issue.

How pathetic can Democrats get with thier anti-worker policies


ilsm -> JohnH... , August 23, 2019 at 04:47 PM
Late 90's US corporations went whole in to industrializing [extreme low wage] China... FOREX, federal deficits, ignoring the US worker, etc. were in the [sympathetic] mix. There is a chicken, which egg is not important.

The US worker lost in the evolutions. Aside from Trump who has tried anything for the US working stiff?

JohnH -> ilsm... , August 23, 2019 at 05:06 PM
Personally, I think that Trump is exploiting the distress of the working stiff and not doing anything for him. Meanwhile, the Democratic leadership has shown callous indifference toward the working stiff so Trump gets their votes, because at least he will acknowledge that there's a problem unlike kurt and his ilk.
ilsm -> JohnH... , August 24, 2019 at 04:39 AM
Like Andrew Jackson taking on Charleston on Nullification?

[Aug 25, 2019] Trump Says He Regrets Escalating Trade War With China, White House Immediately Retracts

Notable quotes:
"... During his meeting with Johnson on Sunday at the G7 in France, the US president raised eyebrows when he responded in the affirmative to questions from reporters on whether he had any second thoughts about the tariff move. ..."
Aug 25, 2019 | www.zerohedge.com

While one may accuse the US president of many things, having second thoughts is hardly one of them: once Trump has decided on a course of action, he tends to follow through. Which is why the global press gasped when a rare case of doubt emerged this morning during Trump's breakfast meeting with the UK's Boris Johnson at the Biarritz G-7, when the US president acknowledged having second thoughts about the escalating the trade war with China... only for his top spokeswoman to later retract and say Trump meant he regretted not raising tariffs even more.

During his meeting with Johnson on Sunday at the G7 in France, the US president raised eyebrows when he responded in the affirmative to questions from reporters on whether he had any second thoughts about the tariff move.


TheRapture , 14 minutes ago link

Every president of the USA for the past 50 years has cultivated US exports to China. You want to just throw it away, only two or three years before the purchasing power of China exceeds that of the USA???

China - 1.5 billion.
USA - 326 million

China growth rate 2018: 6.4%
USA growth rate 2018: 2.8%
source

China now produces twice as many graduates a year as the US
source

As of 2015, China had already taken global lead in manufacturing output: source
China - $2,010 billion
USA - $1,867 billion

World market size, based on population: source
China - 18.7%
USA - 4.3%

LoveTruth , 1 hour ago link

Greedy US corporations have been in bed with China robbing the US citizen with all those job exports to China.

If things were produced in US, the corporations would have made less money, but the US citizen would have been better off. The trade deficit which has been running for decades wouldn't have been that much.

Let it Go , 1 hour ago link

Anyone with a lick of commonsense knew Trump's detractors would be gunning for him during his trip to Europe. Trump has not disappointed these people by continuing his effort to come across as too clever for his own good. Trump gave these people more ammunition when he said he has doubts about his actions.

During breakfast with the UK's Boris Johnson at the G-7 meeting in Biarritz, France Trump acknowledged having second thoughts about the escalating the trade war with China. The article below explores how this may cause Trump a great deal of grief.

https://Trump Continues His Effort To B Too Clever By Half.html

cmurali , 1 hour ago link

https://www.theguardian.com/us-news/video/2019/aug/25/sure-why-not-trump-admits-second-thoughts-on-china-trade-war-video

[Aug 25, 2019] China Hits Back at Trump With Higher Tariffs on Soy, Autos

Beijing just might be able to doom the president's chance of reelection. They can tune tariffs to hurt Trump base.
Notable quotes:
"... China's tariff threats take aim at the heart of Trump's political support -- factories and farms across the Midwest and South at a time when the U.S. economy is showing signs of slowing down. Soybean prices sank to a two-week low ..."
"... The tariffs beginning in September include 10% on pork, beef, and chicken, and various other agricultural goods, while soybeans will have the extra 5% tariff on top of the existing 25%. Starting in December, wheat, sorghum, and cotton will also get a 10% tariff. ..."
Aug 25, 2019 | www.bloomberg.com

Some of the countermeasures will take effect starting Sept. 1, while the rest will come into effect from Dec. 15, according to the announcement Friday from the Finance Ministry. This mirrors the timetable the U.S. has laid out for 10% tariffs on nearly $300 billion of Chinese shipments

An extra 5% tariff will be put on American soybeans and crude-oil imports starting next month. The resumption of a suspended extra 25% duty on U.S. cars will resume Dec. 15, with another 10% on top for some vehicles. With existing general duties on autos taken into account, the total tariff charged on U.S. made cars would be as high as 50%.

China's tariff threats take aim at the heart of Trump's political support -- factories and farms across the Midwest and South at a time when the U.S. economy is showing signs of slowing down. Soybean prices sank to a two-week low

.... ... ...

The tariffs beginning in September include 10% on pork, beef, and chicken, and various other agricultural goods, while soybeans will have the extra 5% tariff on top of the existing 25%. Starting in December, wheat, sorghum, and cotton will also get a 10% tariff.

[Aug 25, 2019] U.S. Decoupling From China Forces Others To Decouple From U.S.

G7 is not less then 50% of world economics.
Notable quotes:
"... "The 2008 experience demonstrated that the U.S. dollar as the global reserve and main trade currency is dangerous for all who use it. Currently any hickup in the U.S. economy leads to large scale recessions elsewhere." ..."
"... It has also become a primary tool for the US to assert extraterritorial jurisdiction over the world to enforce extreme uses of sanctions, as in blowing up the Iran deal. Already the EU has explored ways to get around that to work with Iran. ..."
"... The over use of sanctions, and abuse of the US financial position in order to govern others, reinforces the desire to deal with fears that dependence on the dollar risks vulnerability to economic depression due to US irresponsibility. ..."
"... The US is creating a perfect storm for the dollar, with is exactly what it would take to make others undertake the expense and difficulty of replacing it as the world reserve currency and presumed standard of exchange. ..."
"... I just had a thought. The USSA has been doing it all wrong for all these decades. There are at least two responses the USSA could have applied to the obviously impending debacle of simply allowing the Chinese to thoroughly undermine its industrial system. The most obvious response would have been tariffs, which could be perceived as an aggressive policy, but certainly not as the outright aggression of sanctions. ..."
"... Or probably even much better, a 'negative sales tax' on USSA manufactured products, which could in no way be perceived as aggressive at all. Note that there is (I presume) a vast difference between simply subsidizing companies (since subsidies coud then flow directly into the pockets of the companies' capitalists) and providing the companies' customers with a 'negative tax' on USSA produced products (basically an instant rebate). This could effectively provide price parity for the goods produced for the two countries, and could maintain the viability of the USSA manufacturing system. ..."
"... The US ruling class cannot grow out of its desire to extend its rule to the rest of the planet. But humanity is not as malleable as the American people-with their dreams of sharing in the dividends when America (Great Again) (aka its ruling class) orders the rest of the world around and exploits everyone the way that it exploits the working people in the United States. ..."
"... Are you not aware that the Bank of Japan basically owns 70% of the Japanese stock market in the from of ETFs? ..."
"... While Europe and Japan are failing economically at least America is at war with the second biggest power on the planet, making drastic moves justified in the face of a national emergency. ..."
"... I imagine now that John Maynard Keynes'ghost, if it were observing our current global political and economic affairs, would be having a laugh. It was Keynes who suggested the notion of International trade using a common trading currency created purely for International trade purposes, in a system in which nations would not be allowed to build up continuous balance-of-payments surpluses or deficits over several years, but would be required to spend their surpluses on countries forced to go into deficit because of other countries' desires for annual surpluses, leading to trade policies or currency manipulations to achieve such a dubious goal. ..."
"... The real solution though is a different system with some global exchange medium that can not be manipulated by one country or a block of selfish countries. ..."
Aug 25, 2019 | www.moonofalabama.org

The U.S. is decoupling itself from China. The effects of that process hurt all global economies. To avoid damage other countries have no choice but to decouple themselves from the U.S.

Today's Washington Post front page leads with a highly misleading headline:

The headline above the article is also wrong:

Trump retaliates in trade war by escalating tariffs on Chinese imports and demanding companies cut ties with China

It was China, not Trump, which retaliated. Trump reacted to that with a tweet-storm and by intensifying the trade war he started . The piece under the misleading headline even says that :

President Trump demanded U.S. companies stop doing business with China and announced he would raise the rate of tariffs on Beijing Friday, capping one of the most extraordinary days in the long-running U.S.-China trade war.
...
The day began with Beijing's announcement that it would impose new tariffs on $75 billion in goods, including reinstated levies on auto products, starting this fall. It came to a close Friday afternoon with Trump tweeting that he would raise the rate of existing and planned tariffs on China by 5 percentage points.

Beijing's tariff retaliation was delivered with strategic timing, hours before an important address by Powell, and as Trump prepared to depart for the G-7 meeting in Biarritz.

After Trump's move the stock markets had a sad. Trade wars are, at least in the short term, bad for commerce. The U.S. and the global economy are still teetering along, but will soon be in recession.

The Trump administration is fine with that. (As is Dilbert creator Scott Adams (vid).)

U.S. grand strategy is to prevent other powers from becoming equals to itself or to even surpass it. China, with with a population four times larger than the U.S., is the country ready to do just that. It already built itself into an economic powerhouse and it is also steadily increasing its military might.

China is thus a U.S. 'enemy' even though Trump avoided, until yesterday, to use that term.

Over the last 20+ years the U.S. imported more and more goods from China and elsewhere and diminishes its own manufacturing capabilities. It is difficult to wage war against another country when one depends on that country's production capacities . The U.S. must first decouple itself from China before it can launch the real war. Trump's trade war with China is intended to achieve that. As Peter Lee wrote when the trade negotiations with China failed:

The decoupling strategy of the US China hawks is proceeding as planned. And economic pain is a feature, not a bug.
...
Failure of trade negotiations was pretty much baked in, thanks to [Trump's trade negotiator] Lightizer's maximalist demands.

And that was fine with the China hawks.

Because their ultimate goal was to decouple the US & PRC economies, weaken the PRC, and make it more vulnerable to domestic destabilization and global rollback.

If decoupling shaved a few points off global GDP, hurt American businesses, or pushed the world into recession, well that's the price o' freedom.

Or at least the cost of IndoPACOM being able to win the d*ck measuring contest in East Asia, which is what this is really all about.

Trump does not want a new trade deal with China. He wants to decouple the U.S. economy from the future enemy. Trade wars tend to hurt all involved economies. While the decoupling process is ongoing the U.S. will likely suffer a recession.

Trump is afraid that a downturn in the U.S. could lower his re-election chances. That is why he wants to use the Federal Reserve Bank to douse the economy with more money without regard for the long term consequences. That is the reason why the first part of his tweet storm yesterday was directed at Fed chief Jay Powell:

In his order for U.S. companies to withdraw from China, some close to the administration saw the president embracing the calls for an economic decoupling made by the hawks inside his administration.

The evidence of the shift may have been most apparent in a 14-word tweet in which Trump appeared to call Xi an "enemy."

"My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?" he said in a Tweet posted after Powell gave a speech in Jackson Hole that contained implicit criticism of Trump's trade policies and their impact on the U.S. and global economies.

Jay Powell does not want to lower the Fed interest rate. He does not want to increase bond buying, i.e. quantitative easing. Interest rates are already too low and to further decrease them has its own danger. The last time the Fed ran a too-low interest rate policy it caused the 2008 crash and a global depression.

Expect Trump to fire Powell should he not be willing to follow his command. The U.S. will push up its markets no matter what.

From Powell's perspective there is an additional danger in lowering U.S. interest rates. When the U.S. runs insane economic and monetary policies U.S. allies will also want decouple themselves - not from China but from the U.S. The 2008 experience demonstrated that the U.S. dollar as the global reserve and main trade currency is dangerous for all who use it. Currently any hickup in the U.S. economy leads to large scale recessions elsewhere.

That is why even long term U.S. ally Britain warns of such danger and looks for a way out :

Bank of England Governor Mark Carney took aim at the U.S. dollar's "destabilising" role in the world economy on Friday and said central banks might need to join together to create their own replacement reserve currency.

The dollar's dominance of the global financial system increased the risks of a liquidity trap of ultra-low interest rates and weak growth, Carney told central bankers from around the world gathered in Jackson Hole, Wyoming, in the United States.
...
Carney warned that very low equilibrium interest rates had in the past coincided with wars, financial crises and abrupt changes in the banking system.
...
China's yuan represented the most likely candidate to become a reserve currency to match the dollar, but it still had a long way to go before it was ready.

The best solution would be a diversified multi-polar financial system, something that could be provided by technology, Carney said.

Carney speaks of a "new Synthetic Hegemonic Currency (SHC)" which, in a purely electronic form, could be created by a contract between the central banks of most or all countries. It would replace the dollar as the main trade currency and lower the risk for other economies to get infected by U.S. sicknesses (and manipulations).

Carney did not elaborate further but is an interesting concept. The devil will be, as always, in the details. Will one be able to pay ones taxes in that currency? How will the value of each sovereign currency in relation to SHC be determined?

That the U.S. dollar is used as a global reserve currency under the Bretton Woods system is, in the words of the former French Minister of Finance Valéry Giscard d'Estaing, an "exorbitant privilege". It if wants to keep that privilege it will have to go back to sane economic and monetary policies. Otherwise the global economy will have no choice but to decouple from it.

Posted by b on August 24, 2019 at 19:22 UTC | Permalink


Mark Thomason , Aug 24 2019 19:54 utc | 2

"The 2008 experience demonstrated that the U.S. dollar as the global reserve and main trade currency is dangerous for all who use it. Currently any hickup in the U.S. economy leads to large scale recessions elsewhere."

It has also become a primary tool for the US to assert extraterritorial jurisdiction over the world to enforce extreme uses of sanctions, as in blowing up the Iran deal. Already the EU has explored ways to get around that to work with Iran.

The over use of sanctions, and abuse of the US financial position in order to govern others, reinforces the desire to deal with fears that dependence on the dollar risks vulnerability to economic depression due to US irresponsibility.

The US is creating a perfect storm for the dollar, with is exactly what it would take to make others undertake the expense and difficulty of replacing it as the world reserve currency and presumed standard of exchange.

No one currency is quite as good now, but one could be improved, or a basket approach could be used. In the ancient world, they used such a nominal currency as a standard by which to value real currencies. We could again.

dltravers , Aug 24 2019 20:45 utc | 11

Trump does not want a new trade deal with China. He wants to decouple the U.S. economy from the future enemy.

That may well be what is going on here. Something between total insanity and managed insanity. The next president will unravel all of this in a year or so of effort. That is what is so damaging. No business can plan on what is next. No policy is long term.

This is pure Trumpian logic unhinged. Hit them twice as hard as they hit you. I would not dare to guess who is winding him up and pointing him in this direction. Trump has had one of his busiest weeks yet.

I see Elisabeth Warren's crowd sizes are getting very large. I will feel better when no one shows up to a Trump rally. China has time to wait this out and the ability to raise some chaos on their own to help undermine Trump.

Jackrabbit , Aug 24 2019 20:46 utc | 12
NemesisCalling @7, donkeytale @8

Sorry guys, it was the realization that the Empire had driven Russia into China's arms that sparked the 'get tough' attitude on China.

The Empire HAD TO isolate China but their horrendous treatment of Russia provided an opportunity for China to escape the coming 'smack down' by joining with Russia to challenge Western global domination.

As usual, it is us 'little people that will suffer for the mistakes of our elites. And elite propaganda means that most will suffer in silence, not realizing what really happened.

It should be clear by now that elite adventurism is a choice that is not subject to democratic controls. The sheeple will sleepwalk into WWIII.

Silver lining? Maybe a multi-lateral world saves us from the the more terrible dystopia of a unilateral world.

blues , Aug 24 2019 20:46 utc | 13
I just had a thought. The USSA has been doing it all wrong for all these decades. There are at least two responses the USSA could have applied to the obviously impending debacle of simply allowing the Chinese to thoroughly undermine its industrial system. The most obvious response would have been tariffs, which could be perceived as an aggressive policy, but certainly not as the outright aggression of sanctions.

Or probably even much better, a 'negative sales tax' on USSA manufactured products, which could in no way be perceived as aggressive at all. Note that there is (I presume) a vast difference between simply subsidizing companies (since subsidies coud then flow directly into the pockets of the companies' capitalists) and providing the companies' customers with a 'negative tax' on USSA produced products (basically an instant rebate). This could effectively provide price parity for the goods produced for the two countries, and could maintain the viability of the USSA manufacturing system.

But... no, we didn't do anything like that. Our Harvard trained economics geniuses hatched the 'far superior' strategy of 'quantitative easing'. They simply eased all the money out of the system and into the absurdly deep pockets of the oligarchs, supposedly in order to 'save the system'. What a masterful strategy! So the options are all used up, and theres no sane way forward. Great job.

So here's my plan. First, of course, we 'take care of' the lawyers. Well... no. First we we bulldoze Harvard. Then we institute the mother of all class action lawsuits, the 99% as plaintiffs and the 1% as defendants, and we clean them out (they will surely run off to China, but good riddance). We will be left with all their fake money, but at least we can try to start over.

Sasha , Aug 24 2019 20:51 utc | 14
@Posted by: Sasha | August 24, 2019 at 20:42

From the article linked above...Just another model of political technology,....and of civilization....

Titled 'Green is gold: the strategy and actions to China´s ecological civilization', the plan that was analyzed during the UNEA assembly explains, in its beginning, its starting point and destination: "Enjoying a beautiful house, a blue sky, a green land and clean water is the dream of any Chinese citizen and, therefore, the center of the Chinese dream (...) To achieve this vision, the government has decided to highlight the concept of eco-civilization and incorporate it into every aspect of the economy, politics, culture and social development of the country."

Definitely, a different political technology from that of Bannon...

Dianxi Xiaoge's YouTube channel is contemporary political technology at its finest. Recommended viewing for all future world leaders.

https://twitter.com/therealsurkov/status/1164310392014811137

bevin , Aug 24 2019 20:58 utc | 15
Can one really get rid of one without just getting a new master?
Contributor@4

Why not? Progress is not inevitable but it is possible.

The US ruling class cannot grow out of its desire to extend its rule to the rest of the planet. But humanity is not as malleable as the American people-with their dreams of sharing in the dividends when America (Great Again) (aka its ruling class) orders the rest of the world around and exploits everyone the way that it exploits the working people in the United States.

Somehow the profits of Empire never quite trickle down to the people who do the work and man the armies.
Elsewhere, however the dream of ruling the planet either never occurred or was grown out of. And people would be very happy to live good lives and make the earth a better place for future generations.

RenoDino , Aug 24 2019 20:59 utc | 16
Spot on in the first part of article about the inevitable new Cold War between China and America and the serious fallout from the breakup of close economic ties. But not so good on the second half wherein America central bankers are acting "insane" while the rest of the developed world looks on in horror. Are you forgetting most of the interest rates in Europe are now negative?

Are you not aware that the Bank of Japan basically owns 70% of the Japanese stock market in the from of ETFs? America is way behind the curve when it comes to complete surrender to "market forces." Trump wants Powell to play catchup now that it's game on with China. While Europe and Japan are failing economically at least America is at war with the second biggest power on the planet, making drastic moves justified in the face of a national emergency.

China is a bigger threat to America than Russia ever was because their economic model has been so successful compared to the U.S. This is made more so because we no longer have a government per se, only competing economic forces, while the Chinese have a government that runs everything. If they lose this war, they still have a system. If we lose this war, we lose everything.

Jen , Aug 24 2019 21:04 utc | 17
I imagine now that John Maynard Keynes'ghost, if it were observing our current global political and economic affairs, would be having a laugh. It was Keynes who suggested the notion of International trade using a common trading currency created purely for International trade purposes, in a system in which nations would not be allowed to build up continuous balance-of-payments surpluses or deficits over several years, but would be required to spend their surpluses on countries forced to go into deficit because of other countries' desires for annual surpluses, leading to trade policies or currency manipulations to achieve such a dubious goal.

The EU would be looking very different as a result, without a southern zone of debtor nations with unstable economies and high unemployment, and a northern zone of smug nations with full employment whose social welfare programs depend on an army of unemployed southerner immigrants willing to work for peanuts.

AntiUSA , Aug 24 2019 21:07 utc | 19
When an American claims China has been behaving unfairly, what they really mean is that the Chinese played America's rigged game and ended up outsmarting the dealer.
b , Aug 24 2019 21:10 utc | 20
Why would others want to de-couple from US? What difference it would make to UK or other EU vassals to serve FED/petro-dollar or to serve CCP/petro-yuan? Can one really get rid of one without just getting a new master?

Posted by: Contributor | Aug 24 2019 20:02 utc | 4

The US$ is overvalued because there is, as it is the global reserve currency, a higher demand for it than otherwise justifiable. In consequence U.S. companies buy up companies in UK and Europe with an overvalued dollar. When the Fed lowers the price for US$ loans it increases that effect. The Fed also creates bubbles, see the mortgage crisis, and the currently overvalued stock markets, that have effects on foreign countries.

Said differently: The U.S. abuses is 'exorbitant privilege'. The hope is that China would be less inclined to do so.

The real solution though is a different system with some global exchange medium that can not be manipulated by one country or a block of selfish countries.

NemesisCalling , Aug 24 2019 21:36 utc | 23
... ... ...

Here is an interesting article entitled "The Dialectic of Globalization," that raises several important questions pertaining to the phenomenon of globalism from the end of colonialism to the height of "transnationalism" with the end of the cold war.

I can just about agree with its conclusions and provide my own opinion as to the end of the "dialectic of globalism," that Trump seems to have, whether wittingly or not, ushered into its next phase.

International neoliberalism needs vast amounts of regulating, but I do not believe that Supranational governing agencies will be able to do this fairly and in the light of day. The only other option then is to reassert state-controlled notions of legality which is what vast proportions of the west seems to be clamoring for as can be seen with the Trump-phenomenon.

[Aug 24, 2019] DoJ 64% Of All Federal Arrests In 2018 Were Non-Citizens

Aug 24, 2019 | www.zerohedge.com

Non-citizens accounted for 64 percent of all federal arrests in 2018, according to new data released on Aug. 22 by the Justice Department. The surge was driven largely by immigration -crime arrests, which have soared to the highest level in at least two decades.

Federal authorities conducted 108,667 arrests for immigration crimes in 2018, up more than five times from the 20,942 arrests in 1998. Immigration arrests accounted for 95 percent of the total increase in the number of federal arrests over the past 20 years, the data shows.

That data also shows a flip in the percentage of arrests of noncitizens compared to arrests of U.S. citizens. In 1998, arrests of citizens accounted for 63 percent of the total arrests. By 2018, arrests of noncitizens had grown to 64 percent of the total.

In a press release accompanying the data, the Bureau of Justice Statistics (BJS) noted that while noncitizens accounted for 7 percent of the U.S. population, they committed 24 percent of all federal drug arrests, 25 percent of all federal property arrests, and 28 percent of all federal fraud arrests.

... ... ...

In terms of prosecutions, more than 78 percent of noncitizens were prosecuted for illegal reentry, alien smuggling, and misuse of visas. The most common prosecutions of noncitizens outside of immigration-related offense dealt with drugs, at 13 percent of the total, and fraud, at 4 percent.


cynicalskeptic , 1 hour ago link

a 95 % increase in immigration arrests.... they were getting arrested for BEING illegal immigrants, right?

so....that 64% of all Federal arrests statistic comes from arresting 'non-citizens' BECAUSE they were not citizens.

really a bogus statistical mash-up....

the question should be:

What percentage of serious crime is committed by non-citizens?

Faeriedust , 4 hours ago link

Weall, they say it right out. 78% of those noncitizen arrests were for illegal immigration, a "victimless" crime. Most prosecutions for robbery, murder, rape, assault, and even drug trafficking are prosecuted under state laws. They'd only move it to federal court specifically because non-citizens or cross-border activity was involved. So what this really says is, "Hey, folks. Trump is actually enforcing immigration laws." That's it. The only crimes that foreigners really commit more than citizens are immigration violations. That and, historically, organized criminal gangs have used connections in other countries, whether Mexico or Sicily, to escape American justice and facilitate smuggling of whatever's profitable.

Expendable Container , 4 hours ago link

'Mexico or Sicily'

Hey you forgot to mention safe haven Israel and the international Jewish Mafia (that call the Sicilian mafia 'the MICKY MOUSE MAFIA').

HyperboreanWind , 5 hours ago link

Fits the demographics of the invasion.

US: Noncitizens Commit Crime At 2.5X Their Population Share (2018)

"At least 21 percent of people convicted of non-immigration crimes in the United States between 2011 and 2016 were non-citizens -- 2.5 times their share of the population, a new study has shown."

http://newobserveronline.com/non-us-citizens-commit-crime-at-2-5x-their-population-share/

... ... ...

HyperboreanWind , 5 hours ago link

Not yet.

High Numbers Of Indian Nationals Crossing Into US At Southern Border (2019)

"In the 2018 fiscal year, 8,997 people from India were apprehended at the Southwest border -- more than triple the number from the year before, when 2,943 Indian migrants were apprehended."

https://www.cnn.com/2019/06/14/us/border-migrants-india/index.html

Arab Living In Mexico Smuggles 6 Yemenis Into US Via Southern Border (2018)

https://www.judicialwatch.org/corruption-chronicles/arab-living-in-mexico-smuggles-6-yemenis-into-u-s-via-southern-border/

[Aug 23, 2019] Trump Hikes Tariffs On Chinese Goods In Retaliation To Trade War Escalation

Aug 23, 2019 | www.zerohedge.com

Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%. Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%.

dibiase , 38 seconds ago link

ideally america would start rebuilding it's massive rust belt and get the hell out of the middle east..

[Aug 23, 2019] An interesting observation in the NYT about the US China trade war

Aug 23, 2019 | www.moonofalabama.org

vk , Aug 23 2019 13:38 utc | 85

Interesting observation in the NYT:

From the same flaw the western MSM must suffer: did the NYT really expected China would just treat Trump like a child, wait for him to lose the 2020 election and suddenly make amends with the USA?

Did it really think this trade war was just a bad taste joke? Did it really think China would just cave in in order to "defend globalisation"?

Do they really think of America as some kind of transcendental, abstract idea, and not a concrete entity made of real human beings?

Are they really that dense?


donkeytale , Aug 23 2019 13:43 utc | 86

China announces tit for tat tariffs as yuan sinks to new low against the dollar.

Also sinking is Trump's popularity among US voters. AP has him at 36% approval versus 62% disapproval. Remarkably, Trump's highest mark of 46% approval is for his handling of the economy.

A no deal Brexit which Trump supports is just the thing to set off a recession in the EU which spreads to Asia and the US.

