Take Your Tariff Screaming AND SHOVE IT
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2019-08-02 14:15 by Karl Denninger
in Editorial , 314 references Ignore this thread
Take Your Tariff Screaming AND SHOVE IT
[Comments enabled]

I'm tired of this crap.

CNBS -- all the financial lies we can tell -- just ran a segment with a "hypothetical" $50 pair of canvas shoes made in China.  They claimed the 10% tariff will make it about $59.

Bull****.

The tariff is paid, in theory, on the price at the point of export.  In other words the factory in China makes shoes for Frobozz Shoe Company.  They charge Frobozz $15 for that pair of shoes on a container-load basis.  The tariff is laid on that $15 price that Frobozz pays, which is not $9 -- it's $1.50!

But in fact it's worse because there is a lot of game-playing that goes on.  The shoe factory, call it Chinaman-****em-US, is a cute scammer, with the full backing of the PLA -- that is, the Communist Chinese government.  They not only make shoes allegedly for Frobozz, the nice and cuddly US company you recognize in the store, they also sell out the back door to a bunch of bootleggers with other names; the only difference is the logo stamped on the shoe and sometimes only barely at that!  Because of this Chinaman-****em-US doesn't sell directly to Frobozz; he could get audited on materials and such by Frobozz and caught.  In addition Chinaman-****em-US uses child labor and pays slave wages so Frobozz has every reason to stick someone in the middle who is allegedly "his source" so as to have deniability for the outrageously abusive practices in that factory.

So Chinaman-****-US instead sells to CuddyDolphinLovesUS that is allegedly not a Chinese company but has its sole and only office on a clipboard at the dock, and that company is "officially" registered in Vietnam or something similar.  He sells the shoes to CuddlyDolphinLovesUS for $10 and the tariff is collected on that, because title allegedly passes out of Chinese hands at that point.

CuddlyDolphinLovesUS in turn signs a piece of paper and that same container now goes on a ship; for this he takes a $5 cut.  Why do this?  Because it hides what Chinaman-****em-US is doing to Frobozz selling counterfeit **** out the back door of the back door of the factory; he's selling twice as many shoes and so taking that mark-up is worth it for him!  In addition Frobozz knows good and damn well that the factory is employing children, has no fire standards, people are having their hands cut off by heavy machinery with no guards and both their pay and working conditions would be seriously damaging to the brand if he could be conclusively linked to that.

The problem is that for this "forbearance" Frobozz gets it up the ass.  He has counterfeit product he can't run down because he can't prove where it's coming from.  It's not coming from CuddlyDolphin and he cannot prove Chinaman-****em-US is responsible.  If he tries to audit the manufacturer somehow manages to get a warning (gee, you think the PLA might know who's flying in tomorrow from the flight manifests?) and suddenly there are exactly zero counterfeit shoes to be seen in that factory and all the kids are sent home for the day.  The minute he gets back on the plane, they get the other stamps out and production for the counterfeiters, along with the child labor, resumes.

Point is this: The retail impact on these tariffs isn't going to be $9, it will be one dollar.  More to the point, however, is that now Frobozz has a damn good reason to find a way to get those made somewhere else and he probably can, maybe for $13!  Not only is that cheaper than his $15 price he doesn't have someone robbing him at the same time through counterfeit sales out the back door as well.

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Raftermanfmj
Posts: 4830
Incept: 2010-09-06

USA
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Im having a Zork flashback for some reason :)

Figured out a long long time ago the MSM is lies on lies all the way down.

Trump and his endless trade negotiations, his soon immigration changes, its all bull**** and the purpose of the bs is to forestall anyone from saying enough.

Youll see its all a show, keep em laughing as you go, just remember the last laugh is on you!

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I have never wished to cater to the crowd; for what I know they do not approve, and what they approve I do not know. - Epicurus
Oderint dum metuant - Caligula & Police State USA
Tat668
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Karl, you missed a bug.

Now that the shoe factory Chinaman-****em-US no longer has a contract with Frobozz to lose, they then turn up their production numbers to the lowest cost of the learning curve and run those machine at their near death rate, further dropping the production cost to 6 bucks a pair.

Then they start a few "domestic distributor" with clipboard names and start to sell the famous Froboss sneakers at 38 bucks in domestic market. Since those are identical to the famous name brand sold in the US, with minor spelling mistake, them'll sell like hot cakes. The local consumer getting a 10 bucks break on the famous US brand name sneakers; may be 40 bucks for the tourists when they laugh at the chinamen's lack of knowledge in proper spelling.

