Day: July 15, 2018

China May Be In Far Worse Trouble Than Many Realize

(Be forewarned, there’s a bit of a rant contained below, but it’s about time someone said it.)

Whether one agrees with the current stock “market” reactions (i.e., sanctions, smang-tions, just buy, buy, buy) or not, to the tit-for-tat trade tariffs announced via both the U.S. administration, or the Chinese politburo, one thing is certain: “It’s on like Donkey Kong®”

The true issue at hand is neither understood or appreciated in its timing by most politicians, academics, think tanks, next-in-rotation fund managers, Ivory Towered Ph.D’d talking heads, mainstream business/financial media outlets, along with a whole slew of others.

What many do not remember (or no longer get, period) is this:

In a true, competitive business environment, where competition is based on the prowess of its companies to create products that people want, and will buy, at prices that generate net profits after all expenses are paid (e.g., Buildings, machinery, trucks, salaries, all taxes Federal, State, local, etc., etc., etc.) to then enable it to either reinvest, or reward shareholders. The United States – bar none – is the only entity proven that it can outdo, outlast, as well as rebuild faster and stronger, than any communist centered nation ever could or can. The reasoning is simple:

Free enterprise trumps Communist controlled. Period.

This simple truth is no longer recognized, or at least professed, by the likes of many of today’s so-called “smart crowd.” e.g., Joseph Stiglitz, Paul Krugman, Tom Friedman et al. No, what this cabal, along with their willful globalist corporate overlords, want one to believe is something along the lines of, what we need in the American system of free enterprise (aka capitalism) to just include a bit more of that communist/socialist stuff.

The unsaid, but easily inferred part is, until they can get rid of that nasty free enterprise stuff, and replace it with giving everyone free stuff. That is, as long as you don’t touch their stuff.

Question: How’s Venezuela doing? (paging Mr. Stiglitz, clean up in aisle V, please)

If you are one who thinks it’s (e.g., Venezuela) a complete travesty (which it is) just remember when either you, or your child, is trying to pay for all that student loan debt amassed with no way of charging it off (e.g., bankruptcy court) that will follow one around like an anvil around their neck, possibly for life, as they finally reach that pinnacle of employment demanded by this crowd of minimum wage.

Just remember to remind them they should be happy, for people in Venezuela are starving, and would love to trade places with them. That should make them feel better, right?

Yes, it may not be the utopia they were taught in school for $50K a year, but that doesn’t mean the people teaching this twaddle aren’t getting rich via this insulting progression.

For them socialist Utopia has been reached, it’s now called academia – and just like the model calls for – it’s all paid for by you and your children via government guaranteed free money (aka student loans) that will equip them to capture that brass ring so elusive to many today, i.e., $15 an hour minimum wage – for life.

As far as ever running out of funds to pay for all this “greatness” don’t worry, all one has to do is create a “trillion-dollar coin”, possibly using the now banned plastic made available from the straws that are no longer available at Starbucks™, and just like magic – every-things paid for, easy-peasy.

But here’s the dirty little secret to all that “genius” you watch, hear, or read professed via this cabal and its house organs: If it was such a perfect solution, then why wasn’t it implemented in Venezuela?

Well, actually it is a bit of a trick question, for they did do the exercise in spirit aka as “printing money,” lot’s of it. So much so that they couldn’t pay the printers printing it, because what they were printing was becoming more worthless with every strike of the printing press! (paging Mr. Krugman, we need a recycling dumpster pick up of overflowing Bolívars, just remember, please bring security for protection from robbers, not to protect the money, but the fuel in the truck, asap.)

Then, of course, we have the “American worker” who seems can’t compete with any other country that’s run via some socialistic, or outright communist system. The purveyors of this outright tripe are eager to write, and write, and write, and write just how inferior the capitalistic model (and its workers) compares to the “harmony” they witness via the top down “velvet glove” (i.e., iron fisted) business formation and rule under the communist or socialist model of “free trade.”

Well, it sure does run quite efficiently, that’s for sure. As long as it’s at the expense of unfair practices like flagrantly jettisoning anything comparable to child labor laws, slave labor laws, or any environmental concerns. Then top it off (but far from limited to) with the “disappearing” of business leaders who don’t tow the party line, or for some reason, are deemed to be making “too much profit,” to then have it all confiscated either personally, or the entire enterprise aka “nationalize.” You know, for the “social good.”

