Drudge Retort: The Other Side of the News
Friday, August 09, 2019

Opinion: If you want to understand the developing trade war with China, the first thing you need to realize is that nothing Donald Trump is doing makes sense. His views on trade are incoherent. His demands are incomprehensible. And he vastly overrates his ability to inflict damage on China while underrating the damage China can do in return.

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Wake me up the next time Paul Krugman is right about anything.

-Rip Van Winkle

#1 | Posted by Rightocenter at 2019-08-09 11:37 AM | Reply

Always-wrong Krugman, the house economist for the DNC, said the internet wouldn't be any more significant than the fax machine. He's like the Paul Ehrlich of economics.

#2 | Posted by nullifidian at 2019-08-09 11:41 AM | Reply

Paul Krugman on election night, 2016

"It really does now look like President Donald J. Trump, and markets are plunging. When might we expect them to recover? ... If the question is when markets will recover, a first-pass answer is never."

#3 | Posted by Rightocenter at 2019-08-09 11:47 AM | Reply

Paul Krugman on CNBC in February, 2017

"I think that there is a quite good chance that we will have a recession late this year (or) early next year,"

#4 | Posted by Rightocenter at 2019-08-09 11:51 AM | Reply

Paul Krugman in December 2018, when his predicted recession didn't happen

"By the way, my track record for this is bad -- as is everybody's. No one is good at calling these turning points."

#5 | Posted by Rightocenter at 2019-08-09 11:52 AM | Reply

Paul Krugman in 2002, as the US economy was mired in the Tech Bubble recession

"To fight this recession the Fed needs ... soaring household spending to offset moribund business investment. [So] Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble."

#6 | Posted by Rightocenter at 2019-08-09 11:54 AM | Reply

Paul Krugman, eleven times from 2010-2011

"The Euro will soon collapse, leading to a resurrection of abandoned European currencies"

#7 | Posted by Rightocenter at 2019-08-09 11:56 AM | Reply

If there ever is a source that deserves slaughtering, it is Krugman.

#8 | Posted by Rightocenter at 2019-08-09 11:57 AM | Reply


I notice that no one, has anything to counter what is in the op-ed.

So, y'all must agree with it.

For example:

...About Trump's views: His incoherence is on view almost every day, but one of his recent tweets was a perfect illustration. Remember, Trump has been complaining nonstop about the strength of the dollar, which he claims puts America at a competitive disadvantage. On Monday he got the Treasury Department to declare China a currency manipulator, which was true seven or eight years ago but isn't true now. Yet the very next day he wrote triumphantly that "massive amounts of money from China and other parts of the world is pouring into the United States," which he declared "a beautiful thing to see."

Um, what happens when "massive amounts of money" pour into your country? Your currency rises, which is exactly what Trump is complaining about. And if lots of money were flooding out of China, the yuan would be plunging, not experiencing the trivial (2 percent) decline that Treasury condemned.

Oh well. I guess arithmetic is just a hoax perpetrated by the deep state....



So, are you saying that "massive amounts of money pouring into the United States" doesn't make the dollar rise, counter to what Pres Trump wants the dollar to do?


#9 | Posted by LampLighter at 2019-08-09 11:58 AM | Reply | Newsworthy 1

Lamp, Krugman hates Trump, we get it.

His whole premise is that Trump is an idiot (and with some justification). He tries to argue that China is fine, but conveniently ignores that China's growth is now at a 25 year low, that Chinese exports have dropped 17%, that even Chinese companies are moving manufacturing to Vietnam, Cambodia and Malaysia and that businesses in China have issued over $200B in CABs.

At the end of his op-ed he makes his only salient point: "So this trade dispute will probably get much worse before it gets better."

Thanks for the tip, Paul!

#10 | Posted by Rightocenter at 2019-08-09 12:20 PM | Reply

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@#10 ... He tries to argue that China is fine ...

I don't see that argument at all. I don't see him saying all that much about China. He does mention that China has more leverage over the US than the US has over China. One example of this - if the trade war has an even more significant effect upon the economy, it could affect Pres Trump's re-election chances, while Pres Xi has no such re-election worries.


