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Author: Tan KW   |   Latest post: Sat, 21 Sep 2019, 9:11 PM


Trump is wrong. Trade wars are not easy to win, even non-players end up as losers

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Stock market “relief rallies” – such as the temporary one that greeted US President Donald Trump’s decision to hold off
for the moment on imposing a further round of tariff increases on China – have become as frequent as they are fatuous. They are surely signs that markets are flying blind towards a crash landing. 
If this sounds overly pessimistic, try counting the grounds for optimism that the global economy can exit safely from Trump’s trade and currency wars. Then compare the result with the reasons for fearing a stall, as speed and altitude meters continue to register declines, and see which scores highest.
It is not just indicators like the growth of the world’s biggest economies (the US, China, Japan and Germany) that are falling. A range of other instruments, registering everything from the rising value of dollar debt to outflows of funds from emerging markets, are signalling altitude loss.
Analyses from the International Monetary Fund, the Organisation for Economic Cooperation and Development and other sources have become increasingly cautious in recent months, as trade and currency wars exact a rising toll on confidence. But there are limits to the frankness that official bodies such as these can show without being accused of precipitating a crisis.
Yet, it does not require a gargantuan intellect to compute the risks in the global economy and to see that it is already in stall mode. The onus now is on those who believe recession can be avoided to justify their optimism, rather than on “pessimists” to prove their case.
What is truly scary is the apparent belief in financial markets that the Trump trade wars can be ended at the throw of a switch – that, if the US leader calls off his tariff attacks, the global economy will quickly revert to the status quo ante, or that if he even pauses, danger can be averted.
Hence, the absurd relief rallies every time Trump claims that China is suing for peace (when in fact it appears to be Trump himself who is beginning to fear there will be “no Christmas” this year). The truth is that we have passed the point of no return in this downward leg of the economic cycle.
Supposing the US president were to declare a truce, or even go so far as to remove all tariffs levied on China and others, who could have confidence that he (or his successor) might not erect them again at short notice? Trade confidence has taken a nasty knock, if not exactly a fatal blow.
This eliminates trade as a pillar of economic recovery, whereas it had been the mainstay of global growth from late 2016 until the Trump tariffs kicked in. It will take time for confidence to creep back and for supply chains to be reconstructed so that sourcing vulnerabilities can be eliminated.
What about investment – that other primary engine of economic momentum (along with consumption)? Private capital investment has likewise become a victim of damaged confidence everywhere including the United States, while recent weak economic data
from China and Germany is ominous in this regard.
So, what are we left with to hold the line against recession? Private consumption, maybe, but only in the US does it look at all robust and that mainly on the back of consumer borrowing. In any case, the warnings of trouble in the global economy do not augur well for consumer confidence.
So, where do we look for salvation? Do not expect emerging markets to bail out advanced economies this time. As the Institute of International Finance pointed out recently, the strong dollar is sucking money out of emerging economies and also hiking the cost of their corporates’ dollar borrowing.
We are left with public investment as the only real catalyst for a resumption in economic momentum and that, of course, takes us directly into the area of fiscal stimulus and indirectly into the question of whether monetary stimulus still has a role to play after a long innings already.
Fiscal stimulus is unlikely to kick in, in a big way, until all else is seen to have failed (and until financial markets stop sending silly signals that all can still be well, given a bit more monetary easing). Few politicians wish to be seen to be going first when spending public money.
When the fiscal bailout does come, as it must once a crash seems unavoidable (or maybe even after it happens), the issue of monetary easing will become moot. A rescue can be financed only by central banks undertaking even bigger purchases of government debt than they have done already.
The history of trade wars may not repeat itself but the echoes of the past are remarkably strong just now. Trade wars, contrary to what Trump naively believes, are not “easy to win”. They are games for “losers”, with lots of collateral damage even for those who play no active part in them.
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nash2233 do not believe in the American politicians especially the guy who names himself donald trump.the american economy is now at or close to full employment .
21/08/2019 5:27 PM
enning22 don't be silly , just look at China current condition ,not her propaganda ,you can deduced the dismal state.currency RMB devaluation is also another strong indicator.
21/08/2019 5:29 PM
qqq3 enning...skeptics have been wrong about China....like forever............

and China has the most competent govt in the world, perhaps in history.
21/08/2019 5:30 PM
qqq3 its meritocracy vs American crazy rule of the mob led by a child.
21/08/2019 5:31 PM
rajachulan https://en.wikipedia.org/wiki/First_Opium_War

In the 17th and 18th centuries, the demand for Chinese goods (particularly silk, porcelain, and tea) in Europe created a trade imbalance between Qing Imperial China and Great Britain. European silver flowed into China through the Canton System, which confined incoming foreign trade to the southern port city of Canton. To counter this imbalance, the British East India Company began to grow opium in India, and smuggled it into China illegally. The influx of narcotics reversed the Chinese trade surplus, drained the economy of silver, and increased the numbers of opium addicts inside the country,

someone did win the war...
US was in the second opium war...

