Armstrong Economics Blog/Basic Concepts
Re-Posted Jun 17, 2019 by Martin Armstrong
QUESTION:
Mr Armstrong
In your opinion of Trump’s trade war policy, you disagree with him because it makes China look weak. What is your solution when the real problem is China stealing intellectual property and they have been called out on it. A person or party always looks weak when they get caught doing something illegal or immoral. Is a little dose of humility and acknowledgment of the error too much to ask?
JM
ANSWER: When dealing with nations, you really cannot humiliate the other side. The best way to deal with that is privately to make it appear there is cooperation and dignity. Both sides must save face. This is not a brawl nor is it a negotiation in a lawsuit. I believe that there is a huge cultural divide and that is a big problem. Many in the private sector in Asia do not negotiate the same way things are done in the West.
The best way is to negotiate behind the curtain and allow the victory to be shared. Head to head confrontation will never win. They cannot afford to yield. This is the same problem with Russia. How can anyone expect Putin to say, “Oh, sorry, you are right. I will yield to your sanctions!” There is less than a zero percent chance of that EVER happening and it would be political suicide for Putin to adopt such a policy in Russia.
I have been in that position of trying to negotiate between two foreign governments. It is not an easy task. One government asked me to see what I could do because I knew the leadership in the other. You must respect the dignity of each player when you are at that level of negotiation
Sunday Talks: Peter Navarro -vs- Charles Payne…
June 16, 2019
Charles Payne, filling in for Maria Bartiromo, interviews White House Manufacturing and Trade Policy advisor Peter Navarro. Unfortunately the interview begins with a discussion of tariff polling…. The vast majority of Americans have no understanding of the impact of tariffs and/or MAGAnomic policy; they only know the economic outcomes they can feel.
Mr. Navarro walks through how tariffs interact with global supply chains and the financial manipulation by multinational corporate interests.
President Trump on DOJ/FBI in 2016: “It was a set-up” … “I would say that President Obama had to know about it”…
June 16, 2019
President Donald Trump granted a three-day exclusive and extensive interview to ABC News ¹propagandist, and narrative engineer, George Stephanopoulos.
[¹You might remember Stephanopoulos was actually deployed by the DNC in 2012 to ask GOP primary candidates in an ABC debate about the constitutionality of requiring insurance companies to pay for birth control pills. A totally out of left-field goofy question that no-one understood until two-days later when the DNC trotted out Sandra Fluke]
Well, here’s Stephanopoulos again, somehow granted access (likely by a person inside the White House coordinating with Nancy Pelosi). The final broadcast will be heavily edited, manipulated and presented for distribution and maximum political damage; with the intent to assist Nancy Pelosi and the impeachment narrative at 8:00pm this evening.
In an effort to gain maximum publicity ABC has released some preview segments to stimulate interest by a national audience.
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[Transcript at 10:38] President Trump: “It’s very simple; very simple. There was no crime. There was no collusion. The big thing is collusion. Now, there’s no collusion. That means they set — it was a setup. In my opinion, and I think it’s going to come out.”
Stephanopoulos: “Who set it up?”
President Trump: “We’re going to find out very soon, because I really believe it’s going to come out. When you look at Strzok, these FBI guys that were low-lifes. When you look at – because the FBI’s the greatest- but these top people were absolute low-lifes. When you look at Strzok and Page, and they’re talking about an insurance policy ‘just in case she loses’, that was the insurance policy.”
Stephanopoulos: “You know I’ve heard you talk about”…
President Trump: “George, I went through the insurance policy.”
Stephanopoulos: “I understand that, but if they were determined to prevent you from becoming president, why wouldn’t they leak it before hand?”
President Trump: “You’d have to ask them.”…
Stephanopoulos: “Have it come out before the election”..
President Trump: “Oh, they tried. They tried – and you know what, had that gone out before the election, I don’t think I could have – I don’t think I would have hand enough time – to defend myself.”
Stephanopoulos: “You clearly believe there was a group of people working against you. Do you think President Obama was behind it?”
President Trump: “I would say that he certainly must have known about it because it went very high up in the chain. But you’re going to find that out. I’m not going to make that statement quite yet. But I would say that President Obama had to know about it.”
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Reminder:
George Stephanopoulos always operates with an agenda. Most have forgotten a Jan ’12 New Hampshire debate when Stephanopoulos asked Mitt Romney a very carefully worded and scripted question, seeming to come out of left field, about whether states have the right to ban contraception. Exactly two weeks later Sandra Fluke and the DNC 2012 campaign attack narrative “Romney’s War On Women” began. WATCH:
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The 2019 version of Stephanopoulos has all the same characteristics, purposes and intents as the 2012 version of Stephanopoulos.
In 2012 he set up: “war on women”. In 2019 he is setting up: “Trump impeachment”.