... His whole premise is that Trump is an idiot ...

Not an idiot as much as not knowing the ramifications of what he is doing. So, yes, I do agree that the op-ed is more about Pres Trump's lack of insight into the ramifications of his actions, and not so much about how "fine" China is.

That seems to be the gist of the op-ed, in my eyes, Mr Krugman is saying that Pres Trump is doing things that go against his own stated goals, and gives examples of those things.


My question is - does Pres Trump even have a plan or a strategy for the trade war he is entering?


#11 | Posted by LampLighter at 2019-08-09 12:40 PM | Reply | Newsworthy 1

LOL 80% of this thread is nothing but slaughter the source from the two biggest whiners about slaughter the source on the DR.

#12 | Posted by jpw at 2019-08-09 12:45 PM | Reply | Newsworthy 2

Opinion: If you want to understand the developing trade war with China, the first thing you need to realize is that nothing Donald Trump is doing makes sense. His views on trade are incoherent. His demands are incomprehensible. And he vastly overrates his ability to inflict damage on China while underrating the damage China can do in return.

We need to stop assuming we know his true intentions.

His strategy might make perfect sense if you know what his objectives are. His true objectives.

#13 | Posted by jpw at 2019-08-09 12:46 PM | Reply | Newsworthy 1


@#13 ... His strategy might make perfect sense if you know what his objectives are. His true objectives. ...

That's why i asked the question I did at the end of #11.

#14 | Posted by LampLighter at 2019-08-09 12:57 PM | Reply

#12

I make a very rare exception to my STS aversion for a has-been like Krugman:

If there ever is a source that deserves slaughtering, it is Krugman.

#8 | POSTED BY RIGHTOCENTER AT 2019-08-09 11:57 AM

#15 | Posted by Rightocenter at 2019-08-09 02:53 PM | Reply

China understands now that they cannot trust the orange sloth who had treated them just like any other person or entity he had ever done business with (every deal can be cancelled or renegotiated at any time).

China is just waiting patiently until election night 2020. If Trump is reelected they will respond harshly. Otherwise they'll pick up where they left off with Obama.

#16 | Posted by bayviking at 2019-08-09 02:58 PM | Reply


@#16 ... China is just waiting patiently until election night 2020. ...

A similar point was made by Mr Krugman...

...Which brings us to the question of how much power the U.S. really has in this situation.

America is, of course, a major market for Chinese goods, and China buys relatively little in return, so the direct adverse effect of a tariff war is larger for the Chinese. But it's important to have a sense of scale. China isn't like Mexico, which sends 80 percent of its exports to the United States; the Chinese economy is less dependent on trade than smaller nations, and less than a fifth of its exports come to America.

So while Trump's tariffs certainly hurt the Chinese, Beijing is fairly well placed to counter their effects. China can pump up domestic spending with monetary and fiscal stimulus; it can boost its exports, to the world at large as well as to America, by letting the yuan fall.

At the same time, China can inflict pain of its own. It can buy its soybeans elsewhere, hurting U.S. farmers. As we saw this week, even a mostly symbolic weakening of the yuan can send U.S. stocks plunging.

And America's ability to counter these moves is hindered by a combination of technical and political factors. ...



Our farmers are already hurting, some selling pizza to make ends meet.

While I do think that it was time that the US confronted China about some difficulties, such as technology and intellectual property theft, I am still not convinced that punishing American consumers and farmers via tariffs is the correct approach to a resolution of those difficulties.


#17 | Posted by LampLighter at 2019-08-09 03:35 PM | Reply


Another viewpoint:

Trump's China Problem Is That a Weak Yuan Is a Strong Weapon
www.bloomberg.com

...President Donald Trump has bragged repeatedly, in tweets and press conferences, that China is absorbing the cost of U.S. tariffs on Chinese products. He said it again on Aug. 5, tweeting that "it is now even more obvious to everyone that Americans are not paying for the Tariffs -- they are being paid for compliments of China, and the U.S. is taking in tens of Billions of Dollars!"