lets hope this one will not turn ugly....

but there is an old saying...
history repeat...
21/08/2019 5:34 PM
nash2233 for anyone who wants to talk about a trade war, don't use trump's quotes.
21/08/2019 5:42 PM
enning22 CCP governance bases on meritocracy,what a laughable silly notion,a complete lack of understanding of CCP.
21/08/2019 6:15 PM
qqq3 the China miracle, lifting 700 million out of poverty.......general satisfaction and the direction the country is going......

only a very competent govt can accomplish that.

100 million CCP members is the back bone for China success...............

its true govt of the people for the people by the people.
21/08/2019 6:28 PM
nash2233 mainland chinese is buying huawei phones and boycotting american products and services.NIKE ,Apple phones , you name it.most of the american companies are in deep shit if they can not grow their business in china.where are the Chinese big spenders now ? Europe.
21/08/2019 6:53 PM
qqq3 if the government drops hint don't buy Apple....1.4 billion Chinese will not buy a single iPhone..........

they have not drop hint yet...........
21/08/2019 6:57 PM
Up_down CCP is being too ambitious in overtaking US for the past few years. China wants to reduce the influence of USD in the world by using RMB for buying commodity especially crude oil from Arab and Rusia. This is what US can't stand with. Iraq and Libya are the good examples for intending to sell their crude oil in currency other than USD.
21/08/2019 7:29 PM
nash2233 a trade war is always a tit for tat game between two countries ending up in a lose lose situation.
21/08/2019 10:40 PM
7300 only those idiots honkies dare to hope for without meritocracy,,,root of opium war was started becos Briton nothing can sell but got so many to buy, so brainless honkies
21/08/2019 10:44 PM
7300 97 left like hero teams with kwailors found no better pastures by comparisons.... .crawled back HK want to freedom rape with excuse of democracy that has been in existence........very soon bz In Shenzen put in use, keep mistress,ayam ,itik only in HK
21/08/2019 10:59 PM
qqq3 Shenzhen GDP already bigger than HK......When two systems invented by China, Shenzhen just a fishing village.

Those HK kids should swim back to mainland, their idiot fathers swam to HK...................
21/08/2019 11:05 PM
7300 their parents no underwear rushed to HK,....they just want to wear underwear outside pant without merits
21/08/2019 11:16 PM
enning22 don't talk nonsense, your understanding of HongKong history is totally wrong.just scratching the toes with the shoe on.
22/08/2019 9:52 AM
Junichiro SHANGHAI (Reuters) - China is considering testing a ban on gasoline-powered vehicles in some parts of the country and may set a timetable to eventually phase out such vehicles, according to the industry ministry.

The oil age is begining to wane.
22/08/2019 11:42 AM
qqq3 China speed.............I learn 80% of motorbikes in China are already e bikes...........China can do magical things.

eventually, I like to see EVs, e motorbikes and e bicycles are primary means of private transport augmented by public transports which is already going completely electric.

China will change every thing.
22/08/2019 12:00 PM
qqq3 too bad there is a child boy leading America who is doing all the poisoning....................................
22/08/2019 12:02 PM
qqq3 ultimately what is good for China is good for America and good for the world.............but the child boy is poisoning every thing.
22/08/2019 12:04 PM
Junichiro Today :
"The RMB, which earlier this month breached 7 per dollar for the first time since the financial crisis, weakened 0.15% to 7.0740 per greenback as of 12:30 p.m. in Shanghai, extending a six-day drop to 0.7%, the biggest in Asia. The offshore rate fell 0.27%.

The weakness comes as U.S. President Donald Trump said overnight he was the "chosen one” to wage a trade war with China and asserted that he’s winning.

The Chinese government is making arrangements for the possibility that no trade deal is reached with the U.S., Hu Xijin, editor-in-chief of the state-run Global Times, wrote in a tweet Wednesday."

China preparing for the possibility of no trade deal with US. China is weakening the RMB. Will there be another crash in Wall Street ?
22/08/2019 2:32 PM
qqq3 Juice...................China did not start this thing....It is totally and completely the child boy who is accountable.
22/08/2019 2:42 PM
qqq3 China already concluded talking with Trump is pointless.

China is preparing for 30 years cold war with America.

The atmosphere is so poisoned China also concluded they cannot depend on business as usual with America.........................
22/08/2019 2:46 PM
qqq3 Apple Juice > Aug 22, 2019 2:44 PM | Report Abuse

Qqq3! Madam,China took advantage of US patronage for 25 years! US allow it so that China will eventually becomes a democracy nation! But now, China under Xi wants to takeover the No.1 superpower role! Tell me, who started the Negan race!

what is good for China is good for America and the world...That is because China is a benign and wise power. But Trump has poison the air so much, things cannot be trusted to get back to business as usual.

