Why China's Soybean Tariff Changed Everything

[farmaholic]

"The US is adding interest debt at a rate of $6,000 a second. 13 billion would take 25 days.
That is the swan no one wants to talk about."


Visualize the debt clock. Mechanically impossible to keep up....thank God for digital technology!!!

[errolanderson]

U.S economic growth touted as high as 3.5% in 2018 may be nowhere close to that once the dust settles.

Some analytical firms have already pulled estimates below 2%. It does take much to push the GDP into negative territory. Soybeans exports was a leader for the U.S. GDP in their latest economic report.

Call it a black swan or call it reality . . . .

[farming101]

Need a good crash every once in a while anyway. Just hope it doesn't affect me at all

[LWeber]

U.S economic growth touted as high as 3.5% in 2018 may be nowhere close to that once the dust settles.

Some analytical firms have already pulled estimates below 2%. It does take much to push the GDP into negative territory. Soybeans exports was a leader for the U.S. GDP in their latest economic report.

Call it a black swan or call it reality . . . .

I view numbers as reality - otherwise the analyst you are reading might have had a tide pod for breakfast.

[GDR]

Maybe just conspiracy theory here but any chance all this drama is just created by design and collusion? If both countries impose sanctions on equal amount of goods the net impact to each country is the same. Both governments collect the government tariffs into general revenue but not viewed as a tax by taxpayers as they can blame the other country instead. Both leaders get credit and praise for standing up for their country. In the end doesn't change a thing because supply and demand remains the same, consumer just pays more as a hidden tax but does so happily as it's not a tax.

It's not that far fetched, work together to create national pride and keep money flowing. World leaders meet all the time, controlling the masses is likely topic no 1.

[macdon02]

Imo don't get too hung up on GDP numbers as they are flawed based on a fixed flat currency.

One might expect total recorded world trade, exports plus imports, over all countries to equal financial flows payments plus receipts. But in fact, during 1996–2001, the former was $17.3 trillion, more than three times the latter, at $5.0 trillion. The problem is our accounting system for trade. To reduce the trade surplus Japan had with the USA during the 1990s, I*instructed our clients to buy gold on the COMEX and take delivery. The gold was thus exported and resold again into London. The trade surplus Japan held over the USA was reduced for there is no distinction between a manufactured product and raw commodities. It is always measure in dollar flows in and out.

Likewise, most financial capital flows are not recorded at all. Financial transactions between international financial institutions are cleared by netting daily offsetting transactions. Hence, U.S. banks have claims on Japanese banks for $10 billion and Japanese banks have claims on U.S. banks for $12 billion. Therefore, the net flow recorded in the transactions will be cleared through their central banks with only $2 billion from the United States to Japan. Then if the purchase of the goods in the USA by Japan are financed, the goods may travel but no money moves between the countries when financed by a USA bank.

Since the collapse of Bretton Woods, the introduction of the floating exchange rate system has rendered the global capital flows total gibberish from a formal accounting standard since the value of the dollar rises and falls making comparisons impossible using a system that was designed with a fixed exchange rate structure*in mind. Since the 1970s, this floating exchange rate has resulted in a*sustained and unexplained balance-of-payments discrepancies in both trade and financial flows. The unrecorded capital flows in netting out positions distorts the real picture.*

[errolanderson]

Maybe just conspiracy theory here but any chance all this drama is just created by design and collusion? If both countries impose sanctions on equal amount of goods the net impact to each country is the same. Both governments collect the government tariffs into general revenue but not viewed as a tax by taxpayers as they can blame the other country instead. Both leaders get credit and praise for standing up for their country. In the end doesn't change a thing because supply and demand remains the same, consumer just pays more as a hidden tax but does so happily as it's not a tax.

It's not that far fetched, work together to create national pride and keep money flowing. World leaders meet all the time, controlling the masses is likely topic no 1.

Please take as an opinion, but equity and commodity markets dodged-a-bullet yesterday. Had the White House not downplayed the China trade war threat quickly, who knows where markets would be today.

Protectionism with global debt loads this out-of-control is a recipe for market volatility and heightened price risk. Believe we are all witnessing the beginning of this in markets right now . . . .

[ajl]

As the evidence shows Chinese raising soy tariffs and grandstanding is utterly irrelevant and changes nothing. Soy up strongly today. US goes and sells its beans into Chinese vassal state Brazil instead while the Chinese pay a premium for Brazilian beans making the Chinese, not the US, look like fools. Don't know why so many want Canuckistan to become a Chinese vassal state. We need to say to the Chinese that their imports are going to face restrictions here as well unless the 9% canola tariffs comes off.

[Hopalong]

See news comment about progress on NAFTA, do have a beef with our own farm interests not politically or economically supported by supply management.
Could be speaking out against it and other protectionist policy of our own country.
Maybe a bit of a problem for Canadian Federation of Agriculture long supported by marketing boards.

[Hopalong]

Note that CFA policy is to support NAFTA but oppose any further concessions on supply management.
Our own APAS association is a CFA member and supports CFA policy.