Trump happens to be wrong about this, but set that aside for a moment and focus on his desideratum. He seems to be saying that he wants Chinese companies to cut the prices they charge by an amount equal to the tariffs to keep their customers unaffected. In his beautiful vision, Chinese companies would bear the full cost of the tariffs. Add the federal government's import tax onto the discounted China price, and you would get the best of all worlds: more revenue for the federal government, no harm to the American consumer, and a squeeze on the Chinese competition.

To repeat, this is not what's happened so far. Economic analyses have shown that American consumers are bearing almost all of the cost of the tariffs. That's because Chinese exporters haven't cut prices significantly -- their profit margins were already thin, and they've had little or no room for discounts.

What if China did exactly what Trump wants? Wouldn't that make the president happy? Actually, no. Because China effectively cut prices on Aug. 5 by allowing its currency to weaken -- and Trump is furious. ...


#18 | Posted by LampLighter at 2019-08-09 04:52 PM | Reply

I love how all these politically driven economists ignore what is really happening in China, from today's South China Morning Post:

The US-China trade war is forcing China's manufacturers to sell their products at a discount rate, driving prices into deflationary territory in July, data released on Friday showed.

The producer price index (PPI), reflecting the prices that factories charge wholesalers for their products, fell into negative territory at minus 0.3 per cent compared to a year earlier, down from the flat reading in June.

The release showed the pressure being placed on manufacturers in China due to tariffs the United States have placed on Chinese imports and China's economy, which analysts are predicting is veering dangerously close to recession.

One major concern is the negative economic impact if price declines become entrenched, and wholesalers delay their purchases in the expectation of lower prices in the future.

China's consumer inflation, meanwhile, remained high in July, due in large part due to the cost of pork, with the African swine fever crisis ravaging the pig population in the world's biggest consumer of pork.

The consumer price index (CPI) rose to 2.8 per cent, the highest reading since February 2018, and a slight increase on the 2.7 per cent figure reported in May and June. Pork prices rose by 27 per cent year-on-year.

The continued rise in prices is eroding the purchasing power of Chinese consumers at a time when they are already anxious about their incomes and job prospects. Policymakers in Beijing are also counting on stronger consumer spending to offset the impact of the weakening economy and the trade war with the United States.

Sluggish PPI is also an indication of a slowdown in China's industrial economy, as shown in other indicators. The official manufacturing purchasing managers' index (PMI) – a gauge of sentiment among factory operators – rose to 49.7 in July from 49.4 in June, but remained below the 50 break-even level, signalling an overall contraction in activity in the sector.

US trade war drives China's producer prices into deflation, as pork prices send consumer inflation higher

#19 | Posted by Rightocenter at 2019-08-09 08:08 PM | Reply


@#19 ... I love how all these politically driven economists ignore what is really happening in China, from today's South China Morning Post ...

Once again I'll say that all those "politically driven economists" are not saying that China will not feel any pain. On the contrary, they say China will.

However...

The point you seem to be missing is that China may be able to weather the pain far better than the United States.

For starters...

Pres Trump is facing a re-election cycle. How will a trashed economy affect him?

When does Pres Xi need to worry about a re-election cycle?

Pres Trump is already shooting his wad in the trade wars. ( www.slate.com -- it's not what you think. And get your mind out of the gutter...)

He is at the point where he needs to use Huawei's inclusion on the "black list" for national security reasons as a tactical weapon in the trade war.

Think about that for a second. Pres Trump is invoking National Security to gain a tactical advantage in a trade war.

That is so not cool. He's all but admitted defeat, imo.


#20 | Posted by LampLighter at 2019-08-09 09:21 PM | Reply

Sounds like RightOCenter thinks Trump's tariffs are "hurting the people that need to get hurt."

#21 | Posted by snoofy at 2019-08-09 09:50 PM | Reply

While I do think that it was time that the US confronted China about some difficulties, such as technology and intellectual property theft, I am still not convinced that punishing American consumers and farmers via tariffs is the correct approach to a resolution of those difficulties.

