DOW falls 1100 points

[Paul77]

DOW managed to reverse most of its losses, the next few days will be interesting to watch.

On our local gambling den Capita lost 7.39% and hit new 20 year low...

[crashmonitor]

11 hours ago, Paul77 said:

DOW managed to reverse most of its losses, the next few days will be interesting to watch.

On our local gambling den Capita lost 7.39% and hit new 20 year low...

Capita is worthy of its own thread, it has lost 90% of its value in 3 years. The Market Cap is just 871 million but the forthcoming rights issue has been underwritten at 700 million. If the rights issue did fail and Capita becomes insolvent, Carillion will look like a walk in the park.

[Errol]

‘It’s only polite to reciprocate’: Beijing slams new US tariffs on $50bn worth of Chinese goods

After the US unveiled a preliminary list of imports from China that will be hit by the tariff hikes ordered by President Trump last month, Beijing has vowed to take retaliatory measures of “equal scale and strength.”

https://www.rt.com/business/423115-china-us-tariffs-reciprocate/

[JohnLondon]

I really don’t know what Trump is hoping to achieve with these tariffs on China. All it’s done is caused China to do the same on US imports which will hit US companies that export to China & spook the markets. 

[Kosmin]

10 minutes ago, JohnLondon said:

I really don’t know what Trump is hoping to achieve with these tariffs on China. All it’s done is caused China to do the same on US imports which will hit US companies that export to China & spook the markets. 

Even without China responding it would harm American consumers and businesses (owners and employees) who use the imported goods as inputs. China responding makes it worse, but increasing tariffs is probably bad on its own. If he wanted to raise revenue, better to increase the inheritance tax he just cut, or land/property taxes.

He might think it sounds tough, which makes him popular with his base.

[Gigantic Purple Slug]

15 minutes ago, JohnLondon said:

I really don’t know what Trump is hoping to achieve with these tariffs on China. All it’s done is caused China to do the same on US imports which will hit US companies that export to China & spook the markets. 

It's mostly about political capital.

The idea is putting tariffs on Chinese goods will bring jobs back to the US or at least secure current jobs in the US. The downside of course will be stuff will cost more for everyone and it's a question of which one of those carries more political weight with the voters.

Mark Blyth did some good youtube videos on it.

There is an idea that the working class have been sold down the river by the neoliberals (losing their jobs in the name of free trade) so that the neoliberals can trouser cash. Trumpism is supposedly the idea that the working class have woken up to that fact, and have decided to fight back.

The real issue is whether or not people are willing to pay more for stuff in order to keep their next door neighbour in a job. That one will take some time to play out.

 

 

[Noallegiance]

History can always guide for the present:

https://en.m.wikipedia.org/wiki/Smoot–Hawley_Tariff_Act

Hopefully it won't end up with another 1939...

[Kosmin]

1 hour ago, Gigantic Purple Slug said:

The real issue is whether or not people are willing to pay more for stuff in order to keep their next door neighbour in a job. That one will take some time to play out.

There will be reduced demand even if everyone is prepared to pay more, so the net effect is expected to be negative.

[Gigantic Purple Slug]

21 minutes ago, Kosmin said:

There will be reduced demand even if everyone is prepared to pay more, so the net effect is expected to be negative.

That sounds like the sort of simplistic guff an economist with an agenda would say.

[Kosmin]

6 minutes ago, Gigantic Purple Slug said:

That sounds like the sort of simplistic guff an economist with an agenda would say.

Maybe, but it's also what theory and history suggest will happen. 

 

American workers are worried that other Americans will import cheaper goods from China.

A tariff on Chinese goods means they don't have to worry about this competition. Americans will buy American as importing is now more expensive.

But Americans who used to import Chinese goods (both consumers and producers) will have to pay higher prices. Consequently expenditure will be reduced somewhere. This will have knock-on effects everywhere, and even the workers who thought they would be made safer by being protected from foreign competition will suffer from lower demand.

