Patterico's Pontifications

8/15/2019

It’s the Economy and Other Headlines

Filed under: Economics — DRJ @ 7:00 am



[Headlines from DRJ]

This week:

Trump delayed tariffs in part to avoid a recession during 2020 election, says US Chamber of Commerce president Donohue.

Yesterday:

Warnings of economic crisis as Treasury yields invert for the first time since the Great Recession sending Dow tumbling more than 600 points.

At the close yesterday:

US MARKETS: Dow tanks 800 points in worst day of 2019 .

— DRJ

8/13/2019

Trump delays Chinese Tariffs

Filed under: Economics,International — DRJ @ 10:06 am



[Headline from DRJ]

Donald Trump CAVES on tariffs on Chinese goods putting them off for MONTHS after ‘very good call’ with Beijing so they do not send cost of Christmas shopping soaring amid fears they will end his economic boom:

The Trump Administration announced Tuesday morning that is delaying tariffs on Chinese-manufactured goods like laptops and cell phones until Dec. 15.

Trump’s trade office says that certain products ‘will not face additional tariffs of 10 percent’ due to health, safety or national security concerns. Some of the products it listed were cell phones, laptop computers, video game consoles, computer monitors, footwear and clothing. USTR said it will post a list of items that are being excluded on its website.

It announced the postponement shortly after the the stock market opened, and the Dow jumped nearly 500 points within minutes of the news.

Donald Trump has not commented directly but hinted in a tweet that the action was intended to get China to move forward with large agricultural orders.

Did Trump’s negotiating strategy work or did he cave because of farmers and Christmas?

— DRJ

8/7/2019

News Headlines for 8/7/2019 (Part 1)

Filed under: Economics,Politics — DRJ @ 6:33 am



[Headlines from DRJ]

China rare earths group supports counter-measures against U.S. ‘bullying’:

BEIJING (Reuters) – China’s rare earths association said it would support Chinese counter-measures in the escalating trade row with the United States, which it accused on Wednesday of “bullying”.

The Association of China Rare Earth Industry issued a statement after a special working meeting on Monday to discuss the “guidance” given by Chinese President Xi Jinping during a visit to a rare earth plant in Jiangxi in May.

Xi’s visit stoked fears China would use its dominance over production of rare earths, a group of 17 chemical elements prized for their use in consumer electronics and military equipment, in the escalating trade war, although no restrictions on supplies have so far been announced.

In an amazing coincidence, Real Donald Trump changes course today:

“Three more Central Banks cut rates.” Our problem is not China – We are stronger than ever, money is pouring into the U.S. while China is losing companies by the thousands to other countries, and their currency is under siege – Our problem is a Federal Reserve that is too…..

….proud to admit their mistake of acting too fast and tightening too much (and that I was right!). They must Cut Rates bigger and faster, and stop their ridiculous quantitative tightening NOW. Yield curve is at too wide a margin, and no inflation! Incompetence is a…..

….terrible thing to watch, especially when things could be taken care of sooo easily. We will WIN anyway, but it would be much easier if the Fed understood, which they don’t, that we are competing against other countries, all of whom want to do well at our expense!

7:46 AM · Aug 7, 2019

Everyone be sure to target the Fed, not China, from now on.

— DRJ

8/6/2019

Farmers, Bankers and Tariffs

Filed under: Economics,Government — DRJ @ 1:00 am



[Headlines from DRJ]

U.S. farmers are exasperated by latest trade war moves: ‘Another nail in the coffin’:

In response to President Trump recently announcing 10% tariffs on $300 billion in Chinese goods, China allowed the yuan to weaken and suspended purchases U.S. agricultural products.

“The Chinese market has a large capacity and the prospect of importing high-quality U.S. agricultural products is bright,” state-owned media Xinhua said on Monday. “However, we hope the U.S. will conscientiously implement the consensus reached at the [G-20 summit in Osaka, Japan] between the heads of the two countries, and implement the commitments to create the necessary conditions for cooperation in the agricultural fields between the two countries.”

America farmers were dismayed by the developments. “This is just another nail in the coffin,” Tyler Stafslien, a North Dakota-based soybean farmer, told Yahoo Finance. “To see this thing only seems to be getting worse rather than better is very concerning, and the American taxpayers may have to foot another round of funding if this keeps up — or we could see a ton of farmers’ loss throughout this nation.”