Yep, I agree with you, keep up the tariff and the largest manufacturing country will then free to put any label on the stuff that they have been making, increasing their gain by folds!

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"This marks the beginning of the end."- Barack Obama 2-26-09

"Every rock we turn over, every time we looked for it, it's not only there, it's worse than we anticipated."
Bill Priestap, FBI's counterintelligence division
Emupaul
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Tariffs on China? So what. They'll still make the stuff they make because the factories are built. But now it comes from Vietnam or Cambodia or India or wherever.

It's all bull****.
Wishbringer
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Oklahoma City
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LOVE the Zork reference!
Lobo
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The GUE shall rise again! Or is that sink again?

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Village Idiot
Tat668
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A thought after reading all the bull****s on the trade talk.

Question that I'll ask: are we getting lead into the butchering line for slaughtering?

Points to consider:

Now that Trump's tariffs have been running for a period, a time long enough to judge the actual effects, and found to have minimum negative impact on China's economy.

There are more pressing reasons for China to get their chess pieces in the world firmly set before the change of guard in the US, another unknown factor in front of their progress plan. Stalling is a good way to stretch out the time and may just be killing a few extra birds for dinner. By insisting that Trump must remove ALL tariff before any serious trade talk, the Chinese has now succeeded in misdirecting Trump's attention, and helped him to believe that tariff is the most feared weapon against China.

Meanwhile, in China, new operating systems for AI, smart phones, tablet, and computer systems are getting their international standard certification one at a time, creeping up and forward at neck breaking speed.

I doubted that China gives a **** about who they will be dealing with, Trump or demonrats, as long as they are declawed and defanged.

Turkey, India, Cambodia are all buying weapons from Russia; Korea and Japan are torn apart in their fight for their market; INSTEX can be removing the ump out of American power in the oil producing countries; China's weapon market is expanding in definitive steps, so where will our next battle be?

I believe that it will be on US soil between those who are destroying this country from within and those who want to preserve the US Constitution. So, why the **** we hear more about trade war than what those snow flakes, ****s, and perverts are doing to the foundation this country. I believe it is because it affect Wall Street, thus all the big monies?!

By the way, my friend living in Oakland just got a knife poke to his throat while two others ransack the house and made off with cash and all of his wife's jewelry. This event happened in midday, and you can guess who were those who came to dinner?!

What would happen if that knife was on your throat? I still have trouble in deciding on that item at this time, may be my doubts will fade away in time.

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"This marks the beginning of the end."- Barack Obama 2-26-09

"Every rock we turn over, every time we looked for it, it's not only there, it's worse than we anticipated."
Bill Priestap, FBI's counterintelligence division
Ebt
Posts: 4
Incept: 2018-12-22

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What no one is saying is "what will China now do?" Will they capitulate as Trump seems sure of - or will they do nothing - or start selling treasuries and let things crash? What will Trump do then - cancel the tariffs and concede defeat? Or have the markets crashing into the election? Cause the charts are saying that could happen right here and it would be worse than 2008-2009.

Trump may have shot-from-the-hip and miscalculated this one big time.

Could be president Biden or Pocahontas. I don't think Biden because he seems to be experiencing cognitive decline.
Tickerguy
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@Ebt -- smiley

Uh, no.

China's economy is already taking a huge hit. THEIR risk is internal to a degree that makes such a retributive strike impossible. Oh sure, they might try it, but if they do they likely get a civil war out of it, starting with Hong Kong and Taiwan. If they try to invade either odds are that draws embargoes from half the world, and then they're REALLY ****ed.

Let 'em sell the Treasuries. I think the US ought to declare them as liquidated damages for all the IP theft and other cheating, holding a bonfire on the White House lawn. There's not **** Xi could do about it either.

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Winding it down.
Rickyd
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Ontario, Canada
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According to TIC data..

https://ticdata.treasury.gov/Publish/mfh....

...they own about 1.1 Trillion Dollars of US Treasuries. As a percentage of the outstanding amount, it does not seem that big.

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"That day is coming again, for the same reason -- willful and intentional blindness toward a grossly over-extended economic picture fueled by debt accumulation that cannot permanently continue as a simple function of arithmetic."

