Ready or Not, China Is Becoming the Big Boy on the Block

My fav British economist-journalist Martin Wolf sums it up well in his most recent Financial Times op-ed titled “US-China rivalry will shape the 21st century.” I recommend you take the time to read it, especially if you want to understand the Trump-China tussle better.

I wish Wolf wasn’t right about this but fear he is. He opines:

The threat is the decadence of the west, very much including the US — the prevalence of rent extraction as a way of economic life, the indifference to the fate of much of its citizenry, the corrupting role of money in politics, the indifference to the truth, and the sacrifice of long-term investment to private and public consumption.

History tells us that the odds are high that the U.S. and China will find themselves in armed conflict before this power shift is complete. It’s not inevitable though.

My hope is that America’s attention will be focused on many of the problems alluded to by Mr. Wolf: the out-of-control rent extraction economy, the indifference to quality of life issues, the corruption (particularly in our deeply flawed system for financing political campaigns), the lack of honesty and virtue, our short-term mindset, our excessive leverage, etc.

China is on the rise. By quite a few measures, America is on the wane. But China’s rise does not require America’s decline. Both can rise together, albeit at different rates (since China has far to go to catch up). But that’s not necessarily what will happen. The choice is ours. And, right now, there’s not a whole lot of reason for optimism.

A War That No One Will Win

The war is on. History tells us no one wins such wars. But the U.S. is throwing caution to the wind and proceeding nonetheless. Its president says he’ll win this war. But he’s a fool. No one of any substance believes him.

The war is picking up steam quickly. It started about a month ago with the U.S.’s announcement of new tariffs on steel and aluminum imports. China shot back with a list of 128 U.S.-produced products that would be subject to new tariffs.

The next battle in this war started last night, when the White House unveiled new tariffs on 1,300 additional Chinese products. It’s a long list. I found myself in bed scouring the list to see if a products that compete with any of my clients were included.

The Chinese struck back quickly. It took them only a matter of hours (by the time I got up this morning) to impose new tariffs on 106 categories of goods presently imported into China from the U.S.

The war is now on. In full force.

If you want to see a list of potential losers in this war, all you have to do is scan through the list of products that will be subject to these new stiff taxes and then start working your way backwards to determine who their producers and their suppliers are. Or wait for the inevitable news reports of layoffs and other financial hits that will be taken by affected industries and producers as well as their employees.

Prices may be affected, too. In certain cases, prices could rise due to lessened competition; in other cases, prices could fall, at least in the short term, due to oversupply. It’s too complicated to model in one’s head. We’ll have to await the economists’ modeling or be patient enough to observe price changes for ourself.

There may be other winners, including some domestic producers and other importers who now will have less competition from China. We’ll have to wait and see how this plays out.

Some people who have assessed the list of new tariffs imposed by the Chinese say it appears the Chinese have intentionally targeted states that supported Mr. Trump in the election. I hope so. It would only be fair to the states that didn’t support him. Targeted fallout is always preferable to generalized impact which, by its nature, ends up with innocents taking collateral damage. It’s only fair that those who voted for Mr. Trump bear the brunt of his reckless actions.

Based on everything the president and his minions have said to date, it appears unlikely this is the final battle in this new trade war. It’s likely our neighbors in North America will get pulled into this war as well as our Allies in Europe, especially Germany for whom the president seems to harbor ill-will.

Stay tuned. And hope you don’t get caught in any cross-fire.

What Will We Have When Mr. Trump Is Done Breaking Eggs?

Larry Kudlow, President Trump’s new Director of the National Economic Council and long-time confident of Mr. Trump, was quoted last week as saying the president “loves to break eggs.” And, indeed, for better or for worse, Mr. Trump has been breaking a lot of eggs recently.

I’m sure people have different opinions on the matter. Some are terrified by some of Mr. Trump’s actions; others are heartened. My opinion on the matter isn’t very important (to anyone but me, of course). Of course, the media think opinions matter. They’re constantly polling the American people.

I’m not one who is fond of the media’s incessant polling. Whether the polls suggest support for or opposition to the egg breaking is of no consequence to me. The only poll that counts is the one taken on election day.

I remain troubled by the poll taken in November 2016, when the American people decided to hand over the keys to the Oval Office (and our nuclear arsenal) to a megalomaniac. But it was their decision. It is what it is.

Given that election, I’m not particularly bothered by Mr. Trump’s egg breaking, mainly because none of it is coming as a surprise. Mr. Trump was upfront about his intentions during the campaign. Everyone knew (or should have known) he was going to break the eggs he’s been breaking. Obviously, that’s what a lot of people wanted or they wouldn’t have voted for him.

Naturally, the question on some people’s minds these days is, what will the country look like once all the eggs have been cracked? Will it be a better place? Or a worse place? How will our future be impacted? Will our kids and grandchildren’s lives be better or worse?

Many people have their predictions, but no one can know for sure. I suppose we’ll just have to wait and see. And be prepared to reap the benefits or suffer the consequences, whatever they might be. Perhaps the results of all of this egg breaking will be better than some people fear. But, of course, the ramifications could be worse than anyone can imagine. Only time will tell.

In the meantime, people aren’t left to be mere spectators. They have other people whom they’ve elected to represent them — people to whom they can reach out to express either support or disgust for the president’s egg breaking. And they can prepare for the next election, too — to ensure the election of a Congress that either supports or rejects the egg breaking.

The decision the country made in November 2016 has consequences, like all decisions do. And the decisions we make today have consequences, too — whether we decide to do nothing, voice support, or voice opposition. Perhaps even more importantly, the decisions we make in November 2018 will have consequences.