Wall Street banks bailing on troubled U.S. farm sector:

The retreat from agricultural lending by the nation’s biggest banks, which has not been previously reported, comes as shrinking cash flow is pushing some farmers to retire early and others to declare bankruptcy, according to farm economists, legal experts, and a review of hundreds of lawsuits filed in federal and state courts.

Sales of many U.S. farm products – including soybeans, the nation’s most valuable agricultural export – have fallen sharply since China and Mexico last year imposed tariffs in retaliation for U.S. duties on their goods. The trade-war losses further strained an agricultural economy already reeling from years over global oversupply and low commodity prices.

What’s next? Trump will call for more farm aid.

— DRJ

8/2/2019

Trump’s China tariffs – Paid by U.S. importers, not by China

Filed under: Economics,Politics — DRJ @ 5:16 am



[Headline from DRJ]

Reuters’ Business News Explainer:

With U.S. President Donald Trump’s announcement on Thursday of tariffs on another $300 billion of Chinese imports, nearly all goods from China will be subject to import taxes, and Trump says they generate billions of dollars in revenues for the U.S. Treasury from China.

But that is not how tariffs work. China’s government and companies in China do not pay U.S. tariffs directly. Tariffs are a tax on imported products and are paid by U.S.-registered firms to U.S. customs when goods enter the United States.

Importers often pass the costs of tariffs on to customers – manufacturers and consumers in the United States – by raising their prices. U.S. business executives and economists say U.S. consumers foot much of the tariff bill.

Trump tariff threat pushes up chance for Fed rate cuts as recession risks rise:

President Donald Trump’s threats of a new round of tariffs on $300 billion in Chinese goods increases the chances the U.S. economy could head into recession, and also that the Fed would be more aggressive cutting interest rates in an effort to head it off.

The president’s tweet came a day after he expressed his dissatisfaction with the Fed’s quarter point rate cut, saying that Fed Chairman Jerome Powell “let us down.”

Are Trump’s latest tariffs about targeting China or the Fed, or just us?

— DRJ

7/31/2019

Fed cuts Interest Rate; Trump responds

Filed under: Economics — DRJ @ 3:34 pm



[Headlines from DRJ]

Fed cuts key rate for first time in more than a decade:

The Federal Reserve cut its key interest rate Wednesday for the first time in a decade to try to counter the impact of President Donald Trump’s trade wars, stubbornly low inflation and global weakness.

It left open the possibility of future rate cuts, but perhaps not as many as Wall Street had been hoping for. During a news conference, Chairman Jerome Powell struggled to find just the right words to articulate the Fed’s strategy and what might prompt future rate cuts at a time when the risk of a recession in the United States seems relatively low.

***

The central bank reduced its benchmark rate — which affects many loans for households and businesses — by a quarter-point to a range of 2% to 2.25%. It’s the first rate cut since December 2008 during the depths of the Great Recession, when the Fed slashed its rate to a record low near zero and kept it there until 2015. The economy is far healthier now despite risks to what’s become the longest expansion on record.

Trump responded that Fed Chief Powell ‘let us down’ by not clearly signaling more rate cuts.

— DRJ

7/2/2019

Trump Strategery

Filed under: Economics,International — DRJ @ 8:08 am



[Headlines from DRJ]

The FederalistListen To What Happens When Donald Trump Gets Asked Real Questions By A Media Interviewer (March 2016):

“I am a conservative,” Trump said. “I’m not so conservative when it comes to the pure aspects of trade… I believe in free trade, which is nice and conservative,” he said before repeating his usual talking points about being a tougher negotiator with other countries by threatening to implement costly tariffs on imported goods.

“It’ll never happen,” Trump said of a tariff. “But you have the threat out there.”

“Well you’re a much better negotiator than I am,” Sykes said. “But you just said it’ll never happen, so you’ve basically said your negotiating ploy is a bluff.”

Trump stammered and repeatedly insisted that other countries like China, India, and Mexico are “killing us.”

The HillTrump, Kudlow ‘had it out’ after contradiction on who is hurt by tariffs: report (May 2019):

Trump’s former nominee to join the Federal Reserve Board, Stephen Moore, told the Post that the president is unlikely to back down from his threats for more tariff action against China unless a deal is struck to address U.S. concerns with U.S.-China trade policy.

