Trump's Plan to Balloon the US Trade Deficit

♠ Posted by Emmanuel in , at 8/29/2018 05:03:00 PM
Inside Trump's plan to blow up [and not send down] the US trade deficit to kingdom come.
Trump claims that his various trade wars--against Europe, Asia, North America, and pretty much everybody else--are intended to bring down the US trade deficit. While it's true that the US trade deficit is large, many have argued that it's not really the result of unfair trading practices of the United States' trade partners but rather the Americans' woeful lack of savings. At any rate, despite all Trump's huffing and puffing, the United States' trade deficit for July exploded upwards:
The Commerce Department said on Tuesday the goods trade gap surged 6.3 percent to $72.2 billion last month. Exports of goods dropped 1.7 percent to $140.0 billion, weighed down by a 6.7 percent plunge in shipments of food, feeds and beverages...

Last month, there were also decreases in exports of capital and consumer goods, though motor vehicle exports rose. Imports of goods increased 0.9 percent to $212.2 billion in July, boosted by imports of food, industrial supplies and capital goods. 
Why is it that the US trade deficit looks like ballooning instead of narrowing despite all the American demagoguery aimed at virtually all of its trading partners? Phil Levy at Forbes offers a succinct explanation as to why the Trump administration's actions are precisely the opposite of what you'd do to decrease the American trade deficit:
If there were a three-part plan to increase the trade deficit, the first part would attempt to boost investment in the United States while trimming national saving...The trick to expanding the trade deficit would be to make sure that federal budget deficits increase. Unless there is an offsetting move in other domestic saving, this should cut national saving. The combination of investment incentives and government dissaving would be a strong start toward growing the trade deficit.
You'd also verbally undermine others' economies, thus reducing their demand for imports from countries like the US:
The second part of the plan would be to undercut growth in major trading partner economies...the trick would be to instill doubt and foster economic turmoil in partners such as the European Union and China. If the United States could effectively destabilize those economies, U.S. exports should fall. If you pair that with rapid U.S. growth, it should also grow the U.S. trade deficit.
And, for the coup de grace, you'd engineer a currency crisis in other countries that drives up the value of the dollar relative to other currencies:
The third and final element would be to try and stoke a currency crisis of some sort. Perhaps find an emerging market that is teetering and see if you can push it over the edge. Not only will this directly affect trade with the target country – as its currency falls, its goods look cheaper for the United States to import and U.S. goods look more expensive for export.
By blasting China's economy as "weak" and stoking a holy war with predominantly Islamic Turkey over a detained American pastor that's driving the Turkish lira down, Trump and his minions are certainly doing all of these things. Don't be surprised, then, if the US trade deficit continues marching upwards since Trump certainly appears to be doing all these things designed to do so.
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How Stormy Daniels Explains US Farmers' Fate

♠ Posted by Emmanuel in ,, at 8/19/2018 06:55:00 PM
So much soy with nowhere to go; Stormy Daniels may explain their fate.
The Atlantic brought to my attention this very cogent explanation of what's happening to American farmers amid Trump's trade war, by way of alleged Trump paramour Stormy Daniels. It's a story of regret for an increasing number of them, although you get anecdotal reports that Trump is still popular among several misguided sorts. No matter; here's Iowan farmer Christopher Gibbs on his "buyer's remorse" in voting for Trump:
Let me be clear. I want to be supportive of the president and his policies. As a farmer, we voted for the president because he purported to represent a “can do, just get it done” attitude. That attitude is the core of farm folks. But the president’s trade war, now being supported by hush money to keep agriculture sedated, is a bridge too far for me. This week the president announced he is offering $12 billion of borrowed taxpayer monies to continue to “have farmer’s backs.” These dollars are nothing more than verification that the president’s protectionist’s trade policies are folly.