This is the case in which other countries do not retaliate.

In reality it will be worse as China is retaliating.

[Errol]

The idea of the US bullying either China or Russia is just laughable anyway.

[afly]

China old all the cards here because they can simply buy American imports from another seller. America is ideologically forcing itself to domestically produce which it can't with any efficiency because it's pampered population are too unwilling to work for the slave wages & conditions that are necessary to feed their insatiable addiction to tat for pennies.

 

[scottbeard]

2 hours ago, Gigantic Purple Slug said:

The real issue is whether or not people are willing to pay more for stuff in order to keep their next door neighbour in a job. That one will take some time to play out.

And also as another poster said "[America's] pampered population are too unwilling to work for the slave wages & conditions that are necessary to feed their insatiable addiction to tat for pennies."

I think that these two points are fundamental to how Western economies have operated in recent years.  The fact is that people would rather have MORE stuff than GOOD stuff.  Their purchasing decisions prove it.

I don't know whether it's a change in recent years, or whether people have always been like this.  But the fact is that people prefer to buy a cheap watch AND a cheap pair of jeans instead of choosing to buy a quality one or the other and saving up for the other one later.

It has led over the last 20 years to everything being made in China as cheaply as possible, and nothing being built to last.  It's hard to imagine the whole world suddenly changing their mind and going "actually no, I don't want that new cheap IKEA table that I'll need to replace in 10 years, I want a table that cost four times as much but will last my whole lifetime".

[Toast]

3 hours ago, TonyJ said:

Is this the pin finding its bubble?

 

3 hours ago, Gigantic Purple Slug said:

It's mostly about political capital.

The idea is putting tariffs on Chinese goods will bring jobs back to the US or at least secure current jobs in the US. The downside of course will be stuff will cost more for everyone and it's a question of which one of those carries more political weight with the voters.

Mark Blyth did some good youtube videos on it.

There is an idea that the working class have been sold down the river by the neoliberals (losing their jobs in the name of free trade) so that the neoliberals can trouser cash. Trumpism is supposedly the idea that the working class have woken up to that fact, and have decided to fight back.

The real issue is whether or not people are willing to pay more for stuff in order to keep their next door neighbour in a job. That one will take some time to play out.

I guess, as with most policies, there are several different directions from which political support comes. As TonyJ indicates, this could be part of a gamble by the military-industrial complex to try to de-stabilise China as a whole through its financial vulnerability. The domestic politics of Trump's key support base also sounds highly plausible. I also heard a long time ago that much of China's imports from the US are agricultural products. I don't know if that is still true, but if so, China might be limited in what it can do to retaliate in a trade war, since I believe starvation (and floods) have been key drivers of political instability there in the past: they have to keep their population fed.

If this trade war threatens to turn bloody, then I can imagine people getting very nervous in the US about the scale of high tech electrical goods imports from the Middle Kingdom. I'm somewhat surprised these haven't been targeted yet for tariffs, but maybe that would be too dangerous to the American economy, and the US has to bring back more silicon foundries to domestic soil first? 

[Freki]

3 hours ago, Noallegiance said:

History can always guide for the present:

https://en.m.wikipedia.org/wiki/Smoot–Hawley_Tariff_Act

Hopefully it won't end up with another 1939...

Brilliant NPR Planet Money podcast on the subject episode 833

[Gigantic Purple Slug]

11 minutes ago, Toast said:

 

I guess, as with most policies, there are several different directions from which political support comes. As TonyJ indicates, this could be part of a gamble by the military-industrial complex to try to de-stabilise China as a whole through its financial vulnerability. The domestic politics of Trump's key support base also sounds highly plausible. I also heard a long time ago that much of China's imports from the US are agricultural products. I don't know if that is still true, but if so, China might be limited in what it can do to retaliate in a trade war, since I believe starvation (and floods) have been key drivers of political instability there in the past: they have to keep their population fed.