What will his approval rating be then?

donkeytale , Aug 23 2019 13:43 utc | 86 vk , Aug 23 2019 13:47 utc | 87
Wrong configuration from the last post (#85). I politely ask the administer to delete it.

From the NYT:

China to Raise Tariffs on $75 Billion in U.S. Goods

The interesting part is the sub-headline:

The plan to retaliate against President Trump's tariffs suggests that neither side in the trade war is prepared to back down.

I doubted this theory for a very long time, but now I'm beginning to believe it: Americans really don't think they are responsible for the politicians they elect. They expect the rest of the world to interpret any wrongdoings of their country as individual flaws of random politicians. They expect the rest of the world to swallow the abuses by their POTUS under the idea that they will elect another one the next election cycle. They expect the rest of the world to be suportive, loyal and patient with their contry forever.

From the same flaw the western MSM must suffer: did the NYT really expected China would just treat Trump like a child, wait for him to lose the 2020 election and suddenly make amends with the USA? Did it really think this trade war was just a bad taste joke? Did it really think China would just cave in in order to "defend globalisation"? Do they really think of America as some kind of transcendental, abstract idea, and not a concrete entity made of real human beings? Are they really that dense?

[Aug 23, 2019] The USA likely absorbed around 44 million immigrants from 2010 to 2017

Aug 23, 2019 | www.nakedcapitalism.com

Kurtismayfield , August 23, 2019 at 4:15 pm

That NYT article is not for the proles.. it is for the ten percent. They want their hairdressers, lawn maintenance, nannies, and home health aides to make $10 an hour. It is better for them to have a lower class pool of people's to do this work. This is why the author didn't question the "$10-12 an hour for a CNA" statement. He/she wants that cheap labor for themselves.

marym , August 23, 2019 at 4:23 pm

Typo in the text for your link s/b 44.5 million. The report makes a further adjustment for illegal immigrants to obtain a total of "likely 46.4 million" immigrants. Then, from your link:

Between 2010 and 2017, 9.5 million new immigrants settled in the United States. New arrivals are offset by roughly 320,000 immigrants who return home each year and natural mortality of about 2ha90,000 annually among the existing immigrant population.2 As a result, growth in the immigrant population was 4.6 million from 2010 to 2017.

So net average about 12.6K per week, though the detail shows numbers increasing over the time span.

As far as "overloading the social systems, welfare and finances" it would be helpful to see some detail. There are often studies showing factors like the overall contribution of immigrant labor to the economy, and comparative immigrant uses of social services which illustrate these issues, pro and con. For example, a recently proposed change would make it more difficult for military veterans to obtain a green cards for themselves and their families if they had accepted public benefits, though some would argue that military service is a valuable contribution to the country.

A key consideration for me is that there are powerful politicians, and those who vote for them, who favor even the most inhumane versions of gutting or ending immigration who also favor gutting or eliminating social programs and workers rights for non-immigrants.

Monty , August 23, 2019 at 8:19 pm

facts schmacts!

Don't an overestimate in the order of magnitude interfere with our shared fight against The Others!

NotReallyHere , August 23, 2019 at 6:17 pm

This is NOT about immigration. Get the terms right and you can see the problem clearly. Allow others to define the vocabulary and you get the mess we are in where illegally trafficked, quasi-slaves are lumped together with legal immigrants.

The difference is rights. A legal immigrant has the right to a minimum wage, safe working conditions, a vote and all of the other protections afforded a native born citizen. And guess what, both government and corporations work hard to make legal immigration difficult. It costs thousands of dollars, takes years and if, at any time throughout that period you, or – more likely your now teenaged kid – makes a mistake involving law enforcement, then YOURROUT.

On the other hand we have human traffickers trawling around Guatemala, Nicaragua and probably rural Mexico selling the American dream for your teenage son. And all you have to do to get him trafficked to a life of luxury working fifteen hours a day in a battery chicken shed for 4 bucks an hour .. is to give over the deeds of your Guatemalan shack. So if kiddo doesn't work hard enough or, heaven forfend, says forget this and bails, then you're all homeless.

Get the difference?

anon in so cal , August 23, 2019 at 6:35 pm

Yes, "get the difference."

Unfortunately, open borders proponents are partly to blame for the terminological murkiness.
Pro illegal immigration advocates typically use slogans affirming the value of immigrants and immigration. They correctly note that immigrants make the country great, etc. No argument there. But they use these slogans and line of argumentation to advocate for illegal immigration. They deliberately conflate the two processes of legal and illegal immigration.

Summer , August 23, 2019 at 7:09 pm

"The difference is rights. A legal immigrant has the right to a minimum wage, safe working conditions, a vote and all of the other protections afforded a native born citizen "

They..the legal immigrants also often enjoy protections from their original country and dual citizenship. They have an escape route

Leaving the US citizen ass out with ZERO protections.

Carey , August 23, 2019 at 7:16 pm

"..Leaving the US citizen ass out with ZERO protections."

Thank you!

GERMO , August 23, 2019 at 7:45 pm

Just, ugh, to seeing rightwing talking point anti-immigrant comment thread on NC. Sorry. Thanks to anyone attempting to correct the stirring-up-of-reactionary-resentments with some critical thinking. Right now, I can't even.

Monty , August 23, 2019 at 8:21 pm

Superb satire!

NotReallyHere , August 23, 2019 at 7:57 pm

That's fair, but you pay taxes at full rate with no rights for a decade, then you pay thousands in legal fees to keep your legal status correct and you can't leave the job your in till you get the green card – which can take years.

The "right" to go back to your own country" is indeed true. But now you have American kids and likely/eventually American grandkids who know nothing of your "old country" – which is itself unrecognizable from when you lived there – and maybe that "right" is less valuable than you think.

Anyway, my aim was to point out the difference between a legal, organized system of immigration and a cynical nasty system of wage suppression using quasi- slavery. They are different things and conflating them serves to hide what is going on

[Aug 22, 2019] Anti-China Cult Gets U.S. Government Money - Runs Large Pro-Trump Ad Campaign

Aug 22, 2019 | www.moonofalabama.org

jb , Aug 21 2019 18:32 utc | 1

"The Democrats could up their game by taking a deeper look into this issue." you mean the CIA democrats like Mark Warner? the US has nothing to offer the world except war, which is why the people of the US must destroy this country. there is 1000% bipartisan agreement on the war drive against both china & russia. both parties spend their days yelling at each other about who is the most commie, like Moscow Mitch or Comrade Nancy, b/c they are unified in their war drive. as they are on anything else that matters. this country exists to wage war, as the platform for projection of power, against competitors. nothing else. the illusion that any of the operators w/in the system, any of them at all, are doing anything but crafting a persona in relation to power for self-aggrandizement, not challenging power in the slightest, is not helpful.

ab initio , Aug 21 2019 18:56 utc | 2

b, what makes you think the Democrats are not in on the scam?

Also, just like the US funds NGOs in other countries, China too spends hugely and has bought many influential lobbyists and think-tanks as well as media personalities and politicians in the US. Not very different than Israel lobbyists through AIPAC and the massive Israel First big money. China influence operations in the US is likely significantly larger than US influence operations in China since China is a closed CCP controlled system.

psychohistorian , Aug 21 2019 18:57 utc | 3
b wrote
"
The Democrats could up their game by taking a deeper look into this issue.
"
I agree with jb at comment #1

Yes there are "good" Democrats which are very much in the minority. The rest D/R are acolytes for the God of Mammon finance/war based social order of the West.

Yes, we are in a very strange WWIII with lots of spinning plates and propaganda action and shedding of blood mostly where the Western public does not "see" it

vk , Aug 21 2019 19:15 utc | 5
Well, unless the crisis catches the USA first:

Deficit Will Reach $1 Trillion Next Year, Budget Office Predicts

This time, the world may not be able to prop the Dollar up : the "rest of the world" is also maxed out.

karlof1 , Aug 21 2019 20:37 utc | 15
Excellent work b! Funding what on the surface appears to be a propaganda op aimed at another nation becomes a form of campaign finance for a president's reelection campaign! I wonder how many such funds went to similar work on previous occasions?

It seems that at some point in time those within the Outlaw US Empire deemed it unimportant that other nations learn the funding for numerous NGOs seeking to subvert them are overtly financed by the USG and are thus not NGOs at all but CIA appendages; and that despite the overtness, the USG still claims those organizations to be legitimate NGOs.

I find it worthy in an ironic manner that the USA will soon be eclipsed by the nation it might have become had it not sought to be a global empire. In fact, it's the very product of those Open Door policy advocates that will soon become the bane of their descendants who opted for a financialized Free Lunch economy for themselves instead of a massively robust, resilient industrial/commercial economy for all Americans.

William Gruff , Aug 21 2019 20:40 utc | 16
Falun Gong is kinda like Scientology crossed with Amway. Get rich quick while simultaneously healing your goiters. In its best days it was a terrible scam. Now it is just a blunt instrument that the US State Department uses to try and beat China with.
FSD , Aug 21 2019 21:01 utc | 18
The Epoch Times' Jeff Carlson has been in the thick of uncovering the broad Democratic Party coup (in league with transnational intelligence assets) against the Trump Presidency. Thus b's depiction here of the Dems potentially acting in the role of white knight subverts mountains of evidence. As for Falun Gong's potential affiliations with the CIA and NED that's another quite plausible storyline altogether.
DrivelP , Aug 21 2019 21:32 utc | 19
Funny thing, after watching a Vesti News video on youtube I saw a video ad for the Epoch Times. It had a young white millennial saying a bunch of propaganda drivel about the evil communist Chinese with regards to the Hong Kong protests.

Money is flowing.

[Aug 20, 2019] Is the So-Called Manufacturing Renaissance a Mirage

Without suppression of Wall Street speculators the renaissance on manufacturing is impossible...
Notable quotes:
"... A tooling firm closes, and a complex organism withers. The machinery is sold, sent to the scrapyard, or rusts in place. The manuals are tossed. The managers retire and the workers disperse, taking their skills and knowledge with them. The bowling alley closes. The houses sell at a loss, or won’t see at all. Others, no doubt offshore, get the contracts, the customers, and the knowledge flow that goes with all that. All this causes hysteresis. “The impact of past experience on subsequent performance” cannot be undone simply by helicoptering a new plant in place and offering some tax incentives! To begin with, why would the workers come back? ..."
Aug 20, 2019 | www.nakedcapitalism.com

If I lived in the past, I might assume that re-industrialization would be as easy as building a new plant and plopping it down in my model town; "build it and they will come." But this America is not that America. Things aren't that frictionless. They are not, because of a concept that comes with the seventy five-cent word hysteresis attached, covered here in 2015. Martin Wolf wrote :

"Hysteresis" -- the impact of past experience on subsequent performance -- is very powerful. Possible causes of hysteresis include: the effect of prolonged joblessness on employability; slowdowns in investment; declines in the capacity of the financial sector to support innovation; and a pervasive loss of animal spirits.

(To "loss of animal spirits" in the entrepreneurial classes we might add "deaths of despair" in the working class.) And if there were a lot of people like me, living in the past -- in a world of illusion -- that too would would cause hysteresis, because we would make good choices, whether for individual careers, at the investment level, or at the policy level, only at random.

Our current discourse on a manufacturing renaissance is marked by a failure to take hysteresis into account. First, I'm select some representative voices from the discourse. Then, I will present a bracing article from Industry Week, " Is US Manufacturing Losing Its Toolbox? " I'll conclude by merely alluding to some remedies. (I'm sure there's a post to be written comparing the policy positions of all the candidate on manufacturing in detail, but this is not that post.)

The first voice: Donald Trump. From " 'We're Finally Rebuilding Our Country': President Trump Addresses National Electrical Contractors Association Convention " (2018):

"We're in the midst of a manufacturing renaissance -- something which nobody thought you'd hear," Trump said. "We're finally rebuilding our country, and we are doing it with American aluminum, American steel and with our great electrical contractors," said Trump, adding that the original NAFTA deal "stole our dignity as a country."

The second voice: Elizabeth Warren. From " The Coming Economic Crash -- And How to Stop It " (2019):

Despite Trump's promises of a manufacturing "renaissance," the country is now in a manufacturing recession . The Federal Reserve just reported that the manufacturing sector had a second straight quarter of decline, falling below Wall Street's expectations. And for the first time ever , the average hourly wage for manufacturing workers has dropped below the national average.

(One might quibble that a manufacturing renaissance is not immune from the business cycle .) A fourth voice: Trump campaign surrogate David Urban, " Trump has kept his promise to revive manufacturing " (2019):

Amazingly, under Trump, America has experienced a 2½-year manufacturing jobs boom. More Americans are now employed in well-paying manufacturing positions than before the Great Recession. The miracle hasn't slowed. The latest jobs report continues to show robust manufacturing growth, with manufacturing job creation beating economists' expectations, adding the most jobs since January.

Obviously, the rebound in American manufacturing didn't happen magically; it came from Trump following through on his campaign promises -- paring back job-killing regulations, cutting taxes on businesses and middle-class taxpayers, and implementing trade policies that protect American workers from foreign trade cheaters.

Then again, from the New York Times, " Trump Promised a Manufacturing Renaissance. What Happens in 2020 in Places That Lost Those Jobs ?" (2019):

But nothing has reversed the decline of the county's manufacturing base. From January 2017 to December 2018, it lost nearly 9 percent of its manufacturing jobs, and 17 other counties in Michigan that Mr. Trump carried have experienced similar losses, according to a newly updated analysis of employment data by the Brookings Institution.

Perhaps the best reality check -- beyond looking at our operational capacity, as we are about to do -- is to check what the people who will be called upon to do the work might think. From Industry Week, " Many Parents Undervalue Manufacturing as a Career for Their Children " (2018):

A mere 20% of parents associate desirable pay with a career in manufacturing, while research shows manufacturing workers actually earn 13%more than comparable workers in other industries.

If there were a manufacturing renaissance, then parents' expectations salaries would be more in line with reality (in other words, they exhibit hysteresis).

Another good reality check is what we can actually do (our operational capacity). Here is Tim Cook explaining why Apple ended up not manufacturing in the United States ( from J-LS's post ). From Inc. :

[TIM COOK;] "The products we do require really advanced tooling, and the precision that you have to have, the tooling and working with the materials that we do are state of the art. And the tooling skill is very deep here. In the US you could have a meeting of tooling engineers and I'm not sure we could fill the room. In China you could fill multiple football fields.

"The vocational expertise is very very deep here, and I give the education system a lot of credit for continuing to push on that even when others were de-emphasizing vocational. Now I think many countries in the world have woke up and said this is a key thing and we've got to correct that. China called that right from the beginning."

With Cook's views in mind, let's turn to the slap of cold water administered by Michael Collins in Industry Week, " Is US Manufacturing Losing Its Toolbox? ":

So are we really in the long-hoped-for manufacturing renaissance? The agency with the most accurate predictions on the future of jobs is the Bureau of Labor Statistics. Their projection to 2026 shows that US manufacturing sector will lose 736,000 manufacturing jobs. I spoke with BLS economists James Franklin and Kathleen Greene, who made the projections, and they were unwavering in their conclusion for a decline of manufacturing jobs.

This prompted me to look deeper into the renaissance idea, so I investigated the changes in employment and establishments in 38 manufacturing North American Industry Classification System (NAICS) industries from 2002 to 2018. I really hoped that the optimists were right about the manufacturing renaissance, but the data I collected in Table 1 (see link) shows some inconvenient truths -- that 37 out of the 38 manufacturing industries are declining in terms of both number of plants and employees.

So, yeah. Mirage.

... ... ...

A tooling firm closes, and a complex organism withers. The machinery is sold, sent to the scrapyard, or rusts in place. The manuals are tossed. The managers retire and the workers disperse, taking their skills and knowledge with them. The bowling alley closes. The houses sell at a loss, or won’t see at all. Others, no doubt offshore, get the contracts, the customers, and the knowledge flow that goes with all that. All this causes hysteresis. “The impact of past experience on subsequent performance” cannot be undone simply by helicoptering a new plant in place and offering some tax incentives! To begin with, why would the workers come back?

So, when I see no doubt well-meant plans like Warren’s “Economic Patriotism” — and not to pick on Warren — I’m skeptical. I’m not sure it’s enough. Here are her bullet points:

There’s a lot to like here, but will these efforts really solve the hysteresis that’s causing our tooling problem? Just spit-balling here, but I’d think about doing more. Start with the perspective that our tooling must be, as much as possible, domestic. (“If your business depends on a platform, you don’t have a business.” Similarly, if your industrial base depends on the tooling of others, it’s not an industrial base.)

As tooling ramps up, our costs will be higher. Therefore, consider tariff walls, as used by other developing nations when they industrialized. Apprenticeships and training are good, but why not consider skills-based immigration that brings in the worker we’d otherwise have to wait to train?

Further, simply “training” workers and then having MBAs run the firms is a recipe for disaster; management needs to be provided, too.

Finally, something needs to be done to bring the best and brightest into manufacturing, as opposed to having them work on Wall Street, or devise software that cheats customers with dark patterns. It’s simply not clear to me that a market-based solution — again, not to pick on her — like Warren’s (“sustainable investments,” “research investments,” “R&D investments,” “export promotion,” and “purchasing power”) meets the case.

It is true that Warren also advocates a Department of Economic Development “that will have a single goal: creating and defending good American jobs.” I’m not sure that’s meaningful absent an actual industrial policy, democratically arrived at, and a mobilized population (which is what the Green New Deal ought to do).

[Aug 20, 2019] Trumponomics on the march: Israeli and EU farmers say thank you to Trump .

Notable quotes:
"... "The sentiment out in farm country is getting grimmer by the day," said John Heisdorffer, the chairman of the American Soybean Association. "Our patience is waning, our finances are suffering and the stress from months of living with the consequences of these tariffs is mounting. ..."
"... The Republican senator Chuck Grassley, who represents Iowa, a state heavily reliant on agriculture, has called for a quick resolution to the dispute. "Americans understand the need to hold China accountable, but they also need to know that the administration understands the economic pain they would feel in a prolonged trade war," Grassley said in a statement. ..."
May 14, 2019 | www.theguardian.com

American farmers are likely to feel the pain first. Soybean exports to China collapsed last year when the trade war began, and agricultural exports will be hit harder when, or if, the new tariffs are imposed. Farmers are also suffering from extensive flooding that has delayed planting.

"The sentiment out in farm country is getting grimmer by the day," said John Heisdorffer, the chairman of the American Soybean Association. "Our patience is waning, our finances are suffering and the stress from months of living with the consequences of these tariffs is mounting."

The new round of tariffs will hit other parts of the US food industry, with beans, lentils, honey, flour, corn and oats all on the list of goods that will be taxed.

... ... ...

The Republican senator Chuck Grassley, who represents Iowa, a state heavily reliant on agriculture, has called for a quick resolution to the dispute. "Americans understand the need to hold China accountable, but they also need to know that the administration understands the economic pain they would feel in a prolonged trade war," Grassley said in a statement.

[Aug 20, 2019] China Warns Trump It Won't Make Trade Concession If US Plays Hong Kong Card

Aug 20, 2019 | www.zerohedge.com

China Warns Trump It Won't Make Trade Concession If US "Plays Hong Kong Card"

by Tyler Durden Tue, 08/20/2019 - 09:15 0 SHARES

Just days after Trump for the first time linked the ongoing Hong Kong protests with his assessment of the US-China trade war, Beijing has issued an ultimatum to the White House: the United States should not link trade negotiations with China to the Hong Kong protests, denouncing such a move as a miscalculation.

In a short commentary published by Communist Party mouthpiece People's Daily late on Monday, the author said that events in Hong Kong were the internal affairs of China, and linking them with trade negotiations was a "dirty" aim.

"Making a fuss about Hong Kong will not be helpful to economic and trade negotiations between China and the US," the commentary said. " They would be naive in thinking China would make concessions if they played the Hong Kong card " the oped cautioned.

Chinese diplomatic observers also said Beijing considered the worsening situation in Hong Kong a sovereignty issue and would be highly unlikely to cave to Washington's pressure.

The remarks followed a statement by US Vice-President Mike Pence on Monday which reiterated President Donald Trump's demand to tie the largely stalled trade talks with Hong Kong's deepening crisis, a day after hundreds of thousands of people marched peacefully in defiance of repeated intimidation from Beijing. In an address at the Detroit Economic Club on Monday, Pence said the Trump administration would continue to urge Beijing to resolve differences with the protesters peacefully and warned that it would be harder for Washington to make a trade deal with Beijing if there was violence in the former British territory. Separately, Mike Pompeo said that China should allow Hong Kong protesters the freedom to express themselves, in what China saw as clear interference in its own internal matters.

The Chinese article countered by saying that the top priority for Hong Kong was to stop violence and restore order, adding that US politicians should not send the wrong message to people creating chaos in the city. "In the face of political intimidation, we not only dare to say no, but also take countermeasures," it warned.

Global Times, a tabloid controlled by the flagship state-run newspaper People's Daily, also warned in an editorial on Monday that American political and public opinion elites should not harbour the illusion they could influence China's decisions on Hong Kong.

"Because of the trade war, the US has lost the ability to impose additional pressure on China," it said.

"The US should stop its meaningless threat of linking the China-US trade talks with the Hong Kong problem. Beijing did not expect to quickly reach a trade deal with Washington. More Chinese people are prepared that China and the US may not reach a deal for a long time."

Chinese analysts noted Trump appeared to have hardened his stance on Hong Kong in the past week or so, under growing pressure from US lawmakers and extensive media coverage of the increasingly violent protests. Indeed, it was only a month ago when we reported that " Trump Abandoned Support For Hong Kong Protests To Revive Trade Talks With Beijing ." Now that trade war is once again front and center, with Trump using it as leverage for further Fed rate cuts, the US president is once again refocusing his attention on Hong Kong.

As the SCMP writes , Trump initially focused on making a deal with China ahead of his 2020 re-election bid and adopted a hands-off approach by characterizing the protests as "riots" which were a matter for China to handle. Over the past few days, he suggested Chinese President Xi Jinping should resolve the situation by meeting with protest leaders and warned that any violence in the handling of the Hong Kong crisis would exacerbate difficulties for attempts to bring an early end to the trade war.

"Trump's about-face on Hong Kong, from being neutral to piling pressure on Beijing, is largely due to domestic political pressure ahead of the presidential elections," said Shi Yinhong, an international relations expert at Renmin University and an adviser to the State Council which is China's cabinet.

" But the Hong Kong issue concerns China's sovereignty and the government's ability to maintain stability, which in Beijing's view is of superior priority . China cannot afford to make much compromise and will do everything to fend off interventions from abroad, in spite of all the risks and ramifications," he said.

Despite the soured mood between China and the US over their spiralling trade war – as well as escalating tensions over Huawei, Taiwan and other geopolitical rifts – both sides were planning further trade talks in the coming 10 days, according to White House chief economic adviser Larry Kudlow on Sunday.

Any progress would be virtually impossible with analysts cautioning that the US attempt to "play the Hong Kong card" would further complicate the trade talks.

Meanwhile, in the latest significant escalation in diplomatic tensions, China responded angrily to Washington's decision on a US$8 billion sale of F-16 fighter jets to Taiwan and Trump's warning against Huawei citing national security threats.

"When a long list of old problems between the two countries remains unsolved, the US side is now ramping up the pressure on Hong Kong," said Shen Dingli, a professor of US studies at Fudan University. "China has so far refused to make concessions in the absence of adequate mutual respect and trust and I don't think we'll have much room to compromise on Hong Kong or other issues. We'll have to wait and see what the US would do next," he said.

Shi also said none of the flashpoints in the bilateral ties – from Hong Kong, Taiwan, to the South China Sea and the denuclearisation of North Korea – had any easy solution in sight, with both sides showing little willingness to cooperate and accommodate the other's interests. He said the increasingly hardline, confrontational approach on China by Trump – who faced mounting pressure in his bid for re-election, especially amid signs of a looming global economic recession – would only make a trade deal increasingly unattainable.

"Even if there were no Hong Kong crisis, could the US and China reach a trade deal? Even if Beijing caved into Washington's pressure on Hong Kong, would it make it easier for them to bridge their glaring differences in the trade talks and cut a deal?"

Of course not, and since Trump is far more interested in keeping trade war simmering and on the verge of a substantial escalation if only to keep the Fed on its toes and ready for far more aggressive rate cuts, and even "some quantitative easing", that's precisely what the US president wants.

[Aug 20, 2019] The immigrant , whether skilled or much more likely unskilled, is the slave in this arrangement for whatever period of time he or she is paid significantly below what was, or what would of been, the prevailing real time local costs of labor without the immigration taking place or the immigrant being present.

Aug 16, 2019 | www.unz.com
Mevashir , says: August 14, 2019 at 11:49 pm GMT
@geokat62

Amazing Tony Martin lecture with David Irving

[Aug 17, 2019] Charge us More by Michael Hudson

Aug 15, 2019 | michael-hudson.com

Trump's claim that China is paying for the tariffs is completely false and basically serves to redirect income from his poor supporters to his wealthy supporters.

Not only that, the policy will have the consequence of further isolating the United States, says Michael Hudson.

[Aug 16, 2019] A New Assessment of the Role of Offshoring in the Decline in US Manufacturing Employment naked capitalism

Aug 16, 2019 | www.nakedcapitalism.com

https://acdn.adnxs.com/ib/static/usersync/v3/async_usersync.html

https://eus.rubiconproject.com/usync.html

https://c.deployads.com/sync?f=html&s=2343&u=https%3A%2F%2Fwww.nakedcapitalism.com%2F2019%2F08%2Fa-new-assessment-of-the-role-of-offshoring-in-the-decline-in-us-manufacturing-employment.html <img src="http://b.scorecardresearch.com/p?c1=2&c2=16807273&cv=2.0&cj=1" /> By Christoph Boehm, Assistant Professor of Economics, University of Texas at Austin, Aaron Flaaen, Senior Economist, Research and Statistics Division, Federal Reserve Board, and Nitya Pandalai-Nayar, Assistant Professor of Economics, University of Texas at Austin. Originally published at VoxEU

What has caused the rapid decline in US manufacturing employment in recent decades? This column uses novel data to investigate the role of US multinationals and finds that they were a key driver behind the job losses. Insights from a theoretical framework imply that a reduction in the costs of foreign sourcing led firms to increase offshoring, and to shed labour.

One of the most contentious aspects of globalisation is its impact on national labour markets. This is particularly true for advanced economies facing the emergence and integration of large, low-wage, and export-driven countries into the global trading system. Contributing to this controversy, between 1990 and 2011 the US manufacturing sector lost one out of every three jobs. A body of research, including recent work by Bloom et al. (2019), Fort et al. (2018) and Autor et al. (2013), has attempted to understand this decline in manufacturing employment. The focus of this research has been on two broad explanations. First, this period could have coincided with intensive investments in labour-saving technology by US firms, thereby resulting in reduced demand for domestic manufacturing labour. Second, the production of manufacturing goods may have increasingly occurred abroad, also leading to less demand for domestic labour.

