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newsnigeria · 6 years ago

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Check out New Post published on Ọmọ Oòduà

New Post has been published on http://ooduarere.com/news-from-nigeria/world-news/sitrep-wage-a-trade-war-march-on-beijing/

Sitrep : If you want to wage a trade war, don’t march on Beijing

by Chris Faure, for Ooduarere

Let’s clarify, a trade war is a war.

Let’s clarify, world trade is not a zero sum game where you have a winner and a loser. Where we are in geopolitical danger levels, we’ve reached the same danger levels in world economics this past week and through this morning in the trade war, US vs China.

Let’s clarify, the US administration, Mr Trump’s special skill of negotiating has lost this trade war, because China does not have to win. China only has to endure and time for China, is a win. You will find parallels with many other countries in hot water in the geopolitical world, where they don’t have to win, but simply endure and win time and wear down the Empire. This is where we are in this trade war. What Trump and his team are arguing for in trade negotiations with China is no different than what they’ve offered so many others – surrender your sovereignty or face punishment. Unfortunately for the US Administration, the world is saying more and more … Bring it On!

In addition, China stood firm on 3 requirements:

The documentation and tone has to show respect for China’s core interests

Demands for what China should purchase from the US should be realistic

China will not, absolutely, not change their internal structures (laws) because the Americans are fearful of BRI or Made in China.

This morning, with monotonous regularly I saw the financial media leading with headlines of how many % tariffs China is placing on how many billions of US imports to China and how many % tariffs the US is placing on how many billions of imports to the US.

That is not where the story lies. In terms of world trade and impact on the financials of these two countries, these are drops in the bucket although they hurt small business badly and has a serious downstream effect on shipping, and everything around moving product.

The story is in the unerring aim that China takes in this trade war, when they need to retaliate. The story is in the fact that neither Mr Trump’s carrot, nor his stick could move China one iota, and this morning we are in a position where China, unerringly just an hour or so before the US market open, takes unerring aim, again at US agriculture as they did before. You know, that piece of the economy that takes a year to even plan and grow and where futures trading is long term and which is still causing mega bankruptcies in the farmer communities of the US midwest whose export to China is lying rotting in the fields or in the warehouses, exacerbated by brutal winter and spring weather conditions. facing surging bankruptcies from farmers hit

The same way Wisconsin dairy farmers are also going bankrupt thanks to the continued flood of cheap European dairy keeping wholesale milk prices low. Why is this happening? Russia countered European and American sanctions over Crimea with a ban on imports of European dairy. https://www.strategic-culture.org/news/2019/05/12/trumps-trade-war-is-already-over/

The same way that Mexican first grade or export grade farming produce is now being sold inside of Mexico, and the Mexicans never had it so good. Whereas before they would buy the avocado with the skin blemish, or the tomato not exactly the right size, now they are buying the cream of the crop as it has become too onerous to continue exports to the US in many cases.

Mr Trump’s art of the deal is eating Americas lunch. Bear in mind, we are not talking about Chinese paper lampshades here. We are talking about what we are all going to eat and how much it will cost to fill a basic food basket.

With a short search you can find the various phases in this trade war, where Mr Trump marched on Beijing. It is however only now getting interesting.

Where we stand now, is here.

China’s position verbalized by …. chief editor of the Chinese Global Times:

Hu Xijin 胡锡进‏ @HuXijin_GT

The sooner new tariffs on $300 b of Chinese goods come, the better. That means trade war comes to the 1st turning point, shifting from a comprehensive US offensive to a stalemate. The two sides will then compete on endurance. China’s political system will ensure we won’t lose.

In reality China is unerringly taking further aim at Mr Trump’s base itself. China might stop purchasing agricultural products from the US in total. They may reduce its orders for Boeing planes and they may restrict service trade. The PBOC is also modelling the dumping of US Treasuries which will have serious systemic effects, most probably strengthen the yuan and push the cost of doing business with the US much higher. If China is going to dump Treasuries, Chinese pride will follow and they may also be dumping US stocks and real estate. After all, China needs now to protect their trade with the rest of the world.

