China will
always remain the builder of world peace, a contributor to global development,
and upholder of international order.
Xi Jinping
Today, has Trade
War Team Trump split Europe from China, by mostly accommodating Juncker last
week? I don’t know either, but with at least a temporary reprieve for German
motors, it looks like it has. But how can the EU import GMO US soybeans?
So what does
China’s play book response look like? China doesn’t know, suggests the South
China Morning Post. What could possibly go wrong for America, or China, or
both?
What if China
offers Trump, China-USA open trade deal for the Hong Kong style return of Taiwan?
What if Trump overplays, triggering mass unemployment in China? What if Trumps
global trade war triggers the next global recession, ending the current
recovery built on a Mount Everest of unrepayable debt?
Will America be
Made Great Again, in a Rest of the World collapse? Unlikely. Would fiat dollar
supremacy even survive a Rest of the World collapse?
Starting wars is
all too easy, it’s the endings that are always tricky.
Thus, what is of
supreme importance in war is to attack the enemy's strategy.
Sun Tzu
China has no idea how to play Trump, and is doing what it always does when it smells trouble
In the past, Beijing has reacted to economic
challenges by opening its credit spigot and letting the money flow, and that’s
what it has started doing this time too even though the mess from the last
crisis is yet to be cleared
Thanks to US President Donald Trump and his
“America first” policy, the global economic and trade outlook perhaps has never
been so uncertain. Nowhere are these economic and policy shock waves being felt
more than in China. And, Beijing is responding the same way it does every time
it anticipates trouble – by pumping cash into its system.It has already used targeted reserve requirement cuts for select banks. This week the People’s Bank of China (PBOC) pushed US$74 billion into the system to get funds to the small-business sector. The State Council also announced US$200 billion of infrastructure spending to boost what were weak infrastructure numbers, while the currency fell to 6.8 to the dollar to take the edge off tariffs. It’s a playbook we have seen before.
Following the global shock in 2008 due to the financial crisis, Beijing panicked when a reported 20 million migrant workers had or were at risk of losing their jobs. After years of trying to bring financial discipline to the banks, they opened the credit spigot and let the money flow. That stimulus, hailed at the time as the saviour of global growth, is now one of the main causes of the debt dependency which Beijing still struggles to rein in.
US-China trade war: who wins, who loses?
To some, Beijing’s rapid fiscal and monetary moves may seem like strength: it is proactive, decisive and has the financial capacity to act to avert the worst. But in reality, it is a sign of utter confusion. Trump has clearly thrown China off kilter.In the past few years, Beijing has understood the threats to the economy and has started to clamp down on risks in the financial sector, cross-border flows and the shadow banks. There have been successes, and many traditional metrics of credit growth or shadow-banking balances did slow or fall, but often the lending merely rebranded itself under a different name.
Now the calculus has changed again. Trump went lightly on China in his first year, and was best friends with President Xi Jinping. This gave the Chinese a false sense of security when dealing with the Donald. A focus on North Korea, not trade, didn’t prepare Beijing for what came next.
Trump has for years talked tough when it comes to China and trade. His basic metric to measure the relationship, the deficit, is a poor one. But that debate has brought into the open the unfairness and unlevel playing field for foreign businesses in China.
Western policy for 30 years
has been one of engagement with the hope for change in China. Trump rejects
that; you can be a foe on Monday and best friends by Tuesday. Deals are the
worst ever or the best ever. Everything is fluid for Trump, everything is in
play.
Chinese leadership find themselves
in a bind. Xi and the official media have been remarkably restrained in their
pushback against the trade war. Touchy-feely statements on fighting
protectionism sounds hollow on the lips of Chinese leaders. They are able to
try and boost the economy domestically, but Trump is too unpredictable to
formulate a long-term policy. The Chinese aren’t even clear what Trump wants,
so how can they respond?
The trade war has now started, and could well escalate within weeks. What
the long-term impacts of a trade war is, no one knows. There hasn’t been one
for decades and certainly not one in an era of global supply chains. It’s a
trade war Beijing didn’t even think would happen at the start of the year.Beijing is acting fast to try and dampen the coming shocks, yet the formal banking sector is very bad at getting money to small businesses; it is good getting it to local governments and state-owned enterprises. That’s partly why the shadow banking sector developed. As for infrastructure spending, whether it is at home or abroad under the Belt and Road Initiative, Beijing has without doubt wasted vast quantities of money on vanity projects which have very little financial return.
If economic numbers and pain on the ground increase, then only expect more support from the PBOC. It isn’t an independent bank and, especially in times of crisis, it is the political leadership which is in charge. Good financial housekeeping can wait, keep the growth going and the money flowing – the mess can be cleaned up later.
More
We will never
allow anyone, any organization, or any political party, at any time or in any
form, to separate any part of Chinese territory from China.
Xi Jinping
In EUSSR news, the
war continues to swing away from the Brussels-Berlin Axis. As ever in EUSSR
negotiations, very little happens until the deadline nears, then the clock is
all too often “stopped” for all night last minute horse trading, with a deal
announced one day late, and a penny short. Just don’t expect to find this on
the extreme left wing, Europhile BBC.
BBC: "the
propaganda arm of the EU."
Martin Durkin. Brexit Filmmaker.
July 28, 2018 / 10:52 PM
Italy's interior minister says EU trying to 'swindle' Britain - Sunday Times
LONDON
(Reuters) - Italy’s far-right interior minister, Matteo Salvini, has accused
the European Union of trying to cheat Britain out of the Brexit it voted for,
according to extracts from a newspaper interview published late on Saturday.