Any suggestions on leverage other than being their biggest customer would be very well received. Unfortunately, none have emerged in over 20 years.

The point you seem to be missing is that China may be able to weather the pain far better than the United States.

Not missing it at all, but we import 3x as much as we export and other countries are wisely rushing to fill the gap. As the SCMP notes, on a daily basis, China is hurting because of the trade war, and is hitting a deflationary period as it is "perilously close to recession".

Pres Trump is facing a re-election cycle. How will a trashed economy affect him?

He loses, and the Obama Pacification Strategy comes back into place, but China will be emboldened.

When does Pres Xi need to worry about a re-election cycle?

He needs to worry about a billion people angry that they are out of work.

He is at the point where he needs to use Huawei's inclusion on the "black list" for national security reasons as a tactical weapon in the trade war.

The NIE is what called Huawei a national security risk, which is compiled by the NSA, CIA and FBI. Are they now not to be trusted? It's so hard to keep up with the Narrative nowadays.

#21

You are DRtarded, but in a special kind of way.

#22 | Posted by Rightocenter at 2019-08-09 10:07 PM | Reply


@#22 ... Any suggestions on leverage other than being their biggest customer ...

Their biggest individual customer, but only about 20 to 30% of their exports.

That is what seems to be lost on many. China has many more export customers than the US.


... He needs to worry about a billion people angry that they are out of work. ...

For sure, that is a problem for him. But, it's China. So what's yer point?

You cannot apply your United States concerns to China. Two very different countries.


... The NIE is what called Huawei a national security risk, which is compiled by the NSA, CIA and FBI. Are they now not to be trusted? ...

You really need to ask that question of the person in the Oval Office.

It is not I who apparently is using a national security blacklist for the tactical purpose of a trade war advantage.

#23 | Posted by LampLighter at 2019-08-09 10:27 PM | Reply

China has already lost the trade war. The currency devaluation was China taking 100% of the brunt of the tariffs thus far - the US is not paying the tariffs - China is absorbing the cost. But, this will not stop the pain for China as the exodus of their manufacturing base continues to leave the country. China debt bubble and zombie SOE problem just got 10x worse as the country is already in recession and the job market is contracting vs. adding new jobs. They will face mass civil unrest, economic collapse, and the first real threat to the elite since the TM massacre. I told you all this was coming and it is unfolding as I type this.

#24 | Posted by iragoldberg at 2019-08-09 11:39 PM | Reply | Newsworthy 1


@#24 ... China has already lost the trade war. The currency devaluation was China taking 100% of the brunt of the tariffs thus far ...

If that were even remotely true, the stock markets would not have plummeted like they did when China did that quite minor devaluation.

Think about it.

China's currency devaluation was super minor, and the stock market plummeted. What might happen if China decided to do a more significant currency devaluation?

The problem you have with these international economic interactions is that bumper sticker witticisms don't work.

The question becomes, how soon will Pres Trump realize that?

#25 | Posted by LampLighter at 2019-08-10 12:01 AM | Reply

"If that were even remotely true, the stock markets would not have plummeted like they did when China did that quite minor devaluation.
Think about it."

The stock market was a sign of rotation out of risky assets and into bonds - which is why yields are now negative on German bonds, etc. What the market sees is the logical next step - China will get additional tariffs placed to offset the currency manipulation and the rest of SEA devaluing in lockstep with China.

"China's currency devaluation was super minor, and the stock market plummeted. What might happen if China decided to do a more significant currency devaluation? "

It is not minor - it is almost 10% vs. earlier this year....yes, in response to the tariffs. China is only cutting their own throat with devaluations. Their people will suffer with the currency going down and Trump can just place additional tariffs on goods coming to the US to offset the decrease. Meanwhile, China's debt which is linked the US dollar in standard contracts just got much harder to repay. They cannot increase exports to Europe (which is already in recession) so the devaluation serves no purpose. They are in a no win situation.