How the White House did not know that George Stephanopoulos would be used to position the Pelosi impeachment narrative is beyond my ability to comprehend.
Sunday Talks: Secretary of State Mike Pompeo -vs- Chris Wallace…
June 16, 2019
Secretary of State Mike Pompeo appears on Fox News Sunday to debate antagonistic DC Swamp Guard Chris Wallace. The primary topic was the recent attacks on shipping tankers by Iranian elements in the Gulf of Oman.
Additionally, Secretary Pompeo discussed the protests in Hong Kong against the growing influence from Beijing; the issues with North Korea to achieve a positive outcome with Kim Jong Un; the New York Times story on U.S. active measures against Russia; and the nonsensical -hypothetical- foreign opposition research issue.
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Secretary Pompeo also appeared on Face The Nation:
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Deep State Target Interview – Part II
Armstrong Economics Blog/Politics
Re-Posted Jun 16, 2019 by Martin Armstrong
Wall Street Wrong Again – Import Prices Decline During Full Year of Import Tariffs…
June 15, 2019
The latest set of statistics from the Bureau of Economic Analysis (BEA) shows all of the professional pundit claims of higher prices on imported goods due to Trump tariffs are simply disconnected from reality. In actuality the year-over-year prices of import products are actually dropping:
U.S. Import prices fell 0.3 percent in May, the first monthly decline since a 1.4-percent drop in December. Import prices advanced 1.8 percent from December to April before the downturn in May. The price index for overall imports decreased 1.5 percent over the past 12 months, matching the drop in January. These were the largest over-the-year declines since the index fell 2.2 percent in August 2016. (See table 1.)
The U.S steel and aluminum tariffs have been in effect globally since 2017. Tariffs on softwood lumber (Canada) & durable appliances (S. Korea), same duration. Additionally the first set of tariffs on China is now well over a year old; and the second set of expanded tariffs on China began a month ago; again, no material impact to the delivered price.
Despite two years of claims by the professional media that tariffs would lead to higher prices for U.S. consumers, as you can see above the reality is quite different.
In part this is driven by lower fuel and energy costs. Additionally, China is attempting to subsidize its affected industry; and several nations, including China, are attempting to retain export status by adopting monetary policies that devalue their currency. All of these efforts at countering the U.S. tariffs are having a deflationary impact.
[…] Imports by Locality of Origin: The price index for imports from China edged down 0.1 percent in May following a 0.2-percent drop the previous month. Import prices from China have not recorded a monthly advance since the index rose 0.1 percent in May 2018. Prices for imports from China declined 1.4 percent over the past year, the largest 12-month drop since a 1.6-percent decrease in February 2017.
Import prices from Japan recorded no change in May, after a 0.1-percent decline in April. Prices for imports from Japan also recorded no change from May 2018 to May 2019.
The price index for imports from Canada declined 1.0 percent in May, driven by lower fuel prices. (Link)
President Trump Outwits Chairman Xi Jinping Ahead of G20 Summit…
June 15, 2019
President Trump has taken the leverage of economics to levels of geopolitical strategy never seen before. Nowhere is the genius strategy more clear than in the way Trump has positioned the trade reset and confrontation with China.
In hindsight every move since early 2017 including: (1) the warm welcome of Chairman Xi Jinping to Trump’s Mar-a-Lago estate; (2) the vociferous praise poured upon Xi; (3) the November 2017 tour of Asia; (4) the direct engagement with North Korean Chairman Kim Jong Un; the strategic relationship with Japanese Prime Minister Shinzo Abe; and a host of smaller nuanced moves have been quietly building toward a conclusion.
The upcoming G-20 summit is the last chance for Trump and Xi to reconcile considerable differences and President Trump has the strongest strategic position any Chinese official has ever faced.
After Beijing walked away from previous agreements between USTR Robert Lighthizer and Vice-Premier Liu He, Trump initiated a series of punishing economic consequences that had to have been well planned in advance.
The economy in China is reeling from the pressure applied; and stunningly it has only been a month since the consequence phase began.
In addition to tariff increases, the U.S. blacklisted Huawei Technologies Co., threatened other major Chinese tech companies and essentially cut-off China from the international supply chain it needs to sustain itself. Beijing responded by drawing up a list of “unreliable entities” and making threats against any enterprise that would walk away from business engagement with China. The totalitarian response has worsened the situation, and more companies have announced their intent to decouple from Beijing.
An important aspect, missed by most observers, is the ideology and outlook within any Chinese engagement. Quite simply, if it does not benefit China it is not done. Therefore any negotiation with China is challenging because Beijing will cede no ground they view as already won.
China does not believe in ‘concession from current position‘ within any terms. Ultimately this is the reason why the negotiated agreement by Lighthizer and Vice-Premier He was dismissed by Beijing and talks collapsed. China will not cede an already attained position.