New Facts on Manufacturing Employment, Trade, and Multinational Activity

On the surface, the second explanation appears particularly promising. Manufacturing employment declined from nearly 16 million workers in 1993 to just over 10 million in 2011, shown by the black line in Figure 1. This large decline in manufacturing employment coincided with a surge in outward foreign direct investment (FDI) by US firms (the blue line in Figure 1). Nevertheless, existing theories of trade and multinational production make ambiguous predictions regarding the link between foreign production and US employment. Further, due to a lack of suitable firm-level data on US multinationals, there has been limited research on their role in the manufacturing employment decline (see Kovak et al. 2018 for a recent exception).

Figure 1 US manufacturing employment and US outward FDI

Source : BEA for FDI; Longitudinal Business Database (LBD) and authors' calculations for employment.

In a recent paper, we address the question of whether foreign input sourcing of US multinationals has contributed to a decline in US manufacturing employment (Boehm et al. 2019). We construct a novel dataset, which we combine with a structural model to show that US multinationals played a leading role in the decline in US manufacturing employment. Our data from the US Census Bureau cover the universe of manufacturing establishments linked to transaction-level trade data for the period 1993-2011. Using two directories of international corporate structure, we augment the Census data to include, for the first time, longitudinal information on the direction and extent of firms' multinational operations. To the best of our knowledge, our dataset is the first to permit a comprehensive analysis of the role of US multinationals in the aggregate manufacturing decline in the US. With these data, we establish three new stylised facts.

Fact 1: US-owned multinationals were responsible for a large share of the aggregate manufacturing employment decline
Our first finding is that US multinational firms, defined as those US-headquartered firms with foreign-owned plants, contributed disproportionally to the decline in US manufacturing employment. While 33.3% of 1993 employment was in multinational-owned establishments, this group directly accounted for 41% of the subsequent decline.

Fact 2: US-owned multinationals had lower employment growth rates than similar non-multinationals
In Figure 2, we show that multinationals exhibited consistently lower net job creation rates in the manufacturing sector, relative to other types of firms. Compared to purely domestic firms and non-multinational exporting firms, multinationals created fewer jobs or shed more jobs in almost every year in our sample. Of course, these patterns may not be causal, and other characteristics of multinationals could be driving the low job creation rates. To address this concern, we control for all observable plant characteristics, and find that multinational plants experienced lower employment growth than non-multinational owned plants in the same industry, even when the size and age of the plants are held constant.

Figure 2 Net US manufacturing job creation rates by type of US firm

Source : Authors' calculations based on the LBD, Directory of Corporation Affiliations (DCA), and Longitudinal Foreign Trade Transactions Dataset (LFTTD)

Fact 3: Newly multinational establishments experienced job losses, while the parent multinational firm expanded imports of intermediate inputs
An alternative way to assess the role of multinational activity on US employment with our data is to use an 'event study' framework. We compare the employment growth trajectories of newly multinational-owned plants to otherwise similar plants in terms of industry, firm age, and plant size. As can be seen in Figure 3a, prior to the plants becoming part of a multinational, their growth patterns are not different from the control group. However, in the years following the multinational expansion, there is a brief positive but then sustained negative trajectory of employment at these manufacturing plants. Ten years after the transition, these newly multinational-owned plants have manufacturing employment that is about 20% smaller than an otherwise similar plant.

Figure 3 US employment and import dynamics at new multinational plants

a) Relative imports

b) Cumulative relative employment (Index)

Source : Authors' calculations based on LBD, DCA, and LFTTD.

Further, these newly multinational firms increase imports following the expansion abroad. As Figure 3b demonstrates, these firms substantially increase imports both from related parties and other firms (at arms-length), relative to their control group. Taken together, Figures 3a and 3b suggest that offshoring might explain the observed negative relationship between trade and employment.

Structural Analysis: Did the Offshoring of Intermediate Input Production Result in a Net Employment Decline in the US at the Firm Level?

While the patterns we identify above are suggesting that increased foreign input sourcing by multinational firms led to a decrease in US manufacturing employment, they are not necessarily causal. Standard models of importing, such as Halpern et al. (2015), Antras et al. (2017) or Blaum et al. (2018), make ambiguous predictions as to whether foreign sourcing is associated with increases or decreases in domestic employment. At the heart of this ambiguity are two competing forces. First, a reduction in the costs of foreign sourcing leads firms to have access to cheaper intermediate inputs. As a result, their unit costs fall and their optimal scale increases. This 'scale effect' raises their US employment. On the other hand, firms respond by optimally reallocating some intermediate input production towards the location with lower costs. This 'reallocation effect' reduces US employment. Theoretically, the scale effect could dominate the reallocation effect and lead to positive employment effects of offshoring, or vice versa.

We use our microdata to estimate the relative strengths of these two competing forces. We show that in a conventional class of models and in partial equilibrium, the value of a single structural constant – the elasticity of firm size with respect to firm production efficiency – completely determines which of the two forces dominates. Our estimation approach is to develop a method to structurally estimate an upper bound on this constant using our data on the universe of US manufacturing firms. While a high value of the upper bound leaves open the possibility that foreign sourcing and domestic employment are complements, a low value of the bound unambiguously implies that the two are substitutes.

Our estimates of the bound are small, indicating that during the period 1993-2011, the reallocation effect was much larger than the scale effect. In other words, during this period of aggregate manufacturing employment decline, multinationals' foreign input sourcing was leading to a net decline of manufacturing employment within these firms.

Aggregate Implications for US Manufacturing Employment

It is important to point out that the model we use only speaks to employment changes within existing firms and does not take into account general equilibrium forces that can also affect employment. Since such general equilibrium effects are inherently difficult to assess, estimates of how much of the observed aggregate decline can be attributed to offshoring of multinational firms are uncertain and often require strong assumptions. We thus proceed under two alternative sets of assumptions. In the first, we conduct a simple partial equilibrium aggregation exercise, which uses observed changes in firm cost shares of domestic inputs together with our estimated parameter bounds to obtain model-implied predictions of the employment loss due to foreign sourcing. This approach captures both the direct impact of foreign sourcing by existing firms as well as the first-order impact on domestic suppliers, holding all else equal. Under the second, we model these indirect, general equilibrium effects, such as firm entry and exit, explicitly. In both of these scenarios, we find that the offshoring activities of multinationals explains about one-fifth to one-third of the aggregate US manufacturing employment decline.

Policy Implications

Our research shows that the global sourcing behaviour of US multinational firms was an important component of the manufacturing decline observed in the past few decades. These firms set up production facilities abroad and imported intermediate goods back to the US, with the consequence of reduced demand for domestic manufacturing workers. While our research suggests that offshoring had a negative impact on employment, we caution that it does not support the view that offshoring and trade should be contained with tariffs or other policy interventions. Previous research has shown that both trade and offshoring are critical for consumers' access to affordable goods in the US. Instead, our research implies that government assistance for displaced manufacturing workers could facilitate their transition to new jobs in other sectors.

Authors' note: Any opinions or conclusions expressed herein are those of the authors and do not necessarily represent the view of the US Census Bureau or the Board of Governors or its research staff.

See original post for references

https://acdn.adnxs.com/ib/static/usersync/v3/async_usersync.html

https://eus.rubiconproject.com/usync.html

https://c.deployads.com/sync?f=html&s=2343&u=https%3A%2F%2Fwww.nakedcapitalism.com%2F2019%2F08%2Fa-new-assessment-of-the-role-of-offshoring-in-the-decline-in-us-manufacturing-employment.html <img src="http://b.scorecardresearch.com/p?c1=2&c2=16807273&cv=2.0&cj=1" />


Louis Fyne , August 16, 2019 at 10:29 am

It's not just big-ticket manufacturing (appliances, etc) .little stuff that a nation uses on a daily basis has been off-shored as well -- electrical wiring, capacitors, even foodstuffs like cookies and candy.

Bobby Gladd , August 16, 2019 at 11:04 am

Rx, military equipment parts

https://regionalextensioncenter.blogspot.com/2019/08/china-rx.html

upstater , August 16, 2019 at 10:51 am

"our research implies that government assistance for displaced manufacturing workers could facilitate their transition to new jobs in other sectors."

How does the research make such an implication? Every person a gig worker, I suppose?

Synoia , August 16, 2019 at 3:56 pm

our research implies .could facilitate their transition

Can we pay our bills with the "implied" income?

"implied" < 40% probability, "facilitated" < 40% probability, overall probability < 16%.

Nice, less than 1 in 4 get a new job.

rd , August 16, 2019 at 11:10 am

I think an overlooked aspect is environmental protection and labor working conditions as well as wages.

We are offshoring our pollution by moving manufacturing to other countries with much less stringent environmental regulation. Similarly, labor rules in those countries don't require as much worker safety, so we are offshoring injuries as well.

As the other countries become wealthier and more educated, they are starting to push for more of these protections as well as higher wages which is forcing the companies to move their production again to keep their costs low.

An interesting recent trend is the rejection of our "recycling" from countries that used to receive it, so the feel-good greenwashing of filling the recycling bins is started to boomerang back to North America as countries ship back the trash parts of the recycling. This will likely require a second recycling revolution with more domestic processing of recycling or an admission that it simply isn't going to happen in which case the righteousness quotient of many suburbanites is going to plummet.

Tyronius , August 16, 2019 at 3:07 pm

This is such an easy problem to solve from a policy standpoint- and it has been solved by countries as small as the Netherlands.

Legally mandate a small list of fully recyclable materials for manufacturers to use in production and packaging, and enforce it with punitive tariffs on non conforming goods. This can take many forms, one logical option being that of holding companies responsible for the costs of recycling their products.

This is as applicable to soda bottles as it is to large and complex products like automobiles; BMW is a world leader in lifecycle waste reduction and recycling of vehicles.

As usual, the impediment isn't technology or consumerism, it's corporate profitability and one time costs of adjusting the supply chain.

neo-realist , August 16, 2019 at 11:15 am

So the writer says "that government assistance for displaced manufacturing workers could facilitate their transition to new jobs in other sectors." I take it to mean that a policy such as "free college" as advocated by Sanders which would involve government funded vocational training in other sectors would go a long away toward helping those displaced by outsourcing?

David Carl Grimes , August 16, 2019 at 11:27 am

It's just another version of "Let them eat training!"

Inode_buddha , August 16, 2019 at 11:51 am

I remember all that BS back in the 80's and 90's everybody was on the bandwagon about careers in computers, or any other hi-tech. I was one of those who had *some* training at least .. right before they offshored all those jobs to India. It was a double kick in the nuts.So, manufacturing went to China, computing went to India. And people wonder why I'm so bitter and cranky sometimes.

Napoleon: "Money has no Fatherland. Financiers are without patriotism and without shame. Their sole object is gain." IMHO US manufacturing is the reason why we're not all speaking German today. And we gave all that capacity away like a bunch of lemmings over the cliff

Katniss Everdeen , August 16, 2019 at 12:35 pm

"that government assistance for displaced manufacturing workers could facilitate their transition to new jobs in other sectors."

This "implies" that there are "jobs in other sectors" that create as much economic value, expertise and "innovation" as manufacturing jobs do. What are they–"service" jobs? Taking in each other's laundry? Delivering McDonald's to your door? Netflix?

Manufacturing is not just a job category that can be changed out for something shiny and new, it's vital infrastructure that represents a nation's ability to provide for itself, and to create a standard of living that reflects that capability. Those "affordable goods" so important to american "consumers" are manufactured goods. It's not just the price to buy them, it's the ability to make them that's important.

Like it or not, the once mighty american economy was built on the mightiest manufacturing capacity that the world had ever known. Trivializing it as being only about cheap stuff is a colossal mistake. We used to know that, and we've only begun to pay the price for forgetting.

polecat , August 16, 2019 at 2:43 pm

We* might very well learn to make lasting things of value again .. on a lesser scale, after half the population is dead from despair, war, and disease ..

*not necessarily as one people, however ..

Summer , August 16, 2019 at 3:31 pm

40 years later?!?! This is the conclusion. Note it's still not being done effectively.

They are full of it.

They may have an effective retraining program once there are about 10 manufacturing workers left in the country

Punxsutawney , August 16, 2019 at 6:15 pm

Let me tell you how useful this is in replacing your income when your 50 and the manufacturing you supported is gone.

Not so much!

sierra7 , August 16, 2019 at 11:58 am

Outsourcing of manufacturing jobs by multi-nationals contributed to job losses ..
Really! LOL!
30 years too late for this info.
Wasn't hard to see even way back in the 1980's how multi-nationals were working very hard to export jobs and import their "anti-labor" behaviour they were excising outside the laws and borders of the US.

Synoia , August 16, 2019 at 12:26 pm

Dear Mr Trump

Tariffs were historically used to protect domestic manufacturers. Both the fees and increased price were use to boot domestic manufacturing, and hence domestic employment.

What's you intention for the tariff money?

doug , August 16, 2019 at 2:23 pm

So , you are implying there is a plan in the man's head?

Synoia , August 16, 2019 at 2:45 pm

No, I'm asking if he has one.

I'm implying nothing.

Trump makes a lot of noise. I'm also familiar with the proverb "Empty Vessels make the most Noise."

MyLessThanPrimeBeef , August 16, 2019 at 5:21 pm

That's a little different from the Zen story about the empty tea cup being more receptive.

The Rage , August 16, 2019 at 5:13 pm

Yes, during the wave of industrialization. But they don't work so well once consolidation starts. 1875-1925(roughly) was the golden age of US manufacturing, even the WWII bounce was government DoD driven. Private ex-DoD manufacturing peaked in 1924 and was flat since then. Then we have the 97-05 downwave which then has boosted us about back to 1925's ex-DoD high. Just like the tech wave, it ended.

I mean, by 1925 Portsmouth Ohio was done by 1925, by 1950 they just bled manufacturing while it consolidated around bigger cities after WWII.

We need self-efficiency not capitalists growth. It ain't happening people. Its over. We need 10% contraction of GDP just to get manufacturing growing again from a much lower base. Tariffs are dead in the water for growth now, and act like the opposite. They are also creating a bubble in "base" consumption while killing domestic production and yes, eventually overcapacity will kill base consumption and it crash again like last years 4th quarter driving down domestic manufacturing further.

Samuel Conner , August 16, 2019 at 12:38 pm

Anecdotally, in a field I worked in for a while, middle management in a small privately owned "needle trades" firm, the "growth" among our competitors was in firms that (we assumed) did their design work in US but manufactured overseas. Domestic manufacturers either adapted to this, or closed down.

At least in this field, automation had next to nothing to do with it.

cirsium , August 16, 2019 at 12:54 pm

Instead, our research implies that government assistance for displaced manufacturing workers could facilitate their transition to new jobs in other sectors.

Ah yes, the subsidised retraining for manufacturing jobs that, in fact, do not exist. Louis Uchitelle covered this policy failure in his 2006 book "The Disposable American: Layoffs and their consequences". Is the phrase "got the T-shirt" relevant here?

Susan the other` , August 16, 2019 at 1:23 pm

For the government to re-employ workers who have lost their factories would be a form of industrial policy. Ours is never clearly stated, if there is one. But one thing is clear and that is the government gave the internationals every opportunity to offshore our national productivity without any safety net for labor except unemployment insurance. Which runs out. Michael Pettis has just backed a proposal to tax foreign capital saving and investment here in this country. Because most of it is just financial "investments". Foreign investment for long term capital projects would be virtually unaffected. It is claimed that this tax on money parking would reduce out trade deficit and make it fluctuate within an acceptable balance. By doing something that sounds like real-time exchange rate adjustments for every transacted trade, now to include foreign investment and savings. So why didn't the government, after offshoring all those jobs, re-employ all the laid-off workers as banking and investment managers? So all this unproductive foreign money is skewing our trade balance. Making our unemployment deeply structural. It is so bizarre that we are "trading" in money at all. We are trading in the medium of exchange, which is fiat, which itself is susceptible to exchange rate adjustments with other money and all of it supposedly backed by the productivity of that country. That foreign productivity is frequently nothing more than IMF money, stolen and taken out of the country. The P word. Because the world has reached manufacturing overcapacity, I assume, all this money is totally skewing the ledgers. It's laughable except for the fact that the bean counters take it seriously. The mess we are in is something more fundamental than balanced exchange rates. It's more like hoarding at its most irrational. Way over my head. And for us to fix unemployment here in the US will take far more than a tax on all this loose international money.

Inode_buddha , August 16, 2019 at 1:40 pm

Yeah it's nice to have it "officially" credentialed etc its not like I haven't been saying this since they passed NAFTA, but then I wasn't "credentialed" so nobody listened . its like, "No $#!t sherlock ???" pretty much *everyone* who has spent some time in the industrial sectors knows this by heart without even needing to be told. Of course maybe now its OK to say it out loud or something . smh.

Glen , August 16, 2019 at 2:25 pm

Can we also admit that American CEOs gave our jobs away?

Inode_buddha , August 16, 2019 at 2:59 pm

Dirty furriners sho didn't steal em trying to get *anyone* to admit this is like pulling teeth

MyLessThanPrimeBeef , August 16, 2019 at 5:19 pm

It's good people are asking questions.

Jerry B , August 16, 2019 at 2:33 pm

===the Role of Offshoring in the Decline in US Manufacturing Employment===

It is not just the role of offshoring in the decline of US manufacturing employment, BUT the effect the offshoring, and the competing with foreign manufacturers, had on the existing US manufacturing workforce. The manufacturers and manufacturing workers that remain in the US have to compete with their cheaper foreign competition for work.

I spent most of the last 25 years working in plastics injection molding. After spending the first six years of my career in plastics/ polymer research and development, I transitioned to injection molding. In the mid 90's when I started in injection molding, globalization had already begun especially in the automotive sector. The car manufacturers were already setting up global and domestic supply chains. But even then the Chicago area (and the US in general) was heavy in mold making and injection molding businesses.

Then China became a major player in the world economy, NAFTA started, etc. and in the early 2000's it was like the last manufacturer who gets stuck in the US gets to turn out the lights!

There were a lot of small to medium size mold maker shops and plastic injection molders in the Chicago area that went under because they could not compete with the cheaper foreign competition. It was very sad as I knew many small mom and pop mold makers and injection molders in the Chicago area who were in business for 20 – 30+ years that closed.

The fact that many businesses/corporations in the US, due to offshoring and globalization, are forced to compete with foreign competitors that have cheaper labor, less regulation, cheaper land costs, etc. etc. is beyond reason.

And to this day you can see the effects of neoliberal globalization in any manufacturing or other business you visit as they are dealing with consequences of having to compete directly with cheaper foreign competitors through cost cutting, low wages, and running the employees into the ground.

The tables were tilted against manufacturers and manufacturing employees in the US. It is like the US manufacturing (and other sectors) are trying to fight a battle with one hand tied behind our backs.

There is a good book that relates to this post. The book is called Failure to Adjust: How Americans Got Left Behind in the Global Economy by Edward Alden.

https://www.amazon.com/Failure-Adjust-Americans-Economy-Relations-ebook/dp/B01M03S1R4

The Rage , August 16, 2019 at 5:04 pm

NAFTA killed a bunch of material extraction jobs, but boosted a bunch of auto production jobs down the supply chain. You can see that on the data. Granted, auto sales have been flat for 20 year which has led to a flattening of employment growth since 2005 after the material extraction driven drop.

That is why the Trump Administration just basically rebooted it.

John , August 16, 2019 at 3:41 pm

Has there been a study of a relationship between off-shoring and the rise of upper management compensation?

Susan the other` , August 16, 2019 at 4:22 pm

can the government itself, operating under a vague constitution, be treasonous?

Subaltern , August 16, 2019 at 4:48 pm

Consider it payback for colonialism and neocolonialism.

The Rage , August 16, 2019 at 4:52 pm

lol, but it created a bunch of debt finance jobs throughout the economy as well, that boosted existing manufacturing. Offshoring accounts for .1% of the job loss. Most of it is consolidation and technology. My great grandfather lost his job in 1925 during the first wave of consolidation. What about that?

This post reeks of globalist propa.

Altandmain , August 16, 2019 at 5:09 pm

As someone working in manufacturing, while I am glad that there is some acknowledgement that outsourcing is responsible, I strongly disagree about not implementing tariffs. Effectively workers are competing for a race to the bottom in wages, working conditions, and other factors like environmental laws.

Guess what if there are tariffs? Things will cost more, but there will also be more jobs for the working class. Actually there will also be quite a few white collar jobs too. Engineering, HR, Finance, Sales, etc, are all needed in any manufacturing industry.

I suspect that net, most workers would be better off even if prices were higher due to the jobs. The thing is, the top 10 percent would not be and the 1 percent would not be. That's the main reason for this outsourcing. To distribute income upwards so the rich can parasitically take it.

While our research suggests that offshoring had a negative impact on employment, we caution that it does not support the view that offshoring and trade should be contained with tariffs or other policy interventions. Previous research has shown that both trade and offshoring are critical for consumers' access to affordable goods in the US. Instead, our research implies that government assistance for displaced manufacturing workers could facilitate their transition to new jobs in other sectors.

This is where I strongly disagree. As discussed above, I think that the net effect might be beneficial for the majority of society.

The other is the old retraining claims, which never pan out. What jobs are there? Visit the communities in the Midwestern US and Southern Ontario. Retraining for what? For jobs that are part time, minimum wage, with few or no benefits?!

Manufacturing may not have been perfect, but at least there were benefits, it was often full time, and the salaries allowed a middle class existence.

When I read things like this, as much as I dislike Trump, I can understand why people would support him.

sierra7 , August 16, 2019 at 7:13 pm

For the life of me I don't see how any other outcome could have happened. With the economic system we have embraced at least in my long lifetime, it was inevitable that "capital" would seek the lowest level playing field in the long term. Nation's boundaries kept that flow "fenced" to a certain limit for as long as there have been physical borders between countries. Once the cat was let out of the bag of competing countries after WW2, for example the Japanese with computer driven machinery (lathes) that crushed American companies that in too many cases refused to invest and welcomed the slow destruction of organized labor here in the US, it was inevitable that that condition would be the future of manufacturing here. The advent of the Mexican maquiladoras gave a great push to the exporting of jobs. NAFTA put the nails in the coffin so many more of those good paying jobs. "Labor" was never invited to those global meetings that proved to be so destructive to so many countries.
But, again. The system we embrace can have no other outcome. "Tariffs" will eventually lead to wars. So in the words of that famous Russian: "What is to be done?"
Anybody have a solution? You will be saving civilization from itself. We need a complete rethinking of how we live on this planet. That will take better humans that we have now that lead nations. In the meantime it's, "kill them all and let God sort them out!" The weak will succumb; the strong will continue to battle for territory, in this case jobs, jobs, jobs.

Rick , August 16, 2019 at 8:35 pm

For a look at what the numbers have been for the past half century:

Manufacturing employment

It's surprisingly linear, and the inflection point at the last recession is curious.

[Aug 15, 2019] The Evangelicals Trying to Turn America Into a Theocracy"

Aug 15, 2019 | economistsview.typepad.com

im1dc , August 14, 2019 at 08:35 AM

...

https://www.thedailybeast.com/the-family-on-netflix-the-shadowy-christian-cabal-puppeteering-american-politicians

"The Family': The Evangelicals Trying to Turn America Into a Theocracy"

'Netflix's new five-part series "The Family," now streaming, explores an elite coalition of Christians with enormous influence in American politics'

by Nick Schager...08.14.19...7:07AM ET

"According to The Family, Netflix's unnerving new five-part documentary series, the most powerful club in America is a consortium of religious true believers bound by their fanatical love of Jesus. It has no official membership and requires no dues. It works overtime to avoid publicity. Its ranks are comprised of both Republicans and Democrats.

And it seeks the eradication of the separation of church and state in its quest for its most coveted asset: power...

...Think of it as a Christian mafia endeavoring to create a global theocracy under Jesus, with grassroots enclaves around the USA (and planet) and a commitment to conducting "non-consensual diplomacy" with tyrants -- by elected American officials who claim their overseas efforts are just "Jesus stuff" -- as part of a "worldwide spiritual offensive." With a depth and breadth that amplifies its terrifying conclusions, The Family lifts the veil of secrecy surrounding this shadowy outfit, and what it reveals is a new world order that's not only on its way -- it's already here."

[Aug 15, 2019] Why a Banking Heiress Spent Her Fortune on Keeping Immigrants Out

Aug 15, 2019 | economistsview.typepad.com

im1dc , August 14, 2019 at 03:48 PM

A MUST READ in its entirety

Be prepared to have your mind blown

https://www.nytimes.com/2019/08/14/us/anti-immigration-cordelia-scaife-may.html

"Why a Banking Heiress Spent Her Fortune on Keeping Immigrants Out"

'Newly unearthed documents reveal how an environmental-minded socialite became an ardent nativist whose money helped sow the seeds of the Trump anti-immigration agenda'

By Nicholas Kulish and Mike McIntire...Aug. 14, 2019

"She was an heiress without a cause -- an indifferent student, an unhappy young bride, a miscast socialite. Her most enduring passion was for birds.

But Cordelia Scaife May eventually found her life's purpose: curbing what she perceived as the lethal threat of overpopulation by trying to shut America's doors to immigrants.

She believed that the United States was "being invaded on all fronts" by foreigners, who "breed like hamsters" and exhaust natural resources. She thought that the border with Mexico should be sealed and that abortions on demand would contain the swelling masses in developing countries.

An heiress to the Mellon banking and industrial fortune with a half-billion dollars at her disposal, Mrs. May helped create what would become the modern anti-immigration movement. She bankrolled the founding and operation of the nation's three largest restrictionist groups -- the Federation for American Immigration Reform, NumbersUSA and the Center for Immigration Studies -- as well as dozens of smaller ones, including some that have promulgated white nationalist views."...

[Aug 13, 2019] Trump Is Delaying Tariffs on China for Holiday Shopping Season

Aug 13, 2019 | economistsview.typepad.com

im1dc , August 13, 2019 at 09:46 AM

Ho Ho Ho

https://www.thedailybeast.com/trump-is-delaying-tariffs-on-china-for-holiday-shopping-season?ref=home

"Trump Is Delaying Tariffs on China for Holiday Shopping Season"

by Shira Feder...08.13.19...11:04AM ET

"The Trump administration announced Tuesday that tariffs set to be imposed Sept. 1 on Chinese consumer products like electronics, sneakers, and video game consoles will not go into effect until Dec. 15."...

