Headlines

Trump exults in rocket launch as chaos unfolds around the country

SpaceX launches two NASA astronauts in space for the first time in historic US mission

As Minneapolis burns, mayor takes heat for response ...

Report: Majority of arrested Minneapolis rioters have Minnesota addresses

European trade chief mulls bid for WTO top job

Coronavirus updates: EU asks U.S. to reconsider WHO exit as India extends lockdown in ‘containment zones’

Cities brace for increasing unrest ... Spiraling out of control ...

Bill Barr: Violence appears planned by far-left groups

De Blasio, Cuomo target June 8 for first phase of New York City reopening

University of Michigan is taking steps to bring students back on campus this fall

Security officers gunned down in Oakland ...

Bernie Kerik: FBI must investigate funding of ANTIFA terrorism

Western Naiveté

First Nixon, then all the West opened China to modernity. Their naive notion was that, if China embraced capitalism, it would create a wealthy middle class of hundreds of millions ... which would provide an enormously juicy market for our products and service. This was all under the rubric of "free trade."

Didn't happen. Instead, the U.S. and the rest of the world became customers for Chinese products while being shutout, with tariffs and autocratic restrictions, from freely entering Chinese markets ... or, even worse, being forced to cede trade secrets and technologies to their Chinese "partners."

It was not like this mercantilism was a secret. Ever since Bill Clinton opened the door to the World Trade Organization to China, American presidents and candidates have averted their eyes from this potentially fatal flaw in world trade ... except for Donald Trump ... who is willing to try to fix things while they still might be fixable.

A simple conclusion: capitalism under a democratic government is powerful ... but is quite dangerous when tightly managed by a totalitarian regime.

If Ptesident Trump will succeed in his trade war is any one's guess. But, for me, I give him great credit for trying. And, if he does win, somehow I doubt if China's Xi is going to embark on an apology tour ...

Patoxsyms

Resist the Resistance -- Anon.

I can  think of no better word ... much of this country is experiencing paroxysms of irrational hysteria  over who we are and where we are going. All because Donald Trump has identified and given voice to the unmet cravings of hundreds of millions of Americans. These masses have felt controlled and manipulated by alien forces -- the media, the Washington establishment, the Chamber of Commerce, NAFTA, Wall Street, Hollywood, the UN, George Soros, the environmentalists, professional sports, higher education, the WTO, the tech giants, the Davos poobahs --- and they don't like it ... so they elected Trump.

Ironically enough, these paroxysms are occurring more to preserve these desmal institutions than those wishing their destruction. Donald Trump is the one rethinking and reshaping the world more to their liking. And be not confused ... those that Trump represents are a huge number and growing ... not as sophisticated and vocal and violent as the Resistance or Robert Mueller ... but much bigger ... that "silent majority' of days past.  And now that they have a champion in Trump, they feel that they are being heard ... and they really like it. Their muzzle is off ... so be careful those of you who want them gone.

You have a dangerous task ... one that can only be won by the abrogation of our Constitution. That would truly be the end.

Economic War?

Last week I commented on the possible trade war between the U.S. and China ... see: Soybeans and  Trade War? for some perspective on this pissing contest. Since these mentioned events, Trump has pushed more chips on the table threatening to add another $100 billion of new tariffs to the bundle. China has not responded with more threatened tariffs ... probably because they might be running out of  U.S. products to punish. So China has shifted its focus from tariffs and is now threatening to devalue its yuan in order to keep its mercantile edge in trading with the U.S. ... see: Bloomberg Article.

Now this currency threat tells me a few things:

- China realizes that it cannot win this trade war with tariffs alone. So, it  might have to escalate things to an economic war using its currency. This would dash its hopes of making the yuan an international currency of trade.

- Although China might devalue the yuan just relative to the dollar, the dollar is a powerful arbitration unit in international commerce ... meaning most of the rest of the world would be adversely affected ... not something China may want to do.

- The U.S. Is not likely to respond in kind to such a currency devaluation which would further besmitch the almighty dollar. But we do have other arrows in our quiver in such an economic war. One of which might be to reduce our interest payments on the $1.3 trillion of our debt by the degree of China's currency devaluation. After all such a devaluation by China artificially increases its local currency benefit of America's interest payments. This would, of course, reduce the value of this treasury hoard that China holds.

- The U.S. might adjust any threatened tariffs upward to compensate for any yuan currency devaluation. This wold be difficult for China to respond  to.

And there are many other arrows: WTO sanctions, a coordinated international response to China's mercantilism, subsidies to U.S. industries affected by any trade or currency war, restrictions on Chinese investment in the U.S., etc., etc. This is a complex chess game being played by two very smart players. But the U.S. does have more experience playing this game (although it hasn't looked like we have utalized this edge until just recently.)