China never negotiates terms where they give ground. Almost all negotiation with China has historically surrounded time. To appease the West the longer-thinking approach of China has been to negotiate winning more slowly, but they will never retreat on previously won gains.
However, in advance of the G20 Summit in Japan President Trump has positioned Chairman Xi in a lose/lose dynamic. This forces the outlook of Beijing into a state of internal anxiety. Only President Donald Trump could have achieved this position, is really is remarkable and is noted within this Bloomberg article:
(Bloomberg) By now, Xi Jinping is used to Donald Trump’s tariff threats. But the U.S. president’s latest ultimatum is personal, and the Chinese leader’s response could have far-reaching consequences for his political future.
Trump on Monday said he could impose tariffs “much higher than 25%” on $300 billion in Chinese goods if Xi doesn’t meet him at the upcoming Group of 20 summit in Japan. China’s foreign ministry — which usually refuses to provide details of meetings until the very last minute — declined Tuesday to say whether the meeting would take place.
The brinkmanship puts Xi — China’s strongest leader in decades — in perhaps the toughest spot of his six-year presidency. If Xi caves to Trump’s threats, he risks looking weak at home. If he declines the meeting, he must accept the economic costs that come with Trump possibly extending the trade conflict through the 2020 presidential elections.
“Whether they meet or not, none of the possible scenarios are good for President Xi or the economy in the long run,” said Zhang Jian, an associate professor at Peking University. “You don’t have a good choice which can meet the needs of the Chinese economy or Mr. Xi’s political calculations.” (read more)
Read that again carefully….
“If Xi caves to Trump’s threats, he risks looking weak at home. If he declines the meeting, he must accept the economic costs that come with Trump possibly extending the trade conflict through the 2020 presidential elections.”
That is what you call a Lose/Lose scenario.
China NEVER faces lose/lose situations. The Chinese culture doesn’t even have a frame of reference for a position that includes ‘less losing’ amid better options.
For President Trump to have navigated Chairman Xi into such a position is the pinnacle of strategic success. In the long history of western engagement with Beijing it has never happened, ever.
President Trump is now playing with Chairman Xi like a mouse in a maze.
Trump wants to go to the full confrontation position. Donald J Trump has been talking about this for thirty years. Additionally, for the past two years he has strategically laid the groundwork and aligned the allies needed for this final confrontation. President Trump is looking for an excuse to apply the scale of tariffs on China that will crush their U.S. export business – and – force them into massive state subsidies to retain their manufacturing model. This approach creates pressure to retract from preexisting global financial obligations.
President Trump has threatened more tariffs and more consequential action as it relates to non-tariff barriers, IP protection, forced technology transfers etc. as a result of China reneging on their prior agreement. In essence, President Trump has put Chairman Xi under threat. Beijing’s traditional and cultural position would be no-meeting and no negotiation while under threats.
However, as a baseline disposition President Trump doesn’t want Xi Jinping to meet with him. The appearance of a ‘slight’ is the opening Trump can exploit to apply the 25% tariffs to the remaining $350 billion of imported Chinese goods. This will crush his adversary.
So what does President Trump do… while the tariff threat and trade punishment looms (and he keeps reminding everyone of it), he levels massive amounts of praise upon Chairman Xi making the pressure almost unbearable.
Laughably, U.S. President Trump is wearing the panda mask, and simultaneously applying the dragon approach. Yes, Trump is using China’s own duplicitous strategy against them.
Chairman Xi cannot meet with President Trump or his appearance implies a willingness to negotiate terms; and that reverses the dismissive position previously outlined by Beijing when they rebuked the earlier agreement. A meeting now would appear as weak.
However, if Xi refuses the G20 meeting he will be walking into a trap and allowing President Trump to take all adversarial action that could indeed collapse Xi’s economy.
Worse still, Beijing cannot fall-back-on their historic approach and begin shooting missiles from their proxy province of North Korea to attain leverage and negotiating position… because President Trump has already blunted that ability by meeting with Chairman Kim Jong Un.
Oh, the G20 is going to be epic.
…and LOL, the G20 is on Trump’s home ASEAN turf, Japan, with Trump’s good friend and golf partner Prime Minister Abe.
Reminder: John Durham Questioning CIA Officials About Intelligence Community Assessment…
June 15, 2019
Against the backdrop of the DOJ admitting FBI investigators never had access to the DNC servers to verify a Russian hack; and with new information about the FBI receiving partial and redacted analysis from Crowdstrike; the review by U.S. Attorney John Durham toward the downstream assessment/claims of the CIA takes on new meaning.
CTH has previously outlined how the December 29th, 2016, Joint Analysis Report (JAR) on Russia Cyber Activity was a quickly compiled bunch of nonsense about Russian hacking.
