Impact of Trade War or will Impact Trade War? Another Chinese bank implodes
- Thread starter CBradSmith
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Wonder why DNC@StateAlignedFakeNews@CorporateFascists aren't taking about this?
"In short, a 3rd Chinese bank in as many months received an implicit (or explicit) state bailout, and with the dominoes now falling, it's just a matter of time before most if not all of the banks shown in the list above collapse"
"Incidentally, just days before the Heng Feng rescue, JPMorgan correctly downgraded China's banks due to increasing pressure for banks to support growth agenda as macro risk escalates:
The J.P. Morgan economics team revised down its GDP growth forecast for 2020 by 0.1ppt due to the recent sharp turn in Sino-U.S. trade negotiations. But even prior to that, declining PPI and industrial profits growth, suggesting declining debt-servicing ability and weakening cash flow for Corporate China, increase the risks that banks will be asked to support macro growth at the potential expense of profitability. Recent official PBOC comments on an accelerating interest rate liberalization process are illustrative of such rising risks."
The J.P. Morgan economics team revised down its GDP growth forecast for 2020 by 0.1ppt due to the recent sharp turn in Sino-U.S. trade negotiations. But even prior to that, declining PPI and industrial profits growth, suggesting declining debt-servicing ability and weakening cash flow for Corporate China, increase the risks that banks will be asked to support macro growth at the potential expense of profitability. Recent official PBOC comments on an accelerating interest rate liberalization process are illustrative of such rising risks."
"Additionally, JPM cautioned investors to stay away from Chinese banks as, "(1) we cut our NIM and earnings estimates to factor in potential NIM compression due to interest rate liberalization; (2) banks’ re-rating path comes to a halt, at least for now, due to the re-leverage of Corporate China leading to debt concerns; and (3) rising concerns of failed small banks contaminating the balance sheets of large banks may lead to de-rating pressure on large banks."
It now appears that Beijing has indeed picked a model where concern (3) is especially valid, as large banks will be brought in to bail out smaller, insolvent ones (think JPMorgan and Bear Stearns), in the process "contaminating" their balance sheets, as what until now was a localized financial weakness diffuses across the entire banking sector.
But what may be worst for China, is that it as of this moment its options to boost the economy are severely limited following the latest inflation data which was "the worst of both worlds", as PPI prices posted their first decline in 3 years, while CPI jumped to 16 month highs as food prices continued to soar."
It now appears that Beijing has indeed picked a model where concern (3) is especially valid, as large banks will be brought in to bail out smaller, insolvent ones (think JPMorgan and Bear Stearns), in the process "contaminating" their balance sheets, as what until now was a localized financial weakness diffuses across the entire banking sector.
But what may be worst for China, is that it as of this moment its options to boost the economy are severely limited following the latest inflation data which was "the worst of both worlds", as PPI prices posted their first decline in 3 years, while CPI jumped to 16 month highs as food prices continued to soar."
This, as Bloomberg's Kyoungwha Kim wrote, is "an ominous sign for equities because it underscores the difficulties the PBOC faces if it wants to boost policy stimulus"
The bottom line: Trump now appears to be winning the trade war with China, whose economic contraction is accelerating and between slowing trade, sliding corporate profits (PPI), rising inflation (CPI), a devaluing Yuan, a record debt load, and now a sudden crisis in its banking sector, Beijing has found itself paralyzed and with zero credibly options how to kickstart the economy.
The only thing that's left is for China to admit that this is indeed the case, so sit back, relax and watch as bank after bank on the list above fails and China's financial cancer spreads across the country with the $40 trillion in assets (which is certainly not bad news for either gold or bitcoin).
I've said for years China is totally dependent on the USA market to finance their growth and that the USA always held all the cards but we had pussy leadership that wouldn't put a stop to their ripping us off. We can survive without China they can't survive with out the USA market.
Sure it will cause some pain in some areas but we have a leader with balls to put a stop to it. The USA will win this war if we have the will to make the tough decisions.
Sure it will cause some pain in some areas but we have a leader with balls to put a stop to it. The USA will win this war if we have the will to make the tough decisions.
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Not my thoughts, but rather Mike Shedlocks: causing more pain in China than causing pain to yourself is not “winning.”
https://moneymaven.io/mishtalk/econ...ake-a-deal-with-china-Oq3CXb-kYEmyXGveT59GCg/
I don't want somebody else's thoughts. If so, I'd have tagged them.
The only issue I see is that the Chinese leadership will sacrifice 10, 20 or 30+ million Chinese peasants and bottom feeders to win this and not one dogooder entity in the world will bat an eye.
Once this starts effecting the Chinese elites and their bank accounts then DJT will have their attention.