Fred C. Dobbs , August 13, 2019 at 09:50 AM
(Ho, ho, ho!)

US to Delay Some China Tariffs Until Stores Stock
Up for Holiday Shoppers https://nyti.ms/2H50NMv
NYT - Ana Swanson - August 13

The Trump administration on Tuesday narrowed the list of Chinese products it plans to impose new tariffs on as of Sept. 1, delaying levies on cellphones, laptop computers, toys and other consumer goods until after stores stock up for the back-to-school and holiday shopping seasons. Stocks soared on the news.

The move, which pushed a new 10 percent tariff on some goods until Dec. 15 and spared others entirely, came as President Trump faces mounting pressure from businesses and consumer groups over the harm they say the continuing trade war between the United States and China is doing.

Mr. Trump's earlier tariffs on Chinese imports were carefully crafted to hit businesses in ways that everyday Americans would mostly not notice. But his announcement this month of the 10 percent tariff on $300 billion of Chinese goods meant consumers would soon feel the trade war's sting more directly.

On Tuesday, Mr. Trump acknowledged as much.

"We're doing this for the Christmas season," he told reporters around noon. "Just in case some of the tariffs would have an impact on U.S. customers." ...

Fred C. Dobbs said in reply to Fred C. Dobbs... , August 13, 2019 at 09:54 AM
... Mr. Trump's comments about the tariffs' impact on consumers followed the United States trade representative's office announcement that while the new tariffs would take effect as Mr. Trump had threatened, some notable items would not immediately be subject to them.

Consumer electronics, video game consoles, some toys, computer monitors and some footwear and clothing items were among the items the trade representative's office said would not be hit with tariffs until retailers had time to stockpile what they needed for their busiest time of year.

The administration also said some products were being removed from the tariff list altogether "based on health, safety, national security and other factors." A spokesman for the trade representative's office said the products being excluded from the tariffs included car seats, shipping containers, cranes, certain fish and Bibles and other religious literature.

The S&P 500 climbed nearly 2 percent after the announcement, lifted partly by stocks of retailers and computer chip producers that have been sensitive to indications that trade tensions were getting either better or worse.

Best Buy, which gets a many of the products it sells from China, was among the best-performing stocks in the S&P 500, up more than 8 percent in morning trading. The Nasdaq composite index rose more than 2 percent. ...

[Aug 13, 2019] The United States is openly encouraging a hard or radical split between the United Kingdom and the European Union

Aug 13, 2019 | economistsview.typepad.com

anne -> anne... , August 13, 2019 at 01:38 PM

The United States is openly encouraging a hard or radical split between the United Kingdom and the European Union. This by way of John Bolton. Why the administration would take such a position is a puzzle to me, and the openness is shocking.
anne -> anne... , August 13, 2019 at 01:41 PM
https://news.cgtn.com/news/2019-08-13/U-S-supports-no-deal-Brexit-with-trade-deals-ahead-says-Bolton-J7cM4HEMLK/index.html

August 13, 2019

U.S. supports no-deal Brexit with trade deals ahead, says Bolton

The United States would enthusiastically support a no-deal Brexit if that is what the British government decided to do, U.S. National Security Adviser John Bolton said on Monday during a visit to London aimed at reassuring Britain over UK-U.S. ties.

"If that's the decision of the British government we will support it enthusiastically, and that's what I'm trying to convey. We're with you, we're with you," Bolton told reporters after his first day of meetings.

"They will have to figure out how to do what they can by October 31 or soon thereafter. From our point of view, we would have been happy to do it before that," the official said. "The previous government didn't want to do it, this government does. We're very happy about it," he added.

U.S. President Donald Trump wants to see a successful British exit from the European Union on October 31 and Washington will be ready to work fast on a U.S.-UK free trade agreement, Bolton told British Prime Minister Boris Johnson.

BBC quoted Bolton as saying that a bilateral agreement or "series of agreements" could be carved out "very quickly, very straight-forwardly."

He said British officials had given him an unmistakable sense that they were determined to honor the 2016 referendum vote to leave the EU.

"The fashion in the European Union: When the people vote the wrong way from the way the elites want to go, it's to make the peasants vote again and again until they get it right," Bolton said.

The central message Bolton was delivering is that the United States would help cushion Britain's exit from the EU with a free trade deal that is being negotiated by U.S. Trade Representative Robert Lighthizer and his British counterpart, Liz Truss.

Bolton said Britain and the United States could agree trade deals on a sector-by-sector basis, leaving more difficult areas in the trading relationship until later.

He said the ultimate aim was a comprehensive trade deal, but highlighted that financial services could be one of the more difficult industries to reach an agreement on.

Bolton had been expected to urge officials from Johnson's government to align its policy on Iran more along the lines of the United States, which has pushed a much tougher line against Tehran since withdrawing from world powers' 2015 nuclear agreement with Tehran.

But, after his meetings Bolton said talks on some of these thornier diplomatic issues could wait.

Johnson has told the European Union there is no point in new talks on a withdrawal agreement unless negotiators are willing to drop the Northern Irish backstop agreed by his predecessor Theresa May.

The EU has said it is not prepared to reopen the divorce deal it agreed with May, which includes the backstop, an insurance policy to prevent the return to a hard border between the British province of Northern Ireland and EU-member Ireland.

[Aug 13, 2019] From an economic perspective, when and if UK exists the EU is shrinking from 27 member-states to 9."

Aug 13, 2019 | www.moonofalabama.org

Grieved , Aug 12 2019 5:29 utc | 69

@66 psychohistorian

Good to catch you around these economic matters. The WWIII is actually just being waged by one side, I think. China is the caravan moving on. The fading bark of the dogs is the western end of the deal, I think. But no time to enlarge on this right now, what with Europe having the vapors...

Everybody got economics going on, it seems like, and Europe is no exception. Check out below.

~~

Brexit and the EU

Alastair Crooke has a new piece out, riffing largely on a Pritchard Evans article in the Telegraph, and including a very hot video clip from the heart of German concerns as the UK executes Brexit.

I didn't realize how important the UK is to the EU and how its exit changes everything for Germany. But the EU realpolitik illustrated in this Crooke article and in the 6-minute video clip of the German speech is an entire facet of Brexit I had never seen until now. Check this quote:

Speaking in the German parliament, Alice Weidel, the AfD leader, tore into Chancellor Merkel for her and the Brussels botched handling of Brexit (for which "she, Merkel bears some responsibility"). Weidel pointed out that "the UK is the second biggest economy in Europe – as big as the 19 smallest EU members combined". "From an economic perspective, the EU is shrinking from 27 member-states to 9." [My emphasis]

Crooke and co are saying that the UK departure from the EU changes the entire regime of monetary controls within this economic union. Crucially, the lead is now shifting away from Germany and to the failed economic model of France.

To make the chronic acute, now Trump cares, and the US has a stake in this - who knew? The EU didn't know. It always thought the US was a partner, but maybe not.

If you want to dive straight into the German angst, here's the six-minute video of Alice Weidel ripping German complacency apart with a call to attention from her constituency in marginalized eastern Germany:
German view of Brexit

And for the containing article from Crooke - be warned that he quotes Paul Krugman but I have to say it sounds pretty good to me - here's his article:
Germany Stalls and Europe Craters

[Aug 13, 2019] The Satanic Temple, an organisation masquerading as a Satan-worshipping religion, whose members stage various stunts that expose the hypocrisy of governments and mainstream religious organisations in pushing for greater freedoms and rights for themselves but denying freedom of speech and freedom of religious worship to others, and in the lip service these institutions pay to the separation of religion and the state.

Aug 13, 2019 | www.moonofalabama.org

Jen , Aug 12 2019 10:54 utc | 83

Aye, Myself & Me @ 44:

You should try watching the recent documentary "Hail Satan?" by Penny Lane. It's about the founding and evolution of The Satanic Temple, an organisation masquerading as a Satan-worshipping religion, whose members stage various stunts that expose the hypocrisy of governments and mainstream religious organisations in pushing for greater freedoms and rights for themselves but denying freedom of speech and freedom of religious worship to others, and in the lip service these institutions pay to the separation of religion and the state.

The only disappointing aspect of the documentary is that most of the in-fighting amongst the different chapters of The Satanic Temple was edited out of the film to preserve its flow and emphasise the documentary's main themes. You only get a hint of the differences that developed among the members in how they interpret the organisation's agenda and tenets, and in their attitudes towards working within the system to change it or not working within it but challenging it instead. You do get a sense though that many people around the world must have been waiting for an organisation like TST to come along, that the organisation taps into a deep yearning among people for something or someone to challenge the authorities, and that the organisation grew very quickly, perhaps too quickly for its founder members to get a handle on.

Interestingly, the director became a member of The Satanic Temple after she completed filming and editing the documentary.

[Aug 12, 2019] Bretton Wood is the American version and as usual it was all screwed up, but Keynes original proposals contain policies needed for the EAEU's ability to function

Aug 12, 2019 | www.moonofalabama.org

Formerly T-Bear , Aug 12 2019 21:30 utc | 137

@ karlof1 | Aug 12 2019 20:08 utc | 129

J.M.Keynes addressed 'foreign exchange' between sovereign states in his original version of World Bank and International Money Fund, both addressing the fundamental causes of the Great Depression. These presentations to U.S. government authorities also included the British application for war debt forgiveness at the termination of hostilities to avoid repeating post WWI scenarios. These presentations were then made to the Bretton Woods Conference as the American version of the proposals, reversing institution and purpose as contrived by Washington's design. Makes interesting reading the cables between Keynes and London. What exists since Bretton Wood is the American version and as usual it was all screwed up, but Keynes original proposals contain policies needed for the EAEU's ability to function (and to avoid the economic causes of the Great Depression).

I recalled it was tax collection that became the failure of the colonial confederation, the failure of the Continental Congress to meet its obligations, but then interpretations can vary.

[Aug 12, 2019] The generation that wrote the Treaty of Rome were mostly replaced by the 1980's with a generation not sharing common experiences that the war generation had

Aug 12, 2019 | www.moonofalabama.org

karlof1 , Aug 12 2019 18:23 utc | 115

Grieved @69--

Finally got around to reading Crooke's latest. Yes, the EU's surely in a fix; but IMO, he's correct about the ultimate source of the problem and the inability of solving it without a total reformation. However, I would argue that reforming the EU would be a massive error. IMO, it makes far greater sense to learn from the mistakes and negotiate with Russia and China to consummate Putin's proposal for an EAEU sans the strangulating aspects of an EAEU Central Bank and currency--the Euro and EUCB being two of the EU's mistakes. Such a creation would also see the demise of NATO and the freeing of monies for war to be used on debt relief, infrastructure, and building public/human capital. Russo- and Sinophobia would immediately cease. The issues of South Asia would become easier to handle. And to be included in the club Occupied Palestine would need to become Palestine--one state--thus defusing the last colonial imposition impeding Eurasian integration/unity.

Yes, the five anglophone entities would be left out in the cold, although I can't see The City allowing its politicos to blow its opportunity to cash in by having a piece of the action (but then the British are unpredictable) while Scotland, Ireland and Wales prosper. Africa would see its future lies in joining with Eurasia.

I don't think either Merkel or Macron have the vision required to even imagine the above possibility, although I'd be happy to get surprised. But would such a suggestion need to come from either France or Germany; why not Central and Southern Europe as such a change would really benefit those nations?


Formerly T-Bear , Aug 12 2019 18:59 utc | 122

@ karlof1 | Aug 12 2019 18:23 utc | 115

Don't forget the generation that formed the Treaty of Rome and conducted subsequent negotiations were mostly replaced by the 1980's with a generation not sharing common experiences that the war generation had. Also, by the 1980's the economic theories being taught had substantially changed from the economic understandings and experiences of the war generation.
The war generation had each sovereign country having sufficient and adequate laws governing banking and finance that prevented most aberrations within that country. Each country had developed from differing circumstances and had drafted their laws to those specific circumstances. Finding a common legal denominator proved to be, as they say 'a bridge too far' but as long as each country's laws were effective, no problems presented.
The subsequent generation under the neoliberal economic theories found the central EU government devoid of economic governance or regulatory structures; an open field easily commanded by removing the abilities of each country to provide such governance for their state. Centralisation of economic power became the problem and the cause of problems that remain unaddressed and unless address is done, the economic house of cards will not last for long.

karlof1 , Aug 12 2019 20:08 utc | 129
Formerly T-Bear @122--

Agreed! That's why I made it a point to list the EUCB and Euro as the two main mistakes that must be learned from if an EAEU is to be formulated. Both Russia and China are determined that each nation must remain sovereign, which means each must have control over its monetary and political systems. Instead of a Union implying a federal structure, the proposed political entity would be better termed as a Confederation with each nation retaining its homogeneity. The major difference being the proposed Confederation would have no trade barriers and visa-free movement for its citizens. (Recall the main failing of the initial Confederation of United States were the trade barriers erected between states that prompted the businessmen's revolt that led to the 1787 Constitution and the formation of the federal United States of America.) If a regional grouping of nations--say the former Yugoslavian entities--wanted to reform into a larger political-economic unit to better provide for their collective citizenry, there would be no objection; and the reverse would be possible as sovereignty of people would remain a foundation of human rights.

Given future challenges, IMO the above makes the best sense for Eurasia and Africa. The implosion of the Outlaw US Empire and its affect on its hemispheric neighbors remains unknown. It's possible the once formidable economic magnet of the Empire's economy will reverse its polarity and drive people out as it did during the Great Depression. The vast amount and depth of corruption within the Empire will take several generations to be extinguished, and only then will political reformation become possible.

[Aug 12, 2019] One bright side of our malignant political moment is that you never have to listen to Political Christians again

Aug 12, 2019 | economistsview.typepad.com

EMichael , August 12, 2019 at 12:40 PM

Populists, my a$$.

"One bright side of our malignant political moment is that you never have to listen to Political Christians again. Any moral authority these folks might've claimed prior to becoming the number-one constituency for Donald Trump, American president, is gone. What principles of Jesus Christ does the current president embody? Of course, that question assumes the Son of God's words ever played a particularly prominent role in an Evangelical political movement that for decades has devoted nearly all its energy to opposing marriage equality and getting abortion banned. Matthew 25:35 has never been high on the list of priorities, and Trump -- as he has in so many other areas of our social and political life -- merely laid that truth bare.

Still, it is...something to see a report in Politico outlining what some members of the Evangelical movement found sickening about Trump' recent rally in North Carolina. You know, the one where his fans started chanting, "Send her back!" about a sitting member of Congress who just happened to be a woman of color whom Trump himself had told to go back to where she came from. These Constitutional Conservatives were appalled at the idea of stripping someone of her citizenship because she exercised her First Amendment rights to criticize the country that her constituents had duly elected her to help run. They were gravely offended at the prospect of expelling Ilhan Omar, who came here as a refugee from Somalia as a child, in breach of Christ's edict about inviting in the stranger, the least of my brothers and sisters.

Just kidding! They didn't like the salty language.

'The nation was gripped after the rally by the moment when a "send her back" chant broke out as Trump went after Somali-born Democratic Rep. Ilhan Omar, an American citizen. But some Trump supporters were more fixated on the casual use of the word "goddamn" -- an off-limits term for many Christians -- not to mention the numerous other profanities laced throughout the rest of the speech.

The issue has recently hit a nerve among those who have become some of the president's most reliable supporters: white evangelicals...Coarse language is, of course, far from the president's only behavior that might turn off the religious right. He's been divorced twice, faced constant allegations of extramarital affairs, previously supported abortion rights and has stumbled when trying to discuss the specifics of religion, once saying "two Corinthians" instead of "Second Corinthians." Yet to this point, Trump has maintained broad support from evangelicals, including the unwavering backing of prominent conservative Christian leaders.'

Did tearing children from their parents "hit a nerve"? It appears not, at least among the 73 percent of white Evangelicals who approve of the president's job performance. Neither, as Politico pointed out, does the president's blatant non-religiosity that borders on outright disdain for his religious audiences. After all, "Second Corinthians" doesn't tell the whole story. Here's the line in full: "Two Corinthians, 3:17 -- that's the whole ballgame," he said, adding: "Is that the one you like? I think that's the one you like." It's hard to imagine a more condescending delivery.

The simplest explanation is that the most important part of White Evangelical Christian is "white," and that the movement has always been about maintaining the United States as a country by and for white people. No wonder these folks overlooked Trump's many affairs and divorces and vulgarities. He might have "joked" on television about dating his own daughter, or OK'd calling her a "piece of ass" on the radio, but he's on their side on the truly important things, like federal judge appointments. It's kind of like how no one cares that Trump employs -- and has always employed -- large numbers of undocumented immigrants while railing against illegal immigration. He enforces the racial hierarchy, and that's what matters. It's not really that no one should come. It's that they should be ruthlessly exploited and forced to live in fear as a societal underclass.'

https://www.esquire.com/news-politics/a28675460/donald-trump-evangelicals-goddamn-send-her-back/

[Aug 11, 2019] How much of US China trade imbalance are due to each country's trade policy

Aug 11, 2019 | economistsview.typepad.com

anne , August 10, 2019 at 07:06 AM

https://twitter.com/paulkrugman/status/1160183976771936257

Paul Krugman @paulkrugman

OK, I'm having a very nerdy moment. Trying to understand why US-China bilateral trade imbalance is so large. NOT because it's important, but just because it's kind of a puzzle; I guess it's my inner @Brad_Setser 1/

6:39 AM - 10 Aug 2019

So last year US goods imports from China were $539.5 billion, US goods exports $120.3 billion. That's 4.5 to 1. Why so much asymmetry? I think 4 reasons: Hong Kong, macroeconomics, value-added, and oil 2/

Hong Kong: effectively part of the Chinese economy, and the US runs a large surplus - $37 b in exports, only $6 b in imports. Basically a lot of US goods appear to enter China via HK (something similar in Europe, where US exports to Germany go via Belgium/Netherlands) 3/

Adding HK reduces the export imbalance to "only" 3.5 to 1. Now macro: the US runs overall trade deficit, with imports 1.5 times exports. China runs overall surplus, with imports only 0.8 exports. On some sort of gravity-ish story, this suggests ratio "should" be around 2 4/

Now add China's role as "great assembler", with value-added in exports really coming from elsewhere; famous case of iPhone. Much less true than it used to be, but still means that Chinese surplus is partly optical illusion 5/

Lastly, China imports a lot of oil, which means other things equal needs to run a surplus on everything else. Used to be true of US, but with fracking we're now almost self-sufficient in hydrocarbons (but not exporting to China) This adds a further reason for bilateral 6/

Someone with more time and patience should try to do the full accounting, but I think the US-China bilateral can mainly be explained by "natural causes"; doesn't have much to do with either country's trade policy 7/

RC (Ron) Weakley said in reply to anne... , August 10, 2019 at 07:17 AM
I guess that Krugman is just a natural law kind of guy wherein IP protectionism and arbitrage seeking cross border capital flows in an exorbitantly privileged global reserve currency are just natural phenomenon like meteor showers and rain.
anne -> RC (Ron) Weakley... , August 10, 2019 at 07:17 AM
I tried, but have no idea what this criticism means; whereas I understand Paul Krugman.

[Aug 08, 2019] China Retaliation Is '11' on Scale of 1 to 10, Wall Street Warns

Notable quotes:
"... "While there were measures that could have been chosen with larger direct effects on supply chains, the announcements from Beijing represent a direct shot at the White House and seem designed for maximum political impact," Krueger said. " We expect a quick (and possibly intemperate) response from the White House, and consequently expect a more rapid escalation of trade tensions." ..."
"... In a mid-day note, Krueger added that "the next stop on the currency manipulation road is probably off the map." Krueger expects Trump's "drumbeat on currency" will get louder, with the potential for the president to use a "charge of currency manipulation to justify some combination of (more) tariffs, investment restrictions and export controls." ..."
"... Instructing state-owned Chinese firms to halt U.S. crop purchases triggered "the obligatory flight-to-quality," which pushed 10-year yields to 1.74%, with two-year yields keeping pace. That was "an impressive move that suggests August will not experience the traditional summer doldrums. Who needs vacation anyway?" ..."
"... Bank investors' eyes were "glued to the yield curve last week," with Trump's tariff tweet on Thursday, Graseck wrote in a note. They're now asking about Morgan Stanley's net interest margin (NIM), outlook. ..."
Aug 08, 2019 | economistsview.typepad.com

Fred C. Dobbs , August 05, 2019 at 01:39 PM

China Retaliation Is '11' on Scale of 1 to 10, Wall Street Warns
Bloomberg - Felice Maranz - August 5, 2019

https://www.bloomberg.com/news/articles/2019-08-05/china-retaliation-is-11-on-scale-of-1-to-10-wall-street-warns

Analysts continued to warn about the dangers of an escalating trade war on Monday, as China moved to strike back at the U.S., hitting U.S. stocks and boosting Treasuries.

Semiconductors, with direct exposure to trade, and banks stocks, which are sensitive to interest rates, were among the decliners. The biggest U.S. banks slid, with the KBW Bank Index dropping as much as 4.1% to the lowest since June 4. Bank of America Corp. led index decliners, with a drop of 5.5%, the most since Dec. 4, while Citigroup Inc. shed more than 4% and JPMorgan Chase & Co. slipped 3.8%.

Micron Technology Inc. fell 6.2% while Texas Instruments Inc. lost 4.4% and Intel Corp. was down 4%. Apple Inc. dropped 5.6%, the most since May 13. Shares in Chinese tech giants Alibaba Group Holding and JD.com Inc. fell near two month lows in U.S. Trading.

Agriculture equipment makers Deere & Co. and AGCO Corp. tumbled as China suspended imports of U.S. agricultural products. The escalating trade tensions are also a major risk for the U.S. automotive industry, which has a significant exposure to the country. According to UBS's Global Wealth Management Chief Investment Officer Mark Haefele, the latest spat raises the possibility that "tariffs could also be placed on auto imports."

President Donald Trump tweeted about China and the Fed on Monday morning, saying: "China dropped the price of their currency to an almost a historic low. It's called 'currency manipulation.' Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!"

Here's a sample of some of the latest commentary:

Cowen, Chris Krueger
Krueger called China's retaliation "massive," adding that "on a scale of 1-10, it's an 11." He cited the Chinese government calling on state buyers to halt U.S. agricultural purchases, while there's "increased anecdotal evidence that the Chinese government is tightening its overview of foreign firms."

"While there were measures that could have been chosen with larger direct effects on supply chains, the announcements from Beijing represent a direct shot at the White House and seem designed for maximum political impact," Krueger said. " We expect a quick (and possibly intemperate) response from the White House, and consequently expect a more rapid escalation of trade tensions."

"There now will be increased expectations that the Fed will cut again in September to offset the drag caused by this escalation in the trade war," he added. "Such moves will only be a partial, lagged offset to the recessionary headwinds a cycle of retaliation would cause."

In a mid-day note, Krueger added that "the next stop on the currency manipulation road is probably off the map." Krueger expects Trump's "drumbeat on currency" will get louder, with the potential for the president to use a "charge of currency manipulation to justify some combination of (more) tariffs, investment restrictions and export controls."

BMO, Ian Lyngen
"The wait is over for those wondering how Beijing would respond to Trump's recent tariff announcement," BMO said. "The result: the yuan was allowed to depreciate well beyond 7.0."

Instructing state-owned Chinese firms to halt U.S. crop purchases triggered "the obligatory flight-to-quality," which pushed 10-year yields to 1.74%, with two-year yields keeping pace. That was "an impressive move that suggests August will not experience the traditional summer doldrums. Who needs vacation anyway?"

"The most significant unknown at this moment," Lyngen added, "is how much further the yuan will be allowed to fall given that it's already the weakest since 2008."

Morgan Stanley, Betsy Graseck (bank analyst)

Bank investors' eyes were "glued to the yield curve last week," with Trump's tariff tweet on Thursday, Graseck wrote in a note. They're now asking about Morgan Stanley's net interest margin (NIM), outlook.

Graseck didn't change her NIM assumptions -- yet. "We bake one additional cut of 25 basis points in 2019 in-line with our economist, and bake in the 10-year at 1.75% by mid 2020," she wrote. She'll update NIM and earnings per share estimates "if it looks like these trade tariffs are going through as September approaches."

Morgan Stanley, Michael Zezas (policy strategist)

"The dynamics of U.S.-China negotiation and macro conditions mean the next round of tariffs will likely be enacted, and investors are likely to behave as if further escalation will follow in 2019 until markets price in impacts," Zezas wrote. "This supports our core view of weaker growth and skews the Fed dovish."

Zezas sees incentives for the U.S. to escalate quickly. If the administration "understands the Fed's trade policy reaction function, then it may also perceive that a more rapid escalation could deliver one or more of three beneficial points ahead of the 2020 election: 1) A quicker, potentially more aggressive Fed stimulus response that could help the economy heading into the election; 2) More time to re-frame the potential economic downside; and 3) A major concession by China (not our base case, but it is, of course, a possibility)."

Veda, Henrietta Treyz

"The U.S. and China are moving into one of their most aggressive phases yet in the year-plus long trade war and we fully expect things to escalate from here," Treyz wrote in a note.

Treyz added that China's ability to quickly adjust their currency is an advantage they have over the U.S. that "goes to the heart of the issue for the Trump administration." The administration may view China's communist regime as a "systemic advantage" versus "free markets and democracy" in the U.S., as the Chinese can "subsidize domestic industry, quickly, enact lower tax rates and provide stimulus."

Furthermore, her conversations with Republicans point to the belief that "China's economy is on the brink of collapse," she said, with turmoil in Hong Kong "considered evidence of an organic domestic uprising that many believe the Chinese government cannot contain."

Republicans may also believe Trump will "galvanize" his base behind him, while attracting "anti-trade and union Democrats in the Rust Belt as he takes on the mantle of a war time president going into 2020 by engaging in this trade war." ...

[Aug 08, 2019] There's a revealing puzzle in the China tariffs

Aug 08, 2019 | economistsview.typepad.com

anne , August 06, 2019 at 12:26 PM

http://larrysummers.com/2019/05/15/theres-a-revealing-puzzle-in-the-china-tariffs/

May 15, 2019

There's a revealing puzzle in the China tariffs

On Monday, China announced new tariffs on $60 billion of U.S. exports, and the United States threatened new tariffs on up to $300 billion of Chinese goods. These actions were cited as the principle reason for a decline of more than 600 points in the Dow Jones industrial average, or about 2.4 percent in broader measures of the stock market. With the total value of U.S. stocks around $30 trillion, this decline represents more than $700 billion in lost wealth.

This was not an isolated event. Again and again in the past year, markets have gyrated in response to the state of trade negotiations between the United States and China.