Karl Denninger
Tickerguy
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@Rickyd -- It isn't. Further, while they could sell them and impact our market it would be a short-term disruption but would totally ass-rape THEIR market and currency, never mind that doing so means their policy leverage goes to zero instantly.

The "threat" of this has been bandied about for more than a decade now, and it hasn't happened, and this is why. The reality of the situation China finds itself in here is that they've buggered their economy BADLY with artificial bull**** and outright lies, and exponents are a bitch there as well as here.

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Winding it down.
Oliver1655
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Light up those bonds !
smiley




Clay3482
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Alaska
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The last time I checked China had a DEBT to GDP ratio of close to 400%

While the US is 105% or so. If I remember correctly.

Thats of course what they and us admit to.

If their Debt to GDP is by their own admission at 400% how bad is it really?

You cant build a city the size of LA every 18 months with no one living in it for years and just have one specualtive bubble after the other without it eventually blowing up.

Also

They dont really have any energy supplies that amount to ****.

They import Most of their food since we got them to build the 3 Gorges Damn destroying some of the most fertile farm land on this planet.

Not to mention their water problems, polution problems, Enemies on their borders, and inside their borders, and their inability to Decouple.

China is ****ed.

We are ****ed for sure but as Karl has pointed out many times, we are a hooker with crabs and everyone else is a hooker with Aids, and ****loads of other STD's.
Amused
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I am convinced China wants this anyway. They have had like 27 years of insane growth, yes a lot of scams and ghost cities, but also a lot of legitimate growth, in some sectors that is unsustainable like the ghost cities and needs to be unwound. They cannot blow their own bubble forever and they know it.

By us waging the so-called 'Trade War' against them, we get to have them position us as the enemy, for the unwinding they need to do anyway due to their own corruption, but they get to deflect all the blame on us and make us appear unreasonable.

Its not that I don't think we shouldn't have tariffs against them, I do, but I just think we need to think about how we proceed in this context and adjust our measures accordingly. There has to be a way to fight this so their people can see the truth for what it is, that it is all the fault of their leadership, not the orange man in the whitehouse.
Peterm99
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Amused wrote..
There has to be a way to fight this so their people can see the truth for what it is, that it is all the fault of their leadership, not the orange man in the whitehouse.
Don't think so.

We, in the US, have relatively free and unfettered access to information sources of all types (including "independent" mass media), foreign and domestic. Yet, the vast majority of our own population cannot/will not see or comprehend the "truth" of what is going on.

Believing that the general Chinese population, with access to information sources tightly controlled by their gov't, could come to accept "reality" that is diametrically opposed to what their gov't feeds them on a daily basis is foolish, IMO. Perhaps after their system self-destructs, they can come to realize what happened after time, but certainly not before.

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". . . the Constitution has died, the economy welters in irreversible decline, we have perpetual war, all power lies in the hands of the executive, the police are supreme, and a surveillance beyond Orwells imaginings falls into place." - Fred Reed
Stee_man
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I think tariffs are just the 5th inning in this so-called war.

Remember, the US always starts with diplomacy, then verbal threats, then economic sanctions, then war. Since we cannot have a shooting war with a nuclear power, war means trade embargo. Keep them weak and backwards buy cutting them off from global trade. The north korea or cuba model.

China thinks they can just wait for a more tame president. If Trump wins re-election, they are heading toward a full embargo if they don't play fair. Big miscalculation on their part happening right before our eyes.
Peterm99
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Stee-man wrote..
If Trump wins re-election, they are heading toward a full embargo if they don't play fair.
Yeah, right.

Just like "I'll fix the illegal immigration problem", "I'll drain the swamp", "i'll stop the unnecessary foreign interventions", "I'll stop the medical/insurance scams", "I'll start fixing the deficit", "I'll bring peace to the ME", etc., etc., etc., etc.

Trump has been completely co-opted by the special interests and they do NOT want China to implode. He will do nothing meaningful that might go against the interests of the powers-that-be, either in this term or a possible second term.

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". . . the Constitution has died, the economy welters in irreversible decline, we have perpetual war, all power lies in the hands of the executive, the police are supreme, and a surveillance beyond Orwells imaginings falls into place." - Fred Reed
Quik49
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Indeed.

Oh...and there go the futures in the toilet again.

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Long Vaseline....

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