The US side stands here:

There’s a hole in the bucket dear Liza, dear Liza –

With what shall I fix it Dear Henry, Dear Henry …. ? Oh Sh!t!

Mr Trump stands here:

Even at this early stage, we can add up another loss for empire and a very amazing gain in an ongoing systemic change in economics that is necessary in our world, in parallel with the systemic change in geopolitics, all toward a multi-polar peaceful world.

Bellowing at China for problems that were uniquely created by the US itself, will not win this trade war. Tweeting is not going to make one iota of change. China has now settled in for the long haul while still talking (and winning time).

To make the farmers happy (Trump’s base), he says the US will buy their own farmer’s production from their own farmers and give it (sell it – disaster capitalism?), to poor and hungry countries. It is of course a lie that China will pay for any tariffs. A quick search will show how tariffs actually work.

So, we are in a space where the world economy is in real hot water and China is the only stable force that we have currently from a world perspective. Mr Trump is still hoping that a more expensive product delivered into the US will lead to a type of economic manufacturing reconquista, i.e., on-shoring of manufacturing back to the US. There is a problem with this thinking and it is that no big organization in its right mind will fully return to US shores in the current climate of decay, uncertainty and societal derangement. Oh, they will, eventually, but some issues must be solved first. Trump has no more economic clout left – he can still do damage, but China is making statements that they will keep their internal economics floating on an even keel, in order to create some stability for the world. China will of course act in China’s interest and they have been hardening against full tariffs since this trade war started.

We have the world’s economic well being in China’s hands, with Trump delusional and breaking what he can break, under the mistaken belief that this is all in his hands.

We can only look forward to China hitting back hard, which they have started to do this morning, and then pivoting hard to its own business and its own civilizational well being. What happened this last week, is that Trump gave away his full hand, and China has given nothing yet – and nobody knows what really is in their hand. So what rabbit can be pulled out of Mr Trump’s hat now? At this stage, looking at past doubling down from Empire, missiles and aircraft carriers may be the next best thing for the US and that is the terrifying part.

This morning in China news:

Tall tales won’t help US win trade war

China has plenty of countermeasures. The US tariff moves are very much like spraying bullets. They will cause a lot of self-inflicted harm and are hard to sustain in the long term. China, on the other hand, is going to aim with precision, trying to avoid hurting itself.

The Chinese government has been blunt about the difficulties and losses that the trade war will bring to the Chinese economy. This is in sharp contrast to the US government seeking to beautify the trade war.

The Chinese side is obviously more realistic while the US is falsifying. This will, to a large extent, influence how the two countries digest the trade war impacts.

http://www.globaltimes.cn/content/1149748.shtml

If you want to wage a trade war, don’t march on Beijing.

#China #U.S.A

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rebeccahpedersen · 6 years ago

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Morneau, Millennials, & Mortgages

TorontoRealtyBlog

We didn’t start the fire It was always burning Since the world’s been turning We didn’t start the fire No we didn’t light it But we tried to fight it

Written in 1989, it’s still applicable today.

Maybe even more so.

The chords might be simple, and the riff might be too catchy to be thought of as anything “special,” but wasn’t this song a bit before it’s time?

Think about how complicated the world is in 2019. I have daily arguments with myself about a variety of subjects, none of these arguments getting me any closer to understanding life, society, culture, or world issues.

And yet the lyrics from Billy Joel’s 1989 smash-hit, “We Didn’t Start The Fire,” are still relevant. Many of the mysteries haven’t been solved, the problems unaddressed, and the names mentioned have been made even more famous (or infamous…) with passing time.

If somebody re-wrote We Didn’t Start The Fire in 2019, how do you think that would go? Oh, wow. The mind marvels at the mere thought!