"The problem you have with these international economic interactions is that bumper sticker witticisms don't work.
The question becomes, how soon will Pres Trump realize that?
#25 | POSTED BY LAMPLIGHTER A"

Trade wars are easy to win - like Trump is already proving. You just can't have weak hands like the Democrats making policy decisions.

#26 | Posted by iragoldberg at 2019-08-10 12:18 AM | Reply


@#26 ... The stock market was a sign of rotation out of risky assets and into bonds ...

Because of the problems and uncertainty caused by China's minor currency devaluation. Well, duh.

... It is not minor - it is almost 10% vs. earlier this year. ...

Yes, it is minor. The recent devaluation was minor, not the full 10% you say.

It was that recent minor devaluation that caused the big stock market drop. The fact that you try to hide that reality weakens your argument. But I'll give you a Nice Try for your efforts. :)

... Trade wars are easy to win - like Trump is already proving. ...

Yes, I heard when Pres Trump said that trade wars are easy to win.

So why is he getting his ass kicked?

This trade war has been going on for how long now? And Pres Trump is now saying he thinks that China won't be talking with him about the trade issues for months? Meanwhile our farmers are holding pizza parties to raise money to live.

If it were easy to win, Pres Trump would have won it already. But he didn't. It's not even close.


... You just can't have weak hands like the Democrats making policy decisions. ...

In some respects I'd agree with the weak hands part.

But you also cannot have a crazed person, who does not know what he wants, making policy decisions either.

So, where do we go from here?


#27 | Posted by LampLighter at 2019-08-10 12:46 AM | Reply

"Because of the problems and uncertainty caused by China's minor currency devaluation. Well, duh."

Yes, because the market is risk weighted and there is additional uncertainty. Just like the Dow dropped 800 points on election night and is now up 40% under Trump, these dips represent a buying opportunity for the smart and the weak/dumb hands like Krugman to hide their savings under their mattress.

"Yes, it is minor. The recent devaluation was minor, not the full 10% you say.

Again, it is 10% this year - and more importantly - the Chinese government signalling that this will be their way to try to increase exports. It is a major event.

"It was that recent minor devaluation that caused the big stock market drop. "

Again, it was the drop combined with Chinese signalling this is their policy moving forward. It is not minor.

"So why is he getting his ass kicked?"

By what measure? China is in a full blown meltdown and Trump only had to toss some money to the farmers. Again, China has already lost the trade war and will undergo a de-industrialization over the next 2 years that will make ours seem like a walk in the park as they don't have domestic consumption or an economy that can handle the mass amounts of displaced workers.

"Meanwhile our farmers are holding pizza parties to raise money to live."

LOL. Got on believing that fairytale.

"If it were easy to win, Pres Trump would have won it already"

As I noted above, he already did. The additional tariffs were just spiking the ball in the endzone.

"But you also cannot have a crazed person, who does not know what he wants, making policy decisions either
#27 | POSTED BY LAMPLIGHTER"

His policies are only crazy according the -------- that crafted the trade deals that got us into this mess in the first place. Fools like Krugman. I wonder if he is happy he sold all his stocks when Trump was elected....

#28 | Posted by iragoldberg at 2019-08-10 01:04 AM | Reply

His whole premise is that Trump is an idiot (and with some justification).

"Some."

#29 | Posted by JOE at 2019-08-10 06:19 AM | Reply

Trump's best hope for reelection is the economy so ROC is there posting and posting and posting to defend the TRump economy even though farmers are going bankrupt due to his policies. Hey, maybe we can sell more Treasury Bills to them so we can bail out the farmers again. Very unlikely. When the President doesn't have the intelligence or even the desire to consult with real economists about what the consequences will be to his economic policies bad things are bound to happen. Why do you think Trump was so determined to get the fed to lower interest rates? That should not have even been a consideration if the economy is actually still growing. It was simply an attempt to boost the economy, for the short term, to help him at the polls nest year. I think it was probably too little (and that cut was very small and Powell said there will be not additional cuts) and too late.

