Market Reaction (Before the Above Tweets)
- S&P 500: Down 75 Points, -2.6%
- Nasdaq 100: Down 242 Points, -3.2%
- DOW: Down 623 Points, -2.4%
Looking for Whom to Blame?
I can help.
This may be related to Seth Moulton, “whoever that may be“.
There is no other rational explanation.
I almost forgot: “Thank you for your attention.”
Mike “Mish” Shedlock
Economic powers act of 1977 invoked.
After nearly 40 years of unregulated laissez faire Wall St. capitalism, we are now entering the age of populism. Trump is the right-wing version of it. Looking at how unpopular the establishment corporate Democrats are in their own party, you might want to get ready for the left-wing flavor of populism to come to the fore. And it will happen sooner than you might be expecting it to.
Food riots in china? Well before that happens, south korea hong kong and much of southeast asia would have serious food shortages when the chinese decide to stop exporting cabbages and greens. Too much cnn can turn even a half-thinking ape into an armchair strategist.
I am pretty sure we all know where this is headed, most of us, including me knew the first time we heard the word tariff that it was going to end with a total embargo of all trade with China. This is going to devastate at least half the nation, you know those people that can’t find $400 in the event of an emergency. The other half will be hurt but manage to get through it. As a disabled vet on a fixed income all I had to do is take one look at that orange face and his history of ranting his way to bankruptcy court over and over to know I was not going to like his “presidency.”
The photo at CNBC is so perfect, he looks like a petulant brat that just set the cat on fire because it licked his ice cream cone. Poor Xi, he though he could deal with Trump, all that is left for he and China now is all the little nuclear options, currency wars, dumping US Treasuries, maybe sinking a few of our subs and destroyers.
You simply cannot make shit up that is dire enough to convey the image of what a failure this nation is having allowed this POS to become president.
That said, I would still vote for him before I vote for Sanders. 🙂
“You simply cannot make shit up that is dire enough to convey the image of what a failure this nation is having allowed this POS to become president.”
Trump as president is a symptom, not a cause.
Closing some 60,000 American factories allowed Trump to become president. The FED blowing serial financial bubbles allowed Trump to become president.
“I am pretty sure we all know where this is headed…”
The handbook was written long ago. All one has to do is look at history, ancient history even. The cycle of human nature never changes.
Well, yes in a wider sense I do agree with that, but in such a general way that it is not valid entirely. We had choices all along the way that led to this guy getting into office. If you make the wrong choices often enough long enough it is inevitable that one day something like this will happen, it is still the same failure. And, all those cumulative errors along the way could still be fixed, now, I am not optimistic about our chances to come out of this as good or better than where we were when Obama left office. I try, but, the speed at which we have descended is so stunning it is hard to watch this clown circus and not expect a really tragic ending soon.
The simple math of the trade war:
Exports to US are 4% of China’s GDP–a country that has 6 to 7% GDP growth in slow years.
What percent of US voters depend on cheap imports or sales to China?
What percent of China voters depend on imports from US or sales to US?
Trick question, you say, what China voters?
I know that if you want a new pair of sneakers in the next two years you damned well better boggie your ass down and buy them now because 70% of our shoes are made in China. Ditto most consumer electronics, damn, I wanted a new PS5 due out next May, now rumor is they will be $1,000 rather than the 3-400 the PS4 and 3 were. Oh by the way, THIS IS NOT INFLATION! God forbid we have to give old and disabled poors a decent raise that keeps up with costs.
Who depends on cheap imports? Everybody who goes to Wallmart.
Mish you hit the nerve and now pro trump astroturfers are being ordered to post lies here and in other economic blog sites. I saw uptick of the usual astroturfers like 2banana spreading lies and propaganda here and in other blogs..
1000% tariffs on all Chinese,Mexican,VC,Indian junk,pay off the deficit,build the wall,help our vets,give every citizen a (handout)bonus check and have change left over.…..everybody wins!
When the socialists agree with your trade policy, you may not be doing it right.
If the socialists are agreeing then it is no different from the unions agreeing, and I would agree had we not sold out our manufacturing base to foreign mercantilist nations like China, but we have, those jobs are never coming back. Sooner or later we will source our consumer goods and supply chains from other mercantilist countries and things will get back to normal, but for the next couple years life is going to get really expensive especially for goods that go into shortage because of these insane policies.
