The Trump Economy

[SoCal Deek]

7 hours ago, plenzmd1 said:

Have you read this report? Tell me what you disagree with the main analysis that Trumps tariffs are hurting the American economy

Oh come on! Did you read my comment? Yes, on the surface it looks to be hurting the American economy but if you ever want to make anything here again we’d better stand up to China now. Or...we could just say screw it since we only have eleven years to live.

[TPS]

On 8/30/2019 at 2:46 PM, KRC said:

 

I imagine GG or TPS will correct me, but trade deficits are not necessarily a bad thing. You have the potential to make more money with deficits (depends on purchasing of treasuries, etc.). However, there is a point where it is no longer economically beneficial for the U.S. (which should obviously be our focus). We should focus on making it more equitable when we have crossed that threshold where it is no longer beneficial.

 

IP theft is a different story.

 

In both cases, Trump is using tariffs as a hammer to get them to work on IP theft and to lessen the trade imbalance. Whether you agree or not with the approach, that is what he is using as leverage. Short-term pain for long-term gain.

There's a lot in that first paragraph.  "Free trade theory" is based on the idea that each country will produce what they are most efficient at given their resources. In practice, what has driven trade flows with China is US corporations moving production to take advantage of cheaper wages, so-called "labor arbitrage" -- this is NOT what trade theory is based on. 

US corporations started the process.  China (and South Korea) followed the Japanese model of development, which is to allow US companies in so you can absorb their technology, then create your own competitive corporations.  The largest part of the Chinese trade deficit was (may still be) consumer products that US corporations outsourced.  From the US perspective, it was good for Wall Street (higher profits and stock prices), but millions of manufacturing jobs were outsourced. 

 

The main issue now is that China manages its currency with the dollar, preventing the yuan from strengthening, which is why it buys the treasuries--buying the treasuries (and other US assets) prevents the $ from depreciating, which the trade flows would normally cause.  Going back 5-6 years ago, the gains from labor arbitrage became very small as Chinese wages increased and US wages stagnated.  Trump's tariff tantrum may cause some firms to move back, but it's a very complicated process since manufacturers rely on extensive supply chains that feed their own processes. It's quite possible that firms move to other low wage (Asian) countries and not the US.  

 

Personally, I think it's more important now to put pressure on US corps to stop the focus on short-term profits and stock prices, and go back to being good social stewards in the US.  I posted a link recently about a statement from a group of high profiled CEOs stating this.

[Tiberius]

 

 

Quote

the Associated Press reports from Lincoln, Neb.: “The Nebraska Corn Board and the Nebraska Corn Growers Association issued a joint statement criticizing the Trump administration for continuing to issue oil refinery waivers that thwart ethanol production and for a trade policy that they said has damaged agriculture. ‘Many of our corn farmers have stood with Trump for a long time, but that may soon change,’ Dan Nerud, a Dorchester farmer and president of the 2,400-member Nebraska Corn Growers Association, said in a release.” The statement also said, “As harvest approaches after an extremely difficult year for agriculture, many Nebraska corn farmers are outraged by the Trump administration’s lack of support for the American farmer.”

 

29 minutes ago, TPS said:

There's a lot in that first paragraph.  "Free trade theory" is based on the idea that each country will produce what they are most efficient at given their resources. In practice, what has driven trade flows with China is US corporations moving production to take advantage of cheaper wages, so-called "labor arbitrage" -- this is NOT what trade theory is based on. 

US corporations started the process.  China (and South Korea) followed the Japanese model of development, which is to allow US companies in so you can absorb their technology, then create your own competitive corporations.  The largest part of the Chinese trade deficit was (may still be) consumer products that US corporations outsourced.  From the US perspective, it was good for Wall Street (higher profits and stock prices), but millions of manufacturing jobs were outsourced. 

 

The main issue now is that China manages its currency with the dollar, preventing the yuan from strengthening, which is why it buys the treasuries--buying the treasuries (and other US assets) prevents the $ from depreciating, which the trade flows would normally cause.  Going back 5-6 years ago, the gains from labor arbitrage became very small as Chinese wages increased and US wages stagnated.  Trump's tariff tantrum may cause some firms to move back, but it's a very complicated process since manufacturers rely on extensive supply chains that feed their own processes. It's quite possible that firms move to other low wage (Asian) countries and not the US.  

 

Personally, I think it's more important now to put pressure on US corps to stop the focus on short-term profits and stock prices, and go back to being good social stewards in the US.  I posted a link recently about a statement from a group of high profiled CEOs stating this.

It was also good for US consumers who pay less for goods. 

