Re: Gunther's post on trade
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Started by cfdr - July 24, 2018, 11:50 p.m.

Thanks for your link to Goldman's article, Gunther.

http://www.atimes.com/article/a-tragedy-in-the-making-as-the-us-confronts-china/

I always enjoy reading Goldman (aka "Spengler").  In fact, I read his book about demographics around the world, and it was fascinating.  I'm up in BC now, so I don't have the book, but I think the title was "How Civilizations Die."

I'm not so sure that Goldman is as good a thinker about business/trade, however, as he is about demographics.  He says:  "The United States still believes it is powerful enough to bully China into submission, while the Chinese believe they are strong enough to come out on top in a confrontation with the United States."  I'm not so sure that is a good picture of what is going on.  We have been sending hundreds of billions of dollars to China buying lots and lots of stuff we should be making here at home.  That money has strengthened China in an unbelievably short amount of time.  That money has been invested in agriculture in South America, and now in Africa, and those investments have turned into competition for farmers here.  That money has been used to buy American companies and force them to turn over intellectual property - including national defense intel property.  I think I posted this earlier, but it is worth posting again:

https://fablesofaesop.com/the-eagle-and-the-arrow.html

As Herb Stein once said (as I remember) - if something cannot go on forever .  .  .  it won't.  What is the end result of our giving China the means to overcome us?  Isn't it idiotic to keep doing the same thing when we know what the end result probably will be?  I think of the old saying - when you find yourself in a hole, the first thing to do is to STOP DIGGING.  If Trump is not successful, when will we ever be successful??

BTW, I saw where Mohamed El Erian said, in an interview with CNBC, that "the US is poised to win a trade war."  I have no idea, but if forced to choose who to listen to about markets and trade, I would choose El Erian over Goldman every time.

We can't afford to send hundreds of billions of dollars to China every year - and pay people here to do nothing.  I'm waiting for anyone who calls Trump an idiot for trying to do something about this to come up with a better ideal.

As a farmer, I've said that for us to have a healthy situation, we have to convince China that they WANT TO buy more of what we produce.  That leads to a healthy demand-driven market.  If they do not wish to close down factories and put their people out of work, they must buy more from us to reduce the trade deficit.  Isn't it really that simple?


(Now, let's see if we can keep this trade-related and not turn it poisonous.)

Comments
By 7475 - July 25, 2018, 7:29 a.m.
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cfdr,

The key is what you said-get China to WANT to buy from us.But as you point out,soon China will be able to produce all that they now may WANT to buy from us.That progression is just natural business tactics and history shows that it often is impossible to stop when attempted by smart dudes.

 We need to figure out how to make ourselves valuable to the world in ways no one else is making themselves valuable.

I havent a clue what that way would be.

John

By mcfarm - July 25, 2018, 9:36 a.m.
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vandy did you happen to read the line cfdr wrote when he said..."do you have better idea" fine lets see it or quit the idiotic pot shots at a guy who is trying to stop China from running right over the US economically....small scarifice if and when this works out


and to that point, just this morning Larry Kudlow was walking into a meetng  about the trade dispute, yes dispute for all the cnn'rs, and said "hold tight, you all might be very surprised when we come out of this meeting.....Most Americans hope ther will be good news following as we root for America



By cfdr - July 25, 2018, 11:33 a.m.
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"Let's have a trade war and find out."

Once again, you add nothing to the discussion.

When you look down the road we are currently on, do you really want to go where it appears to be leading?

Are you one of the many who feel it is ok to ignore the ever increasing debt we owe - especially to foreigners?

Are you ok with the Chinese using our money to build agricultural production around the world?  To purchase US companies and steal intellectual property so that they can most likely dominate us in the near future?

Is it a valid solution to the problem to stick our heads in the sand and pretend that everything will be all right?

Do you like seeing the working middle class destroyed by the globalists who have bought politicians like Obama?