Now that I think of it though, perhaps they will not ever get back to normal since this very likely to trigger the failure of US dollars as the reserve currency. We will look more like the failed British Empire as it crumbled post WWI and the people demanded socialism and the end to wealthy aristocrats and confiscatory taxes on business and bourgeois.
Might be a good idea to brush up on your commie pinko lingo and how to kiss socialist ass. I mean, it is what it is, and the USA has failed. Even though 69% of democrats and 90% of republicans have a negative view of socialism it is taking over, with the assistance of the new Man Made Global Warming religion, damn, I mean Anthropocentric Climate Change all scientists agree we are causing. Can’t say man made, it is heresy now, besides being sexist. Even though Anthropogenic means man made, but their Madison Avenue propaganda machine hates that name.
anthropos means human; andros means man; gune means woman. As in android, or misogyny or androgynous.
Several comments:
First–the issue of IP theft and China’s unfairness has been a topic for decades. The businesses whose bottom line would be most affected by the theft have continued to do business there–again, for decades. Tell me again what a serious deal this is….
Second– I seem to remember the Chosen One and his family arranged to have their stuff manufactured in China over the decades. Tell me again that where we are at is because of his passion for fair trade and labor practices, instead of spiraling down in a trade war because the Chosen One doesn’t want to lose face in an over-personalized conflict that he thought was easy to win…
Third–seems to me we are battling to push manufacturing labor to even cheaper suppliers and not back to the US. Are there people out there that believe that this will significantly expand US employment? And I am highly suspicious of those rapidly moved plants–is it just the final packaging operations being moved from China, while the equipment and main labor still in China? Who is funding these “new” plants?
FromBrussels said: …”China is not to blame, WE are for allowing a intrinsically nefast situation to run out of hand ! In the meantime, China with OUR money has become a strong military power,”..
Amen to that, Brother… We have Feed the Beast (i.e., Dragon) and they intend to eat us all…..
(Hope it’s cooler in Brussels – great city, great people….)
The fact is: who else would ‘kick-the-box’ but this guy…. He has balls of steel (American-made!)…
Can anyone really expect a trading partner with a far better deal than we have would cave easily? For our Chinese friends (i.e., the few Communist Party members who really run over a billion people), this is a manhood issue (e.g., Hong Kong).
China is very long-term (e.g., 100 year plan); USA is very short-term (next election; next quarterly earnings release)…..
We need to stay strong…..
In the eternal struggle between good and evil, good always wins…
Let’s just hope we’re ‘good’…..
How did the 100 year plan go for the government before 1949? Chinese history is replete with stuff ups. They may say they have a long term vision but history suggests it doesn’t matter.
In the eternal struggle between good and evil, evil usually wins and then redefines evil as good.
“He has balls of steel ”
Yeah to bad his heels are not of the same material. We sure could have use a guy like him in the war… LOL
Don’t just watch the Fox news. Go out, see the world, and talk to people. You will be surprised how the world opinion has changed on Uncle Sam since late 90’s.
Trump may be a weird unpredictable fella and all those tariffs and measures probably come too late but he absolutely right nevertheless ! Developed nations should never have allowed China to disrupt and destroy their economies with mostly inferior subsidized products, China s exponential growth in recent decades has delivered NOTHING positive apart from some selfish short term, short sighted benefits for big corporations. On top of that China ‘s 1,2 billion materialism craving people are driving the final nail in the earth’s coffin… But hey, China is not to blame, WE are for allowing a intrinsically nefast situation to run out of hand ! In the meantime, China with OUR money has become a strong military power, so we better watch out what we do, a 1,2 billion( and ruthlessly ticking) nation might become very desperate and dangerous…. I d say the EU should impose tariffs too but what to expect from a clueless, spineless, worthless institute run by ditto clowns?
Coulda woulda shoulda. Woe is me, Nixon had little choice but to go to China and promise and beg, maybe they should have retained the Bretton Woods Agreement and controlled deficits so our gold vaults were not getting slammed with claims.