Another key will be when you see more of the leftos jumping on board, which signals that in the bowels of hell, ie congress, they are getting reports that the Chinese are in trouble and going to make a deal that is very favorable for the US.
In the meantime don’t buy Chinese crap!
Once this starts effecting the Chinese elites and their bank accounts then DJT will have their attention.
Another key will be when you see more of the leftos jumping on board, which signals that in the bowels of hell, ie congress, they are getting reports that the Chinese are in trouble and going to make a deal that is very favorable for the US.
In the meantime don’t buy Chinese crap!
Oh, OK, here’s my thought: Trump’s trade war with China causes more pain in China than the US. Trump’s trade war with China has caused the US a lot of pain. That is a perverted way to look at “winning” at trade.
Another thing to ponder:
http://coyoteblog.com/coyote_blog/2019/08/trumps-trade-war-strategy-seems-doomed-to-fail.html
Short sighted view but okay. At least it is movement off of your absolutist view of tariffs.
What war doesn't come with pain and sacrifice?
The reason I believe this will work out for the USA, if we have the will to tough it out, is basic capitalism.
Someone in the US or other countries will see an opportunity and step up and fill the void. Vietnam, Indonesia, India and many other countries that compete with China have to be loving this opportunity.
China is losing out on a tremendous amount of capitol investment and it will only get worse.
China's economy is suffering, the US economy is still rolling along.
Advantage USA.
China is trying to run out the clock. They hope that in 2020 Trump is defeated and that Biden comes back in and China can return to its status quo.
No offense but it's this "I should not feel pain or sacrifice in any manner attitude" that gets me about people like you. You're on a football message board, I assume because you're a fan of OSU football. Everyone of those football players are sacrificing everyday they are part of the team. Kids are willing to sacrifice their minds, bodies and risk their physical future for our entertainment and you think you or anyone else shouldn't sacrifice short term to get a favorable long term result that greatly benefits the country as a whole. SMFH
That’s a somewhat short-sighted analogy. The football players are “sacrificing” because they chose to do so. The corn, soy and dairy farmers have been given no choice, they are sacrificial pawns. I will always be opposed to tariffs as part of a trade war, but I would hold DJT in a little higher esteem if his tariffs intentionally were affecting his personal financial bottom line.
What do I know about DJT’s personal finances? Absolutely nothing. But a logical deduction would tell us if he were personally impacted he would be telling us at every opportunity how he is sacrificing right alongside all the little guys he’s hurting, wouldn’t you agree?
Let me put it another way, and I want to emphasize from the beginning I’m not trying to pick on Ostatedchi, he’s just the only one who has told part of his personal reasons for applauding the trade war.
Ostatedchi works for a multi-billion dollar petroleum/energy company, and some time back a visiting Chinese student managed to steal some proprietary technology from his company and sneak it back to a Chinese company that put the technology on the market. If memory serves it had something to do with battery technology, and his company estimates the theft amounted to over a billion dollars.
If the story is as Ostatedchi relates (and there is no reason to question how he relates it) there is not a person with a semblance of a moral code who would not denounce the theft. The culprits should face justice. The question becomes: how to get them to pay for their sins.
DJT’s solution is to impose tariffs on billions of dollars of imported goods from China, whether the manufacturers of those goods are part of the crime or not. That alone IMO is illogical thinking, but let’s leave that aside for the moment.
Tariffs on Chinese imports are actually a tax on American consumers of those imports, on that I think we can all agree.
So from the beginning the tariffs are imposing “justice” on innocent American consumers, people who did not steal the battery technology and people who want to buy Chinese products that had no association with the theft. Surely we can all see that justice is not being served in this instance.
But on top of that China has countered with tariffs of their own, which has had a devastating impact on several American industries, almost none of whom are in any way connected with the battery technology theft. Again, justice is not being visited on the thief who stole the technology, nor on the Chinese company to whom he gave it.
Now let me ask you: would it not make much more sense, if Trump were to impose tariffs for the burden of those tariffs be placed on the recipient of the “victory” the tariffs are supposed to benefit? Rather than telling innocent corn and soy and dairy farmers it is their moral duty to sacrifice to the point of bankruptcy for the benefit of the multi-billion dollar energy company, wouldn’t it make more sense for Trump to tell the multi-billion dollar energy company to make the sacrifice until the “easily won” trade war was victorious? After all they are the ones for whom the trade war is being waged.