The JAR was followed a week later by the January 7th, 2017, Intelligence Community Assessment. The ICA took the ridiculous construct of the JAR and then overlaid a political narrative that Russia was trying to help Donald Trump.
The ICA was the brain-trust of John Brennan, James Clapper and James Comey. NSA Director Mike Rogers would not sign up to the “high confidence” claims, likely because he saw through the political motives of the report.
(New York Times) […] Mr. Barr wants to know more about the C.I.A. sources who helped inform its understanding of the details of the Russian interference campaign, an official has said. He also wants to better understand the intelligence that flowed from the C.I.A. to the F.B.I. in the summer of 2016.
During the final weeks of the Obama administration, the intelligence community released a declassified assessment that concluded that Mr. Putin ordered an influence campaign that “aspired to help” Mr. Trump’s electoral chances by damaging Mrs. Clinton’s. The C.I.A. and the F.B.I. reported they had high confidence in the conclusion. The National Security Agency, which conducts electronic surveillance, had a moderate degree of confidence. (read more)
Questioning the construct of the ICA is a smart direction to take for a review or investigation. By looking at the intelligence community work-product, it’s likely Durham will cut through a lot of the chatter and get to the heart of the intelligence motives.
Apparently John Durham is looking into just this aspect: Was the ICA document a politically engineered report stemming from within a corrupt intelligence network?
The importance of that question is rather large. All of the downstream claims about Russian activity, including the Russian indictments promoted by Rosenstein and the Mueller team, are centered around origination claims of illicit Russian activity outlined in the ICA.
If the ICA is a false political document…. then guess what?
Yep, the entire narrative from the JAR and ICA is part of a big fraud. [Which it is]
Information available as of 29 December 2016 was used in the preparation of this product.
Scope: This report includes an analytic assessment drafted and coordinated among The Central Intelligence Agency (CIA), The Federal Bureau of Investigation (FBI), and The National Security Agency (NSA), which draws on intelligence information collected and disseminated by those three agencies. It covers the motivation and scope of Moscow’s intentions regarding US elections and Moscow’s use of cyber tools and media campaigns to influence US public opinion. The assessment focuses on activities aimed at the 2016 US presidential election and draws on our understanding of previous Russian influence operations. When we use the term “we” it refers to an assessment by all three agencies.
DOJ Admits FBI Never Saw Crowdstrike Report on DNC Russian Hacking Claim…
June 15, 2019
The foundation for the Russian election interference narrative is built on the claim of Russians hacking the servers of the Democrat National Committee (DNC), and subsequently releasing damaging emails that showed the DNC worked to help Hillary Clinton and eliminate Bernie Sanders.
Despite the Russian ‘hacking’ claim the DOJ previously admitted the DNC would not let FBI investigators review the DNC server. Instead the DNC provided the FBI with analysis of a technical review done through a cyber-security contract with Crowdstrike.
The narrative around the DNC hack claim was always sketchy; many people believe the DNC email data was downloaded onto a flash drive and leaked. In a court filing (full pdf below) the scale of sketchy has increased exponentially.
Suspecting they could prove the Russian hacking claim was false, lawyers representing Roger Stone requested the full Crowdstrike report on the DNC hack. When the DOJ responded to the Stone motion they made a rather significant admission. Not only did the FBI not review the DNC server, the FBI/DOJ never even saw the Crowdstrike report.
Yes, that is correct. The FBI and DOJ were only allowed to see a “draft” report prepared by Crowdstrike, and that report was redacted… and that redacted draft is the “last version of the report produced”; meaning, there are no unredacted & final versions.
Whiskey-Tango-Foxtrot!
This means the FBI and DOJ, and all of the downstream claims by the intelligence apparatus; including the December 2016 Joint Analysis Report and January 2017 Intelligence Community Assessment, all the way to the Weissmann/Mueller report and the continued claims therein; were based on the official intelligence agencies of the U.S. government and the U.S. Department of Justice taking the word of a hired contractor for the Democrat party….. despite their inability to examine the server and/or actually see an unredacted technical forensic report from the investigating contractor.
The entire apparatus of the U.S. government just took their word for it…
…and used the claim therein as an official position….
…which led to a subsequent government claim, in court, of absolute certainty that Russia hacked the DNC.
Think about that for a few minutes.
The full intelligence apparatus of the United States government is relying on a report they have never even been allowed to see or confirm; that was created by a paid contractor for a political victim that would not allow the FBI to investigate their claim.
The DNC server issue is foundation, and cornerstone, of the U.S. government’s position on “Russia hacking” and the election interference narrative; and that narrative is based on zero factual evidence to affirm the U.S. government’s position.
…”the government does not need to prove at the defendant’s trial that the Russians hacked the DNC”… (pg 3)
Ridiculous.
You couldn’t make this nonsense up if you tried…
Here’s the full filing (h/t Techno Fog) :
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Centinel2012 