You think Presdents Bush, Clinton, Bush II, Obama, did not also think the same thing and WISH we had not gone down that road? They knew and probably did not like it, but were mature enough and sane enough not to take us down the road Trumps is because the results my end the USA, even if we survive it will be as a nation that far more resembles modern russia, a poor and backward people ruled by a ruthless and very wealthy oligarchic mafia.
By election day we will be far worse off and with an economy in cardiac arrest with a Fed out of ammunition. At this point I doubt Trump could get elected dog catcher. Even with Tsar Vladimir’s help and GRU. Let us hope he is institutionalized in time for Weld to replace him on the ticket. Because the absolute worst thing that can happen to America at this point is Sanders or one of his carbon copy bots. Yet there will be much gnashing of teeth and wringing of hands over the plight of more than 60% of us in the soup lines that will form prior to November 2020 more than a year away.
Trust me, ‘soup lines’ are going to be part of the even not so distant future; a fragile overstretched, overleveraged financial system and insane social liabilities in developed nations to be paid from 0% interest rates…. I won t even mention the millions of refugees coming our way and the effects of climate change. I don t believe in miracles any more, do you ?
“Mostly inferior subsidized products”
This is wrong on so many levels. This is what they said about Japanese junk in the fifties. They said it Hong Kong shoddy stuff in the sixties. They said it about Taiwan trinkets in the seventies. And they said it about Korean cars and TVs in the eighties. The Chinese will climb the value chain, and are very conscious about doing so.
If they are so inferior, why does anybody buy them? People are making a cost/quality judgement. Sure, everybody would rather get the best quality and pay 10× more, but then they would have to forego a lot of other things. That is what “market” basically means.
How did China get so prosperous if they are subsidizing all their exports? First they export the fruit of their labor in exchange for little pieces of paper called dollars. Then they using the meagre yuans in their pockets to pay to ship the stuff out. How are they possibly succeeding in having anything left over to shoot from a peasant to a developed economy in 3 decades? Get real.
Curious Cat is correct about this: “Do not to underestimate the Chinese communists orderly determination in this matter, or any other for all of that.”
That is nonsense. China like all other governments need order. They are about to have a historic depression with malinvestments galore exposed. All their wasted spending on empty cities and such. Its going to spur mass chaos. The people cant vote the bums out like we do.
Trade wars are inherently stupid but the universal acclaim the chinese communists get from free marketers who should know better is astounding.
Is that a thumbs up for communist governance?
Trump is the catalyst for a historic drama : democratic capitalism versus authoritarian capitalism ; nationalism versus globalism ; and free speech versus the censorship of political correctness. My guess is that democracy will fail to meet the challenge : that both Trump and his principles will become the victims of a system that is no longer fit for purpose.
I make bold statements about misallocation of resources by centrally planned governments because i have a history book.
No you actually make bold statements because you see the world as black and white. We got to the moon because of central planing and this is just one of the examples of the 1000’s I can come up with. There is room for central planing and for distributed planning. They are not mutually exclusive.
How old is that history book?
China has largely adopted Singapore (Lee Kuen Yeu) governance system: meritocracy, central planning and applying best practices around the world. But given its scale (1.4B va 5M population and immense land mass), the control is stricter to achieve its end goal – a harmonious society for the majority.
I dont share your enthusiasm for the chinese government or any communist central planning. I guess we will agree to disagree.
Personally, I think the democrats made a mistake agreeing with Trump on trade. It will work on his favour in 2020.
The mistake they make is not so much with regard to agreeing with Trump, but what kind of candidate they nominate. If they keep nominating corporatists like Clinton, they will keep losing.
Trump is trying to jawbone the markets down in hopes of them going up next year. He actually needs a recession now a recovery next year but I’m starting to forecast that once a recession does happen, there will be no recovery.
Plausible. Market direction in 12 months will matter more in the election than market direction today.
All his 3D chess matches have ended in the US Bankruptcy Courts.
His playing at populist politics made him rich and famous, and got him the Presidency. At the game of gaining social power, Trump is quite effective, whether or not we like how he wields that power.
Yes, and speaks volumes about the stupidity of the American voter, people who ignored the fact that he has been on every side of every issue, was a democrat a lot longer than he was a “republican,” and was so successful in business that he only had to hit up the BK courts 6 times. As far as I am concerned America has headed towards this political black hole that would end us for quite a long time, but his installment in office was the event horizon that would make sure we never escape our fate now, the USA is not going to survive in it’s current form much longer, and 99% of us will be the ultimate losers.