Let me tell you a riddle. “I slept with a billionaire because he said he loved me. I expected to make love, but in the morning I realized I was getting screwed. When I went to tell the world, I was offered cash to keep my mouth shut.” Who am I? No, I’m not a model or someone named Stormy. I’m the American farmer [my emphasis].
Gibbs then continues by contrasting the many years it took to establish overseas markets for corn and soybeans with the damage caused by Trump at the stoke of a pen when he decided to levy tariffs on Chinese goods, which the PRC then retaliated against by hitting America where it hurts most--in agriculture:
In the mid-1980s we were awash with over production in the corn and soybean sectors. Agriculture got busy, boarded planes, trains and automobiles and started building markets around the world, one handshake and one relationship at a time. We used our own funds through our check off dollars and trade associations to build markets in Mexico, Canada, Latin America and the Pacific Rim. And we didn’t stop there. In partnership with the U.S. taxpayers, we built an ethanol industry to ensure another renewable energy source for U.S. consumers.

The world markets, which the president is now tearing down in the name of fairness, were built and paid for by farmers to ensure agriculture had outlets for our production so we didn’t have to come to the American taxpayer for support.
What can I say? While a lot of what Trump campaigned on is a lot of hot air, you cannot exactly vote for someone on the premise that he will not do what he said he would do. China-bashing just happens to be at the top of the list. At the end of the day, you must bear the consequences of your actions however foolhardy, and voting for Trump is as close to  a crime against humanity as you can get at the ballot box.
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Trump: Chinese Students in US are [PRC] Spies

♠ Posted by Emmanuel in ,, at 8/14/2018 05:34:00 PM
Trump to Chinese students in America: You ain't nuthin' but PRC spies.
Donald Trump loves a conspiracy theory: Ted Cruz's dad was involved in the assassination of John F. Kennedy. Global warming is a hoax invented by the Chinese to make US manufacturing non-competitive. Ever so fond of bashing China in any way, shape or form, a recent gathering of executives from America's largest multinational corporations (and some Trump toadies besides) represented a reversion to Trump's mean. Instead of discussing ways to stop Trump's trade war--fat chance of that--they were instead subjected to another of his lunatic rantings:
The president entertained a group of 15 CEOs and senior White House staff at a dinner in the middle of his annual working vacation. The dinner was billed as “an opportunity for the president to hear how the economy is doing ... and what their priorities and thoughts are for the year ahead...”

At one point during the dinner, Trump noted of an unnamed country that the attendee said was clearly China, “almost every student that comes over to this country is a spy.”
Unsurprisingly, the United Chinese Americans (UCA) are up in arms over Trump's racist characterizations. Not that Trump is the only white guy in government insulting Chinese students...
The United Chinese Americans (UCA), a leading federation of Chinese American organizations across the country, is greatly disturbed by multiple news reports that, at a private dinner with corporate executives in New Jersey on August 7, President Donald Trump spoke in alarming terms about Chinese students studying in America as mostly spies for China... 

Recent reported remarks by President Trump, FBI Director Christopher Wray, and Senator Marco Rubio, who has characterized persons of Chinese origin in the United States as a national security threat, are unjustified and deeply offensive. The United Chinese Americans calls on the White House to clarify the President's reported disparagement of Chinese students.

We also call on the Chinese American community and other Americans of conscience to contact the White House, their Members of Congress and their local news media outlets to protest these negative portrayals of Chinese students. And we call on all Americans to continue the fine American tradition of welcoming all international students and scholars to our shores.
Fat chance of that as well for as long as Trump perceives there is political capital to be made from characterizing Chinese students Stateside as spies. There may, however, be economic fallout from this latest bout of Trump's white supremacy. Insofar as Chinese students represent the largest group of international students, payback would be substantial if these students decided to go elsewhere:
There are more than 350,000 Chinese students studying at U.S. universities -- the largest group of international students by far -- and Chinese students earned about 10 percent of all doctorates awarded by American universities in 2016.