My parallel to today’s topic might seem cheezy, but it’s apt.

I was reading about the Liberal government’s pending announcement, which has been a very poorly-kept secret, whereby they intend to making housing more affordable for millennials. This made me realize that the give-and-take with different political parties, and different bodies of government, have essentially resembled a struggle to both put out, and keep a fire, going.

The housing market here in Toronto was on fire for a long period of time, there’s no doubting that. The fire raged on for about three-times as long as the average upward market cycle, and it wasn’t until the Ontario government, led by the LIberals, doused the fire in April of 2017 that we began to see things change.

In the two years since, we’ve seen a mixed market, not only here in Toronto, but throughout the rest of the province, and across the country.

Different cities and provinces have seen both increases and decreases in property values, slow and busy periods, and many of the buyers and sellers in the market ended up with experiences that they did not expect. The once-predictable market has kept us on our toes ever since, and it’s likely due to the changes in political parties, and associated policies, that have both aimed and either slowing down or speeding up the market.

I have never seen a run-up like the first four months of 2017, but I have also never seen a speeding car hit a wall quite like what happened in the third week of April in that same year. The Liberal government approached a raging fire, doused it with water, and kept spraying the hose until the fire was out.

But now, along come the federal Liberals, about to dump kerosene on the smoldering ashes, and re-ignite the fire anew.

We discussed the idea of “What the government could or should do” to and for the real estate market, and it’s participants, last month. Many of the commenters said the government should do absolutely nothing, and others made suggestions ranging from altering the terms of the mortgage stress test, to increasing amortization, to changes to the RRSP withdrawal for first-time buyers.

Reports this week suggest that when the Liberal government tables their budget on March 19th, “housing affordability for millennials” will be one of the key components.

Opinions will be mixed, and I do believe there’s potential for this to backfire both politically and in terms of the effects on the market.

First and foremost, many will question this move from a political standpoint.

The reports are using the word “millennials” and not the term “first-time home buyers.” If this is truly the case, then I can see how many members of society will claim this is discriminatory.

“First-time home buyers” can be of any age. I have clients that are 37-years-old and 38-years-old respectively that have been renting for over a decade, who scrimped and saved for a down payment that they think is reasonable (ie. way more than most would put down), and who are finally ready to enter the market. One might argue that they are smarter and more responsible than another individual who was or still is willing to take on far more debt, and others might argue that they were stupid to miss out on a huge market run, even though the latter part is hindsight.

In any event, they are just on the outside of what most consider to be “millennials,” and yet they are first-time buyers.

For the federal government to implement legislation that would help today’s 25-year-olds enter the real estate market, but not my 37 and 38-year-old clients, is discriminatory.

It’s age discrimination.

And look, I’m the right-of-centre caveman who shouts at clouds, wondering why everybody is so sensitive about everything out there today, feeling that most news stories are much ado about nothing, but I’d be remiss if I didn’t point out how others might perceive this.

So does this not open the door to other types of favouritism and/or discrimination on the intersectional hierarchy?

What about sex? Gender? Race? Sexual orientation? Religion? Class? Or creed, if that’s even a word people use anymore?

Tell me I’m arguing for the sake of arguing, but I don’t know that you can open this door, walk through it as you see fit, and expect that when you close it, the door stays shut forever.

Then again, and here’s where I like arguing against myself, just to provide perspective, maybe the government’s role is to find the sectionalities of the population who need more help, and step in.

As it pertains to age, we know that there are all kinds of benefits for senior citizens (that term has now been changed to “people of advanced age”), so is it not reasonable to assume that if the government implements programs, benefits, and rules/regulations for people at one end of the age spectrum, that they can do so for the people at the other end?

I know many would argue that a 65-year-old has paid taxes for the better part of a half-century, and simply put, has earned the rights and privileges that he or she enjoys, especially when compared to a 22-year-old who wants to purchase a home.