I wonder where China would be, if the failed USA Congress knew how to balance Uncle Sam’s checkbook. Due to the past and present Administration and Congress’ inability to balance the budget, we the USA have to rely on China to float our debt. Currently, China holds $1.1125 TRILLION of Uncle Sam’s debt.
So, how much of the American worker’s payroll federal tax withholdings goes to support China (interest payment on the debt holdings) with the administration and congress’ blessing?
Wiping out the equity market so that they can profit later is not exactly good faith, or faithful execution of the law. Not saying I disagree with you, I am pretty sure that they have all shorted the market and need it to plotz by Christmas. In fact I wonder if Jeffery Epstein wasn’t handling their trades for them. Then they buy on the cheap with all the money they made with their short positions, viola, who knows how many new billionaires with several named Trump.
So, the market took a 623 point dump today even as we go into the long Labor Day weekend. Tuesday will be very interesting, my bet is the Plunge Protection Team has it’s hands full all day.
Tariffs are real action, and who they hurt the most will be those who can least afford to be hurt. We are getting very close to dystopian levels of failure in which the pitchforks actually put in an appearance.
Congress will never balance the budget. The trade deficit exists to support the purchase of Treasuries. That allows Congress to overspend. It is deliberate. Trump is not only fighting the Chinese, he’s fighting the entire US government.
“The trade deficit exists to support the purchase of Treasuries.”
No it does not. The deficit exits because we buy more from them than they from us. They have to park those $$ somewhere so they pick treasuries. They could also buy USA companies (but we do not let them). The process is not different than with the petrodollars. $$ that we send overseas get re-cycle to the US like a money conveyor.
And Trump-in-the-box will cancel tariffs next week. Damn flip-flopper in chief.
Exactly. Seems like Xi and Trump are best of friends, secretly shorting the stock market together.
When is the last time America won a war? Even uneducated goat herders have
crushed America militarily, in Afghanistan.
America losses wars, it doesn’t win them.
Well then.
Game On!!!
China doesn’t know what to do. They keep expecting an historical weak obama-bush-clinton president to apologize and bend America over (again).
Support for the HK riots. Food riots coming to mainland China. Sell so many weapons to Taiwan until the island is about to tip over.
An economy that can’t feed itself, is export driven and must have 7%+ growth rates/year in order to keep its population busy and not plunge into turmoil.
I think you seriously underestimate the determination and resources of China. They have a history of bowing to the English, the Japanese and even Genghis Khan. They have learned their lesson. Giving in never worked out for them. I think it is very unlikely they will allow themselves to be bullied. Before you predict food riots, take a little time to learn about the country.
Are you really comparing the current US/China situation to the military invasion and brutal occupation of China by foreign powers through out history?
A better comparison would be the unjust export taxes put on American exports to Britain (Stamp Act, Sugar Act, Townshend Act, Tea Act, etc.) so that Britain could keep a positive balance of trade with the Colonies. Hmmm….sounds mucho like something today.
Anyways – a little fun fact. Genghis Khan’s grandson Kublai Khan united China and assumed the emperorship. He then went about instituting fiat paper money (a first in history) as the only accepted currency in his empire. In fact, Marco Polo said of Kublai Khan and the use of paper currency:
“You might say that [Kublai] has the secret of alchemy in perfection…the Khan causes every year to be made such a vast quantity of this money, which costs him nothing, that it must equal in amount all the treasure of the world.”
And yes, it did end in total failure. Marco Polo later said:
“All the beneficial effects of a currency that is allowed to expand with a growth of population and trade were now turned into those evil effects that flow from a currency emitted in excess of such growth. These effects were not slow to develop themselves…The best families in the empire were ruined, a new set of men came into the control of public affairs, and the country became the scene of internecine warfare and confusion.”
Good luck with your theory – they think in terms of decades when measuring wins and losses.
So tell me.
Does China building all those many “ghost cities” that are now falling apart fit into the “decades of thinking?”
Does China putting millions of its own citizens into “re-education” camps fit into the “decades of thinking?”