If this trade war threatens to turn bloody, then I can imagine people getting very nervous in the US about the scale of high tech electrical goods imports from the Middle Kingdom. I'm somewhat surprised these haven't been targeted yet for tariffs, but maybe that would be too dangerous to the American economy, and the US has to bring back more silicon foundries to domestic soil first? 

I suppose there is always the chance people will pay 25% more for their telly. Or that tellies will be made somewhere else (not necessarily the US, but maybe India for example) and imported from there. It's important to remember it's an import tariff not an import ban.

To me anyone who says one side or the other will comprehensively win is talking nonsense. That may happen, but it's impossible to analyze with any certainty, just as it's impossible to say what the outcome of something like Brexit might be.

[Kosmin]

7 minutes ago, Gigantic Purple Slug said:

I suppose there is always the chance people will pay 25% more for their telly. Or that tellies will be made somewhere else (not necessarily the US, but maybe India for example) and imported from there. It's important to remember it's an import tariff not an import ban.

To me anyone who says one side or the other will comprehensively win is talking nonsense. That may happen, but it's impossible to analyze with any certainty, just as it's impossible to say what the outcome of something like Brexit might be.

You are right about Brexit. It's too complicated and there are too many possibilities.

I don't think you can say the same thing about increasing tariffs. People from both countries will be harmed directly from reduced trade and/or increased prices. People not harmed directly will be harmed indirectly due to interdependence with those who are harmed directly.

You are right that saying one side will win comprehensively is talking nonsense. Neither side can win a trade a war.

[Gigantic Purple Slug]

1 minute ago, Kosmin said:

You are right about Brexit. It's too complicated and there are too many possibilities.

I don't think you can say the same thing about increasing tariffs. People from both countries will be harmed directly from reduced trade and/or increased prices. People not harmed directly will be harmed indirectly due to interdependence with those who are harmed directly.

You are right that saying one side will win comprehensively is talking nonsense. Neither side can win a trade a war.

I think that depends how you define "win".

Generally I don't believe anyone wins a war. One side simply loses less badly.

Economic imbalances though are bad for all concerned and if they aren't rectified the results will be worse than a trade war. US-China is bad. Germany-Rest of Europe is bad.

They need to be rectified gradually over time, but neither sides politicians seem to be capable of doing this.

[jonb2]

4 hours ago, Gigantic Purple Slug said:

I think that depends how you define "win".

Generally I don't believe anyone wins a war. One side simply loses less badly.

Economic imbalances though are bad for all concerned and if they aren't rectified the results will be worse than a trade war. US-China is bad. Germany-Rest of Europe is bad.

They need to be rectified gradually over time, but neither sides politicians seem to be capable of doing this.

Germany and China are winning becuase they have governments who understand manufacturing and exporting is a key contributor to a country's wealth. The US and UK in particular have got themseves entangled in financials - which are built on straw.

[Gigantic Purple Slug]

5 hours ago, scottbeard said:

And also as another poster said "[America's] pampered population are too unwilling to work for the slave wages & conditions that are necessary to feed their insatiable addiction to tat for pennies."

I think that these two points are fundamental to how Western economies have operated in recent years.  The fact is that people would rather have MORE stuff than GOOD stuff.  Their purchasing decisions prove it.

I don't know whether it's a change in recent years, or whether people have always been like this.  But the fact is that people prefer to buy a cheap watch AND a cheap pair of jeans instead of choosing to buy a quality one or the other and saving up for the other one later.

It has led over the last 20 years to everything being made in China as cheaply as possible, and nothing being built to last.  It's hard to imagine the whole world suddenly changing their mind and going "actually no, I don't want that new cheap IKEA table that I'll need to replace in 10 years, I want a table that cost four times as much but will last my whole lifetime".

Dunno.

I think most people by tat when they need to buy tat and buy quality when they need it.

Quality is available, if you choose to seek it out. It's just that most of the time it's not worthwhile, especially at consumer/amateur level.