It is hard for me to view as a victory demanding the sacrifice of the well being of thousands of “little guys” and their families in the name of waging a trade war for the benefit of multi-billion dollar international corporations when those corporations are not feeling the slightest pinch from the tariffs.
in the interest of full disclosure
and
out of respect for your lengthy post
you answered my question
thanks
I think this reply is very close to getting it right. Here’s a link that explains China’s “banking problem” began long before Trump’s tariffs, and the tariffs have almost nothing to do with the upcoming Chinese banking crisis.
https://mises.org/wire/chinas-biggest-problem-isnt-trump-its-broken-banking-system
China's theft and chicanery is very damning to me. Where I break down is imposing tariffs to reform a thief. It seems so self evident to me from a business perspective that it's infinitely wiser to avoid rather than to attempt to reform a thief. Bit american business wants..... what, for the scorpion to change its nature because of a tariff? I don't get it. They're so greedy they'll go back into that?
So your solution is to quit doing business with them?
You're going to make Ponca Dan's head explode.
Your implication is that these farmers somehow agree with you. I know personally that any of them who have the business acumen to stay in business long term are quite aware of long term trade policy strategy. They might not like what’s going on but I know plenty that realize that someone needed to do something to reign in China’s endless list of unethical practices, both at micro and macro levels. They are bullies who need the proverbial punch in the nose to realize that they don’t get to dictate terms.
Arguing that Trump’s behavior can allow for logical deduction seems naive, no?
You're correct that I don’t personally know any Nebraska corn farmers or Wisconsin dairy farmers. Whether some agree with the policy is immaterial. They have been thrown under the bus without their prior consent, and I find that to be repugnant. I’m not going to look it up but not too long ago there were reports that farmers in Wisconsin are declaring bankruptcy in record numbers. (I think it was Wisconsin.). I do not see that as “winning.” I guess you do. I wonder what would be your attitude if you were one of those farmers?
It’s been over a year now and the easily won trade war seems to be just getting started. Who was the trade negotiator that admitted getting China to buckle has been much harder than expected?
I have pointed to the WTO several times as the appropriate adjudicator for America’s complaints about China’s malpractice. But so far the Trump administration has brought only one suit before the WTO, which ruled against China, and China promptly ceased the practice. I don’t remember the correct number, but there have been over 30 complaints filed with the appropriate US agency to bring issues before the WTO, and yet only one has been brought. It’s almost as if the Trump administration doesn’t want to resolve trade issues as long as it can perpetuate an enemy to be feared.
While no one can claim to understand anything in Donald Trump’s mind, I repeat it stands to reason he would be shouting from the rooftops if he had included himself in the “sacrificial lamb” category.
Can we go ahead and get a FISA effort started now that the Chinese are sure to try to help Biden win since it will unseat the Donald?
Couple of things you might want to think about. Inflation is non extent meaning consumer prices are unchanged. If the American people were paying more for Chinese products after the tariffs wouldn't that be reflected in the price of goods? Yes it would yet prices have remained unchanged.
Next Trump's personal wealth has decreased about a billion dollars. If Trump were profiting the way his detractors say he is wouldn't that mean his wealth would be going up not down?
Were you crying the blues when Obama implemented "Cash For Clunkers"? How many auto dealers were forced out of business? How many used car dealers struggled to stay in business.
You say you are against tariffs as part of a trade war yet I haven't seen where you have an issue with other countries charging tariffs on American goods for decades. It would be great if China wanted fair trade but they don't, they want to continue to rape the American economy at will.
This is a very good thread. Thank you, Brad and others for posting things that were above my head. I understand more than I did.
Ironic. On the 15th of this month every single vendor I use is increasing their wholesale prices by 15% to cover the new rounds of tariffs. Until now they have absorbed their extra costs out of fear they’ll lose market share. But now they can no longer eat the costs so they’re passing them on to their buyers like me. Guess what I’ll be forced to do!
I haven’t followed the currency manipulation policies, probably wouldn’t understand them if I did. But from what I’ve read Trump has decried that China has manipulated its currency, crying foul play while simultaneously jawboning the Fed to manipulate our currency, as a means to keep prices stable.
Oh , sorry, I almost forgot your second point. I’m not a detractor saying he’s doing things to raise his bottom line. I’m thinking his tariffs have not hit him personally or he would say so. I admit this is the first time I’ve heard he’s down a billion dollars. How do you know that? Has he released his taxes? I thought he was refusing to show his actual wealth.
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Oh, Bearcat. You so misunderstand me! Yes! I can think of very few things Obama did that I did not “cry the blues.”
I have repeatedly opposed tariffs regardless of the country implementing them. They’re nothing but taxes, and I despise taxes. But I’m an American citizen, so I talk mostly about issues that affect American citizens.
How do you fight back against unfair trade practices of other countries if you do not use tariffs?
He’s already stated that he thinks the WTO should be used.
It’s pretty ironic, IMO, that the anarchist has stated that a global organization should be trusted to deal with unfair trade practices.
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