The market sensitivity to threats and counter-threats in the trade war is quite remarkable. Monday's announcement by the Chinese, for example, would be expected to raise China's tariffs by about $10 billion. Much of this will show up as higher prices for Chinese importers, and some of it will be avoided by diverting exports of goods such as liquid natural gas to other markets, so the impact on U.S. corporate profits will be far less than $10 billion. Meanwhile, U.S. tariffs are likely to raise corporate profits as higher import costs push some business to domestic producers.

There is the further consideration that reasonable market participants should not have entirely discounted the possibility of tariff increases Monday and that there surely remains some chance a trade deal will be reached. So, in fact, the market should not even have moved in full proportion to the change in corporate profitability associated with new tariffs.

There is a revealing puzzle here. Events whose direct impact on corporate profits is a few billion dollars seem to be driving market fluctuations that change the total value of corporations by hundreds of billions of dollars. To be sure, there would be many ways of refining my calculation of the profit impact to recognize various feedbacks, and certainly the imposition of tariffs increases uncertainty, which in general depresses markets. But with any plausible calculation of the direct impact of tariff changes on profitability or uncertainty about profitability, it is not possible to justify the kinds of changes in market value we observed Monday or on many other days when there was news about the status of the U.S.-China trade negotiations.

Part of the answer to the puzzle, I suspect, lies in markets' tendency to sometimes overreact to news, especially in areas where they do not have long experience. This idea is supported by the tendency illustrated by the market's Tuesday rally, which took place without any particularly encouraging U.S.-China developments.

A larger part of the answer probably lies in the idea that the current trade conflict is a possible prelude to a far larger conflict between the two nations with the largest economies and greatest power for as far as can be foreseen. When it appears less likely that a conflict over well-defined and ultimately not-that-difficult commercial issues can be resolved, rational observers conclude that it is also less likely the United States and China can manage issues ranging from 5G wireless technology to North Korea, from the future of Taiwan to global climate change, and from the management of globalization to the security architecture of the Pacific region.

A world where relations between the United States and China are largely conflictual could involve a breakdown of global supply chains, a splinternet (as separate, noninteroperable internets compete around the world), greatly increased defense expenditures and conceivably even military conflict. All of this would be catastrophic for living standards and would also have huge adverse effects on the value of global companies.

It is, I suspect, the greater risk of catastrophic medium-run outcomes, rather than the proximate impact of trade conflicts, that is driving the outsize market reactions to trade negotiation news.

This carries with it an important lesson for both sides: It is risky to turn the pursuit of even vital national objectives into an existential crusade. Rather, even when nations have objectives that are in conflict, it is important to seek compromise, to avoid inflammatory rhetoric and to confine rather than enlarge the areas where demands are being made. Establishing credibility that promises will be kept and surprises will be avoided is as or more important with adversaries as with friends.

As the Trump administration carries on the trade negotiations, and as the presidential campaign heats up, Americans will do well to remember that there is no greater threat to the success of our national enterprise over the next quarter-century than mismanagement of the relationship with China. It is not just possible but essential to be strong and resolute without being imprudent and provocative.

-- Larry Summers

anne -> anne... , August 06, 2019 at 12:29 PM
Correcting date:

May 15, 2019

[Aug 08, 2019] White House To Unveil Rule Banning Agencies From Doing Business With Huawei

Aug 08, 2019 | www.zerohedge.com

As has long been expected, the White House is preparing to release a new rule on Wednesday barring government agencies from buying equipment or doing any kind of business with Chinese telecoms giant Huawei - ratcheting up tensions between the world's two largest economies at an already precarious time for the global economy.

Here's more from CNBC :

The Trump administration is expected to release a rule Wednesday afternoon that bans agencies from directly purchasing telecom, video surveillance equipment or services from Huawei. The prohibition was mandated by Congress as part of a broader defense bill signed into law last year.

"The administration has a strong commitment to defending our nation from foreign adversaries, and will fully comply with Congress on the implementation of the prohibition of Chinese telecom and video surveillance equipment, including Huawei equipment," said Jacob Wood, a spokesman for the Office of Management and Budget.

Per CNBC, the new rule is expected to take effect a week from Wednesday, and it applies not only to Huawei, but also to a list of other telecom companies that have drawn security concerns, such as ZTE and Hikvision.

The official said contractors will be able to seek waivers from individual federal agencies if they believe their business with any of the targeted companies should be exempt from the rule.

Moreover, the new rule will also set a deadline of August 2020 for a broader ban on federal contractors doing business with Huawei and other firms.

The law passed by Congress is separate from the Trump Administration's own efforts to keep Huawei in check.

The Commerce Department instigated the tensions between the US and China after it placed Huawei on a blacklist that effectively bans the company from buying goods or doing any kind of business with Huawei. A 90-day grace period that kept Huawei off the blacklist temporarily is now almost over. And President Trump has apparently walked back his promised, made at the G-20 Summit in Osaka, to ease the pressure on Huawei.

However, US chipmakers and tech firms can request waivers, and the CEOs of Google, Qualcomm, Micron, Intel and others met with President Donald Trump at the White House last month and urged the administration to issue those decisions quickly.

In an interview on CNBC, Huawei CSO Andy Purdy defended the company's track record, arguing that European leaders in the UK and Germany had told their counterparts in the US that they had found no evidence that Huawei was a security threat.

"We have tested the products of all vendors to international standards so that there's trust through verification," Purdy said.

But that likely won't change anybody's mind.


TheRapture , 9 hours ago link

Expect a new rule from China:

All Chinese government agencies will be prohibited from buying CISCO and other American telecommunications products. Furthermore, contractors dealing with Chinese government agencies will also be so prohibited from buying American telecom products.

America - population 329 million. Economic growth rate: 2.8%
China - population 1.4 billion. Economic growth rate: 6.5%
source: Wikipedia

China is rapidly industrializing, and has the largest manufacturing base in the world. The USA is already a mature industrial economy, and since NAFTA has offshored most of its manufacturing base. The USA leads the world in the design, manufacture and export of weapons, but relies on coercive political relationships (such as NATO) rather than the "free market" to sell its overpriced and line of products to captive satellite countries. China is rapidly expanding in the weapons manufacturing sphere, as is Russia, and offer increasingly competitive products at lower prices, and with fewer political strings attached.

Something to think about before breastbeating and cheering ourselves on.

CashMcCall , 10 hours ago link

Trump is getting the **** kicked out of him on CNBC and every Financial media on the internet. When China dug in, that was the end of the Trump bluff. For the first time, the absurd articles about China losing are gone and now the new reality is that China is going to squeeze the life out of Trump.

Huawei is just another of Trump's wayward policies of getting Canadian poodles to kidnap Huawei's founder's daughter. Nice dirty **** Trump. Women already hate Trump this ices that cake.

Last week Huawei overtook Apple as the second largest smart phone maker. Huawei announced it no longer had any dependence on US manufacturers for 5G, another body blow to the blowhard.

Dozens of certifying agencies have no studied Huawei products and have found zero instances of spyware or any instance of this hardware being used for spying. In short, Trump and the NSA and CIA look like a bunch of assholes. This will only accelerate Huawei's 5G rollout.

Trump is being **** canned in every direction. The great part of Trump von hitler's personality is that he knows his 10% Sept Tariffs were essentially the end of his presidency, but is too arrogant to reverse course. Instead, he is screaming at the Fed for more loose money to support his bad policies. And he wants more Farmer WELFARE. That dog don't hunt!

China is not going to roll over over for Trump. The financial media is now tearing Trump a new ******* every hour. Markets are not responding to Trump plunge team efforts. They continue to sell off.

Where's the endgame they ask? This is the same deal as Trump closing down the gov for nothing. Trumptards cheered as the orange idiot painted himself in the corner and accomplished nothing. Not one inch of wall has been constructed since Trump took office. Trump floats on a raft of ********. Meanwhile Trump has a 20 year history of hiring Illegals for Trump Organization. Total Fraud and self dealer.

The GOP is now climbing the walls. Today Trump Screamed at the Fed to reduce rates emergently and then said it had nothing to do with China. Astonishing.

When China put an end to US Ag purchases effective immediately they were basically saying they were tired of Trump's ********. The farmer associations are turning on Trump round the clock. Where is Trump? He's hiding out. But of course this has NOTHING to do with China.

But here is Trump once again playing the phony national Security card with Huawei when a dozen independent organizations have published reports and cleared Huawei of the Trump Administration's phony security claims.

vincenze , 11 hours ago link

Huawei Honor smartphones and tablets are really good. The top models are even better than iPhones.

There were some Chinese smartphones at Best Buy the last time I checked.

But I just bought the 128Gb Lenovo Zuk for $280 from Banggoog a couple years ago when it was on sale. It's a little problematic to update Android, but it works perfectly anyway. There is a forum for Lenovo phones, though, with all answers.

There is no need to buy from Best Buy or Amazon, buy cheaper directly from China.
https://www.banggood.com/Wholesale-Smartphones-c-1567.html

me or you , 11 hours ago link

Back into reality.: Huawei to invest Ł1.2bn in new Shanghai R&D Centre, Build 'Self-Reliance' Amid US Trade War on

Tachyon5321 , 11 hours ago link

Poland's state security agency arrested Huawei sales director Wang Weijing and a Polish national over spying.

Dongfan Chung The 74-year-old former Boeing Co. engineer was convicted in July of six counts of economic espionage and other federal charges for keeping 300,000 pages of sensitive papers in his home

Chi Mak He copied and sent sensitive documents on U.S. Navy ships, submarines and weapons to China by courier.

Don't waste my time. A 20 second google search shows you have no point, but the one on the top of your head.

Thus, Given the Chinese government's record on espionage, "a good-faith assertion from Andy is not enough."

Asoka_The_Great , 12 hours ago link

Trumptard and the US Dark State's campaign to KILL Huawei has failed spectacularly.

Huawei reported revenue growth of 23% in the first half of 2019.

https://www.huawei.com/en/press-events/news/2019/7/huawei-announces-h1-2019-revenue

"In Huawei's carrier business , H1 sales revenue reached CNY146.5 billion, with steady growth in production and shipment of equipment for wireless networks, optical transmission, data communications, IT, and related product domains. To date, Huawei has secured 50 commercial 5G contracts and has shipped more than 150,000 base stations to markets around the world.

In Huawei's enterprise business , H1 sales revenue was CNY31.6 billion. Huawei continues to enhance its ICT portfolio across multiple domains, including cloud, artificial intelligence, campus networks, data centers, Internet of Things, and intelligent computing. It remains a trusted supplier for government and utility customers, as well as customers in commercial sectors like finance, transportation, energy, and automobile.

In Huawei's consumer business , H1 sales revenue hit CNY220.8 billion. Huawei's smartphone shipments (including Honor phones) reached 118 million units, up 24% YoY . The company also saw rapid growth in its shipments of tablets, PCs, and wearables. Huawei is beginning to scale its device ecosystem to deliver a more seamless intelligent experience across all major user scenarios. To date, the Huawei Mobile Services ecosystem has more than 800,000 registered developers, and 500 million users worldwide.

"Revenue grew fast up through May," said Liang. "Given the foundation we laid in the first half of the year, we continue to see growth even after we were added to the entity list. That's not to say we don't have difficulties ahead. We do, and they may affect the pace of our growth in the short term."

He added, "But we will stay the course. We are fully confident in what the future holds, and we will continue investing as planned – including a total of CNY120 billion in R&D this year. We'll get through these challenges, and we're confident that Huawei will enter a new stage of growth after the worst of this is behind us."

[1

Tachyon5321 , 11 hours ago link

Just more proof that Huawei is selling into the USA at below cost. A massive drop in American sales improved the razor thin profit of the company...

Asoka_The_Great , 11 hours ago link

"Just more proof that Huawei is selling into the USA at below cost. "

WHAT A DUMB ****!

HUAWEI HAS NO MARKETSHARE IN US.

Huawei Networking Equipments was banned in US, years ago. None of three major US cellular networks use Huawei's equipment or sell its smartphones.

Tachyon5321 , 4 hours ago link

WHAT A DUMB ****!: Thanks!!! That makes me 3 times smarter than you because Huawei subcontractors do sell Huawei products in the USA. You are an ignorant Asian that should go back to his village and the one room dirt floor hut... LOL

Edit: 8% margins....LOL

Everybodys All American , 12 hours ago link

I'd be the first to say that I don't know everything about this telecom but I will say this seems like a reasonable decision on it's face for the US government not to put in Chinese telecommunications equipment. Of course China is going to not like it because with Hillary she just gave them direct access to damn near anything through her email server.

Archeofuturist , 12 hours ago link

Exactly. Every penny .gov spends should mandated that it MUST be from America companies. Every nut, every bolt.

[Aug 06, 2019] Pretty glum outlook on US China trade war

Aug 06, 2019 | www.moonofalabama.org

Passer by , Aug 5 2019 22:48 utc | 61

b, the trade war is escalating, For The First Time In 25 Years, US Treasury Just Designated China A Currency Manipulator.

Can you make an article on the situation?

karlof1 , Aug 6 2019 0:26 utc | 65

Passer by @61--

First, Trump coerced the Fed into lowering interest rates which made US Dollars cheaper to buy then he increased domestic taxation 10% though increasing the tariff on selected Chinese goods. China then blocks the importation of all US foodstuffs and lowers the price of the Yuan an amount equal to the tariff increase--and the US treasury and Trump have the gall to call China the currency manipulator! NO, as usual with the Outlaw US Empire, it's accusations are psychological projection of what itself does. Hudson discusses it here . US financial markets have finally awakened to Trump's moves and have fallen 5% over the last three trading days, with more likely to follow. Hudson on Trump:

"It's all a diversion so that people won't look at what's really happening, only at what Trump is saying. But as people find that they have to pay higher prices, I don't think they'll believe Trump. I think he's lost all credibility. That's why the stock market's collapsing. They're aghast. They think that even Trump can't get away with this big a lie when it's so obviously false."

As I commented last Friday on the AP article my local paper ran about the tariff hike, it finally told the truth about who'll pay--US Consumers or China: US Consumers! AP, All Propaganda, tore a gapping hole into Trump's narrative--but will people believe a media outlet that's lied so often?

Trump can't win his global trade war. China won't capitulate; it's economy and society are 100x healthier than the Outlaw US Empire's and are resilient where the USA can only claim to have been once upon a time. Why that is has been explained before. The transcript of this interview's poor, but the topic covers the answer by showing how Canada's economy became a victim of the same predators as the USA's.

We know what happened, how and why. What we don't know how to do is reverse the situation politically. Hudson compares the dire situation to that of Rome:

"So they obviously, the left-wingers such as Bernie Sanders, want to run for president as a kind of educational campaign to make their policy clear to the people, but they know that there's no way in which the ruling class will let them win.

"It's been very clear, if they did win, they would be assassinated very quickly. I've been told that by presidential candidates. The threat is, you'll never be president, we have ways of keeping you out, and should you succeed, we will do to you what the Romans did to every advocate of democracy century after century, assassination."

It seems the best those of us residing within the Outlaw US Empire can hope for is that Trump's policies will decimate US financial institutions worse than what occurred in 2008. Hudson's perspective:

"I don't see any popular movement yet. You can very easily see why collapse is inevitable....

"There's no way of knowing when there will be a break in the chain of payment. Usually it's a bankruptcy of a big company, very often by fraud, as the 2008 crisis was bank mortgage fraud. You don't know when people will fight back. Often, surprisingly, they only fight back when things are getting better. But things still have a way to go to get much worse in Canada, much worse in the United States, so I don't see any possibility of reform within the next 4 to 8 years."

Pretty glum outlook.

[Aug 05, 2019] Impulsive and aggreesive President: not a good combination

Aug 05, 2019 | www.moonofalabama.org

Passer by , Aug 4 2019 23:56 utc | 56

Trump Overruled All Advisors Except Navarro "In Heated Exchange" Before Launching New China Tariffs

https://www.zerohedge.com/news/2019-08-04/trump-overruled-all-advisors-except-navarro-launching-new-china-tariffs

So much for Trump being a "moderate" and "not a hawk".

In my assessment Trump is very aggressive President foreign policy wise. Way more aggressive than Obama.

[Aug 04, 2019] Bank of America What Trump Did Is A Game Changer

Price of clothing is already noticeably higher with some categories (shooes) affected more then others.
Aug 04, 2019 | www.zerohedge.com

However, all that is about to change, because as Bank of America team of economists writes, Trump's latest tariff announcement from last Thursday, when the president shockingly unveiled 10% tariffs on $300BN in Chinese imports starting September 1, "is a major escalation." The reason for this is that past measures had mostly avoided consumer goods. By contrast, the threatened tariffs would cover $120bn of consumer goods, out of $300bn in total, and since BofA expects the tariffs to be implemented, either on schedule or later this year, the period of dormant trade war inflation is about to end with a bang, not a whimper.

... ... ...

Was Trump's announcement a negotiating tactic?

For the past year, one of the points of biggest contention among economists and traders is that despite what is now a 1+ year trade war with China, inflation due to higher tariffs has been strangely missing, with some claiming that the goods targeted in previous tariff rounds were either not "consumer" enough, or simply had more affordable substitutes from other, non-Chinese supply chains, allowing US consumer to avoid having higher prices passed upon them.

However, all that is about to change, because as Bank of America team of economists writes, Trump's latest tariff announcement from last Thursday, when the president shockingly unveiled 10% tariffs on $300BN in Chinese imports starting September 1, "is a major escalation." The reason for this is that past measures had mostly avoided consumer goods. By contrast, the threatened tariffs would cover $120bn of consumer goods, out of $300bn in total, and since BofA expects the tariffs to be implemented, either on schedule or later this year, the period of dormant trade war inflation is about to end with a bang, not a whimper.

bitzager , 7 minutes ago link

"Game Changer" - What's in your wallet? We'll soon find out in

the Walmart near you.. :)))

2banana , 13 minutes ago link

Well, a silly "feedback loop" as for the first three years of Trump being elected - the Fed RAISED rates eight (8) times.

In the face of all the tariffs during that time period and a trade war with China.

Also - the Fed started the Great QE unwind in the same time period - "withdrawing" $700 billion from circulation.

[Aug 04, 2019] Commentary China will never buckle under Washington's old trick of trade bullying

Notable quotes:
"... As the U.S. administration is ready to impose a 10 percent tariff on the remaining 300 billion U.S. dollars of Chinese imports, its sincerity in reaching a mutually beneficial trade deal with Beijing that can accommodate each other's major concerns has gone bust. It seems that in the eyes of Washington's China hawks, trade talks are no more than a formality with which to rip China off. ..."
"... While the White House is boasting about taxing China until a trade deal is reached, it should keep in mind that China will only accept a win-win agreement on the basis of mutual respect and equal treatment. ..."
"... Beijing's position has been consistent and clear: China does not want a trade war, but it is not afraid of one and will fight one if necessary. ..."
"... It is therefore hoped that Washington should drop its fantasy to bring Beijing down to its knees with its same and old tricks of maximun pressure. If it truly wants a deal, then they will need to show some real sincerity first. ..."
Aug 02, 2019 | www.xinhuanet.com

Despite calling the just-concluded China-U.S. trade talks in Shanghai "constructive" and hoping for more "positive dialogue," the White House on Thursday announced plans to impose extra tariffs on Chinese imports from Sept. 1.

Washington's unilateral escalation of trade disputes is a serious breach of trust after the two sides reached in June consensus to restart trade talks on the basis of equality and mutual respect.

Apart from undermining the momentum of the newly resumed China-U.S. trade talks, the U.S. flip-flopping again exemplifies Washington's untrustworthiness in striking a deal and its disturbing propensity for bullying.

The U.S. administration should bear in mind that its bullying and tariff threat, which has not worked in the past, will not work this time.

For over a year, the U.S.-initiated trade disputes with China have bogged down not just economic growth of the two countries but that of the whole world. Meanwhile, an increasingly capricious Washington is harming the current world order with more uncertainties.

As the U.S. administration is ready to impose a 10 percent tariff on the remaining 300 billion U.S. dollars of Chinese imports, its sincerity in reaching a mutually beneficial trade deal with Beijing that can accommodate each other's major concerns has gone bust. It seems that in the eyes of Washington's China hawks, trade talks are no more than a formality with which to rip China off.

Also, the new twist in China-U.S. trade talks shows that some Washington politicians are trying to play tough against China on trade matters and gain cheap political points as the new cycle of U.S. presidential election is looming.

Unlike previous rounds of taxing Chinese imports, the U.S. administration this time is targeting a wide swath of consumer goods, and therefore, is "using American families as a hostage" in its trade negotiations, according to Matt Priest, president of the Footwear Distributors and Retailers of America.

While the White House is boasting about taxing China until a trade deal is reached, it should keep in mind that China will only accept a win-win agreement on the basis of mutual respect and equal treatment.

Beijing's position has been consistent and clear: China does not want a trade war, but it is not afraid of one and will fight one if necessary.

In response to Washington's tariff assaults since March 2018, China has had to take forceful counter measures. This instance will be no exception.

Still, Beijing remains committed to handling its trade problems with Washington as long as the settlement is based on mutual respect and equality, and conform to China's core interests. China, which still sees a steady economic growth and boasts enormous potential for further development, will always find a way to withstand any pressure if there no deal is reached.

It is therefore hoped that Washington should drop its fantasy to bring Beijing down to its knees with its same and old tricks of maximun pressure. If it truly wants a deal, then they will need to show some real sincerity first.

[Aug 03, 2019] The US elite realised that globalization no longer serves the US as it leads to the rise of developing nations. Thus they no longer support it and even sabotage it.

Notable quotes:
"... US President Trump does not do that in order to dismantle the dollar or US hegemony because of so called isolationism, as some may think. Trump does that in order to save US hegemony, implementing policies, in my opinion, devised by the US military/intelligence/science community. They now want to hamper globalisation and create fortress US, in order to bring back manufacturing and save as much as possible of the US Empire. Chaos and lack of cooperation in the world benefit the US. They now realise globalisation no longer serves the US as it leads to the rise of developing nations. Thus they no longer support it and even sabotage it." ..."
"... Trump and his trade negotiators continue to insist on China agreeing to an unequal trade treaty. ..."
"... IMO, China can continue to refuse and stand up for its principles, while the world looks on and nods its head in agreement with China as revealed by the increasing desire of nations to become a BRI partner. ..."
"... It should be noted that Trump's approach while differing from the one pushed by Obama/Kerry/Clinton the goal is the same since the Empire needs the infusion of loot from China to keep its financial dollarized Ponzi Scheme functioning. ..."
"... Russia's a target too, but most of its available loot was already grabbed during the 1990s. ..."
"... I keep going back to believing that multilateralism is a code word for no longer allowing empire global private finance hegemony and fiat money. ..."
"... The continuing practice of Neoliberalism by the Outlaw US Empire and its associated corporations and vassal nations checkmates what you think Trump's trying to accomplish. Hudson has explained it all very well in a series of recent papers and interviews: Neoliberalism is all about growing Financial Capitalism and using it to exert control/hegemony on all aspects of political-economy. ..."
"... Trump hasn't proposed any new policy to accomplish his MAGA pledge other than engaging in economic warfare with most other nations. His is a Unilateral Pirate Ship out to plunder all and sundry, including those that elected him. ..."
Aug 03, 2019 | www.moonofalabama.org

Passer by | Aug 2 2019 23:39 utc | 30

I will mention this again, to see what people here think, as they are intelligent people. I sent mails to Russian and Chinese authorities about this.

"I will provide you with possible reasons behind the current trade wars and rejection of globalisation by the US. In short, they think that they will save their hegemony, to a certain degree, that way.

There are long term GDP Growth and Socioeconomic Scenarios developed by the Intergovernmental Panel on Climate Change, the OECD, and the world scientific community. They are generally used to measure the impact of Climate change on the World. In order to measure it, Socioeconomic Scenarios were developed, as the level of economic growth in the world is very important for determining the impact of Climate Change in the future. High growth levels will obviously affect Climate Change, so these GDP estimates are important. The scenarios are with time horizon 2100.

For more on this you can check these studies here, some of the many dealing with this topic. They describe the scenarios for the world.

https://www.sciencedirect.com/science/article/pii/S0959378016300681#sec0025

https://www.sciencedirect.com/science/article/abs/pii/S0959378015000837

There are 5 main scenarios, or "Shared Socioeconomic Pathways". All of them describe different worlds.

See SSP 3. A world of rivalry, trade wars, trade barriers, lack of global cooperation, and fragmentation, will lead to lower level of growth in the developing world, and thus a slow catch up process. Multipolarity in such a world is weak as the developing world is hampered.

In other words, a world of cooperation between countries will lead to higher economic growth in the developing world, faster catch up process, and thus stronger multipolarity.

Low cooperation, fragmented world, high conflict scenarios consistently lead to low growth in the developing world and thus to the US and the West retaining some of its positions - a world with overall bad economy and low level of multipolarity.

Basically, globalisation is key. The developing world (ex West) was growing slowly before globalisation (before 1990). Globalisation means sharing of technology and knowledge, and companies investing in poorer countries. Outsourcing of western manufacturing. Etc. After globalisation started in 1990, the developing world is growing very well. It is globalisation that is weakening the relative power of the West and empowering the developing world. The US now needs to kill globalisation if it is to stop its relative decline.

So what do we see: exactly attempts to create the SSP 3 scenario. Trade wars, sanctions, attacks on multilateral institutions - the WTO, on international law, on the Paris Climate Change Agreement (which if accepted would put constraints on the US economy), on the UN, bullying of Europe, lack of care for european energy needs, support for Brexit (which weakens Europe), crack down on chinese students and scientists in the US, crack down on chinese access to western science data, demands to remove the perks for poor countries in the WTO, etc. This is hitting economic growth in the whole world and the global economy currently is not well. By destroying the world economy, the US benefits as it hampers the rise of the developing nations.

US President Trump does not do that in order to dismantle the dollar or US hegemony because of so called isolationism, as some may think. Trump does that in order to save US hegemony, implementing policies, in my opinion, devised by the US military/intelligence/science community. They now want to hamper globalisation and create fortress US, in order to bring back manufacturing and save as much as possible of the US Empire. Chaos and lack of cooperation in the world benefit the US. They now realise globalisation no longer serves the US as it leads to the rise of developing nations. Thus they no longer support it and even sabotage it."

karlof1 , Aug 2 2019 23:55 utc | 31

psychohistorian @11--

You ask, "The concept of multilateralism is not completely clear to me in relation to the global public/private finance issue and I am not of faith but of questions...."

Wikileaks definition :

"In international relations, multilateralism refers to an alliance of multiple countries pursuing a common goal."