Does China destroying their environment and being the #1 emitter of global pollutants (by far) in order to grow by any means fit into the “decades of thinking?”
Does China crushing religious freedom fit into the “”decades of thinking?”
It sounds like the communists in charge are desperately trying to hang on and keep all the balls in the air.
“Good luck with your theory – they think in terms of decades when measuring wins and losses.”
Hmmm… seem to have touched a nerve. The point I intended was this: Do not to underestimate the Chinese communists orderly determination in this matter, or any other for all of that.
While they deal thoughtfully with the US tariffs, President Trump seems determined to wreak havoc, insult our allies, befriend Russia and North Korea (our enemies), terrify the Republicans, befuddle the Democrats and create his own special category in the DSM-5. Do you not think the Chinese can see the great level of confusion that Trump caused this week? Do this week’s activities make you feel economically safer and more secure? The markets vote no.
Yeah, I know. Xi has Hong Kong. A relatively minor problem compared to setting China’s future place in the world.
It is a mistake to look at an adversary and focus on its weaknesses. If you wish to prevail. focus on its strengths and figure out what you are going to do about those. No country ever prevailed over its adversary by hoping it was “desperately trying to hang on and keep all the balls in the air”.
Do you think a communist dictatorship maintaining control through, among other things, social credit scores, has much positive to add to this world? In other words, how would you approach China knowing its strengths?
Calm down Schaap60: Do you think a communist dictatorship maintaining control through, among other things, social credit scores, has much positive to add to this world?
Sanders is not president yet and I sure as hell ain’t voting for him.
OK, don’t for Sanders. I haven’t voted for the Democrat nominee for president in the 8 elections I’ve been old enough to vote so I doubt I will either.
I appreciate where you are coming from, but remember that just because Sanders calls himself a “democrat” just so he can run on their ticket does not make him one. He has nothing in common with moderate democrats.
How’d all that work out for them?
Absolutely fine. Enormous growth since Nixon’s day with billions pulled from feudal poverty.
Those empty cities? The second prong their former population growth problem–not needed now but a prudent approach to a population bomb.
Re-education and religion restriction to ensure harmony.
Pollution a recognized price of their economic self-sufficiency growth–green (in their case) being the future of their development–far more than the US.
Not random crazy tweets from day to day-actual long range plans.
You or I may not like it, but it worked for China.
Those empty cities. They are speculative investments. Many are not fitted out inside – they’re just shells of buildings. Many are starting to fall apart and wont be inhabitable in a few years.
Many of those buildings already inhabited are becoming maintenance nightmares.
Don’t count on the cities being occupied by the “Population Bomb”.
This is a country with no rule of law.
This is a country with no respect for intellectual property rights – international or domestic.
Doesn’t bode well for the long term future.
The one child law was the main prong in the population bomb scare–the cities were prep for the excess population and 10% economic growth.
2banana already been exposed as paid govt astroturfer posting pro trump lies here and in other sites. Today he posted multiple lies here because Mish really hit the nerve and he was ordered to ‘poison the well’ aka post multiple lies in the comment section.
his posts are all US gov narration on the worldview
One thing the Chinese know how to do is get along on next to nothing, they did it all the time Mao was in charge. So a few million starve and the rest are all hungry, so what? They have 1.3 billion people, they could lose 25 million to starvation and it would be akin to a census rounding error.
But, take away some entitled millennial’s iPhone and watch a bloodcurdling tantrum demanding socialism and death for all wealthy and white males.
We allowed the USA to become dependent upon Chinese goods, so being dependent upon them and doing what Trump is doing is really an awful lot like a junkie shooting their only pusher. Withdrawal is going to really suck and could kill us.
The Communists in China seem to do what Socialists always do: seek more control. They got desperate in the 80’s and ended famine by allowing capitalism. Since they don’t really understand what wealth is, they will now destroy it by tightening the screws on HK and elsewhere throughout China. Back to famine.
The seeds of our trade problems were sewn in the Marshall Plan. It was hugely successful, but we never stopped. Then came fiat money and the dumbass academics that thought we could have a service/knowledge based economy that would allow us to prosper while money was printed to infinity. Well, you can’t eat a megabyte and no economy grows on pedicures and heart transplants. Though crude and irritating, Trump is right. Whether a trade war is the solution, remains to be seen.