[row_33]

start screaming Depression, media

 

DJ down 300, one of the worst declines ever

 

almost under 26,000

 

 

[3rdnlng]

7 minutes ago, row_33 said:

start screaming Depression, media

 

DJ down 300, one of the worst declines ever

 

almost under 26,000

 

 

Gee, I wonder if Dorian has anything to do with this?

[row_33]

55 minutes ago, 3rdnlng said:

Gee, I wonder if Dorian has anything to do with this?

 

the media is quick to jump on "one single headline" to blame for the ad hoc trend, then dumps it quick

 

used to have a game for my long obsolete IBM PC Jr. called Wizard of Wall Street which did a great job with options/puts/calls

 

let me go back and replay each day with 20/20 hindsight, made billions of dollars

 

 

[GG]

52 minutes ago, 3rdnlng said:

Gee, I wonder if Dorian has anything to do with this?

 

Not much.

[row_33]

18 minutes ago, GG said:

 

Not much.

 

the point was that the drop in the Dow in a day may be "TOP 40" historically

 

but it's starting the day above 26,000

 

so it's a blip

 

context

context

context

 

 

[GG]

2 minutes ago, row_33 said:

 

the point was that the drop in the Dow in a day may be "TOP 40" historically

 

but it's starting the day above 26,000

 

so it's a blip

 

context

context

context

 

 

 

Which has nothing to do with whether Dorian has affected the stock prices.

[3rdnlng]

2 minutes ago, GG said:

 

Which has nothing to do with whether Dorian has affected the stock prices.

Are you saying that weather instances have no affect on the stock market?

[GG]

8 minutes ago, 3rdnlng said:

Are you saying that weather instances have no affect on the stock market?

 

Not when it's predicted path is avoiding landfall.    There's far more negative data and sentiment following Labor Day to cause the market to swoon then the unpredictable hurricane.

[row_33]

28 minutes ago, GG said:

 

Which has nothing to do with whether Dorian has affected the stock prices.

 

i'm not into the 10,000 word arguments on here

 

my work is paid for real value added and we are subject to an equal opponent ripping through our Report and the outcome matters BIG TIME to my client

 

the arguments about the economy are the direct opposite of my work day, i laugh at it all

 

[GG]

1 minute ago, row_33 said:

 

i'm not into the 10,000 word arguments on here

 

my work is paid for real value added and we are subject to an equal opponent ripping through our Report and the outcome matters BIG TIME to my client

 

the arguments about the economy are the direct opposite of my work day, i laugh at it all

 

 

If you have real clients, I hope you provide more coherent advice than your spouts on this site.

[row_33]

13 minutes ago, GG said:

 

If you have real clients, I hope you provide more coherent advice than your spouts on this site.

 

 

i would not posit that professional Reports and schedules have ANYTHING to do with dicking around here

 

i guess you might someday aspire to be part of an actual situation with professional Reports and schedules issued that matter to those paying for them?

 

 

[GG]

6 minutes ago, row_33 said:

 

 

i would not posit that professional Reports and schedules have ANYTHING to do with dicking around here

 

i guess you might someday aspire to be part of an actual situation with professional Reports and schedules issued that matter to those paying for them?

 

 

 

I rest my case

[row_33]

so we used to have a team of Economists, a few emeritus, that would write reports telling the government the effect of mergers on the stock price

 

eventually the gov't wizened up and realized no value was being added here, it was a jenga tower of assumptions that was meaningless

 

nice gig though, giving opinions based on 1,000 assumptions and when it doesn't pan out, you blame assumption #737 for not coming through

 

******..........

 

 

 

 

[row_33]

nevermind....

 

Edited September 3, 2019 by row_33

[GG]

11 minutes ago, row_33 said:

so we used to have a team of Economists, a few emeritus, that would write reports telling the government the effect of mergers on the stock price

 

eventually the gov't wizened up and realized no value was being added here, it was a jenga tower of assumptions that was meaningless

 

nice gig though, giving opinions based on 1,000 assumptions and when it doesn't pan out, you blame assumption #737 for not coming through

 

******..........

 

 

 

 

 

Therein lies the problem, having Economists evaluate M&A outcomes.

[row_33]

for some reason GG has never been even a 1% member of "that side" to put on the ignore list

 

i won't let this gibberish change my mind

 

 

[GG]

1 minute ago, row_33 said:

for some reason GG has never been even a 1% member of "that side" to put on the ignore list

 

i won't let this gibberish change my mind

 

 

 

You can't even come up with a coherent insult.  Very Canadian of you.