#30 | Posted by danni at 2019-08-10 08:29 AM | Reply

Under Capitalism, more often than not, the player with the deepest pocket wins consistently, whether they are competent or incompetent. Historically, the orange sloth's technique for making money is to fail to honor contracts and bully everyone he interacts with. As President of the United States he is certainly in a good position to continue those practices and he is doing exactly that with Venezuela, Iran, China and the poor Palestinians. Where only money is involved this technique can be successful for the same reason it makes no sense to spend $10,000 litigating a $5,000 problem. But where an individual's or country's dignity or sovereignty are involved litigation costs be damned. That is the position all four of these countries are in and the USA's economy is not as big as China or even the EU.

There are only three ways to create new wealth, farming, mining and manufacturing. Building the infrastructure is an expense on the one hand, but it is an expense which makes a countries economy more efficient and therefore more competitive. The USA has permitted its educational and manufacturing base to deteriorate while also facing rapidly increasing housing and energy costs. It has the highest health care costs in the world and has shipped many of its factories overseas which are not coming back.

Colonialism consists of occupying a country, exporting its raw materials and selling back high value products. This practice created enormous wealth for the British, USA and other nations. Because of its unique history, size and climate the US has been a leader in food production and remains so. But climate change has recently turned much regional agriculture on end and the full impact has yet to be felt. The Kissinger policy drives most US foreign policy through grain production, control of oil distribution and intimidation through the exercise of military power. Over the last several decades we have witnessed the limits of military power in terms of its ability to limit other people's independence. Our reckless use of that power has sunk the USA deeply in debt without achieving any of its fake public or real secret goals.

Today the USA has deliberately chosen to abandon high value added manufacturing, which has contributed rapidly to short term profits while shrinking its domestic market by lowering wages. It makes no sense to complain about currency manipulation when you no longer have high value added products to sell. The US economy has grown only insofar that floods, tornadoes and hurricanes have forced climate change driven public spending. There is no quick path out of this situation. All we can do is continue to build on what we still have. The model of free markets with private control the money supply will fail. Only by restoring public ownership of the money supply and State subsidies of critical industries can we compete with the rest of the world. Otherwise our existing cost structure will continue to prevent us from having enough cost advantages to compete with the rest of the world. But for that to happen we must stop offshoring manufacturing and there is no indication of any turn around in that policy despite all the attention the orange sloth has paid to the topic of jobs.

#31 | Posted by bayviking at 2019-08-10 09:24 AM | Reply

The currency devaluation was China taking 100% of the brunt of the tariffs thus far - the US is not paying the tariffs - China is absorbing the cost.

Where do you get this schitt from?

#32 | Posted by jpw at 2019-08-10 11:47 AM | Reply | Newsworthy 1

"The problem you have with these international economic interactions is that bumper sticker witticisms don't work."

But...but...but...without bumper sticker witticisms, Rube Goldberg has nothing left.

#33 | Posted by Danforth at 2019-08-10 12:17 PM | Reply

"POSTED BY RIGHTOCENTER"

I think you're wrong about things about 100x more often than Krugman is.

By the way, did you think Krugman was wrong about the recession, or did Trump dump $1 trillion plus dollars into the economy to juice it and put the recession off?

Your simple thought process is cute.

#34 | Posted by BruceBanner at 2019-08-10 03:54 PM | Reply

the russian ashkkk-enazi and ROC have a trump-centric agenda that are mean't to be detrimental to our country.

#35 | Posted by ABlock at 2019-08-11 12:04 PM | Reply

That is funny ... .. a commie teaching a capitalist econ.

#36 | Posted by Sniper at 2019-08-11 05:37 PM | Reply

#36

That's funny, a loser teaching humanitarian traits.

#37 | Posted by lfthndthrds at 2019-08-11 06:10 PM | Reply

China's real lesson, as elucidated by Ellen Brown, is that by owning its own banks, as our own constitution authorizes us to do as well, cuts the cost of public works projects, vital to an efficient competitive economy, in half.

#38 | Posted by bayviking at 2019-08-11 07:25 PM | Reply

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