Sharpiegatte’s Lesson for the Trade War

sharpiegate

The Guardian, ‘Sharpiegate’: Trump insists Dorian was forecast to ‘hit or graze’ Alabama

Washington Post, U.S. economy adds just 130,000 jobs in August amid worries that trade war has sunk its teeth into hiring: The unemployment rate remained at 3.7%

Right now, the United States is a tale of two economies: The service sector remains strong with health care and business adding a lot of jobs in August. But industries such as mining and manufacturing that depend heavily on selling items overseas are struggling….

Most companies have already scaled back spending on buildings and equipment, and there is concern that they will now cease hiring, a move that could have harmful consequences on the U.S. economy, as consumer spending drives so much of the U.S. economy. When Americans are fearful of losing their jobs, they tend to halt spending.

So, let’s review the bidding. China is going to let the economic standoff kind of marinate during the rest of September. That will give time to let any “adults in the room” try to talk Trump out of his madness. Prediction: Won’t happen. Then, in October, some Chinese will show up in October to talk about trade.

This news caused stocks to rise on Friday. For all those folks who thought the forthcoming trade talks were good news—good enough news to go out and bid up the price of General Motors—I  can make you a really good deal on a bridge in Brooklyn.

And let’s review the bidding on Sharpiegate:

  • Day 1: as the hurricane forms in the Atlantic, Trump is told that targets could include Alabama,
  • Day 4: any risk to Alabama has long passed, but Trump, having been asleep at the switch for three days, tweets that Dorian is still targeting Alabama.

Everybody occasionally falls asleep at the wheel. Everybody makes an odd mistake now and then—remember how Pocahontas told the Texas Bar Association she was an American Indian—but normal people acknowledge the mistake and move on. But instead of admitting his error and moving on, Trump keeps insisting that he was right all along. To bolster his case, he gives the whole country a belly laugh by presenting a ludicrously altered weather map.

If he cannot admit error on Sharpiegate, I find it inconceivable that Trump will admit error in respect of his delusional beliefs about tariffs and international trade. Nor on his delusional narcissistic faith in the power of his own bullshit and bluster.

As sure as God made little green apples, Trump’s delusions are going to lead us over an economic cliff.

If you think otherwise, then I am fully prepared to make it a package deal: along with the Brooklyn Bridge, you can have the George Washington Bridge too.

And if you think the Chinese are going to cut us some slack, I’ll make it a threefor: the Brookly Bridge, the George Washington Bridge, and the Golden Gate Bridge.

Such a deal. Such a deal.

Politico Would Like Insiders to Know that Trump is Riding a Rubber Ducky into Allegator-Infested Waters

rubber ducky

Nancy Cook and Ben White, ‘They are riding a rubber ducky into alligator-infested waters’: Trump faces a contracting U.S. factory sector, a narrow path to trade victories and investors spooked by recession risks — all before an election year

You should probably read the whole thing, but here are some choice bits:

Moody’s Analytics chief economist Mark Zandi said the U.S. will fall into a recession if the president keeps escalating the trade standoff with China, including another round of tariff hikes in December. “The president has until the end of the year to turn it around with China,” Zandi said. …

Current and former administration officials acknowledge the ultimate fate of the tariffs against China lie solely with the president, who has not been swayed by the pleas of business leaders, or even his own advisers, to cut a deal with China.

And here’s the nub of it:

A former senior White House official said Trump does not view a protracted trade war with China — even if it means reduced manufacturing and another summer of farmers slammed by retaliatory tariffs — as a political negative.

“Frankly I don’t think he really understands any of this,” the former official said of the economic impact of the trade fights. “The manufacturing slowdown, the lack of corporate investment, what’s happening to confidence — all of this was totally predictable based on what he’s done. But he sees it as a political advantage, that he can tell people he got tough on China and needs to finish the job.”

The official added that there are few senior advisers left in the White House who will push back strongly on Trump’s pugnacious approach to trade. “The sad reality is that in the first 1,000 days of his presidency he managed to get rid of everybody who would tell him the truth or anything he didn’t want to hear.”