“There is no
objectivity or good faith from the European side,” Salvini was quoted as saying
in an interview with Britain’s Sunday Times newspaper.
“My
experience in the European parliament tells me you either impose yourself or
they swindle you,” he added.
Britain is
due to leave the EU on March 29 next year, and Prime Minister Theresa May is
struggling to agree a long-term trading relationship with the bloc or to
finalise a transitional deal to cover the period immediately after Britain
leaves.
Salvini told
May to stick to her principles and be prepared to walk away from the bloc
without a deal - something many businesses fear could lead to chaos.
“On some
principles there is no need to be flexible and you should not go backwards,” he
said.
Separately,
the newspaper cited an unnamed government minister as saying that Britain’s
army would be ready to deliver food and medicine if there were delays at ports
after Brexit.
“There is a
lot of civil contingency planning around the prospect of no deal. That’s not
frightening the horses, that’s just being utterly realistic,” the minister
said.
Supermarkets,
including German-owned Aldi, were also asking some suppliers to hold extra
stocks of goods such as tea and coffee, the newspaper reported, citing a
supplier.
More
July 27, 2018 / 4:49 PM
Markets jitter as founder of Italian ruling party urges euro referendum
ROME
(Reuters) - Italy should have a “plan B” to quit the euro zone with a
referendum if economic conditions dictate, the founder of the co-ruling 5-Star
Movement said, sending ripples through financial markets.
The
anti-establishment movement’s founder Beppe Grillo holds no post in the
coalition where 5-Star governs with the League. But his remarks may fuel new
doubts over Italy’s intention to maintain the single currency.
“You must
have a plan B,” Grillo said in an interview on Friday with Gzero Media, a
subsidiary of risk analysis firm Eurasia Group.
His comments
came as Italy’s new anti-establishment government designated a eurosceptic as
president of the national public broadcaster RAI, whose TV channels are the
most popular among Italians.
Grillo said
the country had not devised any contingency plan yet, and Italians should vote
in a referendum to see if a majority wanted to quit the currency.
More
July 27, 2018 / 4:22 PM
Austria seeks to avoid hard Brexit, Kurz tells May
SALZBURG,
Austria (Reuters) - Austrian Chancellor Sebastian Kurz said it was important to
avoid a “hard” or disorderly Brexit, but negotiations about Britain’s exit from
the European Union were going quite well.
Kurz,
standing next to British Prime Minister Theresa May in Salzburg, said he hoped
Austria and the EU were able to maintain strong ties with Britain after it left
the bloc.
“From our
point of view it’s important to avoid a hard Brexit,” he told reporters. “I can
hope that we can find a way that - also after the Brexit - the relations
between the UK and Austria, the relations between the UK and the EU remain very
strong because we both need that.”
July 28, 2018 / 12:54 PM
Hungarian PM sees shift to illiberal Christian democracy in 2019 European vote
BUDAPEST
(Reuters) - Hungarian Prime Minister Viktor Orban said on Saturday that
European parliament elections next year could bring about a shift toward
illiberal “Christian democracy” in the European Union that would end the era of
multiculturalism.
The right-wing
nationalist Orban, re-elected in April to a third consecutive term, has
spearheaded eastern European resistance to EU moves to have member states
accept asylum seekers and migrants under a quota system.
Along with
Poland’s nationalist government, he has been in constant conflict with the
European Commission, the EU’s executive, over what Brussels calls an erosion of
democratic institutions in formerly commnist east European countries.
In an annual
speech to ethnic Hungarians in Baile Tusnad in neighbouring Romania, Orban
portrayed the 2019 European parliamentary vote as decisive for the future of
Europe.
He said the
Western political “elite” of the EU had failed to protect the bloc from Muslim
immigration and it was time for them to go. “The European elite is visibly
nervous,” Orban told hundreds of cheering supporters.
“Their big
goal to transform Europe, to ship it into a post-Christian era, and into an era
when nations disappear - this process could be undermined in the European
elections. And it is our elementary interest to stop this transformation.”
Orban said
the European parliamentary vote must prove that there was an alternative to
liberal democracy, which he said worked in undemocratic ways in Western Europe
by being intolerant of alternative views.
----“We are facing a big moment: we are saying goodbye not simply to liberal democracy ... but to the 1968 elite,” he said, alluding to an international wave of leftist, liberal protest that upended the ruling conservative order in many countries.
On Friday,
Orban welcomed the founding of the anti-EU Movement group by Steven Bannon, a
far-right former aide to U.S. President Donald Trump, to boost the nationalist,
anti-immigrant vote for the European Parliament next year.
More
Jean-Claude
Juncker. Failed Luxembourg Prime Minister and ex-president of the Euro Group of
Finance Ministers. Confessed liar. European Commission President. Scotch
connoisseur.
Run
Juncker, run Juncker, run, run, run
Run , run Juncker, run, run, run
Bang, bang, bang, bang goes the Brexit gun
Run Juncker, run Juncker, run, run, run, run
Run , run Juncker, run, run, run
Bang, bang, bang, bang goes the Brexit gun
Run Juncker, run Juncker, run, run, run, run
The monthly Coppock Indicators finished June.
DJIA: 24,271 +221 Down. NASDAQ:
7,610 +267 Down. SP500: 2,718 +169 Down.
All
three slow indicators moved down in March and April and May and continued down
in June. For some a new bear signal, for others a take profits and get back to
cash signal.
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