Yes, as long as the transfer of intellectual property can be openly stolen with no regard (as in the worry for true punitive measures) whatsoever, or of any other repercussions for that matter other than incoherent gibberish made to sound as if it means anything, only said for theatric purposes as to continue on with all previous “free trade” agreements that bleed one nation dry for the benefit of another. That’s what “free trade” represents today. It ain’t free anything unless you say free of business sanity.

World trade, more often than not, is said to be going on just swimmingly by this group. And it is this crowd which is, as always, more than happy (for a very sizable speaking fee of course) to profess too all that’ll listen (even if most true business people don’t/won’t) that using an expression of old such as “the world is flat” to analogize their concepts of business, sums up brilliantly just how absolutely clueless about the true workings of free enterprise business models they truly are.

What seems to be lost on this crowd (and I’ll argue intentionally) is how “free enterprise” needs to be allowed to find its own, as well as fought for water-level via the true free enterprise model. And yes, as well as go out of business entirely. Rather, than being manhandled to conform (or allowed to continue) via socialist/communist influences, practices, or crony-capitalist measures. (paging Mr. Friedman, speaking fees for communist/socialist business models or expertise are now going to be paid for with bolívars. But not too worry, that now means one will be receiving “Billions” for the same trite. Just don’t spend it all in one place, for it may come in handy for really pretty toilet paper when needed. Just sayin’.)

Now let me make this point clear: I am not endorsing one political side or administration over another. That is for you decide. What I’m speaking to here is directly to business in general. i.e., What the “American Dream” was originally built on.

And yes, what in tandem created the greatest business nation the world has ever known. i.e., The ability for one to start, build, and run their own business, regardless of age, creed, race, status, political leanings, societal advantage and more.

That is, and always will be, the underpinning of the U.S. business model that is second to none, when it’s allowed to flourish via the free enterprise model.

China, as well as a lot of other nations, only take share when the U.S. allows trade policies to go forth that stifle its small businesses at the expense of global concerns. Small business in the U.S. today still employs about half of all the jobs. We’ll be better as a nation once we begin getting back to well more. And don’t think for a moment I’m trying to imply some Luddite type of undertone. What I mean is this:

The more people, and by that I’m including business people such as freelancers of all stripes, whether they work for themselves figuratively in some independent contractor spirit as employed by another, or literally as in sole proprietorship status – they follow a model of business to which: it is they that are in control of their destiny via their own undertakings rather, than some other where they can only wait for some employer to either reward them, employ them or try to take advantage of them.

Again, the backbone of U.S. free enterprise is made up of individuals that – if they don’t like what the business environment is doing for them? They change it. One way or another – and – are willing (and some eagerly) to suffer the consequences for doing so.

Why is this important one may be asking? Well, it’s for this reason:

That means with about 50% of the entire workforce and business underpinnings: the U.S. doesn’t need or rely on others to make their way. e.g., They create it, on their own, and yes, they build it.

This workforce alone – from owners to employees – should any ramification via a trade war manifest (and there will certainly be some and very disruptive ones at that) don’t/won’t repel, or just allow themselves to be sucked into some black-hole, then wait for some government action to come along and reassemble them from the event horizon.

No, what they’ll do is look for the opportunity that will inherently manifest, then exploit to the best of their abilities.

This will also be done via many in the big business sector also. For not all are, or have been, convinced into following the crony-capital business model.

As a matter of fact, many themselves are just waiting for the opportunity, or moment, when those still benefiting via the fumes of central bank intervention finally take its toll and shows the Potemkin Village of business “might” they truly are. (Hint: just watch how valuable today’s “tech” names are when the QE slosh stops sloshing. Hint: See San Francisco for clues.)

In the U.S. when all things are equal and business gets tough – U.S. small businesses get tough – and get going. They don’t wait or need to be told what they should do next. And it always begins, in earnest, at the small business level, first. (Think Steve’s Plumbing, Joe’s Septic, Tony’s market, Mary’s salon, and on, and on.)

What does China have?

Most, if not all: needs government first. And without it, they just wait, and wait, and wait.

That’s the model preferred by the so-called “smart-crowd.” Our best competitive hope and advantage as we transgress through the now, and still evolving unknowns to be forthcoming during this period of trade unrest is this…

China doubles down on their model.

© 2018 Mark St.Cyr