Mr. ChinaMan Can Do Math?
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2018-04-11 07:00 by Karl Denninger
in International , 167 references Ignore this thread
Mr. ChinaMan Can Do Math?
[Comments enabled]

Well well.

It seems that Xi can actually perform arithmetic.

China tried to play "tough guy" in trade with threatening tariffs on $100 billion in US imports and ran into a problem -- that's just about all the imports that there are!

Meanwhile the US imports far more from China.

Further essentially none of what we import is necessary.  Oh sure, China could try to get nasty about rare earth metals, for example, but we have an answer to that -- we have lots of them, but they're mothballed due to thorium being contained in the same mines.  A bunch of screaming-harpy "proliferation" folks managed to do that, which for reasons I've pointed out before is stupid -- while thorium isn't proliferation proof  it is quite proliferation resistant because the fissile material it tends to produce contains isotopes that cause serious problems for anyone trying to make weapons -- but are of no importance at all to someone simply interested in energy production.

Not only could we cut that stupid out quite-easily we could then use the thorium as I've advocated for years, and in fact spent a whole section in Leverage on it, as it's the singularly most-accessible means of adding real nuclear energy output to the American energy picture and becoming independent of foreign fossil fuels permanently at the same time.

I've written repeatedly on this with arguably the most-comprehensive article on-point being here.

The other side of this, however, is that much of what China imports is necessary.  Specifically, food.  Historically-speaking food shortages have a nasty record of producing riots, civil unrest and worse.  Simply put empty bellies motivate people to pick up weapons and use them on the ruling class when said empty belly can be blamed on those rulers.

Then there's the potentially-larger problem for Xi as well -- China's credit situation is already massively over-levered and arguably on the verge of blowing up all on its own.  Screw the public's ability to eat and the odds of their banking system going prompt critical is very high.  That's very bad for the rulers (and those privileged by them) as well.

So for those who claimed "China won't blink", well, he just did.

But don't take this as being all that positive.  It's not.  The so-called "concessions" are tiny compared to the abuses; addressing a couple of percent of an issue doesn't move the needle.

The market loves it, but as usual it's put exactly zero scale into the evaluation -- although it should.

I'm not only skeptical I see this as nothing more than handing a barking dog a steak laced with rat poison.  I suspect that Trump is too smart to eat it but the stock market was more than willing to gobble it all up.  The most-important take-away, in other words, isn't the materiality of the concessions -- rather it's that all those who claimed China would "not blink" and that their "pride" made the use of the tariff card unwise or even counter-productive are and were dead flat wrong.

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User Info Mr. ChinaMan Can Do Math? in forum [Market-Ticker]
Dilbs
Posts: 81
Incept: 2011-04-19

Maryland
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Trump should publish the complete list of the tariff imbalance, like what he did with automobiles. The fact that the newspaper doesn't include a, at minimum top 10, list of tariffs on goods in both directions, tells me that the news media is a bunch of lazy slobs first and leftist, globalist, progressive asshats second. His one tweet was a huge eye opener to people who are too lazy or fed up to research the crisis of the day. You could color code that list with Mazlow hierarchy or similar so that people see the leverage we have. Might also get people to question if they really need that inexpensive 65" 4k tv in the guest room.
Rstora01
Posts: 4
Incept: 2010-10-13

Pleasanton, California
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The US had another card up their sleeve they could have played without tariffs. Enter the Trans Pacific Partnership (TPP) a 11 nation trade agreement sans China. Which could have allowed the building of factories in TPP nations in direct competition to China. Were TPP to be fully implemented the US could have told China: "You play ball with us or we will not do business with you anymore". Now, I understand why China is building up their forces in the South China Sea.
Tickerguy
Posts: 152426
Incept: 2007-06-26
A True American Patriot!
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Meh. The TPP was a scam at least as large as China's.

Without wage and environment parity tariffs as part of the deal there is no such thing as "free and fair trade."

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Winding it down.
Flaps10
Posts: 6866
Incept: 2008-10-17

PNW
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On the radio the news was going on about how tariffs on grain were going to hurt the US farmers. As Karl points out, my first thought was "no it's not, it's going to hurt the Chinese guy trying to eat".
Opportunity cost
Themortgagedude
Posts: 10590
Incept: 2007-12-17

saint louis
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Trump should just come out and state that effective Jan 1 any country which has trade restrictions or tariffs on any US goods will be met with tariffs on all their goods imported to the US. Then he should also tack on environmental tariffs which will go into effect at a future date if they do not enact regulations to protect our world. Show some ****ing balls Orange Menace.

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I think its time we ask ourselves if we still know the freedoms that our founding fathers intended for us. Ronald Reagan 1964
Tickerguy
Posts: 152426
Incept: 2007-06-26
A True American Patriot!
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The only balls Trump has are the ones in his mouth.

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Winding it down.
Themortgagedude
Posts: 10590
Incept: 2007-12-17

saint louis
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Oh he's got balls. They just don't clank liked we had hoped. In summing up his Presidency an honest person would just state that it was a wasted opportunity for America. Even if he were to fix healthcare now how many billions did he waste? Why do those hospital administrators and drug company execs get to keep those billions? And that's just one place he let us down.

Immigration - **** that's simple. Executive order mandating E-verify across the board.

This Presidenting thing wouldn't be all that hard if he'd just do it.


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I think its time we ask ourselves if we still know the freedoms that our founding fathers intended for us. Ronald Reagan 1964
Tickerguy
Posts: 152426
Incept: 2007-06-26
A True American Patriot!
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But he won't.

All he's done so far is rip people off even more, both directly and by willful blindness.

Never mind the very real risk that he gets us all a bunch of canned sunshine in the coming days and weeks.

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Winding it down.
Apotheoun
Posts: 3604
Incept: 2009-08-14

MN
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... And dude, Chinaman is not the preferred nomenclature.


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Preparing to go fishing.

I can't take the level of theft any longer.
Tickerguy
Posts: 152426
Incept: 2007-06-26
A True American Patriot!
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OK, "ChinaTinyPenis"? smiley

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Winding it down.
Whitehat
Posts: 395
Incept: 2017-06-27

The People's Republic of New York
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Tickerguy wrote..
canned sunshine


love that expression, going to make a Trump campaign decal and poster, a tin can saying something to the effect vote Trump for canned sunshine in a tin can that looks like a nuke.

there was always speculation among the generational discussion crowd that the millennials would be the next WWII generation. perhaps this is their chance to prove everyone wrong about them.

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There are two ways to be rich: One is by acquiring much, and the other is by desiring little.
snow, seasons, distance and dirt roads: SSDD
"Be not deceived; God is not mocked; for whatsoever a man soweth, that shall he also reap" (Gal. 6:7)
Bagbalm
Posts: 5411
Incept: 2009-03-19

Just North of Detroit
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This may shift the balance too: https://www.japantimes.co.jp/news/2018/0....
Peterm99
Posts: 5894
Incept: 2009-03-21

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Bagbalm - Yes, very likely. However, there's a huge difference between "discovered" and "exploitable", quite often measured in many years.

For the foreseeable future, the balance really depends on the amount of currently usable stockpiles we have available, how much the rest of the world has available, how fast our currently known but "inactive" extractable deposits can ramp up production, and, of course, whether China would risk losing access to food imports etc. in order to not continue to sell their stockpiles of rare earths. I would be surprised if the Japanese discoveries would have significant impact at all in much less than a decade.

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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
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