Black Monday

[Balance]

Protectionism needs a large donestic market to be effective. You are finally on to it though, protectionism has not produced Chinese cars, consumer goods or construction standards of high quality! Their banking system is also a ticking time bomb, they just had a huge blow up in peer to peer lending that destroyed many people's life savings and led to large protests that had to be suppressed with force.

Those are China's choices to make but don't expect the rest of the world to just accept them. In an interdependent world the choices you make have consequences.

Hard working people - that’s the difference.

Guess it’s easier to try and use force huh to get already hard working people who sacrifice a lot to get ahead to work even harder?

I think that's how the African blacks were 'recruited' to make America great in its formation years huh?

[dobby41]

Agreed and equally it's the US's choice to impose tariffs to discourage Americans from buying from China

Note, also the US (and others) has plenty of things Chinese people do want to buy but China forces joint ventures (diluting the US benefit) with compulsory techology transfer (long term loss), steals or makes it hard to buy.

The US can impose tariffs to discourage Americans from buying from China but Trump shouldn't be lying to them that the Chinese pay - they don't, the Americans do.
The people will pay more for the stuff they want in the land of the free.
As for the joint ventures - that is very clever of the Chinese. It grows their manufacturing base. Now, of course, companies don't have to take those joint ventures - they just don't do business.

Eg most of China runs on pirated Microsoft software. https://fortune.com/2018/11/02/ballm...windows-piracy

and much of the rest of the world - there is a lot of pirated software out there.

Eg2 Every major western internet company is blocked in China for reasons of protecting domestic companies.

Internet companies like your ISP? Or Internet companies like Facebook etc?
I think it has more to do with controlling information than protecting local companies from competition.

Eg3 government run anti foreign product campaigns dissuade the purchase of foreign cars and other high value goods.

Just a different approach than tariffs.

Eg4 the whole daigou industry wouldn't exist if it was easy to sell foreign products in China.

So? It does exist and then companies sell their products direct (ATM). Good pre-marketing, test the waters.

And if you have a dispute with your Chinese partner, try taking them to court... Oh wait nevermind.

True - I wouldn't want to have to.

Still, the US bleats that it is all unfair but they still want to buy cheap products.
I say again - China isn't forcing them to buy their goods, it is a free market.
It may have tilts here and their (not level) but still free choice for the American people.

[bull....]

still in the range US markets

[BlackPeter]

Protectionism needs a large donestic market to be effective. You are finally on to it though, protectionism has not produced Chinese cars, consumer goods or construction standards of high quality! Their banking system is also a ticking time bomb, they just had a huge blow up in peer to peer lending that destroyed many people's life savings and led to large protests that had to be suppressed with force.

Those are China's choices to make but don't expect the rest of the world to just accept them. In an interdependent world the choices you make have consequences.

Interesting - just replace in your post above the terms "Chinese" and "China" with "American" and "America" and it is still all true. Idiots sitting on both sides of the battleline - and we are just sitting in between ...

[Balance]

https://www.investopedia.com/why-ban...ral&yptr=yahoo

Go high yielders.

[Balance]

https://www.reuters.com/article/us-u...-idUSKCN1VO1K0

And this prize idiot Trump still does not get it - China does not really give a stuff anymore about his bluff and bluster.

Only his pot bellied red neck lazy free loading electoral base does and they are going to find out the hard way when the US goes into a deep recession next year.

Enjoy!

[blobbles]

UK snap election probably imminent. Markets might not like the uncertainty...

[Jaa]

Dobby41 you seem to place little value on the rule of law which is strange for an investor, as it is the fair and even application of the rule of law that supports all our investments whether in the share market, peer to peer lending or in property.

The US can impose tariffs to discourage Americans from buying from China but Trump shouldn't be lying to them that the Chinese pay - they don't, the Americans do.
The people will pay more for the stuff they want in the land of the free.

I want to reply to the above though as you are mistaken by a common fallacy.

Economics teaches us that the incidence of any tax falls on those with the least market power. Think about whether employer Kiwisaver contributions come from the employer's pocket or the employee's. A highly valued and irreplaceable employee will be able to squeeze the boss, where a more easily replaced employee will not. It depends on who has more market power.

This effect is stronger for international trade, as large markets have the power to bend the terms of trade in their favour. Look at the products that the US imports from China, they are more easily replaceable than the goods the US exports to China. So to maintain sales and market share, Chinese manufacturers may choose to lower their prices by 25% so the price to the end consumer stays the same. In this case it is indeed Chinese manufacturers that are paying the tariff. Obviously it is easier to eat a 5% price decrease than a 30% one. Lowering your currency, which China is doing, is another method to achieve the same result. This is known as burden sharing.

If you compare the terms of trade for 2019 with 2018 you can see the terms of trade gap has started to close.

I am not saying this is fair, just explaining the economics behind it. The same thing happened to NZ when the UK joined the EU in the 70s, NZ commodity exporters had to pay the EU's tariffs until we found new markets.

All of this is fairly predicable and clear evidence of the CCP's economic mismanagement. They should have identified the political danger of a massively out of whack terms of trade with the world's largest economy early on and made sure the terms of trade was below 2:1 and not let it get to 4.5:1.

[dobby41]

Dobby41 you seem to place little value on the rule of law which is strange for an investor, as it is the fair and even application of the rule of law that supports all our investments whether in the share market, peer to peer lending or in property.



I want to reply to the above though as you are mistaken by a common fallacy.

Economics teaches us that the incidence of any tax falls on those with the least market power. Think about whether employer Kiwisaver contributions come from the employer's pocket or the employee's. A highly valued and irreplaceable employee will be able to squeeze the boss, where a more easily replaced employee will not. It depends on who has more market power.

This effect is stronger for international trade, as large markets have the power to bend the terms of trade in their favour. Look at the products that the US imports from China, they are more easily replaceable than the goods the US exports to China. So to maintain sales and market share, Chinese manufacturers may choose to lower their prices by 25% so the price to the end consumer stays the same. In this case it is indeed Chinese manufacturers that are paying the tariff. Obviously it is easier to eat a 5% price decrease than a 30% one. Lowering your currency, which China is doing, is another method to achieve the same result. This is known as burden sharing.

If you compare the terms of trade for 2019 with 2018 you can see the terms of trade gap has started to close.

I am not saying this is fair, just explaining the economics behind it. The same thing happened to NZ when the UK joined the EU in the 70s, NZ commodity exporters had to pay the EU's tariffs until we found new markets.

All of this is fairly predicable and clear evidence of the CCP's economic mismanagement. They should have identified the political danger of a massively out of whack terms of trade with the world's largest economy early on and made sure the terms of trade was below 2:1 and not let it get to 4.5:1.

Rule of law in China - it is what it is and you have to deal with it if you want to play with them.
Not saying it is right but it is reality.

As to who pays the tariff - maybe they will reduce the prices, maybe they won't.
Have they - there are tariff increases now?

[bull....]

back at the top of the ranges US markets , catalysts for a breakup. + non farm payrolls ( negative to markets could see us in range still) followed by big ECB easing and then fed meeting easing possible 50 bp move and finally trade news positive about meeting could make a good sept.