"Generations of foreign policy leaders agree that international students and scholars are one of America’s greatest foreign policy assets," Jill Welch, NAFSA's [National Association of Foreign Student Advisers] deputy executive director for public policy, said in a statement about what the president reportedly said. "Blanket generalizations about students from any country will undoubtedly make international students think twice before choosing the United States as their destination. If students, particularly from strategic regions around the world, no longer come here, America will lose the ability to build relationships with future leaders abroad and strengthen our own national security."

"Chinese students contribute $12 billion to the U.S. economy, alongside countless other benefits, so even a modest reduction in Chinese enrollment would be devastating, and virtually every community in America would feel the impact if Chinese students decided not to study in the United States," Welch added. "To make America more secure and welcoming to international students and scholars the president must avoid unwelcoming rhetoric and policies. We are already in a global competition for talent, and students around the world pay close attention to the policies and rhetoric emanating from the White House. In order to avoid a further chilling effect in the United States, it is incumbent upon policy leaders to act boldly and decisively to let students know that they are welcome here and that we value their contributions."
For someone presumably wanting to increase American exports, the idiot Trump probably doesn't realize that higher education is its sixth-largest service export, worth over $43 billion. Already, Trump is phasing in limits on those studying STEM (science, technology, engineering and math) disciplines over fears that the United States is giving away its competitive edge in these key areas of the future to Communist interlopers. I am 100% certain that discouraging its young people from studying in America is one of the actions that the Chinese government is considering should the US-China trade war get worse. At this rate, don't count such a possibility out by any means.
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Trump Antagonizing Turkey is a Really Bad Idea

♠ Posted by Emmanuel in ,, at 8/10/2018 05:51:00 PM
Perhaps someone should tell Trump of US bases in Turkey prosecuting the War on Terror.
Here we go again: some months ago, Saudi Arabia, the United Arab Emirates, Bahrain and Egypt embargoed Qatar over its alleged support for terrorism. Qatar, after all, has comparatively cordial relations with the likes of Hamas and Hezbollah. There's also the matter of state-funded broadcaster Al Jazeera continuously blasting Qatar's neighbors over authoritarian rule when Qatar just happens to be an, er, absolute monarchy. What right did the network have to criticize the likes of Saudi and the Emirates?

Enter Trump. Ever so vainglorious, he suggested that the embargo against Qatar was a good idea, and that he encouraged leaders of some of these countries to isolate Qatar besides. Whether the ignoramus was aware that thousands of American troops "fighting terrorism" were stationed in Qatar or not, Trump had to backtrack on his Qatar-bashing a few days later:
But Qatar is also home to the Al Udeid Air Base, which hosts more than 10,000 American servicemen. The air base is the main regional center for air missions against ISIS.

Trump mentioned the base in a May 21 speech in Saudi Arabia, calling Qatar a "crucial strategic partner," but MSNBC reported Thursday that a source close to the President suggested that Trump was perhaps unaware that there were American troops stationed in the oil-rich nation.

"I think it is fair to say that if there is a crisis this would be the first time he was briefed on exactly where our bases are in the region," Nicole Wallace said.
At present, global financial markets for stocks, bonds and currencies are being roiled by Trump fighting Turkey over the release of some evangelical minister jailed over what appears to be a trumped-up charge. Adding fuel to the fire, he's just announced forthcoming additional tariffs on Turkish steel and aluminum. What started the entire imbroglio were negotiations that broke off over the release of one Andrew Brunson, the pastor detained in Turkey. Likely to please his base of evangelical voters who overlook his enormous and ever-growing portfolio of seven deadly sins, Trump probably calculates that destroying the world's 19th most populous country is a small price to pay for a few more votes come election time Stateside. "Stick it to the "Mooslems"!" is probably the Trumpian rallying cry of them moment.