So, Plutocrats, How’s That Faustian Bargain Workin’ Out for Ya?

As the man said, it was totally predictable that taking a sledgehammer to the international trading system would cause economic chaos.

And ya know something else that was totally predictable? That putting an idiot into office would lead to idiotic economic policy.

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Yesterday’s readers came from Canada, Hong Kong, India, Kenya, Pakistan, Papua New Guinea, Spain, Thailand, the UK, and the US. Lot o’ stuff going on in Hong Kong. Lot ‘o stuff going on in Britain. So thanks for making time to check out the blog. And welcome to the reader in Papua New Guinea. I hope everything is peaceful and copacetic where you are.

Hugh Jim Bissel Responds to China

HJB Responds

About an hour ago, Jonathan Chait hit the nail on the head: Trump Is Melting Down Because China Won’t Give In on Trade:

President Trump is in the midst of a public meltdown that is humiliating, scary, and banana republic–y even by Trumpy standards. The reason is that Trump started a trade war and China refuses to back down, having announced this morning that it is imposing retaliatory tariffs on $75 billion worth of U.S. goods.

Trump has picked fights with lots of countries. Usually they either placate him or try to give him a face-saving way of de-escalating (e.g., Mexico, which is never going to pay for the wall but doesn’t talk about the fact that it’s never going to pay for the wall anymore). Sometimes they get Trump to fold by stroking his ego (the North Koreans have carried out the most over-the-top version of this tactic).

China is playing it differently. Trump is pressuring China with tariff threats, on the theory that China, which is more export-dependent than the U.S., has more to lose from a trade war. China, apparently, calculates that it is Trump who has more to lose from a trade war, since he is facing reelection next year and Chinese president Xi Jinping is facing reelection … never. What’s more, China has little incentive to cough up permanent concessions in its trade relations with the U.S., given that there’s a better-than-even chance Trump will lose and it can just wait for the next president.

And, may I add, with respect to that “better-than-even-chance,” China is damn well trying to load the dice.

Bigly.

And One More Thing

I really don’t think the Business Roundtable and the United States Chamber of Commerce will take well to being “hereby ordered.”

To Hugh Jim Bissel, with Love from Hu Xijin

Screen Shot 2019-08-23 at 10.14.48 AM

China hits U.S. with tariffs on $75 billion worth of goods, including autos: Levies of 5 to 10 percent will be implemented the same days President Trump’s latest tariffs on $300 billion in Chinese goods are slated to effect

Mr. Hu, who edits Global Times on behalf of the Chinese Communist Party, promises more of the same to come. Mr. Hu is a position to know whereof he speaks.

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If, perchance, the headline’s literary reference to Hugh Jim Bissel eluded you, and if you want enlightenment, go here.

And then there is this (sorry, but I couldn’t help myself):

Door One or Door Two?

door 1 door 2

Unlike some other observers, I believe that David Von Drehle, in a Washington Post op-ed, has accurately identified the choice that Xi faces:

… Xi faces a test regarding President Trump.

Whatever one thinks of Trump’s trade-war goals, his tactics appear to have left him at Xi’s mercy. The Chinese people — 60 percent of whom spend less than $10 a day— are far more accustomed to economic pain than Trump’s Americans, and they have no meaningful right to vote. So Xi can probably afford to absorb the economic pain necessary to push the trade war past Election Day. This would greatly increase the chance of a recession in 2020 and damage the American president’s chance of reelection.

On the other hand, Xi also has the power to make a few token concessions that would allow Trump to claim victory in the trade war. Markets would give a hearty cheer; Trump would crown himself the China slayer. But Xi might gain four more years of severe disruption in the West.

The hard-power choice here is probably to stay the course on trade negotiations, spreading the pain unevenly and disproportionately on China’s impoverished majority. In the People’s Republic, it’s always the people who suffer. Confronting a U.S. president and potentially ending his career would ratify China’s arrival at superpower status.

