Originally published at http://www.commondreams.org/views/2019/08/06/china-isnt-economic-manipulator-trade-war-trump
My guess is, most of the 1% who likely have investments in the stock market figured out long ago that Dumpster’s tariff manipulation was going to cause a major drop in stock values and selling off much of their invested funds was a good idea, taking profits and then parking their money somewhere else until stock values plummet to bargain basement prices, then reinvesting in many of the same stocks that were sold off.
In a number of stocks that I own, or just watch on a list, most of these are at their lowest point in years, and still going lower. Value stocks like Ford or Corning Glass, the backbone of US manufacturing haven’t shown much for growth recently, only lots of blood. It could be a good time for speculation with lots of stock at a low point, but selling off stocks that have lost so much value to buy other stocks that have also dropped as well just doesn’t work. The 1%, who aren’t suffering for lack of cash, will be reinvesting in these rock bottom stocks and a short wait for improvement will allow them a new yacht or perhaps a couple new Ferraris, while Joe 6 pack investor, just hopes to break even, or not lose much.
here is a site that may interest you.
You mentioned Ford, and I have a few notes.
- Bill could have shed pensions and did not. “We made promises and we are going to keep them.”
- The current president was previously in Grand Rapids making office partitions. Hired by Ford family for autonominous cars. I am probably wrong about his effect.
- Profits are now from pick up trucks only. The Chicago assy plant is hiring another 400 workers. Local suppliers, Lear for example in Hammond, are paying workers at $26.00 to make seats for the Chi plant. The ford seating comfort ain’t that good!!
A brand new Chevy Cruze hatchback has tire failures. Shocked.
Former Lordstown worker on radio today whining about driving 1,5 hours to earn $16.00 per hour. Heck, the cash wage in Chi is $20.00 and some commutes are 1.5 hour by car, bus, or commuter trains. Get a car pool going.
Anybody who has taken a high school economics class has a better understanding of international trade than Trump.
Oh !, thats right…few Murkins, even college grads, have EVER taken an economics class. No wonder the 99% keeps getting hoodwinked by the 1%.
In Ricardian free-trade, currencies will rise and fall to reduce trade deficits to close to zero.
The trade deficit with China has been growing exponentially over the past 10 years. Over that same time the CNF/Yuan currency has not strengthened as would be required if the CNF/Yuan currency was actually part of those transactions:
Today’s move is miniscule in the general scheme of things.
The reason the Chinese currency will never strengthen against the USD is that when the US buys product from a Chinese manufacturer, the Chinese manufacturer will accept USD, no foreign exchange needed. The CEO of the Chinese company will deposit USD with the Bank of China which in turn has an account with a bank in the US.
USD is legal tender in China (only in the case of foreign transactions) which is why economist Niall Ferguson called the US-China alliance “Chimerica”.
It is a formula for exporting more and more jobs. It is “rigged trade”.
The currency manipulation language hints at this process but Trump can’t explain this process or its effect in detail.
This also why the actual US dollar reserves held by the Chinese government tracks the cumulative trade deficit very closely until about 2015:
Year CumulativeTradeDeficit ChinaUSDollarReserves
2009 2.1 Trillion 2.3 Trillion
2010 2.4 Trillion 2.85 Trillion
2011 2.7 Trillion 3.18 Trillion
2012 3.0 Trillion 3.31 Trillion
2013 3.3 Trillion 3.82 Trillion
2014 3.6 Trillion 3.84 Trillion
2015 4.0 Trillion 3.33 Trillion
2016 4.4 Trillion 3.01 Trillion
2017 4.8 Trillion 2.99 Trillion
From late 1990s till around 2005 (I think), the conversion was over 8 RMB to 1 USD. It gradually strengthened to over 7 RMB and for the last few years to over 6 RMB.
Only an ignoramus would say the RMB never strengthened against the USD.
A weaker RMB is good for Americans as it means cheaper imports from China. Americans working there also benefit. Just ask Helen.
More people than you may realize (HOW few?) take at least one semester of economics. Most consider it one of the most conceptually difficult courses they’ve ever taken if not THE most. At age 45 I became one of them. I took an economics course as part of a program to figure out why my home repair business wasn’t making money. (“Buy high, sell low. Ain’t that how it’'s s’posed to go?”)
My background is mostly “STEM,” and it looked bogus to me, sort of pseudo-science like “creationism,” in which stories that cannot be validated are told to bolster pre-concieved beliefs. Two graduate degrees later I was back where I started: It’s 90-97 percent bogus, with the 3-10 percent being things that every astute ten-year-old knows, like if the price goes up people tend to buy less.
One of the keys to its bogosity is that while it claims to be a social science, human beings–much less society–are written completely out of the equations. Until the late 19th century it was almost entirely speculative philosophy with little hard observation to support it, Ricardian free trade included. In 1890 Alfred Marshall (British, and the other most influential economist that haardly anybody outside the profession has ever heard of) actually wrote equations for the first time. He officially wrote humans out of them by asserting that human institutions have no bearing on how economies work. The equations he and his contemporaries came up with were greatly simplified versions of Newton’s from two centuries earlier, except that they did not include time as a variable. Marshall fixed this little oversight by dividing time into the short run and the long run, but that didn’t fit into the equations.
And THAT’s how the 99% are continually hoodwinked by the One Percent.
Many people who know a lot more than I do have said the same thing since the early 19th century, Marx being only one of them, and even he accepted most of the basic dogma. Economics Unmasked (2011, the sort of title I usually pass over quickly), by Manfred Max-Neef and Philip Smith, make the most fundamental argument I have ever seen for the claim that classical-tradition economics is bogus (by design), and therefore the best.
Sachs is part of the Krugman school, a master of the “conventional wisdom” but more optimistic than Paul. Everything he says in the article is correct in those terms (unlike some of the comments here, some of which are inconsistent and some simply incoherent). That doesn’t make him “right,” but most of his conclusions are, because they fall in that 3-10 percent.
The most important thing to remember about T-Rump and his “policies” is that he is blissfully (sic) ignorant of just about everything except how to separate lots of people from lots of money and more. He is not in the business of “promoting the general welfare” (US Constitution), but of enriching himself and his cronies and destroying everyone and everything else. How old does that make him, mentally and emotionally? About four?
With Trump, after the pitch always comes a different reality.
No quagmires. What is Yemen?
More jobs. Global slowdown.
And if my thought dreams could be seen
They’d probably put my head
In a guillotine
Man, I’d say bag it all. Plan production to augment maximum jobs, not the bare minimum. Aportion what corp’s products get shipped where. This would be an agreement between nations…no blue helmets will/would eliminate nations anytime soon, though if we don’t sell the Chinese population back to a little less meritocractic of a model…
As far as cutthroat competition goes, get rid of it. And get rid of competition period when redundance wastes conspicuously. Get Elizabeth Warren to think up a way to sideline all the world’'s oligarchs
I still have a question about the negotiations, which I mentioned here Stock Market Tumbles After China Devalues Yuan in Response to Trump Tariffs