But is this a fair argument?

I can argue both sides of this, and I will end up right back in the middle.

Millennials are the future of society. Do we take care of them, to help usher them forward, in the same way that we help seniors, as a reward for a job well done?

Now from a market standpoint, there are also arguments to be made both for and against new regulations.

If you’re cynical like me, you realize that these new regulations wouldn’t really be well-thought-out with a plan for the market response, but rather they serve as a vote-buying measure a mere seven months away from an election that is destined to come down to the wire.

So does the market need stimulation?

Do we really want to dump kerosene back on the fire that we just put out?

The “help” for millennials could come in many different forms, ranging from an increased withdrawal limit from RRSP’s, to a 30 or 35 year amortization period, to a less-stressful stress-test, although I sure hope they phrase it better than I just did.

Global News provided the following from RBC economist, Robert Hoque:

RBC economists warn that taking steps to stimulate demand and increase purchasing power may not have the desired effect.

“Our view is that, while these measures could be well intended, at the end of the day, they might become counterproductive,” explained senior RBC economist Robert Hoque.

“It might just stimulate the demand at the time when the supply has difficulty adjusting to that demand, so basic economics entails this is quite likely going to inflate prices and perpetuate the affordability issue.”

The Canadian Mortgage Housing Corporation (CMHC) said, and I know this is hard to believe, that every Canadian should be able to afford a home by 2020.

I know this is going to anger many of the readers and commenters, who have expressed outrage before about how much debt the CMHC stacks upon the backs of Canadians, and frankly I agree. This is pie in the sky nonsense:

“We believe that everyone in Canada deserves a home that they can afford and that meets their needs. We also believe that we are in the best position to make that happen,” Evan Siddall, the corporation’s president, writes in an opening message in the document. “We are single-minded in striving toward this goal and it will guide our work in the coming years.”

“Deserve.”

“Needs.”

Oh boy, that’s a topic for another day.

But all signs point to the government making affordability a major part of both the federal budget as well as the election platform, and we’re going to know in a week just how they intend to pull this off.

Think what you want about real estate, the housing market, affordability, the role of government, or the politics involved, but make sure you take a moment to reflect on the re-igniting of this massive real estate fire, and whether or not that makes sense.

Is this a do-over? A whoopsie?

The government took so many steps to cool the housing market, and now they’re looking to spark the very same market up again.

Why?

You have to ask yourself, why?

Is it about politics and vote-buying? Is it about fairness to Canadians, after cash and foreign-buyers were unaffected by previous measures, while Canadians took it on the chin? Is this a decision made after careful examination of potential outcomes in the real estate market through hundreds of cities across the country?

Why make the change, and why now?

I have one final thought, and perhaps I should have led with this, since the preceding would have made a lot more sense to many of you, but will these measures actually be geared toward millennials, or will they be geared toward the whole market, but with the hope that millennials experience more affordability as a result?

If it’s the latter, which I absolutely expect that it is, then perhaps I could have avoided the entire “discrimination” section, but that was also for effect, and to drive home a point.

The government can’t have it both ways. They can’t implement legislation for persons aged 18 to 29 and expect not to get push-back. But they also can’t implement legislation across-the-board, to the benefit of every person in the country, and then pander to millennials and say, “See, we did this specifically for you.”

So what is my expectation for the announcement?

I expect that the government will re-introduce the 30-year amortization for insured mortgages for first-time buyers.

I can’t see them doing anything for “millennials,” and I can’t see them re-introducing the 30-year amortization across the board either, since that would have major implications.

I can’t see them making changes to the mortgage stress-test, since that would be essentially admitting it was mistake to begin with. Can we really expect them to claim “success” for implementing a policy for 12-18 months? The spin-machine would have to be set to overdrive to pull that off.

Next week may prove me wrong, but I’ll stand by my prediction.

I certainly welcome your predictions as well, and thoughts on idea of policies only for millennials.

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