The key point for the Chinese during negotiations as I understand them via their published White Paper on the subject is development and the international rules put in place at WTO for nations placed into the Developing category, which get some preferential treatment to help their economies mature. As China often reminds the global public--and officials of the Outlaw US Empire--both the BRI and EAEU projects are about developing the economies of developing economies, that the process is designed to be a Win-Win for all the developing economies involved. This of course differs vastly from what's known as the Washington Consensus, where all developing economies kowtow to the Outlaw US Empire's diktat via the World Bank and IMF and thus become enslaved by dollar dependency/debt. Much is written about the true nature of the Washington Consensus, Perkins Confessions of an Economic Hit Man and Klein's Disaster Capitalism being two of the more recent and devastating, and many nations are able to attest to the Zero-sum results. The result is very few nations are willing to subject their economies to the pillaging via Washington Consensus institutions, which Hudson just recently reviewed.

The Empire is desperate and is looking for ways to keep its Super Imperialism intact and thus continue its policy aimed at Full Spectrum Dominance. But the Empire's abuse of the dollar-centric institutions of international commerce has only served to alienate its users who are openly and actively seeking to form parallel institutions under genuine multilateral control. However as Hudson illustrates, Trump doesn't know what he's doing regarding his trade and international monetary policies. Today's AP above the fold headline in Eugene's The Register Guard screamed "Trump threatens 10% tariffs;" but unusually for such stories, it explains that the 10% is essentially a tax on US consumers, not on Chinese companies, which provides a message opposite of the one Trump wants to impart--that he's being tough on the Chinese when the opposite's true. China will continue to resist the attempts to allow the international financial sharks to swim in Chinese waters as China is well aware of what they'll attempt to accomplish--and it's far easier to keep them out than to get them out once allowed in, although China's anti-corruption laws ought to scare the hell out of the CEOs of those corps.

The Empire wants to continue its longstanding Open Door policy in the realm of target nations opening their economies to the full force of Imperial-based corps so they can use their financial might to wrestle the market from domestic players and institute their Oligopoly. China already experienced the initial Open Door (which was aimed at getting Uncle Sam's share of China during the Unequal Treaties period 115 years ago) and will not allow that to recur. China invokes its right under WTO rules for developing economies to protect their financial services sector from predation; the Empire argues China is beyond a developing economy and must drop its shields. We've read what Hudson advised the Chinese to do--resist and develop a publicly-based yuan-centered financial system that highly taxes privatized rent-seekers while keeping and enhancing state-provided insurance--health, home, auto, life, etc--while keeping restrictions on foreign land ownership since it's jot allowed to purchase similar assets within the domestic US market.

The Outlaw US Empire insists that China give so it can take. Understandably, China says no; what we allow you to do, you should allow us to do. Trump and his trade negotiators continue to insist on China agreeing to an unequal trade treaty. Obviously, the latest proposal was merely a repetition of what came before and was rejected as soon as the meeting got underway, so it ended as quickly as it started. IMO, China can continue to refuse and stand up for its principles, while the world looks on and nods its head in agreement with China as revealed by the increasing desire of nations to become a BRI partner.

It should be noted that Trump's approach while differing from the one pushed by Obama/Kerry/Clinton the goal is the same since the Empire needs the infusion of loot from China to keep its financial dollarized Ponzi Scheme functioning.

Russia's a target too, but most of its available loot was already grabbed during the 1990s. D-Party Establishment candidates have yet to let it be known they'll try to do what Trump's failing to do, which of course has nothing to do with aiding the US consumer and everything to do with bolstering Wall Street's Ponzi Scheme.

Passer by | Aug 3 2019 0:06 utc | 32

karlof1 , Aug 2 2019 23:55 utc | 31

Good comment, karlof1 , i think that the attack against China is attack against the heart of multipolarity. It will be good if b could post about the escalation of the trade war. This is important. The US clearly intends to resist multipoarity, and tries to stop it.

karlof1 , Aug 3 2019 0:19 utc | 34
@ karlof1 with the response...thanks

If I would have had my act together last night I would have posted another link fro Xinhuanet (can't find now) about how China wants to retain developing nation status and provides as data that the (I think) per capita GDP had gone down....gotten worse in relation to the US per capita GDP.

I keep going back to believing that multilateralism is a code word for no longer allowing empire global private finance hegemony and fiat money.

Passer by @30--

The continuing practice of Neoliberalism by the Outlaw US Empire and its associated corporations and vassal nations checkmates what you think Trump's trying to accomplish. Hudson has explained it all very well in a series of recent papers and interviews: Neoliberalism is all about growing Financial Capitalism and using it to exert control/hegemony on all aspects of political-economy.

Thus, there's no need to sponsor the reindustrialization that would lead to MAGA. Indeed, Trump hasn't proposed any new policy to accomplish his MAGA pledge other than engaging in economic warfare with most other nations. His is a Unilateral Pirate Ship out to plunder all and sundry, including those that elected him.

In your outline, it's very easy to see why BRI is so attractive to other nations as it forwards SSP1. Awhile ago during a discussion of China's development goals, I posted links to its program that's very ambitious and doing very well with its implementation, the main introduction portal being here .

William Gruff , Aug 3 2019 0:28 utc | 35
psychohistorian @11 asked: "The concept of multilateralism is not completely clear to me in relation to the global public/private finance issue and I am not of faith but of questions...."

karlof1 @31 covered it pretty well I think, but I want to try to answer in just a couple sentences (unusual for me).

Global private finance is driven by one thing and one thing only: making maximum profits for the owners quarter by financial quarter. Global public finance is driven by the agendas of the nations with the public finance, with profits being a secondary or lesser issue.

This boils down to private finance being forever slave to the mindless whims of "The Market™" (hallowed be Its name), while public finance is, by its nature, something that is planned and deliberated. Nobody can guess where "The Market™" (hallowed be Its name) will lead society, though people with the resources like placing bets in stock markets on the direction It is taking us. On the other hand, if people have an idea which direction society should be heading in, public control over finance is a precondition to making it so.

Passer by , Aug 3 2019 0:32 utc | 36
Posted by: karlof1 | Aug 3 2019 0:19 utc | 34

"The continuing practice of Neoliberalism by the Outlaw US Empire"

I'm not sure this will be the case anymore -

Former heads of DHS and NSA explain how the U.S. can keep Huawei at bay

"Perhaps more importantly, this proposal demonstrates one way the U.S. can reinforce elements of what the government calls the “national technology and industrial base” (NTIB), the collection of companies who design, build and supply the U.S. with vital national-security related technologies."

https://www.cnbc.com/2019/07/11/chertoff-mcconnell-us-needs-to-have-more-allies-to-bypass-huawei.html

[Aug 03, 2019] China's UN Envoy Says If US Wants To Fight, We Will Fight, Warns Beijing Will No Longer Allow Hong Kong Protests

Aug 03, 2019 | www.zerohedge.com

he war of words between the world's top superpowers is getting more heated by the hour.

China's new ambassador to the United Nations, Zhang Jun, said on Friday that if the United States wanted to fight China on trade, "then we will fight" and warned that Beijing was prepared to take countermeasures over new U.S. tariffs, Reuters reports.

"China's position is very clear that if U.S. wishes to talk, then we will talk, if they want to fight, then we will fight," he told reporters. Calling Trump latest tariff announcement an "irrational, irresponsible act", Jun said that China "definitely will take whatever necessary countermeasures to protect our fundamental right, and we also urge the United States to come back to the right track in finding the right solution through the right way." The ambassador also took a stab at the disintegration of good relations between the US and North Korea (with Beijing's blessing no doubt), saying that "you cannot simply ask DPRK to do as much as possible while you maintain the sanctions against DPRK, that definitely is not helpful" Yun said siding the the Kim regime. It was more than obvious who the "you" he referred to was.

Pouring more salt on the sound, the Chinese diplomat said North Korea should be encourage, and "we think at an appropriate time there should be action taken to ease the sanctions", explicitly taking Pyongyang's side in the ongoing diplomatic saga between Kim and Trump.

When asked if China's trade relations with the United States could harm cooperation between the countries on dealing with North Korea, Zhang said it would be difficult to predict. He added: "It will be hard to imagine that on the one hand you are seeking the cooperation from your partner, and on the other hand you are hurting the interests of your partner."

As North Korea's ally and neighbor, China's role in agreeing to and enforcing international sanctions on the country over its nuclear and ballistic missile programs has been crucial.

However, it is what he said last that was most notable, as it touched on what will likely be the next big geopolitical swan, namely Hong Kong. To wit, Jun said that while Beijing is willing to cooperate with UN member states, it will never allow interference in "internal affairs" such as the controversial regions of Xinjiang and Tibet, and - last but not least - Hong Kong.

And in the latest warning to the defiant financial capital of the Pacific Rim, Jun virtually warned that a Chinese incursion is now just a matter of time, he said that Hong Kong protests are "really turning out to be chaotic and violent and we should no longer allow them to continue this reprehensible behavior."

... ... ...

[Aug 03, 2019] Bloomberg Economics initial estimate of the additional costs of U.S. tariffs and Chinese retaliation sees both economies taking a 0.2% hit to GDP by 2021

This might speed up "Trump recession"
Aug 03, 2019 | www.bloomberg.com

President Donald Trump's threat Thursday to put 10% tariffs on the remaining $300 billion of Chinese imports that aren't subject to his existing levies sent markets tumbling from Asia to Europe and in the U.S. on Friday. The new tax would hit American consumers, and businesses are going to face even more supply disruptions . China has already vowed to retaliate if Trump follows through.

Bloomberg Economics ' initial estimate of the additional costs of U.S. tariffs and Chinese retaliation sees both economies taking a 0.2% hit to GDP by 2021.

Meanwhile, a simmering trade fight between Japan and South Korea is boiling over , putting the health of two Asian export powers at stake. In Europe, concerns are mounting for a hard U.K. exit from the European Union.

The week ended with fresh numbers out of Washington that show U.S. trade actually declined during the first six months of the year as exports flattened out.

[Aug 03, 2019] Trump created a significant motivation in Europe and even China in creating a real alternative to the US dollar for international transactions which bypasses US banks. If this happens to any significant degree, it would undercut the US dollar as the world's reserve currency, resulting in a permanent drop in its value.

Aug 03, 2019 | www.nakedcapitalism.com

Noel Nospamington , August 3, 2019 at 10:50 am

I think that 10 years from now the biggest impact from Trump will be from his cancellation of the Iran nuclear accord and unilateral imposition of strict sanctions which the Europeans were not able to bypass in any meaningful way due the prevalence of the US dollar in global transactions.

There is now significant motivation in Europe and even China in creating a real alternative to the US dollar for international transactions which bypasses US banks. If this happens to any significant degree, it would undercut the US dollar as the world's reserve currency, resulting in a permanent drop in its value.

Without international support, US Government deficits and trade deficits will become unsustainable, and there will be a significant drop in the American median standard of living.

[Aug 03, 2019] The overwhelming correlation between austerity and Brexit

Aug 03, 2019 | economistsview.typepad.com

Christopher H. , July 23, 2019 at 03:27 PM

how those like kurt who mock economic anxiety are wrong

https://theweek.com/articles/853784/overwhelming-correlation-between-austerity-brexit

The overwhelming correlation between austerity and Brexit
Jeff Spross

July 22, 2019

Across the pond, the Brexit disaster continues to unfold in newly disastrous ways. Theresa May has resigned as prime minister, and the Trump-esque Boris Johnson looks like a lock to replace her. Parliament members -- up to and including Johnson's own fellow Conservatives -- are panicking that the new prime minister may try hardline tactics to force Brexit through, plan or no plan.

At this point, predicting how this mess will end is a fool's errand. But there are still lessons to be learned from how it began.

In particular, the Conservatives might want to look in the mirror -- and not just because it was their government that called the Brexit vote in the first place. It turns out the brutal austerity they imposed on Britain after the global 2008 financial crisis probably goes a long way towards explaining why Brexit is happening at all.

In the run-up to the Brexit referendum in 2016, much of the campaigning in favor of "Leave" was unabashedly racist. Hard-right political groups like the U.K. Independence Party (UKIP) painted a picture of native Britons overrun by hordes of foreign immigrants that were straining the country's health care, housing, public services, jobs and wages to the breaking point. The thing is, the racism was a particular poisonous way of framing a very real underlying economic fear: all those necessities really had become harder to come by.

Yet, as it is in America, actual evidence linking influxes of immigrants to rising scarcity in jobs and wages and other services is scarce. But something else had also recently happened that could explain why hospitals and schools were closing and why public aid was drying up: massive cuts to government spending.

A decade ago, the aftershocks of the global financial crisis had shrunk Britain's economy by almost 3 percent, kicking unemployment up from 5 percent to 8 percent by 2010. Under then-Prime Minister David Cameron, the Conservatives in power concluded that "confidence" among investors was necessary to restore economic growth -- and that meant cuts to government spending to balance the budget.

Thus the Conservatives pushed through a ferocious austerity package: Overall government spending fell 16 percent per person. Schools, libraries, and hospitals closed; public services like garbage collection ground to a halt; poverty shot up; and homelessness doubled. Despite unemployment staying stubbornly high and GDP growth staying stubbornly low -- in defiance of their own economic theory -- the Conservatives crammed through even more reductions in 2012. "It is hard to overestimate how devastating Cameron's austerity plan was, or how fast it happened," the British journalist Laurie Penny observed. A United Nations report from last year called the cuts "punitive, mean-spirited, and often callous."

But the damage was not evenly distributed across the country. At the district level -- Britain's units of local governance -- the reductions in spending ranged from 6.2 percent to an astonishing 46.3 percent from 2010 to 2015. The districts that were already the poorest were generally the hardest hit.

These differences across districts allowed Thiemo Fetzer, an associate professor of economics at the University of Warwick, to gauge the correlation between the government cuts and whether a district voted Leave or Remain. "Austerity had sizable and timely effects, increasing support for UKIP across local, national, and European elections," Fetzer wrote in a recent paper. He found that UKIP's share of a district's vote jumped anywhere from 3.5 to 11.9 percentage points in correlation with austerity's local impact. "Given the tight link between UKIP vote shares and an area's support for Leave, simple back-of-the-envelope calculations suggest that Leave support in 2016 could have been easily at least 6 percentage points lower," Fetzer continued. As tight as the Brexit referendum was, that alone could have been enough to swing it.

Other studies have shown links between how a local British community's economic fortunes fared and how it voted for Brexit as well. Economists Italo Colantone and Piero Stanig found that support for Leave was "systematically higher" in the regions of the country hit hardest by trade with China over the last three decades. Another analysis by Torsten Bell showed a strong correlation between British income inequality as of 2015 and Brexit support, with higher local vote shares for Leave the lower the local incomes were. (It's worth noting the Bell didn't find a correlation with Brexit when he looked at how local incomes changed from 2002 to 2015, but that's also a weird time frame to choose, as it mashes together a period of wage growth before 2008 with a major drop afterwards.)

Inequality in Britain had been worsening for decades, as the upper class in the City of London pulled further and further ahead of the largely rural working class, setting the stage for Brexit. And then austerity fell hardest on the shoulders of the latter group, compounding the effect.

"Individuals tend to react to the general economic situation of their region, regardless of their specific condition," Colantone and Stanig wrote. But Fetzer was able to break out some individual data in his analysis of austerity, and he found a correlation with Brexit votes there as well. Individual Britons who were more exposed to welfare state cuts -- in particular a reduction in supports for housing costs -- were again more likely to vote for UKIP. "Further, they increasingly perceive that their vote does not make a difference, that they do 'not have a say in government policy' or that 'public officials do not care,'" Fetzer observed.

It isn't that the economic dislocation of the 2008 crisis and the ensuing austerity crunch made Britons more racist. By all accounts, half or more of the country has consistently looked askance on immigration going back decades. (Indeed, international polling suggests a certain baseline dislike for immigration is a near-universal human condition.) What changed in the last few years was the willingness of certain parts of British society to act politically on those attitudes. And that, arguably, is where the economics come in.

Work from the Harvard economist Benjamin Friedman is instructive here. He found that periods of economic growth, where people feel the future is bright, make national populations more open, generous, and liberal. Times of economic contraction and stagnation have the opposite effect.

The British people, like everyone everywhere, are a mix of good and evil impulses. But by decimating public investment in a self-destructive quest for investor-led growth, the British government created a monster from those impulses. And the reckoning for that terrible error is still unfolding.

Christopher H. said in reply to Christopher H.... , July 23, 2019 at 03:28 PM
if - what should I call them? centerists? - like Krugman, Kurt and EMike really cared about racism they'd be in favor of ambitious programs so that voters' living standards rise.

Instead they push incrementalism and make excuses about Dems never having any power.

JohnH -> Christopher H.... , July 23, 2019 at 03:33 PM
Tut! Tut! Tut! It's not politically correct for Democrats to talk about the economy, inequality, and dislocation, is it? If people keep raising the issue, Democrats might be forced into acknowledging problems they helped to create. Worse, they might have to craft a coherent economic message that their Big Money puppeteers might not like! OMG!!! Armageddon!!!
Joe -> Christopher H.... , July 23, 2019 at 04:08 PM
He presented no evidence, just pundicizing based on priors.

Well I looked and could find no change in growth, it has been declining steadily since 1990, and the ten years has been correspondingly dropping since 1980.

So, I I am supposed to see evidence, then cite the chart I am supposed to look at. We are tired of useless pundicizers.

Christopher H. said in reply to Joe... , July 23, 2019 at 06:10 PM
no he is presenting the agreed-upon evidence. Austerity hurt the UK.

Cranks like you have no place in the discussion. Go entertain yourself somewhere else.

Joe -> Christopher H.... , July 24, 2019 at 03:15 AM
No, he would have cited evidence.
If he had any brains he would have recognized that we got the secstags going around, meaning the one cannot just look at the eight year recession cycle, one has to look at the full monetary cycle.
It is easy to tell the dufas among economists, they never look at nor cite any data.

For example, Krugman ignored the fact that Obamacare raised monthly taxes about $500 per household, lost four elections, proved himself a dolt and now want to write off Obamacare. Never once did Krugman make any attempt to correlate the Obamacare taxes with election losses, not once. He preferred the delusion, same as most of our favorite economists, I can count the one who actually look.

As Kurt said, being delusional hysterical freaks who send hundreds of billions to wealthy people then complain? Stupid,stupid stupid.

kurt -> Joe... , July 25, 2019 at 10:45 AM
You are exactly right here - Obamacare subsidies should have tapered off or been taxed away around the top 20% of income rather than the top 60. Big mistake - but it was a compromise to get several republicans to vote yes, but they (the Rs) negotiated in bad faith and then didn't do what they promised. But hey - when have the H brothers let facts get in the way of what they know, know, know about me.
Christopher H. said in reply to kurt... , July 25, 2019 at 07:03 PM
Joe said nothing of the kind.

The Rs didn't do what they promised? What did you expect?

you're a naive sucker

[Aug 02, 2019] Global Smartphone Shipments Plunge Again, Huawei Displaces Apple As No.2

Aug 02, 2019 | www.zerohedge.com

The global smartphone bust is currently underway (has been for some time) - but there's a new, surprising trend that could highlight one reason why the Trump administration has waged economic war against China.

First, let's start with the global smartphone shipment data from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker.

This new data details how worldwide smartphone shipments fell 2.3% in 2Q19 YoY. It also states that smartphone manufacturers shipped 333.2 million phones in 2Q19, which was up 6.5% QoQ.

An escalating trade war between the US and China contributed to sharp declines in shipments in both countries over the last year. However, the declines weren't nearly as severe as expected in China over 1H19 versus 1H18, suggesting that three years of a smartphone bust in Asia could be nearing a recovery phase. Asia/Pacific (excluding Japan and China) maintained solid momentum in 2Q YoY, with shipments up 3% in the quarter fueled by Southeast Asia markets.

The surprising trend IDC detected is that Huawei surpassed Apple in 2Q19, making it the first time in seven years that Samsung and Apple weren't the top smartphones manufactures in the world.

Now it seems that a South Korea company [Samsung] and a Chinese company [Huawei] are the world leaders in smartphone shipments, something that has irritated the Trump administration.

Samsung ranked No.1 with 75.5 million shipments in 2Q19, a 5.5% YoY increase. Huawei was No.2 with 58.7 million shipments in 2Q19, a 8.3% YoY jump. Apple was No.3 with 33.8 million shipments in 2Q19, a -18.2% YoY plunge.


Cheap Chinese Crap , 1 minute ago link

So let's see if I got this straight:

1) Huawei announces a .6% decline in shipments worldwide over the Q1 numbers.

2) Huawei announces an all-time high in domestic operations that now take up 62% of its sales.

What do these two numbers hide?

That Huawei's shipments to the international market must have suffered a considerable decline.

That the rise in sales in low-value Chinese phones doesn't begin to offset the large drop in high-value developed world sales except on a purely nominal numerical basis of numbers of phones sold. The money isn't in the phones. It's in the plans. In fact, China pioneered the idea of giving the phones away for free and then making it all back on the gated connection plans.

But there's no way that one Chinese plan equals one western plan in profitability back to the company, so buffing up the domestic numbers at the expense of the cash cow numbers overseas is ultimately not a good business strategy.

Plus of course Huawei can report any number it wants inside China and nobody has any way of testing its veracity. They could have shipped 20,000,000 phones to distributors on consignment and then marked it up as sales.

TheABaum , 6 minutes ago link

Apple's been running on momentum since 2011. Cook isn't Jobs.

Max.Power , 19 minutes ago link

Apple is trapped in a once-brilliant marketing strategy which it struggles to escape now: hi-end expensive devices.

It's not a hi-end product anymore, so it becomes more difficult to justify the price even for true fans.

Omni Consumer Product , 4 minutes ago link

It's still high-end, per se. But the price premium is no longer justified because other companies have commoditized the high-end features.

Frankly, the company was doomed the moment Jobs died and the reins were turned over to Cook - an accountant by training, who clearly has no futurist vision or marketing skill whatsoever.

Jobs might have been a puffed up peacock, but he was a master of creating the Reality Distortion Field.

deFLorable hillbilly , 36 minutes ago link

Smartphones are no longer fun or new or anything other than a commodity.

Now they're also devices which even the dumbest know track your every thought, purchase, move, etc...

It's like having a little East German Stasi agent in your pocket.

I hope they all go broke.

TheABaum , 4 minutes ago link

The curse of always on, always with you, always spying and always misplaced.

He–Mene Mox Mox , 39 minutes ago link

There is one big problem that no one is talking about. The cell phone market is over saturated! Practically everyone has got a cell phone these days. It's like the auto industry. There has been an over production 10 billion automobiles in the world for 7.2 billion people, of which half really can't afford to buy, much less drive, or even have a place to park it. I have seen people with 3 and 4 cell phones, but you only have 2 ears. How are more cell phones going to help you? Even women don't multitask that well.

The only thing that would make sales better on cell phones is if you could combine the computing power of a Cray computer into a roll-up tablet. Or, maybe a brain implant would be even better.

deFLorable hillbilly , 33 minutes ago link

No, they'll realize that it's far easier to design phones that fall apart after 18 month than to keep building quality products. Like American cars.

Iconoclast422 , 40 minutes ago link

who the hell is buying 11 million pieces of iCrap each month?

navy62802 , 57 minutes ago link

Apple has slowly but steadily declined overall since Steve Jobs' death. It's really sad to see the company steadily decline like it has.

adr , 1 hour ago link

Apple's iPhone shipments and sales have been falling for five years. Yet the company added $600billion in marketcap during that time.

That is the insanity of Wall Street.

Max.Power , 22 minutes ago link

In modern days, even having a negative profit for years doesn't mean you can't increase market capitalization.

thereasonableinvestor , 1 hour ago link

Apple has moved on from the iPhone.

Tim Cook: "When you step back and consider Wearables and Services together two areas where we have strategically invested in last several years, they now approach the size of a Fortune 50 company."

[Aug 01, 2019] A 26-year-old billionaire is building virtual border walls -- and the federal government is buying

Aug 01, 2019 | economistsview.typepad.com

Fred C. Dobbs , July 30, 2019 at 06:53 AM

(Is this anything?)

A 26-year-old billionaire is building virtual border walls -- and the federal government is buying

Sam Dean - July 29, 2019

https://techxplore.com/news/2019-07-year-old-billionaire-virtual-border-wallsand.html

On a Friday afternoon in late July, a crowd of techies, military types and a few civilians deployed to the new Irvine, Calif., headquarters of Anduril Industries, a defense tech start-up, to sip hibiscus margaritas and admire the sensor towers and carbon-fiber drones on display. Dave Brubeck tinkled over the sound system, and the dress code skewed office casual and pastel, offset by the bright red pop of a lone "Make America Great Again" hat by the taco bar.

After an hour of socializing amid surveillance equipment, Palmer Luckey, the company's 26-year-old near-billionaire founder, mounted a stage for the ribbon-cutting. Luckey had wanted to use the company's namesake sword -- a legendary weapon in "The Lord of the Rings" wielded by the hero Aragorn -- for the ceremony. ...

Armed instead with large scissors, and wearing his trademark uniform of Hawaiian shirt, cargo shorts and flip-flops, he dropped some Tolkien on the audience.

"Anduril," he said, leaning into the long Elvish vowels, "means Flame of the West. And I think that's what we're trying to be. We're trying to be a company that represents not just the best technology that Western democracy has to offer, but also the best ethics, the best of democracy, the best of values that we all hold dear."

Along remote stretches of the U.S.-Mexico border, and on the perimeters of military bases around the world, Luckey's vision was already becoming reality. Customs and Border Protection is using Anduril's high-tech surveillance network as a "virtual wall" of interlinked, solar-powered sentry towers that can alert agents of suspicious activity, and the company has signed similar deals with U.S. and U.K. military branches. ...

likbez , August 01, 2019 at 09:07 AM
Much depends on the flow via particular area. If the flow is low this is probably a viable technological solution.

Cheaper then the physical wall as spacing between towers can be hundred yards or even more.

Solar powered towers is an interesting feature suitable for this particular area, where sun is abundant during the year.

Drones add flexibility of following intruders "from above" until they are captured, but how efficient they are at night remains to be seen. Again this presupposes a very low flow in the guarded area.

In any case the main task of walls and other entrance barriers is to slow down the flow not to eliminate it completely.

So that those who manage to penetrate the barrier can be dealt with more quickly and efficiently.

[Aug 01, 2019] Trump will put additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China on Sept 1, 2019

Aug 01, 2019 | www.zerohedge.com

Just as investors thought it was safe to buy-the f**king-dip after Powell's plunge, President Trump steals the jam out of their donut by announcing new China tariffs...

"... on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country "

In a series of tweets, Trump laid out the state of the China trade deal... in a word - terrible...

Our representatives have just returned from China where they had constructive talks having to do with a future Trade Deal. We thought we had a deal with China three months ago, but sadly, China decided to re-negotiate the deal prior to signing. More recently, China agreed to...