I'm up in BC - camped along the Skeena River.  The rail line goes right along the river.  I see train after train after train go by.  All of this is most likely not just coming into Canada for consumption.  Canada has made quite a business out of shipping in parts and doing minor assembly and sending the finished product into the US through the "back door" of NAFTA.  Normally, the currency markets take care of unbalances like this.  But, when there is so much demand for the US dollar worldwide that system kind of falls apart - at least for awhile.  Donald Trump, with all his considerable flaws, appears to be a problem solver.  Of course there are risks - how can there not be?  But, what are the alternatives??

By TimNew - July 25, 2018, 12:54 p.m.
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There are some who prefer the approach of kicking the can down the road.   Obama was extremely adept at that, hence his popularity with some as president.


I am still on the fence regarding this trade war.  In wait and see mode.  As CFDR said earlier, we need to make China want to buy our products.  The only real way to do that is to reduce costs while maintaining/improving quality. The tax cuts went a long way in that regard and we were already seeing a reduction in trade deficits prior to the "trade war".. 


But Trump is taking the bull by the horns and maybe he'll make it work.  If so,  I'll give him credit..   But I've yet to see an historic example of positive results from a trade war.

By pj - July 25, 2018, 1:05 p.m.
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Kudlow was dead set against tariffs until Trump drafted him into his administration and he got under Trump's thumb.

By mcfarm - July 25, 2018, 1:09 p.m.
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don't really care what kudlow used to think...his job now is too negotiate...the eu and china and others have their way too long

By pj - July 25, 2018, 1:17 p.m.
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If Trump is such a good negotiator, why doesn't he negotiate himself rather than hire a  lightweight TV commentator, who's life-long philosophy has been against what Trump's wants to do. Another wrong guy for the job? 

By cfdr - July 25, 2018, 1:36 p.m.
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pj:

"If Trump is such a good negotiator, why doesn't he negotiate himself rather than hire a  lightweight TV commentator, who's life-long philosophy has been against what Trump's wants to do. Another wrong guy for the job? "

Kudlow is NOT there to negotiate, IMHO.  Wilbur Ross is there to do the negotiating - along with Robert Lighthizer.  Kudlow is there only to deal with the press - and Wall Street.

Interesting that Donald Trump could persuade Kudlow to work toward the goal of more fair trade - given his "life-long philosophy has been against what Trump wants to do."  Interesting that even Schumer has said that he agrees with what Trump is doing wrt China.

By cfdr - July 25, 2018, 1:40 p.m.
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TimNew:

"As CFDR said earlier, we need to make China want to buy our products.  The only real way to do that is to reduce costs while maintaining/improving quality."

That is necessary, of course, but I was thinking about simply making them want to buy our production because then they won't have to put their people out of work.  They must feel that they need to cut their trade surpluses with us.  This is easy when it comes to agriculture - all they need to do is to allow imports of quality meats, etc.  This, then, gives us exactly what we need - a demand-driven market.

They have to want it and see it as in their best interests.

By cfdr - July 25, 2018, 8:51 p.m.
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I see that in an interview with CNBC, former GM exec Bob Lutz said:

"In my judgment, we are in the midst of a trade negotiation. There’s nothing finalized, there’s nothing that’s going to stay yet. We’re in the middle of a war with tactical moves here, tactical moves there, offensives here, our resistance lines built up over here. We won’t know anything for another couple of months. What President Trump is trying to do is eradicate decades of trade inequity, where the U.S. has almost no tariffs on certain things and other countries have gigantic tariffs to where we have ongoing, monumental trade deficits, which are just sucking the wealth of our country and it’s time for somebody to put an end to that. President Trump has decided this is the time and by George, I’m with him 100 percent. Now, is that going to cause some problems, some dislocation, some trouble in a system that’s been based on cheap imports of just about everything? And nevermind if we export anything or not. Yeah, yeah, trade deficit doesn’t matter. That’s all not true. It does matter and it’s time to get things in balance. I guarantee you the U.S. will come out of this trade war as a winner, with other countries cutting tariffs on key American commodities. I’ll bet you Europe eliminates the automotive tax. It’s too early to get upset about all of this. We’re in the midst of a negotiation."


If things are out of balance, and if your trading "partners" are taking advantage of you, there is no choice  but to shake things up a bit.

Unless, of course, you are terrified of them NOT taking advantage of you.