But, there's also the small, neglected detail that Turkey is a key part of the Western security equation in that part of the world:
It is unlikely that the United States and Turkey will resolve their differences anytime soon. But given Turkey’s geostrategic location—in the backyard of Russia, and bordering Iraq, Iran, and Syria—the United States has an interest in maintaining the relationship. Turkey, meanwhile, does not need to add to its economic woes. The hope, at this point, is that as both Erdogan and Trump play to their bases, they’ll refrain from actions that would be hard to walk back from without embarrassment to either leader’s large ego. Despite the shifts of recent decades, the United States and Turkey still need each other. And the temporary political benefits domestically probably don’t outweigh that.
While it is indeed true that Turkey under Erdogan is moving away from democracy and towards authoritarianism, so is the United States under Trump. Still, it's inadvisable that the American blowhard offend the Turkish blowhard enough as to blow up the postwar security arrangement underpinning NATO. That is, NATO has sought Turkey as a moderating force with regard to Muslims participating in regional security arrangements to counterbalance accusations of religious prejudice. Not that Erdogan is reserved in fanning such insinuations:
President Erdogan described the sanctions on his ministerial colleagues as a “Zionist Evangelist plot” and vowed to retaliate in kind by imposing sanctions on the American counterparts of the Turkish ministers.

Pro-government Turkish newspapers are baying for United States troops to be kicked out of Incirlik, a Turkish air base used in the fight against Islamic State militants and other critical missions, but the Turkish government has not moved in that direction yet.
Insofar as Trump's USA is really punishing Turkey without much enthusiasm from other NATO allies, this brouhaha may be another case of him blowing up long-established relations for the sake of (perceived domestic) electoral gains. But, who would NATO turn to if Turkey boots the US bases out of the country? Where would the Yanks go then? The answers aren't clear, and you do hope Trump is apprised of this potential complication should he continue to punish Turkey over perceived personal slights.
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PRC Tells Yanquis to Shove It On Iran Oil Imports

♠ Posted by Emmanuel in ,, at 8/05/2018 04:11:00 PM
Truly *independent* countries--from American influence, at least--are free to buy Iranian oil.
It's odd that Trump campaigned on American isolationism--withdrawing from misadventures in Afghanistan, Iraq, Syria, et cetera--and then to see his actions on Iran. Being the archetypal Stuck in the 80s sort of guy, Trump seems to have an odd fixation on bashing Iran. Famously leaving the agreement struck on Iranian compliance on limiting enriched nuclear materials in exchange for lifting sanctions, the United States wants to get its way when none of the other signatories to the JCPOA agreement have left it.

The oddity here is that the United States wants everyone else to follow through with re-implementing sanctions on Iran. If this isn't a prime example of playing "globocop" and busybodying in world politics, then I don't know what is. Given the commercial ties of countries like Western European ones with the United States, it's certainly difficult for them to ignore American pressure to stop buying Iranian fuel. For instance, the Germans may chafe at the neophyte US ambassador telling them to stop buying Iranian fuel, but they ultimately will have to comply lest they face American economic sanctions.

Thankfully, though, there is someone bucking the trend. What's more, it's a JCPOA signatory, a permanent member of the UN Security Council, and now the largest buyer of Iranian oil. Yes, I am talking about China:
The U.S. has been unable to persuade China to cut Iranian oil imports, according to two officials familiar with the negotiations, dealing a blow to President Donald Trump’s efforts to isolate the Islamic Republic after his withdrawal from the 2015 nuclear accord...

Teams of U.S. officials have been visiting capitals around the world to try to choke off sales of Iranian oil by early November, when U.S. sanctions are due to snap back into effect. While the Trump administration has said it wants to cut Iranian oil exports to zero by Nov. 4, most analysts viewed that target as unlikely.