...buy agricultural product from the U.S. in large quantities, but did not do so. Additionally, my friend President Xi said that he would stop the sale of Fentanyl to the United States – this never happened, and many Americans continue to die! Trade talks are continuing, and...

...during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%...

...We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!

[Aug 01, 2019] Fortunately, as Trump said, 'Trade Wars are easy to win!

Notable quotes:
"... Mr. Trump's anger was fueled, in part, by the fact that China has not begun buying large amounts of American farm products, which the president promised farmers would happen after a June meeting with Chinese President Xi Jinping. ..."
"... Mr. Trump took credit for China's weakening economy, saying the tariffs he's placed on $250 billion worth of Chinese goods have put enormous pressure on the country, costing it jobs and prompting companies to leave. ..."
"... American and Chinese negotiators finished talks on Wednesday with little progress toward ending a trade war that has shaken the world's economic confidence and rattled markets. ..."
"... Instead, both sides appear to be settling in for a lengthy economic conflict. ..."
"... Senior Chinese officials who gathered at an economic meeting on Tuesday run by China's top leader, Xi Jinping, stressed that the country had to rely on domestic demand to manage "new risks and challenges" and ward off what they described as "downward pressure on the economy," according to the Chinese state news media. China could turn "a crisis into an opportunity," the report added. ..."
"... A lengthy trade war presents China's leaders with some difficult options. China is enduring an economic slowdown that has been made worse by the trade tensions. Beijing has responded by ratcheting up spending on infrastructure and other big-ticket projects, a reliable growth strategy that nevertheless could worsen the country's debt problems and do little to solve economic imbalances that could hinder its long-term prospects. ..."
"... At a daily news briefing on Wednesday, Hua Chunying, a spokeswoman for the Chinese Foreign Ministry, said that "only if the U.S. shows sufficient integrity and sincerity, and conducts trade talks with the spirit of equality, mutual respect, mutual understanding and mutual accommodation, can the trade talks make progress." ... ..."
"... the trade pressure by the United States on China has from the beginning been about undermining Chinese development. The US point has always been to stop Chinese scientific and technological advance but the Chinese have always understood and that is just not ever going to happen. ..."
"... Accept United States restrictions on Chinese investments in sensitive technologies without retaliating. ..."
"... Open up its services and agricultural sectors to full American competition. ..."
Aug 01, 2019 | economistsview.typepad.com

Fred C. Dobbs , July 30, 2019 at 10:52 AM

President Trump took credit for weakening
China's economy and downplayed the likelihood
of a trade deal before the 2020 election.

His comments came as his top negotiators were sitting
down to dinner with their counterparts in Shanghai.

Trump Goads China as Trade Talks
Resume https://nyti.ms/32X4vBj
NYT - Ana Swanson and Jeanna Smialek - July 30

WASHINGTON -- President Trump lashed out at China on Tuesday morning as trade talks between the two nations resumed, taking credit for weakening China's economy and downplaying the likelihood of a deal before the 2020 election.

The president's comments, in posts on Twitter and remarks to the press, came just as his top negotiators were sitting down to dinner with their counterparts at the Fairmont Peace Hotel in Shanghai. While both sides are trying to get trade talks back on track, Mr. Trump's angry words underscored the diminishing prospects for a transformative trade deal anytime soon and the extent to which the bilateral relationship has not unfolded in the way that Mr. Trump expected.

"I think the biggest problem to a trade deal is China would love to wait and just hope," the president said. "They hope -- it's not going to happen, I hope, but they would just love if I got defeated so they could deal with somebody like Elizabeth Warren or Sleepy Joe Biden or any of these people, because then they'd be allowed and able to continue to rip off our country like they've been doing for the last 30 years."

Mr. Trump's anger was fueled, in part, by the fact that China has not begun buying large amounts of American farm products, which the president promised farmers would happen after a June meeting with Chinese President Xi Jinping. Mr. Trump emerged from that meeting in Osaka, Japan, saying he had agreed to postpone tariffs on an additional $300 billion of Chinese products and allow American firms to resume sales of nonsensitive goods to the Chinese telecom firm Huawei. In return, Mr. Trump said China would immediately start buying American agricultural goods, touting it as a big win for farmers.

But no such purchases have happened, and, in the weeks since, Chinese officials disputed that they had agreed to buy more farm products as a condition of the talks. On Sunday, Chinese state media reported that "millions of tons" of American soybeans had been shipped to China. But Mr. Trump on Tuesday said no such purchases had materialized.

China "was supposed to start buying our agricultural product now -- no signs that they are doing so," Mr. Trump tweeted. "That is the problem with China, they just don't come through."

His comments on Tuesday appeared to be an effort to give his negotiators more leverage and to pressure China into making concessions in talks this week. Mr. Trump took credit for China's weakening economy, saying the tariffs he's placed on $250 billion worth of Chinese goods have put enormous pressure on the country, costing it jobs and prompting companies to leave.

But he seemed to veer between goading China to quickly accede to America's demands and suggesting the country could get a better deal if it waits and a Democrat wins the 2020 presidential election. ...

Fred C. Dobbs , July 31, 2019 at 06:50 AM
US-China Trade Talks End With No Deal
in Sight https://nyti.ms/2GE3LHt
NYT - Alexandra Stevenson - July 31

American and Chinese negotiators finished talks on Wednesday with little progress toward ending a trade war that has shaken the world's economic confidence and rattled markets.

Treasury Secretary Steven Mnuchin and Robert E. Lighthizer, the Trump administration's top trade negotiator, were seen leaving trade talks on Wednesday, the Chinese state news media said.

Both sides "conducted frank, efficient and constructive in-depth exchanges on major issues of common interest in the economic and trade field," said a statement late in the day that was released by CCTV, China's state broadcaster.

Another round of high-level talks will take place in the United States in September, CCTV reported.

The Trump administration had not yet released its own statement.

The meeting marked the first formal resumption of talks after negotiations fell apart almost three months ago, with each side pointing fingers at the other for derailing a deal. They agreed to try again after meeting last month on the sidelines of the Group of 20 summit meeting in Osaka, Japan.

Instead, both sides appear to be settling in for a lengthy economic conflict.

Senior Chinese officials who gathered at an economic meeting on Tuesday run by China's top leader, Xi Jinping, stressed that the country had to rely on domestic demand to manage "new risks and challenges" and ward off what they described as "downward pressure on the economy," according to the Chinese state news media. China could turn "a crisis into an opportunity," the report added.

A lengthy trade war presents China's leaders with some difficult options. China is enduring an economic slowdown that has been made worse by the trade tensions. Beijing has responded by ratcheting up spending on infrastructure and other big-ticket projects, a reliable growth strategy that nevertheless could worsen the country's debt problems and do little to solve economic imbalances that could hinder its long-term prospects.

Should China reach a quick deal, on the other hand, the country's leaders risk looking weak in the face of foreign powers, undermining the Communist Party's historical claim to rule.

At a daily news briefing on Wednesday, Hua Chunying, a spokeswoman for the Chinese Foreign Ministry, said that "only if the U.S. shows sufficient integrity and sincerity, and conducts trade talks with the spirit of equality, mutual respect, mutual understanding and mutual accommodation, can the trade talks make progress." ...

anne -> Fred C. Dobbs... , July 31, 2019 at 07:36 AM
As I have repeatedly documented on Economist's View, the trade pressure by the United States on China has from the beginning been about undermining Chinese development. The US point has always been to stop Chinese scientific and technological advance but the Chinese have always understood and that is just not ever going to happen.
anne -> Fred C. Dobbs... , July 31, 2019 at 07:37 AM
https://www.washingtonpost.com/news/wonk/wp/2018/05/04/trump-is-asking-china-to-redo-just-about-everything-with-its-economy/

May 4, 2018

Trump is asking China to redo just about everything with its economy
By Heather Long - Washington Post

The Trump administration has finally presented the Chinese government with a clear list of trade demands. It's long and intense (there are eight sections), and President Trump isn't just asking Chinese President Xi Jinping for a few modifications. He's asking Xi to completely change his plans to turn the Chinese economy into a tech powerhouse.

The demands include the following:

• China will cut the $336 billion U.S.-China trade deficit by at least $200 billion by 2020, a 60 percent reduction.
• China will stop subsidizing tech companies.
• China will cease stealing U.S. intellectual property.
• China will cut its tariffs on U.S. goods by 2020.
• China will not retaliate against the United States (including against U.S. farmers).
• The Chinese government will open China to more U.S. investment.

anne -> Fred C. Dobbs... , July 31, 2019 at 07:38 AM
https://www.nytimes.com/2018/05/04/business/china-us-trade-talks.html

May 4, 2018

U.S.-China Trade Talks End With Strong Demands, but Few Signs of a Deal
By Keith Bradsher

BEIJING -- The extensive list of United States trade demands was unexpectedly sweeping, and showed that the Trump administration has no intention of backing down despite Beijing's assertive stance in the last few days. "The list reads like the terms for a surrender rather than a basis for negotiation," said Eswar Prasad, an economics professor at Cornell University.

Here are the highlights of the demands:

China must

■ Cut its trade surplus by $100 billion in the 12 months starting in June, and by another $100 billion in the following 12 months.

■ Halt all subsidies to advanced manufacturing industries in its so-called Made In China 2025 program. The program covers 10 sectors, including aircraft manufacturing, electric cars, robotics, computer microchips and artificial intelligence.

■ Accept that the United States may restrict imports from the industries under Made in China 2025.

■ Take "immediate, verifiable steps" to halt cyberespionage into commercial networks in the United States.

■ Strengthen intellectual property protections.

Accept United States restrictions on Chinese investments in sensitive technologies without retaliating.

■ Cut its tariffs, which currently average 10 percent, to the same level as in the United States, where they average 3.5 percent for all "noncritical sectors."

Open up its services and agricultural sectors to full American competition.

The United States also stipulated that the two sides should meet every quarter to review progress.

Fred C. Dobbs said in reply to anne... , July 31, 2019 at 07:51 AM
Fortunately, as Trump said,
'Trade Wars are easy to win!'

[Aug 01, 2019] Brexit like Trump election was a protest against neoliberal globalization. A sign of collapse of neoliberal ideology and the grip of neoliberal elite on the population.

Aug 01, 2019 | economistsview.typepad.com

anne , July 31, 2019 at 11:06 AM

https://mainly macro.blogspot.com/2019/07/there-is-no-mandate-for-no-deal.html

July 31, 2019

There is no mandate for No Deal

We are told constantly that the 2016 referendum gives our government a mandate for a No Deal Brexit, and that we would not respect democracy if we failed to leave. Both arguments are obviously false, yet they so often go unchallenged in the media.

... ... ...

-- Simon Wren-Lewis

likbez -> anne... , August 01, 2019 at 09:51 AM
Brexit like Trump election was a protest against neoliberal globalization. A sign of collapse of neoliberal ideology and the grip of neoliberal elite on the population.

In essence, a "no confidence" vote for the neoliberal elite in both countries.

Of course, Simon Wren-Lewis is afraid to acknowledged this and is engaged in sophistry.

[Jul 30, 2019] EU bureaucracy is not compatible with UK identity.

Jul 30, 2019 | www.moonofalabama.org

Noirette , Jul 30 2019 15:42 utc | 94

EU bureaucracy is not compatible with UK identity.

I agree re. a sort of fundamental 'spirit'. So far, since 1973 (EEC, idk if this was properly done, you say not: fraudulent ) EU-UK relations have not been riven by disruptive strife or even temp. explosive argument (in part due to EU rules etc.) Accomodations were made.. An apogee of hand-holding-harmony was reached when Mitterand and Thatcher convinced the Germans to give up the D-mark in return for blessing the re-unification of Germany. The UK did not join the Euro zone (1992). So the UK was overall a big 'winner' on several levels (imho.)

Brexit is the first step in bringing politics back to local accountability

I hope so but dangers lurk and i am pessimistic. Crash-out on 31 Oct. will happen, and will have a horrific impact. In any case the political accountability of the Gvmt. in the UK is at present abysmally low.

[Jul 30, 2019] Donald Trump s ruthless use of the centrality of his country s financial system

Trump definitely contributes a lot to the collapse of classic neoliberalism. He rejected neoliberal globalization in favor of using the USA dominant position for cutting favorable to the USA bilateral deals. That undermined the role of dollar of the world reserve currency and several mechanisms emerged which allow completely bypass dollar system for trade.
Notable quotes:
"... US President Donald Trump's ruthless use of the centrality of his country's financial system and the dollar to force economic partners to abide by his unilateral sanctions on Iran has forced the world to recognise the political price of asymmetric economic interdependence. ..."
"... A new world is emerging, in which it will be much harder to separate economics from geopolitics. ..."
Jul 06, 2019 | www.nakedcapitalism.com

US President Donald Trump's ruthless use of the centrality of his country's financial system and the dollar to force economic partners to abide by his unilateral sanctions on Iran has forced the world to recognise the political price of asymmetric economic interdependence.

In response, China (and perhaps Europe) will fight to establish their own networks and secure control of their nodes. Again, multilateralism could be the victim of this battle.

A new world is emerging, in which it will be much harder to separate economics from geopolitics. It's not the world according to Myrdal, Frank, and Perroux, and it's not Tom Friedman's flat world, either. It's the world according to Game of Thrones .


Synoia , July 5, 2019 at 11:14 am

A new world is emerging, in which it will be much harder to separate economics from geopolitics.

Really? Why was Economics was originally named “Political Economy?”

vlade , July 5, 2019 at 1:36 pm

Politics is a continuation of economy by other means (well, you can write it the other way around too, TBH).

Summer , July 5, 2019 at 9:45 pm

It made me do a face palm. Somebody thought they had separated economics from geopolitics or power…or at least they wanted people to believe that and the jig is up.

fdr-fan , July 5, 2019 at 11:40 am

This paragraph is thought-provoking:

“One reason for this is that in an increasingly digitalised economy, where a growing part of services are provided at zero marginal cost, value creation and value appropriation concentrate in the innovation centers and where intangible investments are made. This leaves less and less for the production facilities where tangible goods are made.”

It depends on what you mean by value.

If value is dollars in someone’s Cayman Islands tax-free account, then value is concentrated in NYC and SF.

But if we follow Natural Law (Marx or Mohammed) and define value as labor, then this is exactly wrong. A Natural Law economy tries to maximize paid and useful work, because people are made to be useful.

The digital world steadily eliminates useful work, and steadily crams down the wages for the little work that remains. Real value is avalanching toward zero, while Cayman value is zooming to infinity.

Carolinian , July 5, 2019 at 12:35 pm

He’s talking more about the whims of the stock market and of our intellectual property laws. For example the marginal cost for Microsoft to issue another copy of “Windows” is zero. Even their revised iterations of the OS were largely a rehash of the previous software. Selling this at high prices worked out well for a long time but now the software can practically be had for free because competitors like Linux and Android are themselves free. So digital services with their low marginal cost depend on a shaky government edifice (patent enforcement, lack of antitrust) to prop up their value. Making real stuff still requires real labor and even many proposed robot jobs–driving cars, drone deliveries, automated factories and warehouses–are looking dubious. Dean Baker has said that the actual investment in automation during the last decades has slowed–perhaps because expensive and complicated robots may have trouble competing with clever if poorly paid humans. And poorly paid is the current reality due to population increases and political trends and perhaps, yes, automation.

And even if the masters of the universe could eliminate labor they would then have nobody to buy their products. The super yacht market is rather small.

eg , July 6, 2019 at 5:39 am

pour encourager les autres …

a different chris , July 5, 2019 at 12:14 pm

>the distribution of gains from openness and participation in the global economy is increasingly skewed. …. True, protectionism remains a dangerous lunacy.

Well “openness and participation” is looking like lunacy to the Deplorables for exactly the reason given, so what is actually on offer here?

Lee , July 5, 2019 at 12:37 pm

With useful physical labor being off-shored, first world citizens should all be made shareholders in the new scheme. We shall all then become dividend collecting layabouts buying stuff made by people we do not know, see, or care about. If they object we simply have the military mount a punitive expedition until they get whipped back into shape. Sort of like now but with a somewhat larger, more inclusive shareholder base. It will be wonderful!

CenterOfGravity , July 5, 2019 at 1:58 pm

Are you sayin’ the lefty Social Wealth Fund concept is really just another way of replicating the same old bougie program of domination and suppression?

Check out Matt Bruenig’s concept below. The likelihood that endlessly pursuing wealthy tax dodgers will be a fruitless and lost effort feels like a particularly persuasive argument for a SWF: https://www.peoplespolicyproject.org/projects/social-wealth-fund/

Lee , July 5, 2019 at 2:26 pm

I’m saying that it can be and historically, and that there are and have been multi-national systems of super exploitation of peripheral, primarily resource exporting populations, relative to a more broadly distributed prosperity for “higher” skilled populations of the center. This has been a common perspective within anti-imperialist movements.

The argument is not without merit. Is this a “contradiction among the people” where various sectors of a larger labor movement can renegotiate terms, or is it some more intransigent, deeply antagonistic relationship is a crucial question. The exportation of manufacturing to the periphery is disrupting the political status-quo as represented by the center’s centrism, political sentiments are breaking away to the left and right and where they’ll land nobody knows.

Ignacio , July 5, 2019 at 12:16 pm

Do not forget mentioning how the tax system has been gamed to increase rent extraction and inequality.

samhill , July 5, 2019 at 12:32 pm

Why is Iran such a high priority for so many US elites?

I was just reading this John Helmer below, like Pepe Escobar I’m not sure who’s buttering his bread but it’s all food for thought and fresh cooked blinis are tastier than the Twinkies from the western msm, and this thought came to mind: Iran is the perfect test ground for the US to determine Russian weapons and tactical capabilities in a major war context in 2019. That alone might make it worth it to the Pentagon, why they seem so enthusiastic to take the empire of chaos to unforseen heights (depts?). Somewhat like the Spanish Civil War was a testing ground for the weapons of WW2.

http://johnhelmer.org/against-the-blitz-wolf-russian-reinforcements-for-irans-defence-in-war-against-all/

Synoia , July 5, 2019 at 12:56 pm

Speculation:

1. Because it has a lot of non US controlled Oil.
2. Because it is Central on the eastern end of the silk road.
3. Because it does not kiss the US Ring bearers hand at every opportunity, and the US is determined to make it an example not to be followed.

John k , July 5, 2019 at 1:27 pm

But consider Saudi us relations… who is kissing who’s ring?
Or consider Israeli us relations… ditto.
We’re a thuggish whore whose favors are easily bought; bring dollars or votes. Or kiss the ring.

Susan the other` , July 5, 2019 at 1:51 pm

An environmental insight here. The world stands devastated. It has reached its carrying capacity for thoughtless humans. From here on in we have to take the consequences of our actions into account. So when it is said, as above, that the dollar exchange rate is more important than the other bilateral exchange rates, I think that is no longer the reality. There is only a small amount of global economic synergy that operates without subsidy. The vast majority is subsidized. And the dollar is just one currency. And, unfortunately, the United States does not control the sun and the wind (well we’ve got Trump), or the ice and snow. Let alone the oceans. The big question going forward is, Can the US maintain its artificial economy? Based on what?

Old Jake , July 5, 2019 at 2:51 pm

That is a factor that seems ignored by the philosophers who are the subjects of the headline posting. It is a great oversight, a shoe which has been released and is now impacting the floor. “The best laid schemes o’ mice an’ men”

Brian Westva , July 5, 2019 at 6:13 pm

Unfortunately our economy is based on the military industrial surveillance complex.

Sound of the Suburbs , July 6, 2019 at 2:53 pm

A multi-polar world became a uni-polar world with the fall of the Berlin Wall and Francis Fukuyama said it was the end of history.

The Americans had other ideas and set about creating another rival as fast as they possibly could, China.

China went from almost nothing to become a global super power.

The Americans have realised they have messed up big time and China will soon take over the US as the world’s largest economy.

Beijing has taken over support for the Washington consensus as they have thirty years experience telling them how well it works for them.

The Washington consensus is now known as the Beijing consensus.

[Jul 29, 2019] Michael Hudson Trump s Brilliant Strategy to Dismember US Dollar Hegemony by Michael Hudson

Highly recommended!
Looks like the world order established after WWIII crumbed with the USSR and now it is again the law if jungles with the US as the biggest predator.
Notable quotes:
"... The root cause is clear: After the crescendo of pretenses and deceptions over Iraq, Libya and Syria, along with our absolution of the lawless regime of Saudi Arabia, foreign political leaders are coming to recognize what world-wide public opinion polls reported even before the Iraq/Iran-Contra boys turned their attention to the world's largest oil reserves in Venezuela: The United States is now the greatest threat to peace on the planet. ..."
"... Calling the U.S. coup being sponsored in Venezuela a defense of democracy reveals the Doublethink underlying U.S. foreign policy. It defines "democracy" to mean supporting U.S. foreign policy, pursuing neoliberal privatization of public infrastructure, dismantling government regulation and following the direction of U.S.-dominated global institutions, from the IMF and World Bank to NATO. For decades, the resulting foreign wars, domestic austerity programs and military interventions have brought more violence, not democracy ..."
"... A point had to come where this policy collided with the self-interest of other nations, finally breaking through the public relations rhetoric of empire. Other countries are proceeding to de-dollarize and replace what U.S. diplomacy calls "internationalism" (meaning U.S. nationalism imposed on the rest of the world) with their own national self-interest. ..."
"... For the past half-century, U.S. strategists, the State Department and National Endowment for Democracy (NED) worried that opposition to U.S. financial imperialism would come from left-wing parties. It therefore spent enormous resources manipulating parties that called themselves socialist (Tony Blair's British Labour Party, France's Socialist Party, Germany's Social Democrats, etc.) to adopt neoliberal policies that were the diametric opposite to what social democracy meant a century ago. But U.S. political planners and Great Wurlitzer organists neglected the right wing, imagining that it would instinctively support U.S. thuggishness. ..."
"... Perhaps the problem had to erupt as a result of the inner dynamics of U.S.-sponsored globalism becoming impossible to impose when the result is financial austerity, waves of population flight from U.S.-sponsored wars, and most of all, U.S. refusal to adhere to the rules and international laws that it itself sponsored seventy years ago in the wake of World War II. ..."
"... Here's the first legal contradiction in U.S. global diplomacy: The United States always has resisted letting any other country have any voice in U.S. domestic policies, law-making or diplomacy. That is what makes America "the exceptional nation." But for seventy years its diplomats have pretended that its superior judgment promoted a peaceful world (as the Roman Empire claimed to be), which let other countries share in prosperity and rising living standards. ..."
"... Inevitably, U.S. nationalism had to break up the mirage of One World internationalism, and with it any thought of an international court. Without veto power over the judges, the U.S. never accepted the authority of any court, in particular the United Nations' International Court in The Hague. Recently that court undertook an investigation into U.S. war crimes in Afghanistan, from its torture policies to bombing of civilian targets such as hospitals, weddings and infrastructure. "That investigation ultimately found 'a reasonable basis to believe that war crimes and crimes against humanity." ..."
"... This showed that international finance was an arm of the U.S. State Department and Pentagon. But that was a generation ago, and only recently did foreign countries begin to feel queasy about leaving their gold holdings in the United States, where they might be grabbed at will to punish any country that might act in ways that U.S. diplomacy found offensive. So last year, Germany finally got up the courage to ask that some of its gold be flown back to Germany. U.S. officials pretended to feel shocked at the insult that it might do to a civilized Christian country what it had done to Iran, and Germany agreed to slow down the transfer. ..."
"... England refused to honor the official request, following the direction of Bolton and U.S. Secretary of State Michael Pompeo. As Bloomberg reported: "The U.S. officials are trying to steer Venezuela's overseas assets to [Chicago Boy Juan] Guaido to help bolster his chances of effectively taking control of the government. The $1.2 billion of gold is a big chunk of the $8 billion in foreign reserves held by the Venezuelan central bank." ..."
"... But now, cyber warfare has become a way of pulling out the connections of any economy. And the major cyber connections are financial money-transfer ones, headed by SWIFT, the acronym for the Society for Worldwide Interbank Financial Telecommunication, which is centered in Belgium. ..."
"... On January 31 the dam broke with the announcement that Europe had created its own bypass payments system for use with Iran and other countries targeted by U.S. diplomats. Germany, France and even the U.S. poodle Britain joined to create INSTEX -- Instrument in Support of Trade Exchanges. The promise is that this will be used only for "humanitarian" aid to save Iran from a U.S.-sponsored Venezuela-type devastation. But in view of increasingly passionate U.S. opposition to the Nord Stream pipeline to carry Russian gas, this alternative bank clearing system will be ready and able to become operative if the United States tries to direct a sanctions attack on Europe ..."
"... The U.S. overplaying its position is leading to the Mackinder-Kissinger-Brzezinski Eurasian nightmare that I mentioned above. In addition to driving Russia and China together, U.S. diplomacy is adding Europe to the heartland, independent of U.S. ability to bully into the state of dependency toward which American diplomacy has aimed to achieve since 1945. ..."
"... By following U.S. advice, countries have left themselves open to food blackmail – sanctions against providing them with grain and other food, in case they step out of line with U.S. diplomatic demands. ..."
"... It is worthwhile to note that our global imposition of the mythical "efficiencies" of forcing Latin American countries to become plantations for export crops like coffee and bananas rather than growing their own wheat and corn has failed catastrophically to deliver better lives, especially for those living in Central America. The "spread" between the export crops and cheaper food imports from the U.S. that was supposed to materialize for countries following our playbook failed miserably – witness the caravans and refugees across Mexico. Of course, our backing of the most brutal military dictators and crime lords has not helped either. ..."
"... But a few years ago Ukraine defaulted on $3 billion owed to Russia. The IMF said, in effect, that Ukraine and other countries did not have to pay Russia or any other country deemed to be acting too independently of the United States. The IMF has been extending credit to the bottomless it of Ukrainian corruption to encourage its anti-Russian policy rather than standing up for the principle that inter-government debts must be paid. ..."
"... It is as if the IMF now operates out of a small room in the basement of the Pentagon in Washington. ..."
"... Anticipating just such a double-cross, President Chavez acted already in 2011 to repatriate 160 tons of gold to Caracas from the United States and Europe. ..."
"... It would be good for Americans, but the wrong kind of Americans. For the Americans that would populate the Global Executive Suite, a strong US$ means that the stipends they would pay would be worth more to the lackeys, and command more influence. ..."
"... Dumping the industrial base really ruined things. America is now in a position where it can shout orders, and drop bombs, but doesn't have the capacity to do anything helpful. They have to give up being what Toynbee called a creative minority, and settle for being a dominant minority. ..."
"... Having watched the 2016 election closely from afar, I was left with the impression that many of the swing voters who cast their vote for Trump did so under the assumption that he would act as a catalyst for systemic change. ..."
"... Now we know. He has ripped the already transparent mask of altruism off what is referred to as the U.S.-led liberal international order and revealed its true nature for all to see, and has managed to do it in spite of the liberal international establishment desperately trying to hold it in place in the hope of effecting a seamless post-Trump return to what they refer to as "norms". Interesting times. ..."
"... Exactly. He hasn't exactly lived up to advanced billing so far in all respects, but I suspect there's great deal of skulduggery going on behind the scenes that has prevented that. ..."
"... To paraphrase the infamous Rummy, you don't go to war with the change agent and policies you wished you had, you go to war with the ones you have. That might be the best thing we can say about Trump after the historic dust of his administration finally settles. ..."
"... Yet we find out that Venezuela didn't managed to do what they wanted to do, the Europeans, the Turks, etc bent over yet again. Nothing to see here, actually. ..."
"... So what I'm saying is he didn't make his point. I wish it were true. But a bit of grumbling and (a tiny amount of) foot-dragging by some pygmy leaders (Merkel) does not signal a global change. ..."
"... Currency regime change can take decades, and small percentage differences are enormous because of the flows involved. USD as reserve for 61% of global sovereigns versus 64% 15 years ago is a massive move. ..."
"... I discovered his Super Imperialism while looking for an explanation for the pending 2003 US invasion of Iraq. If you haven't read it yet, move it to the top of your queue if you want to have any idea of how the world really works. ..."
"... If it isn't clear to the rest of the world by now, it never will be. The US is incapable of changing on its own a corrupt status quo dominated by a coalition of its military industrial complex, Wall Street bankers and fossil fuels industries. As long as the world continues to chase the debt created on the keyboards of Wall Street banks and 'deficits don't matter' Washington neocons – as long as the world's 1% think they are getting 'richer' by adding more "debts that can't be repaid (and) won't be" to their portfolios, the global economy can never be put on a sustainable footing. ..."
"... In other words, after 2 World Wars that produced the current world order, it is still in a state of insanity with the same pretensions to superiority by the same people, to get number 3. ..."
"... Few among Washington's foreign policy elite seem to fully grasp the complex system that made U.S. global power what it now is, particularly its all-important geopolitical foundations. As Trump travels the globe, tweeting and trashing away, he's inadvertently showing us the essential structure of that power, the same way a devastating wildfire leaves the steel beams of a ruined building standing starkly above the smoking rubble." ..."
"... He's draining the swamp in an unpredicted way, a swamp that's founded on the money interest. I don't care what NYT and WaPo have to say, they are not reporting events but promoting agendas. ..."
"... The financial elites are only concerned about shaping society as they see fit, side of self serving is just a historical foot note, Trumps past indicates a strong preference for even more of the same through authoritarian memes or have some missed the OT WH reference to dawg both choosing and then compelling him to run. ..."
"... Highly doubt Trump is a "witting agent", most likely is that he is just as ignorant as he almost daily shows on twitter. On US role in global affairs he says the same today as he did as a media celebrity in the late 80s. Simplistic household "logics" on macroeconomics. If US have trade deficit it loses. Countries with surplus are the winners. ..."
"... Anyhow frightening, the US hegemony have its severe dark sides. But there is absolutely nothing better on the horizon, a crash will throw the world in turmoil for decades or even a century. A lot of bad forces will see their chance to elevate their influence. There will be fierce competition to fill the gap. ..."
"... On could the insane economic model of EU/Germany being on top of global affairs, a horribly frightening thought. Misery and austerity for all globally, a permanent recession. Probably not much better with the Chinese on top. I'll take the USD hegemony any day compared to that prospect. ..."
"... Former US ambassador, Chas Freeman, gets to the nub of the problem. "The US preference for governance by elected and appointed officials, uncontaminated by experience in statecraft and diplomacy, or knowledge of geography, history and foreign affairs" https://www.youtube.com/watch?annotation_id=annotation_882041135&feature=iv&src_vid=Ge1ozuXN7iI&v=gkf2MQdqz-o ..."
"... Michael Hudson, in Super Imperialism, went into how the US could just create the money to run a large trade deficit with the rest of the world. It would get all these imports effectively for nothing, the US's exorbitant privilege. I tied this in with this graph from MMT. ..."
"... The Government was running a surplus as the economy blew up in the early 1990s. It's the positive and negative, zero sum, nature of the monetary system. A big trade deficit needs a big Government deficit to cover it. A big trade deficit, with a balanced budget, drives the private sector into debt and blows up the economy. ..."
Feb 01, 2019 | www.nakedcapitalism.com