I don’t see him crying uncle anytime soon,” said Moore. “It’s a high-risk strategy, but it’s not in his personality to back down. This goes back to what he said that first time he came down the escalator at Trump Tower.”

Why back down when it’s not his money at risk?

— DRJ

6/14/2019

Trump Administration Plays the Tariff Game

Filed under: Economics,Politics — DRJ @ 6:11 am



[Headline from DRJ]

ReutersWhy one U.S. can-maker avoids Trump’s tariffs while rivals pay up:

One of the largest U.S. producers of aerosol cans, Colorado-based Ball Metalpack, has laid off 91 of its 500 U.S. workers since President Donald Trump imposed a 25% tariff on imported steel that abruptly hiked the firm’s raw materials costs.

At a chief competitor, DS Containers, the story is different. The subsidiary of Japan’s Daiwa Can Co has added more than 80 workers over 18 months at its two Illinois plants, bringing employment to 232.

Rivals of the Japanese-owned firm say the reason for its success is simple – it’s not paying the tariff, allowing the firm to snatch business from competitors who have been forced to raise prices to cover their higher materials costs. The U.S. Commerce Department granted DS Containers an exemption from the import tax because it uses a raw material, plastic-laminated steel, that isn’t produced by U.S. steelmakers.

Firms that use standard tin-plated steel, including Ball Metalpack and Mauser Packaging Solutions, have seen their exemption applications denied or delayed by Commerce after U.S. steelmakers objected to them, arguing the material is available domestically. Executives from the can makers counter that domestic steelmakers can’t produce nearly enough tinplate to meet their needs – forcing them to keep importing and paying tariffs.

I think Patterico is right about tariffs. Picking winners and losers is what Trump does when he uses tariffs.

— DRJ

5/19/2019

REUTERS: Walmart says higher China tariffs will increase prices for US shoppers

Filed under: Economics,Government — DRJ @ 8:05 pm



[Headline from DRJ]

Walmart says higher China tariffs will increase prices for U.S. shoppers:

Walmart Chief Financial Officer Brett Biggs said in an interview that higher tariffs will result in increased prices for consumers. He said the company will seek to ease the pain, in part by trying to obtain products from different countries and working with suppliers’ “costs structures to manage higher tariffs.”

But:

“It’s not just tariffs. Transportation costs are up, labor costs are up. It’s an inflationary environment,” Del Monte CEO Greg Longstreet told Reuters on the sidelines of a conference. “A lot of that’s going to have to be passed on. The consumer is going to have to pay more for a lot of critical goods.”

— DRJ

11/24/2015

Bernie Sanders Is Wrong: Part 1: The Bottom 20% Does Not Remain Constant

Filed under: Economics,General — Patterico @ 9:08 am



Lately I have been reading The Thomas Sowell Reader — a collection of essays and passages from across the gamut of Sowell’s writing. One of Sowell’s most valuable contributions comes in the form of hard statistics showing that people like Bernie Sanders are wrong.

Over the next few days, I will present some of the most compelling statistics in different categories, showing Bernie Sanders is wrong. I’ll start with movement between income categories.

MOVEMENT BETWEEN INCOME CATEGORIES

Sanders implies that the top 20% of income earners is a block of powerful people, getting rich at the expense of everyone else:


Sanders fails to recognize that income categories are not stagnant, but that most people move in and out of them throughout their lives. When we hear about how “the top 20% is doing better than the bottom 20%” we are not, by and large, talking about the same people. The people in the top 20% do not stay there. Nor do the people in the bottom 20%. Consider:

  • Only 5% of those in the bottom 20% of income earners in 1975 were still there in 1991.
  • More then 3/4 of working Americans with incomes in the bottom 20% in 1975 were in the top 40% of income earners by 1991.
  • 29% of those initially in the bottom 20% of income earners in 1975 had risen to the top 20% by 1991.

Studies in Britain, Canada, New Zealand, and Greece show similar results.

Perhaps the most staggering error comes from measuring income and not wealth. When Sanders says “you have 99 percent of all new income today going to the top 1 percent” (not true, by the way, because it’s a statement about income pre-tax), you would, again, get the impression that the top 1% is this static category of the same people.

So I’ll tuck the next statistic under the fold and make you guess. Among those in the top 1/100 of 1% of income earners in 1996, what percentage do you think were still there in 2005? Is it more or less than 90%?

Answer below the fold.

(more…)

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