Francis Fannon, the assistant secretary of state for the Bureau of Energy Resources, was recently in China to discuss sanctions, according to a State Department spokesperson. Unfazed, the administration has warned that even allies would face sanctions if they didn’t show “significant” progress in reducing Iranian oil purchases by Nov. 4, ruling out broad exemptions or waivers.
Instead of putting the brakes on its Iranian oil purchases, China has hit the gas instead. Sanctions, if applied, would not be against PRC entities with significant American trade. So, Yanquis pressuring the Chinese has been less effective:
China -- the world’s top crude buyer and Iran’s No. 1 customer -- has said previously that it opposed unilateral sanctions and lifted monthly oil imports from the country by 26 percent in July. It accounted for 35 percent the Iranian exports last month, according to ship-tracking data compiled by Bloomberg.
You can hardly expect the Chinese to become even more compliant / subservient to the United States on this matter given their ongoing trade war fisticuffs. I am not particularly fond of the Iranian leadership's blowhard stances just as I am not of Trump's. However, I do think it unfair to punish Iran's government for living up to JCPOA's commitments. Obviously, the wealthiest country in the world bullying a developing country trying to play by the rules doesn't strike me as an exemplary event, even if Iran's leadership certainly has many foibles.

But then again, what can we say about American "leadership" that relishes separating refugee seekers' children from their parents and then throwing them into cages like cattle?
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US 'Woos' Asia With Puny $113M Belt-Road Alternative

♠ Posted by Emmanuel in , at 8/02/2018 04:25:00 PM
Yanks budget for, er, one pork dumpling at the global economic feast that is the Asian Century.
Trump's Secretary of State Mike Pompeo is scheduled to visit Asia this week to shore up American support there. His previous trips involved going to North Korea to see Kim Jong-un, but now he's supposedly in our part of the world for maintaining diplomatic ties a la winning friends and influencing people. The trouble is, his boss didn't seem to budget all that much in brib...I mean, monetary inducements to stick with Washington and stick it to Beijing:
The US government is expanding its infrastructure drive in the Asia-Pacific region using new investment programmes amid rising anxiety in Washington about China’s aggressive overseas development policies. Announced by Secretary of State Mike Pompeo on Monday, the initiative follows concerns about the Trump administration’s commitment to engaging with countries in the Indo-Pacific region.

Pompeo will visit Southeast Asia from Wednesday to Sunday, when he is expected to announce funding plans for the region. Pompeo’s “Indo-Pacific Economic Vision” will increase the financial support that the US government provides to countries in the region through a proposed merged agency, the US International Development Finance Corporation (USIDFC). Along with US$113 million in direct government investment, the plan would double the global spending cap for the development finance corporation to US$60 billion, which could be used to provide private companies with loans for projects overseas.

The move comes in response to China’s ambitious “Belt and Road Initiative” – a group of multibillion-dollar transport and power projects that Beijing has used to assert its influence in Asia and beyond – and is likely to fuel suspicions from Beijing.
You know, for a country projected to run trillion dollar plus ($1,000,000,000,000+) budget deficits into perpetuity, setting aside $112,000,000 is even smaller than a rounding error. Going by my calculations, it's even less than an hour's worth of American trillion dollar annual deficits. Yet, that's all the mighty United States of America has announced for helping gain the affections of the world's most populous continent. This puny effort is of course a charm counteroffensive to China's One Belt, One Road project. How much have the Chinese budgeted in direct outlays for that?
China is pledging more than $100 billion to finance projects under its "One Belt, One Road" strategy, an ambitious initiative to strengthen the world's second-largest economy's investment, influence and trade links to the rest of the globe.

"China will endeavor to build a win-win business partnership with other countries participating in the Belt and Road Initiative," President Xi Jinping said in his opening speech at a two-day forum on the plan. "These efforts are designed to promote growth both in our respective regions and globally."
That's official PRC government spending, not loan guarantees for national firms or other cheat counts. While China's motives in promoting the Belt and Road initiative are certainly questionable, you do have to wonder how muck influence 1/884th China's commitment will have in encouraging Asian nations to take America's side over China's. You also have to question whether the United States, whose own infrastructure merits a near-failing mark from civil engineers, has much to offer in this respect relative to China with its gleaming airports, expansive and smooth highways, etc.

I've heard about hegemony on the cheap, but what Trump and Pompeo have to offer is beyond laughable--especially after you factor in the tens of billions of damage the US is doing to regional economies via trade war.
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