The end of America's unchallenged global economic dominance has arrived sooner than expected, thanks to the very same Neocons who gave the world the Iraq, Syria and the dirty wars in Latin America. Just as the Vietnam War drove the United States off gold by 1971, its sponsorship and funding of violent regime change wars against Venezuela and Syria – and threatening other countries with sanctions if they do not join this crusade – is now driving European and other nations to create their alternative financial institutions.

This break has been building for quite some time, and was bound to occur. But who would have thought that Donald Trump would become the catalytic agent? No left-wing party, no socialist, anarchist or foreign nationalist leader anywhere in the world could have achieved what he is doing to break up the American Empire. The Deep State is reacting with shock at how this right-wing real estate grifter has been able to drive other countries to defend themselves by dismantling the U.S.-centered world order. To rub it in, he is using Bush and Reagan-era Neocon arsonists, John Bolton and now Elliott Abrams, to fan the flames in Venezuela. It is almost like a black political comedy. The world of international diplomacy is being turned inside-out. A world where there is no longer even a pretense that we might adhere to international norms, let alone laws or treaties.

The Neocons who Trump has appointed are accomplishing what seemed unthinkable not long ago: Driving China and Russia together – the great nightmare of Henry Kissinger and Zbigniew Brzezinski. They also are driving Germany and other European countries into the Eurasian orbit, the "Heartland" nightmare of Halford Mackinder a century ago.

The root cause is clear: After the crescendo of pretenses and deceptions over Iraq, Libya and Syria, along with our absolution of the lawless regime of Saudi Arabia, foreign political leaders are coming to recognize what world-wide public opinion polls reported even before the Iraq/Iran-Contra boys turned their attention to the world's largest oil reserves in Venezuela: The United States is now the greatest threat to peace on the planet.

Calling the U.S. coup being sponsored in Venezuela a defense of democracy reveals the Doublethink underlying U.S. foreign policy. It defines "democracy" to mean supporting U.S. foreign policy, pursuing neoliberal privatization of public infrastructure, dismantling government regulation and following the direction of U.S.-dominated global institutions, from the IMF and World Bank to NATO. For decades, the resulting foreign wars, domestic austerity programs and military interventions have brought more violence, not democracy.

In the Devil's Dictionary that U.S. diplomats are taught to use as their "Elements of Style" guidelines for Doublethink, a "democratic" country is one that follows U.S. leadership and opens its economy to U.S. investment, and IMF- and World Bank-sponsored privatization. The Ukraine is deemed democratic, along with Saudi Arabia, Israel and other countries that act as U.S. financial and military protectorates and are willing to treat America's enemies are theirs too.

A point had to come where this policy collided with the self-interest of other nations, finally breaking through the public relations rhetoric of empire. Other countries are proceeding to de-dollarize and replace what U.S. diplomacy calls "internationalism" (meaning U.S. nationalism imposed on the rest of the world) with their own national self-interest.

This trajectory could be seen 50 years ago (I described it in Super Imperialism [1972] and Global Fracture [1978].) It had to happen. But nobody thought that the end would come in quite the way that is happening. History has turned into comedy, or at least irony as its dialectical path unfolds.

For the past half-century, U.S. strategists, the State Department and National Endowment for Democracy (NED) worried that opposition to U.S. financial imperialism would come from left-wing parties. It therefore spent enormous resources manipulating parties that called themselves socialist (Tony Blair's British Labour Party, France's Socialist Party, Germany's Social Democrats, etc.) to adopt neoliberal policies that were the diametric opposite to what social democracy meant a century ago. But U.S. political planners and Great Wurlitzer organists neglected the right wing, imagining that it would instinctively support U.S. thuggishness.

The reality is that right-wing parties want to get elected, and a populist nationalism is today's road to election victory in Europe and other countries just as it was for Donald Trump in 2016.

Trump's agenda may really be to break up the American Empire, using the old Uncle Sucker isolationist rhetoric of half a century ago. He certainly is going for the Empire's most vital organs. But it he a witting anti-American agent? He might as well be – but it would be a false mental leap to use "quo bono" to assume that he is a witting agent.

After all, if no U.S. contractor, supplier, labor union or bank will deal with him, would Vladimir Putin, China or Iran be any more naďve? Perhaps the problem had to erupt as a result of the inner dynamics of U.S.-sponsored globalism becoming impossible to impose when the result is financial austerity, waves of population flight from U.S.-sponsored wars, and most of all, U.S. refusal to adhere to the rules and international laws that it itself sponsored seventy years ago in the wake of World War II.

Dismantling International Law and Its Courts

Any international system of control requires the rule of law. It may be a morally lawless exercise of ruthless power imposing predatory exploitation, but it is still The Law. And it needs courts to apply it (backed by police power to enforce it and punish violators).

Here's the first legal contradiction in U.S. global diplomacy: The United States always has resisted letting any other country have any voice in U.S. domestic policies, law-making or diplomacy. That is what makes America "the exceptional nation." But for seventy years its diplomats have pretended that its superior judgment promoted a peaceful world (as the Roman Empire claimed to be), which let other countries share in prosperity and rising living standards.

At the United Nations, U.S. diplomats insisted on veto power. At the World Bank and IMF they also made sure that their equity share was large enough to give them veto power over any loan or other policy. Without such power, the United States would not join any international organization. Yet at the same time, it depicted its nationalism as protecting globalization and internationalism. It was all a euphemism for what really was unilateral U.S. decision-making.

Inevitably, U.S. nationalism had to break up the mirage of One World internationalism, and with it any thought of an international court. Without veto power over the judges, the U.S. never accepted the authority of any court, in particular the United Nations' International Court in The Hague. Recently that court undertook an investigation into U.S. war crimes in Afghanistan, from its torture policies to bombing of civilian targets such as hospitals, weddings and infrastructure. "That investigation ultimately found 'a reasonable basis to believe that war crimes and crimes against humanity." [1]

Donald Trump's National Security Adviser John Bolton erupted in fury, warning in September that: "The United States will use any means necessary to protect our citizens and those of our allies from unjust prosecution by this illegitimate court," adding that the UN International Court must not be so bold as to investigate "Israel or other U.S. allies."

That prompted a senior judge, Christoph Flügge from Germany, to resign in protest. Indeed, Bolton told the court to keep out of any affairs involving the United States, promising to ban the Court's "judges and prosecutors from entering the United States." As Bolton spelled out the U.S. threat: "We will sanction their funds in the U.S. financial system, and we will prosecute them in the U.S. criminal system. We will not cooperate with the ICC. We will provide no assistance to the ICC. We will not join the ICC. We will let the ICC die on its own. After all, for all intents and purposes, the ICC is already dead to us."

What this meant, the German judge spelled out was that: "If these judges ever interfere in the domestic concerns of the U.S. or investigate an American citizen, [Bolton] said the American government would do all it could to ensure that these judges would no longer be allowed to travel to the United States – and that they would perhaps even be criminally prosecuted."

The original inspiration of the Court – to use the Nuremburg laws that were applied against German Nazis to bring similar prosecution against any country or officials found guilty of committing war crimes – had already fallen into disuse with the failure to indict the authors of the Chilean coup, Iran-Contra or the U.S. invasion of Iraq for war crimes.

Dismantling Dollar Hegemony from the IMF to SWIFT

Of all areas of global power politics today, international finance and foreign investment have become the key flashpoint. International monetary reserves were supposed to be the most sacrosanct, and international debt enforcement closely associated.

Central banks have long held their gold and other monetary reserves in the United States and London. Back in 1945 this seemed reasonable, because the New York Federal Reserve Bank (in whose basement foreign central bank gold was kept) was militarily safe, and because the London Gold Pool was the vehicle by which the U.S. Treasury kept the dollar "as good as gold" at $35 an ounce. Foreign reserves over and above gold were kept in the form of U.S. Treasury securities, to be bought and sold on the New York and London foreign-exchange markets to stabilize exchange rates. Most foreign loans to governments were denominated in U.S. dollars, so Wall Street banks were normally name as paying agents.

That was the case with Iran under the Shah, whom the United States had installed after sponsoring the 1953 coup against Mohammed Mosaddegh when he sought to nationalize Anglo-Iranian Oil (now British Petroleum) or at least tax it. After the Shah was overthrown, the Khomeini regime asked its paying agent, the Chase Manhattan bank, to use its deposits to pay its bondholders. At the direction of the U.S. Government Chase refused to do so. U.S. courts then declared Iran to be in default, and froze all its assets in the United States and anywhere else they were able.

This showed that international finance was an arm of the U.S. State Department and Pentagon. But that was a generation ago, and only recently did foreign countries begin to feel queasy about leaving their gold holdings in the United States, where they might be grabbed at will to punish any country that might act in ways that U.S. diplomacy found offensive. So last year, Germany finally got up the courage to ask that some of its gold be flown back to Germany. U.S. officials pretended to feel shocked at the insult that it might do to a civilized Christian country what it had done to Iran, and Germany agreed to slow down the transfer.

But then came Venezuela. Desperate to spend its gold reserves to provide imports for its economy devastated by U.S. sanctions – a crisis that U.S. diplomats blame on "socialism," not on U.S. political attempts to "make the economy scream" (as Nixon officials said of Chile under Salvador Allende) – Venezuela directed the Bank of England to transfer some of its $11 billion in gold held in its vaults and those of other central banks in December 2018. This was just like a bank depositor would expect a bank to pay a check that the depositor had written.

England refused to honor the official request, following the direction of Bolton and U.S. Secretary of State Michael Pompeo. As Bloomberg reported: "The U.S. officials are trying to steer Venezuela's overseas assets to [Chicago Boy Juan] Guaido to help bolster his chances of effectively taking control of the government. The $1.2 billion of gold is a big chunk of the $8 billion in foreign reserves held by the Venezuelan central bank."

Turkey seemed to be a likely destination, prompting Bolton and Pompeo to warn it to desist from helping Venezuela, threatening sanctions against it or any other country helping Venezuela cope with its economic crisis. As for the Bank of England and other European countries, the Bloomberg report concluded: "Central bank officials in Caracas have been ordered to no longer try contacting the Bank of England. These central bankers have been told that Bank of England staffers will not respond to them."

This led to rumors that Venezuela was selling 20 tons of gold via a Russian Boeing 777 – some $840 million. The money probably would have ended up paying Russian and Chinese bondholders as well as buying food to relieve the local famine. [4] Russia denied this report, but Reuters has confirmed is that Venezuela has sold 3 tons of a planned 29 tones of gold to the United Arab Emirates, with another 15 tones are to be shipped on Friday, February 1. [5] The U.S. Senate's Batista-Cuban hardliner Rubio accused this of being "theft," as if feeding the people to alleviate the U.S.-sponsored crisis was a crime against U.S. diplomatic leverage.

If there is any country that U.S. diplomats hate more than a recalcitrant Latin American country, it is Iran. President Trump's breaking of the 2015 nuclear agreements negotiated by European and Obama Administration diplomats has escalated to the point of threatening Germany and other European countries with punitive sanctions if they do not also break the agreements they have signed. Coming on top of U.S. opposition to German and other European importing of Russian gas, the U.S. threat finally prompted Europe to find a way to defend itself.

Imperial threats are no longer military. No country (including Russia or China) can mount a military invasion of another major country. Since the Vietnam Era, the only kind of war a democratically elected country can wage is atomic, or at least heavy bombing such as the United States has inflicted on Iraq, Libya and Syria. But now, cyber warfare has become a way of pulling out the connections of any economy. And the major cyber connections are financial money-transfer ones, headed by SWIFT, the acronym for the Society for Worldwide Interbank Financial Telecommunication, which is centered in Belgium.

Russia and China have already moved to create a shadow bank-transfer system in case the United States unplugs them from SWIFT. But now, European countries have come to realize that threats by Bolton and Pompeo may lead to heavy fines and asset grabs if they seek to continue trading with Iran as called for in the treaties they have negotiated.

On January 31 the dam broke with the announcement that Europe had created its own bypass payments system for use with Iran and other countries targeted by U.S. diplomats. Germany, France and even the U.S. poodle Britain joined to create INSTEX -- Instrument in Support of Trade Exchanges. The promise is that this will be used only for "humanitarian" aid to save Iran from a U.S.-sponsored Venezuela-type devastation. But in view of increasingly passionate U.S. opposition to the Nord Stream pipeline to carry Russian gas, this alternative bank clearing system will be ready and able to become operative if the United States tries to direct a sanctions attack on Europe.

I have just returned from Germany and seen a remarkable split between that nation's industrialists and their political leadership. For years, major companies have seen Russia as a natural market, a complementary economy needing to modernize its manufacturing and able to supply Europe with natural gas and other raw materials. America's New Cold War stance is trying to block this commercial complementarity. Warning Europe against "dependence" on low-price Russian gas, it has offered to sell high-priced LNG from the United States (via port facilities that do not yet exist in anywhere near the volume required). President Trump also is insisting that NATO members spend a full 2 percent of their GDP on arms – preferably bought from the United States, not from German or French merchants of death.

The U.S. overplaying its position is leading to the Mackinder-Kissinger-Brzezinski Eurasian nightmare that I mentioned above. In addition to driving Russia and China together, U.S. diplomacy is adding Europe to the heartland, independent of U.S. ability to bully into the state of dependency toward which American diplomacy has aimed to achieve since 1945.

The World Bank, for instance, traditionally has been headed by a U.S. Secretary of Defense. Its steady policy since its inception is to provide loans for countries to devote their land to export crops instead of giving priority to feeding themselves. That is why its loans are only in foreign currency, not in the domestic currency needed to provide price supports and agricultural extension services such as have made U.S. agriculture so productive. By following U.S. advice, countries have left themselves open to food blackmail – sanctions against providing them with grain and other food, in case they step out of line with U.S. diplomatic demands.

It is worthwhile to note that our global imposition of the mythical "efficiencies" of forcing Latin American countries to become plantations for export crops like coffee and bananas rather than growing their own wheat and corn has failed catastrophically to deliver better lives, especially for those living in Central America. The "spread" between the export crops and cheaper food imports from the U.S. that was supposed to materialize for countries following our playbook failed miserably – witness the caravans and refugees across Mexico. Of course, our backing of the most brutal military dictators and crime lords has not helped either.

Likewise, the IMF has been forced to admit that its basic guidelines were fictitious from the beginning. A central core has been to enforce payment of official inter-government debt by withholding IMF credit from countries under default. This rule was instituted at a time when most official inter-government debt was owed to the United States. But a few years ago Ukraine defaulted on $3 billion owed to Russia. The IMF said, in effect, that Ukraine and other countries did not have to pay Russia or any other country deemed to be acting too independently of the United States. The IMF has been extending credit to the bottomless it of Ukrainian corruption to encourage its anti-Russian policy rather than standing up for the principle that inter-government debts must be paid.

It is as if the IMF now operates out of a small room in the basement of the Pentagon in Washington. Europe has taken notice that its own international monetary trade and financial linkages are in danger of attracting U.S. anger. This became clear last autumn at the funeral for George H. W. Bush, when the EU's diplomat found himself downgraded to the end of the list to be called to his seat. He was told that the U.S. no longer considers the EU an entity in good standing. In December, "Mike Pompeo gave a speech on Europe in Brussels -- his first, and eagerly awaited -- in which he extolled the virtues of nationalism, criticised multilateralism and the EU, and said that "international bodies" which constrain national sovereignty "must be reformed or eliminated." [5]

Most of the above events have made the news in just one day, January 31, 2019. The conjunction of U.S. moves on so many fronts, against Venezuela, Iran and Europe (not to mention China and the trade threats and moves against Huawei also erupting today) looks like this will be a year of global fracture.

It is not all President Trump's doing, of course. We see the Democratic Party showing the same colors. Instead of applauding democracy when foreign countries do not elect a leader approved by U.S. diplomats (whether it is Allende or Maduro), they've let the mask fall and shown themselves to be the leading New Cold War imperialists. It's now out in the open. They would make Venezuela the new Pinochet-era Chile. Trump is not alone in supporting Saudi Arabia and its Wahabi terrorists acting, as Lyndon Johnson put it, "Bastards, but they're our bastards."

Where is the left in all this? That is the question with which I opened this article. How remarkable it is that it is only right-wing parties, Alternative for Deutschland (AFD), or Marine le Pen's French nationalists and those of other countries that are opposing NATO militarization and seeking to revive trade and economic links with the rest of Eurasia.

The end of our monetary imperialism, about which I first wrote in 1972 in Super Imperialism, stuns even an informed observer like me. It took a colossal level of arrogance, short-sightedness and lawlessness to hasten its decline -- something that only crazed Neocons like John Bolton, Elliot Abrams and Mike Pompeo could deliver for Donald Trump.

Footnotes

[1] "It Can't be Fixed: Senior ICC Judge Quits in Protest of US, Turkish Meddling," January 31, 2019.

[2] Patricia Laya, Ethan Bronner and Tim Ross, "Maduro Stymied in Bid to Pull $1.2 Billion of Gold From U.K.," Bloomberg, January 25, 2019. Anticipating just such a double-cross, President Chavez acted already in 2011 to repatriate 160 tons of gold to Caracas from the United States and Europe.

[3] ibid

[4] Corina Pons, Mayela Armas, "Exclusive: Venezuela plans to fly central bank gold reserves to UAE – source," Reuters, January 31, 2019.

[5] Constanze Stelzenmüller, "America's policy on Europe takes a nationalist turn," Financial Times, January 31, 2019.

By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is "and forgive them their debts": Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year< Jointly posted with Hudson's website


doug , February 1, 2019 at 8:03 am

We see the Democratic Party showing the same colors. Yes we do. no escape? that I see

drumlin woodchuckles , February 1, 2019 at 9:43 am

Well, if the StormTrumpers can tear down all the levers and institutions of international US dollar strength, perhaps they can also tear down all the institutions of Corporate Globalonial Forced Free Trade. That itself may BE our escape . . . if there are enough millions of Americans who have turned their regionalocal zones of habitation into economically and politically armor-plated Transition Towns, Power-Down Zones, etc. People and places like that may be able to crawl up out of the rubble and grow and defend little zones of semi-subsistence survival-economics.

If enough millions of Americans have created enough such zones, they might be able to link up with eachother to offer hope of a movement to make America in general a semi-autarchik, semi-secluded and isolated National Survival Economy . . . . much smaller than today, perhaps likelier to survive the various coming ecosystemic crash-cramdowns, and no longer interested in leading or dominating a world that we would no longer have the power to lead or dominate.

We could put an end to American Exceptionalism. We could lay this burden down. We could become American Okayness Ordinarians. Make America an okay place for ordinary Americans to live in.

drumlin woodchuckles , February 1, 2019 at 2:27 pm

I read somewhere that the Czarist Imperial Army had a saying . . . "Quantity has a Quality all its own".

... ... ...

Cal2 , February 1, 2019 at 2:54 pm

Drumlin,

If Populists, I assume that's what you mean by "Storm Troopers", offer me M4A and revitalized local economies, and deliver them, they have my support and more power to them.

That's why Trump was elected, his promises, not yet delivered, were closer to that then the Democrats' promises. If the Democrats promised those things and delivered, then they would have my support.

If the Democrats run a candidate, who has a no track record of delivering such things, we stay home on election day. Trump can have it, because it won't be any worse.

I don't give a damn about "social issues." Economics, health care and avoiding WWIII are what motivates my votes, and I think more and more people are going to vote the same way.

drumlin woodchuckles , February 1, 2019 at 8:56 pm

Good point about Populist versus StormTrumper. ( And by the way, I said StormTRUMper, not StormTROOper). I wasn't thinking of the Populists. I was thinking of the neo-etc. vandals and arsonists who want us to invade Venezuela, leave the JCPOA with Iran, etc. Those are the people who will finally drive the other-country governments into creating their own parallel payment systems, etc.

And the midpoint of those efforts will leave wreckage and rubble for us to crawl up out of. But we will have a chance to crawl up out of it.

My reason for voting for Trump was mainly to stop the Evil Clinton from getting elected and to reduce the chance of near immediate thermonuclear war with Russia and to save the Assad regime in Syria from Clintonian overthrow and replacement with an Islamic Emirate of Jihadistan.

Much of what will be attempted " in Trump's name" will be de-regulationism of all kinds delivered by the sorts of basic Republicans selected for the various agencies and departments by Pence and Moore and the Koch Brothers. I doubt the Populist Voters wanted the Koch-Pence agenda. But that was a risky tradeoff in return for keeping Clinton out of office.

The only Dems who would seek what you want are Sanders or maybe Gabbard or just barely Warren. The others would all be Clinton or Obama all over again.

Quanka , February 1, 2019 at 8:29 am

I couldn't really find any details about the new INSTEX system – have you got any good links to brush up on? I know they made an announcement yesterday but how long until the new payment system is operational?

The Rev Kev , February 1, 2019 at 8:43 am

Here is a bit more info on it but Trump is already threatening Europe if they use it. That should cause them to respect him more:

https://www.dw.com/en/instex-europe-sets-up-transactions-channel-with-iran/a-47303580

LP , February 1, 2019 at 9:14 am

The NYT and other have coverage.

https://www.google.com/amp/s/www.nytimes.com/2019/01/31/world/europe/europe-trade-iran-nuclear-deal.amp.html

Louis Fyne , February 1, 2019 at 8:37 am

arguably wouldn't it be better if for USD hegemony to be dismantled? A strong USD hurts US exports, subsidizes American consumption (by making commodities cheaper in relative terms), makes international trade (aka a 8,000-mile+ supply chain) easier.

For the sake of the environment, you want less of all three. Though obviously I don't like the idea of expensive gasoline, natural gas or tube socks either.

Mel , February 1, 2019 at 9:18 am

It would be good for Americans, but the wrong kind of Americans. For the Americans that would populate the Global Executive Suite, a strong US$ means that the stipends they would pay would be worth more to the lackeys, and command more influence.

Dumping the industrial base really ruined things. America is now in a position where it can shout orders, and drop bombs, but doesn't have the capacity to do anything helpful. They have to give up being what Toynbee called a creative minority, and settle for being a dominant minority.

integer , February 1, 2019 at 8:43 am

Having watched the 2016 election closely from afar, I was left with the impression that many of the swing voters who cast their vote for Trump did so under the assumption that he would act as a catalyst for systemic change.

What this change would consist of, and how it would manifest, remained an open question. Would he pursue rapprochement with Russia and pull troops out of the Middle Ea