Yet Xi may stand to gain more from the soft-power play, graciously springing Trump from the trap he stepped in. Trump’s reelection would gratify his supporters and demoralize everyone else, further depleting the soft power of the United States. It’s shocking that a U.S. president has given such juicy options to the Chinese leader. We’ll learn how canny Xi is by the choice he makes.

As I said, I believe Von Drehle is rightly identified the choice. But he thinks Xi should pick door number two. By contrast, I believe Xi will decide that he, like a great many others, cannot take four more years of Trumpism. Xi has Trump over a barrel, and I think he is going to stick it in and just keep on pumping.

But, as the man said at the end of the quote, “We’ll learn how canny Xi is by the choice he makes.”

This is What Happens When a Very Stable Genius is Driving the Bus

trade tactics

Paul Krugman has a Nobel prize in economics; in fact, the scholarly work that won him the award was in international trade. I have neither a degree nor a Nobel prize in economics. Neither Krugman nor I have been awarded degrees or honors in mind reading. And, though I gave up my youthful start as a sinologist, I may know just a bit more than he knows about Chinese statecraft. Or maybe not.

In a recent post I attempted to reverse engineer what the Chinese are up to. If the topic is of any interest to you, you need to read Krugman’s August 8 column on the same topic.

I read the Chinese leadership as royally pissed off and offended by the Trumpster. I believe they have taken the first steps in a ruthless campaign to stick it to Donald Trump, deep in a place where the sun don’t shine. They have in fact given him a choice: go through with his threats and see economic chaos, or back down from his threats and look like a shmuck.

Krugman, who is probably a nicer person than I am, seems to see the Chinese leaders as gently trying to “teach Trump ecomics.” But, at this point, it’s pretty naïve to think you can teach Trump anything. And if the Chinese leaders are afflicted by any shortcomings, naivete is not among them.

But Here’s the Important Point

Or, rather, several important points, all made in Krugman’s piece.

Xi Jinping goes into this international trade poker game with a much, much stronger hard than Trump thinks Xi has.

Trump goes into this international trade poker game with a much, much weaker hand than Trump thinks he has.

Krugman, who possesses a Nobel Prize in the economics of international trade, spells out the details.

Trump does not understand what he is doing. That’s the kind of language we often use, as a rhetorical way of disagreeing with someone’s position. But it this case, it’s not rhetoric. It’s not hyperbole. It’s the God’s honest truth.

Earlier on, Trump did have some people around him who knew what they were doing. (We may question their moral character, in choosing to work for Trump, but at least they were professionally competent.)

Now, Trump has fired all the people who knew what they were doing. He has surrounded himself with boot licking idiots.

Even the idiots have recognized his international trade folly, and have tried to talk him out of it. And he has not listened to them.

And as to Trump’s supporters and enablers, including the farmers, the Prophet Hosea has a few prophesies you might wish to consider:

sow the wind

The Nature of His Delusions

cat and lion

Greg Sargent, Trump is staking reelection on one of his biggest lies

Yes, I know. You are sick and tired of Trump’s bullshit, and just wish it would all go away. Brethren and sistern, I feel your pain.

Nevertheless, he is still with us, at least for a season longer. And as long as he is still with us, it is worth knowing how much of his bullshit he believes, himself, and how much consists of stick-in-the-throat lies. By now, it’s plain there is some of each. But as time marches on, and we gain yet more familiarity with his disordered mind, it seems, at least to me, that the portion of his bullshit consisting of plain lies goes up, and the proportion consisting of rooted factual delusion is relatively low.

Greg Sargent does a nice job of dissecting Trump’s lies relating to trade with China—and how he’s preparing the ground for a loss in the trade war.

The delusion lies largely not in counterfactual beliefs on issues such as who pays the tariffs, but rather in the counterfactual belief that he can keep on bullshitting his way through life and get away with it.

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Welcome to today’s readers from Canada, the Philippines, the UK, and the United States. Also to the good folks from Thailand who took a look in the last few minutes.