What Obama calls the most important bilateral relationship in the world and that needs to be managed wisely is now broken..............and will not be the same again...........
22/08/2019 2:50 PM
qqq3 China will over come....China not afraid....................
22/08/2019 2:53 PM
qqq3 skeptics are wrong about China........like forever............
22/08/2019 2:55 PM
qqq3 All China experts have been sacked by Trump.............there is no one in Trump inner circle who knows any thing about China.

that is also normal for America...............
22/08/2019 2:58 PM
qqq3 Wall Street....what does Wall Street want?? Wall Street and Wall Street commentators just want to see a bull market....mostly, they don't care and don't bother to understand china................
22/08/2019 3:01 PM
qqq3 apple...........America led by child boy is already a laughing stock for the world to see..............................
22/08/2019 3:18 PM
qqq3 Made in China 2025 will be a reality ...America cannot stop it from happening.
22/08/2019 3:23 PM
enning22 sorry to say ;qqq3 is a communist propaganda machine,and unfortunately his info provided here are all misleading and wrong.
22/08/2019 3:25 PM
qqq3 enn


In HK riots, student leader goes to Yale, the rest of you go to jail if caught.................
22/08/2019 3:27 PM
qqq3 yes...I love to watch China media, ......American media very boring and mostly propaganda.....................
22/08/2019 3:28 PM
qqq3 my favorites.........not in any order...........CCTV, China daily, People's daily, CGTN, New China TV.............all very professional.
22/08/2019 3:31 PM
enning22 hopelessly brain washed kaki, classic case of brain damaged.
22/08/2019 3:35 PM
qqq3 the role of China media is to make sure every Chinese is on the same page as the government so that China continues to prosper in order that all Chinese benefits from China's prosperity..................
22/08/2019 3:37 PM
qqq3 enn...China's media plays a very important role in the development of china.......................................
22/08/2019 3:38 PM
qqq3 enn.....I ask u, who understands China more? CCTV or Bloomberg? CNN? VOA?

Only China media understands china.
22/08/2019 4:41 PM
qqq3 All American media are out to demonise china..........each for its own selfish reasons...................
22/08/2019 4:43 PM
enning22 don't be silly, all media are just reporting what they see happening.while in depth understanding has to be done by own analysis ,after many years of study,research,and observation,experiences. As we all know ,China has no free media, all are propaganda machines, their sole purpose is to misled,lie, almost about anything;while America media are more complex, some free, so not so free.
Brain washed/damaged kid, like you may not understand this simple fact.
22/08/2019 5:51 PM
qqq3 enning...China media doing wonderful job for China, that is what matters....................
22/08/2019 6:09 PM
qqq3 apple...............American media call themselves the defenders of democracy......and all out to demonise China at every opportunity.

and what about Wall Street commentators? Wall Street commentators just want people to buy shares.................
22/08/2019 6:11 PM
qqq3 apple...............American media call themselves the defenders of democracy......and all out to demonise China at every opportunity.

and CIA gave this guy a Yale scholarship............I assume.....................

22/08/2019 6:13 PM
qqq3 apple...no worries...China media is dependable.......love China media..............
22/08/2019 6:16 PM
qqq3 China media do a good job for China....that is the only measure that counts.
22/08/2019 6:20 PM
Junichiro Posted by Apple Juice > Aug 22, 2019 2:44 PM | Report Abuse

Qqq3! Madam,China took advantage of US patronage for 25 years!

It can also be said US took advantage of China's cheap labour and vast market. There are 2 sides to it.
22/08/2019 8:07 PM
Up_down Better listen to the pro in analyzing CCP.

22/08/2019 8:17 PM
qqq3 the evil American empire with words like democracy, freedom is very subtle and damaging for a good proper US_ China relationship.........

Back home, America has a non functional government , US government policies never follow the wishes of its own people.

For a government of the people, for the people by the people, then have to look and learn from the CCP...............
22/08/2019 9:00 PM
nash2233 Indeed, in several key areas, Chinese companies are already ahead. High-speed rail, high-voltage transmission lines, renewables, new energy vehicles, digital payments and 5G telecoms are just some of the industries in which Chinese companies are widely regarded as leading their US counterparts.

Almost all sources agree that China is catching up fast — even in foundational disciplines such as artificial intelligence. “Despite China’s bold AI initiative, the United States leads in absolute terms,” the Information Technology and Innovation Foundation said this week. “This order could change in coming years as China appears to be making more rapid progress than either the United States or the European Union,” it added.

23/08/2019 12:07 AM


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