It will be interesting to see what those decisions will be.

Fanning the Flames of Destruction

The president of the United States thinks some countries are “shitholes.” And, to no one’s surprise, they happen to be populated by people with dark skin.

In yesterday’s post, I debated whether America was burning, much like Rome — whether its best days were ahead of it, or behind it. Today the debate seems silly.

Leaders of great nations don’t talk the way America’s president talks.

It’s unfortunate, but it is what it is. There is more to life than the status or standards (of living and morality) of one’s country of residence. Things like family and friends matter more. Far more.

I suspect America was never as great as some people believe and isn’t nearly as bad today as some people believe. As is often the case, truth is probably hiding somewhere in the middle, out of sight.

We do know that such condescension is not new. “Those places are filled with barbarians.” “Savages.” “Illiterates.” So-called great nations have never had any trouble coming up with pejorative terms to describe people of less powerful and less wealthy places. Just add “shithole” to the list.

The danger inherent in condescension is that it always comes back to bite you in the ass. Ironic, isn’t it?

There Is Something Wrong with This Country. Gravely Wrong.

From my perch, all seems right with the world. We live in a nice house in a nice community — indeed, a community replete with new things and amenities. I want for nothing. We’re near you Vera. You stayed with us twice this past weekend. Being near you and your parents is a blessing unmatched by material things. It makes this place special. Very special.

Yet there is something very wrong, too. Yesterday, the president of the United States tweeted a video in which we takes down CNN. It was a doctored version of an old pro-wresting video when he supposedly body slammed someone to the floor. “The president of the United States of America tweeted this,” I thought. “How did we get to this place?”

This isn’t the first time Mr. Trump has encouraged violence or done something cringeworthy that made himself (and us) look foolish. And utterly out to lunch. And it probably won’t be the last. Nonetheless, it was another stark reminder that something is wrong with this country of ours. Very wrong.

How could anyone think this man is fit for the presidency?

The Republicans had countless options. The number of candidates numbered in the teens. Perhaps none was great, but none was as bad as the one they chose (with the possible exception of one).

I’ve read all the explanations. I get it why people are angry. And cynical. Feeling disenfranchised. And fed up with the status quo. What I don’t get, however, and probably never will, is why anyone thought that putting this man in this office was a prudent and responsible thing to do. Or in our country’s best interest.

My hope is that we’ll get through this presidency without an unmitigated disaster, which basically means a war and people dying (that is, more people than Mr. Trump has already killed in Syria and the Middle East). I have no hope that we’ll get out of it without severe damage to our country.

We’ve already been damaged, and the fallout from that damage will last a generation or more. We deserve it, of course. Decisions have consequences.

I realize it could get worse before it gets better (in the long run, it will get better!). Indeed, I realize that, if we don’t address some of the problems that gave rise to such a man taking power, the next guy (or woman) could be even worse. Much worse: he or she could actually be competent.

Yet I have no reason to believe we’re prepared to address those problems. To the contrary, if Mr. Trump’s policies are enacted fully, those problems will get worse.

Meanwhile, I’m back in my own little utopia. And wondering what, if anything, I can do to make a positive difference in our country. And trying to discern how best to protect myself and my family from the fallout of the next financial crisis.

The chair of the Federal Reserve assured everyone that there wouldn’t be another such crisis in our lifetimes. For some reason, I take no solace in such assurances.

A relative of mine thinks I’m angry about all of this. I don’t feel angry; however, if that’s how it appears, then perhaps I am.

What I feel is sadness, shame, deep disappointment and hope. I see how politicians (Mr. Trump wasn’t the first) successfully employ fear-mongering to advance their personal fortunes and political agendas, and it makes me sad to witness the effectiveness of their ploys. I wonder why people can’t see through it all.

I’m ashamed we as a country have unleashed a man such as Mr. Trump on the world community. They didn’t deserve it.

I’m disappointed that we don’t address some of the issues that have brought us to this place — things like antidemocractic gerrymandering, a political system that is for sale and, indeed, is sold to the highest bidder (campaign finance reform), the out-of-whack distribution of income and wealth brought about by the age of digital technology and global over-supply of labor, and the massive build-up of debt (sovereign and private) throughout the world.

Can this country survive much less thrive without fixing the things that brought us to this precarious ledge? I’m not so sure.

Meanwhile, I’m back in my own little utopia, realizing that our country will never be the same again. The despicable has become the acceptable. The abnormal, normal.

Apparently, anything goes if it’s in furtherance of our quest for “success” and “greatness.” I despair at how those principles have changed since our country was born. I am saddened by our country’s rejection of the teachings of the Nazarene.

I hope things will get better. I hope the world my generation leaves behind for yours, Vera, will be even better than the world we inherited from our parents. I hope you will be free and safe and will be supported by a community and nation that fosters the best within you. I hope you will read a history book and look back to this strange period when American elected a self-absorbed, immature fool to the presidency and yet somehow, in spite of it all, managed not only to survive but also to thrive in the long run.

And, if not — if America’s best days are behind it — then I hope, at the very least, I can help carve out a bit of utopia for you.

America Takes A Giant Step Forward

America took a giant step forward last night, Vera. For the first 228 years of our constitutional national government, no woman had been nominated by a major political party for the presidency of the United States. Last night that changed. Last night Hillary Clinton accepted the nomination of the Democratic Party.

Whether or not you support Ms. Clinton, the historical significance of this moment can’t be lost on you. And if you have a daughter or granddaughter, its significance takes on even greater meaning. Continue reading