web analytics

THE ART OF THE DEALS

By Pete Moore On January 18th, 2019

BLOOMBERG: “China has offered to go on a six-year buying spree to ramp up imports from the U.S., in a move that would reconfigure the relationship between the world’s two largest economies, according to officials familiar with the negotiations.”

You have to hand it to the Father of the Nation. He gets things done. Contrast him with the worst Prime Minister since Clement Attlee.

China is sitting on a mountain of dollars. They ended up there because of the rotten social and economic policies of previous US administrations. As trade imbalances grew, decadent and careless administrations seemed to care even less. But those dollars are useless in China. President Trump knows that they only serve a purpose by ultimately coming back from China to the US. The trick is getting them to part with the cash. So Americans have to invest in productive activity and make stuff that the Chinese want.

What the US absolutely must not do is take the cash back in the form of Chinese investment in infrastructure. They like game, because they want to own everything.

15 Responses to “THE ART OF THE DEALS”

  1. “President Trump knows that they only serve a purpose by ultimately coming back from China to the US.”

    I would say that if Trump knows that he wouldn’t have spent the last couple of years gurning about trade deficits.

  2. Pete is cheering for politically managed trade.

    Well, well.

  3. I don’t think I am.

    As long as your entrepreneurs are free to work as they see fit, they will make what foreigners want to buy.

  4. Americans have always made a lot of things that Chinese want.

    But in the case of manufacturing, it will be cheaper to make very many things in China for a long time to come, since the wage differential in the two countries remains significant.

  5. The big thing as much as anything is to stop the Chinese from stealing technology, stop them from forcing transfers of technology, stop them from forcing foreign companies into joint ventures with Chinese, etc.

    The stealing of technology is a near warlike action. And this is one area where Trump is correct to be taking a tough stand, where prior presidents have been weak, from Nixon to Obama, all of them.

  6. As long as your entrepreneurs are free to work as they see fit, they will make what foreigners want to buy

    But China doesn’t want to buy. It is deeply mercantilist and its weapon is currency manipulation rather than tariffs:

    “Economists estimate that China’s currency was undervalued against the dollar by 30 percent from 2003 to 2013. By intervening massively in currency markets—up to $2 billion a day in 2007—China kept the yuan priced artificially low. This was tantamount to a form of mercantilism—intensive government intercession in support of maintaining a trade surplus—using a cheapened currency, which achieves an attractive price for export goods while keeping prices high for imports. Though many argue about Beijing’s actual motives, China ran a trade surplus at nearly 10 percent of GDP, while the U.S. floundered during the financial crisis.

    But this isn’t the whole story: China also imposed tight capital controls, largely walling off its stocks, bonds, and banks from foreign investors by imposing extensive restrictions. Though this seemed to make no economic sense, for Beijing, it was worth foregoing these investments from a currency perspective: the financial inflows could have driven the yuan up and brought inflation, undercutting the real devaluation effort…”

    https://www.city-journal.org/html/countering-chinese-mercantilism-15391.html

  7. Trump has been wrong in a lot of his trade actions against Canada and Europe, but he has been hugely correct in what he has done in the case of China.

  8. Peter –

    But China doesn’t want to buy.

    In that case, those trillions of dollars they have are just useless piles of paper with ink on them.

  9. Pete

    What they have done with them is buy US Treasuries and other financial investments and of course gold. If they ever stop buying Treauries the dollar will tank.

  10. More trouble for The Father Of The Nation:

    “On Thursday CNN reported that Donald Trump was taken aback that his nominee for attorney general William Barr and special counsel Robert Mueller are old chums. ‘I have known Bob Mueller for 30 years,’ Barr said during Senate testimony on Tuesday. ‘And I have the utmost respect for Bob and his distinguished record of service.’ Now Barr’s statements are about to create much bigger problems for him. Barr unequivocally affirmed, in response to a question from Sen. Lindsey Graham, that it would be a crime if the president sought to tamper with the testimony of a witness: ‘yes, under an obstruction statute. Yes.’

    Oh, no, is what many in the Trump White House must be thinking as the revelation sinks in that Trump’s former personal lawyer Michael Cohen has told federal investigators that Trump instructed him to lie to Congress about the Trump Tower deal that he and his associates sought to broker during the 2016 campaign. BuzzFeed broke the story last night. Cohen reportedly met 10 times with Trump to discuss the deal. In addition, Trump signed off on a plan for Cohen to visit Moscow and meet with Russian president Vladimir Putin. ‘Make it happen,’ Trump said.”

    https://spectator.us/buzzfeed-news-michael-cohen/

  11. “If it was just a matter of Cohen’s word, it would be one thing. But Mueller, who is sitting on a mountain of evidence, none of it conducing to Trump’s case, apparently has multiple witnesses, text messages, emails, and other information attesting to the truth of Cohen’s statements. When Cohen appears before Congress on February 7, his testimony is sure to be a doozy, one that even Trump, for all his skills at prestidigitation, won’t be able to obscure with a manufactured crisis for the day.

    That Trump would lie about his finances and instruct his subordinates to prevaricate about them should almost be taken as a given. He lies so consistently that the remarkable thing is when he utters a veracious statement. As Mary McCarthy once observed about Lillian Hellman, ‘every word she writes is false, including “and” and “but.”’

    As Susan Glasser observes in the New Yorker, ‘we do not yet know whether Trump himself is actually Putin’s man in Washington or merely a sycophant with a distinctly un-American affinity for autocrats in general and Putin in particular.’ … Trump’s own affection for Putin is well established, and his record of advancing Putin’s agenda is about as subtle as Putin’s resurrection of the Soviet anthem.’”

    https://spectator.us/buzzfeed-news-michael-cohen/

  12. If Russia was financing Trump when no one else would touch him….

  13. If China is really offering to spend money I will bet my back teeth it isnt for made in america products, the only thing america still makes well is weapons systems and I dont see them allowing China to buy

  14. Presumably you have some sort of airport near where you live

    Go out there some day and look at the beautiful Boeings take off

  15. Two words Phantom, Air Bus