I think maybe older people struggle a bit more, because they come from a time when stuff was scarce and expensive, and most stuff bought was of reasonable quality.

Now you have a range of quality/cost available, and need to appreciate that fact.

[frederico]

16 minutes ago, jonb2 said:

Germany and China are winning becuase they have governments who understand manufacturing and exporting is a key contributor to a country's wealth. The US and UK in particular have got themseves entangled in financials - which are built on straw.

Exactly,  

[ftb_fml]

On 04/04/2018 at 1:42 PM, scottbeard said:

And also as another poster said "[America's] pampered population are too unwilling to work for the slave wages & conditions that are necessary to feed their insatiable addiction to tat for pennies."

I think that these two points are fundamental to how Western economies have operated in recent years.  The fact is that people would rather have MORE stuff than GOOD stuff.  Their purchasing decisions prove it.

I don't know whether it's a change in recent years, or whether people have always been like this.  But the fact is that people prefer to buy a cheap watch AND a cheap pair of jeans instead of choosing to buy a quality one or the other and saving up for the other one later.

It has led over the last 20 years to everything being made in China as cheaply as possible, and nothing being built to last.  It's hard to imagine the whole world suddenly changing their mind and going "actually no, I don't want that new cheap IKEA table that I'll need to replace in 10 years, I want a table that cost four times as much but will last my whole lifetime".

Totally agree with this. I think people have always been greedy and shallow; the problem being that now more than ever it's being shamelessly fuelled and capitalised upon by the establishment. Brainwashed consumers perpetually binging on disposible tat provides their pointless, vacuous existance with a brief, shallow sense of meaning, achievement, satisfaction and status.. until it quickly fades away in the shadow of the next debt-fuelled consumer crutch required to keep up with the Jones' and validate their existance.

The mechanism ticks many boxes - it keeps people working, placated, distracted, indebted.. while continuing to feed the ponzi economy.

Those who lose out are ultimately the environment through resource / energy consumption and waste / pollution, while the consumer has to run ever-faster in their hamster wheel to keep on spending.

Sadly we live in a society that's increasingly alienating us from the things that truely matter - friends, family, meaningful interactions, nature, exercise and replacing them with shallow sources of instant gratification which ultimately only serve to make us more disfunctional and alienated.

The whole situation is increasingly unsustainable and will come to an end sooner or later - be it for economic, environmental or social reasons.

As someone who abhors most of the goals of our horrible society, this can't come soon enough IMO

Edited April 5, 2018 by ftb_fml

[GreenDevil]

You've got to "Buy the Dip!"

[Fence]

3 hours ago, ftb_fml said:

......I think people have always been greedy and shallow; the problem being that now more than ever it's being shamelessly fuelled and capitalised upon by the establishment. Brainwashed consumers perpetually binging on disposible tat provides their pointless, vacuous existance with a brief, shallow sense of meaning, achievement, satisfaction and status.. until it quickly fades away in the shadow of the next debt-fuelled consumer crutch required to keep up with the Jones' and validate their existance.

......Sadly we live in a society that's increasingly alienating us from the things that truely matter - friends, family, meaningful interactions, nature, exercise and replacing them with shallow sources of instant gratifcation which ultimately only serve to make us more disfunctional and alienated.

Nuffing to say.  Just wanted to extract a lovely bit of meaningful prose, although I still have a bit of faith in people, if free.

Edited April 4, 2018 by Fence

[winkie]

6 hours ago, jonb2 said:

Germany and China are winning becuase they have governments who understand manufacturing and exporting is a key contributor to a country's wealth. The US and UK in particular have got themseves entangled in financials - which are built on straw.

Yes, I would have thought there is more potential growth in China and India, the sheer numbers of people, that can make and sell to themselves, their people are getting richer are they not?... They have got the rest of the world to also sell and buy from..... Brexit would open trade further for the UK, putting up barriers only isolates.....think we should start making more stuff that the rest of the world would want, diversity a bit.....not just about services.

Edited April 5, 2018 by winkie