It's Time to Say Good Bye to China

Nearly 50 years ago, then-president Richard M. Nixon opened the door to trade and normalized relations with China.

The exact date was February 21, 1972. Months later, on November 7, 1972, Nixon was re-elected in a landslide victory over Senator George McGovern of South Dakota, winning 60.7 percent of the popular vote and 520 electoral votes, to McGovern’s 37.5 percent and 17, respectively.

On August 8, 1974, Nixon left office as the House of Representatives was preparing to launch an impeachment inquiry for his attempt to cover up and participation in the Watergate scandal.

Nixon's crime in Watergate was heinous enough. Perhaps, revisiting history from our perspective today, he should have been impeached for his China policy. It opened the door for American manufacturers to relocate facilities to the Asian nation, costing millions of Americans their jobs and setting in motion decades of trade imbalances and a long, slow decline of American culture.

It could also be alleged that Nixon's worst crime was his "temporary" closing of the gold window on August 15, 1971, effectively ending the Bretton Woods era. Taken together with his China policy, Nixon set in motion the wreckage of a prosperous middle class in America.

while it's easy to scapegoat Mr. Nixon, it should be pointed out that his policies were mostly not of his making, but those of his advisors and cabinet members, particularly Secretary of State Henry Kissinger, advance man Dewey Clower, founder of the notorious February Group, speechwriter Pat Buchanan, and Donald Rumsfeld, who served as counsellor to the president (1969–73), the United States Permanent Representative to NATO (1973–74), and White House Chief of Staff (1974–75), among others such as George Romney, George Schultz, John Connally, Elliot Richardson, but that's a deep state story for another day.

As of 2019, over $560 billion worth of products come from China. Everything from electric blankets to video game consoles, from cooking appliances to baby carriages are made almost exclusively in China. Proctor & Gamble estimates that Chinese materials impact 17,600 different finished products.

Decades of cheap, sub-standard manufactured products from China have eroded the quality of life in America. dealing with the communists allowed the propagation of Wal-Marts across the country, wiping out hundreds of thousands, if not millions, of small businesses that dotted the business landscape of both urban and rural America. Our economy is now almost fully dependent on imports from China and spending by consumers.

Corporations don't make much of anything in America any more. The mainstream media, flush with scary stories about COVID-19, the second wave, lockdowns, protesting in the streets, and the cultural revolution of Black Lives Matter and ANTIFA, will almost certainly have a field day if trade relations with China sour, which they already have, though they're too busy with all the other nonsense to notice.

American dissatisfaction with China is reaching catastrophic proportions. According to a polls conducted by the Gallup organization, 67 percent of Americans have a negative view of China. 87 and 89 percent of those polled view China's military and economic strengths, respectively, as critical or important threats to America. 62 percent believe China's trade policies toward the US are unfair, and 86 percent are either somewhat concerned or very concerned about China's trade policies. And these polls were taken before the coronavirus, of which 77% of people polled by Harris believe originated in China [PDF], spread disease and death around the world.

Aside from the lying, spying, stealing of state secrets, knock offs and pirating of American products, pet food that kills dogs and cats, substandard plywood, concrete and other building materials like nails that bend on impact and screws that break in half, forays into the South China Sea and Africa, aggressive attitude toward Hong Kong and Taiwan, defective coffee makers, blenders and a slew of household and consumer products, China is just fine as a trading partner.

The United States should, instead of appeasing them on trade as many former presidents have, take President Trump's approach to the extreme and just sever relations with them altogether. While such a policy would likely result in many empty shelves in WalMart and Target stores, it might just be enough of a spark to ignite a fire under the dormant manufacturing base in the United States of America and create millions of new jobs in a restructured economy.

The world has been ravaged by a Chinese scourge for nearly 50 years. It's time to turn the tables on the Communists and banish them rather than bless them and promote them, as the BLM and ANTIFA protesters do.

Markets will be closed on Friday, in observance of Independence Day. Enjoy the holiday by buying American-made goods, if you can find any.

At the Close, Wednesday, July 1, 2020:
Dow: 25,734.97; -77.91 (-0.30%)
NASDAQ: 10,154.63, +95.86 (+0.95%)
S&P 500: 3,115.86, +15.57 (+0.50%)
NYSE: 11,901.55, +7.77 (+0.07%)

Weekend Wrap: Stocks Rebound in Face of Coming Currency Crisis

Other than the idea that Chinese and US officials were "talking" about trade and tariffs, nothing much changed in the world of high finance during the week, though investors thought they heard the "all clear" whistle.

Major indices broke off a four-week losing streak, bounding higher by 2.5 to three precent over the course of the week, heading into the Labor Day holiday.

The end of August marks the unofficial end of summer, back to school activity, and a return from the idyllic Hamptons or other leisure locales of the Wall Street hard-liners, the big boys with big money who guide trades, firms and financial fates.

Over the holiday weekend, the US slapped on the promised tariffs on September 1, with China responding with some of their own on US imports. That ran in stark contrast to the trading sentiment from the week past and suggests that the gains may be fleeting.

As the opening approaches for the first trading day of September, US futures are sliding. Anticipation of easing tensions in the trade wars are fading fast, though the narrative that the trade and tariff foibles of Trump and Xi are the sole motivator for moving equities is likely a contrived one.

What really worries Wall Street and should concern anybody with a pension tied to a 401k or other stock market vehicle is the shaky state of global commerce. The World Bank, IMF, and pundits far and wide have been predicting a recession for well over a year. Though the timing of such a downturn is far from settled science, evidence continues to build. More than just recession concerns are deeper fears that central banks have run out of ammunition with which to save the world again.

Interest rates, long regarded as the primary tool of central banks to stave off natural downturns in the business cycle are already low and many negative, prompting unbelievers to portend the end of central bank monetary hegemony. While such calls for an impending end to the global financial scheme are almost always present, this time appears to hold some truth.

Fractional reserve lending of debt has impoverished the lower and middle classes, expanded wealth inequality, and may now be acting as a brake on the system as money movement is nearing stall speed. It's been nearly 50 years since President Nixon closed the gold window and set the world on a path of unbacked, floating currencies. The result has been a revolving bubble, boom-bust scenario, punctuated by massive counterfeiting by coordinated central banking interests, each successive round more severe than the last.

Considering the depth of the last crisis in 2007-2009, central banks are desperate to keep the financial plates spinning for as long as possible, because the next crisis may well be their last.

These prospects are not pretty for central banks, or, for that matter, anybody. However, change is always in the wind, and the wind is blowing with a hot breath.

2001 was a malinvestment correction. 2008 was a liquidity affair. 202---? will be a currency crisis that will shake the foundations of monetary policy.

At the Close, Friday, August 30, 2019:
Dow Jones Industrial Average: 26,403.28, +41.08 (+0.16%)
NASDAQ: 7,962.88, -10.51 (-0.13%)
S&P 500: 2,926.46, +1.88 (+0.06%)
NYSE Composite: 12,736.88, +32.88 (+0.26%)

For the Week:
Dow: +774.38 (+3.02%)
NASDAQ: +211.12 (+2.72%)
S&P 500: +79.35 (+2.79%)
NYSE Composite: +320.43 (+2.58%)