WORLD ECONOMICS

I was siting in my easy chair. Sometimes meditating, sometimes dozing off, my usual Morning enjoyment. Once in a while it would cross my mind that this was a blog day. What was I going to write today? Then I remembered the tariff war with China. Had to check the stock market – Dow Jones down over 600- then over 700- now back to 670 or so down.

It sounds like a lot, but as a percentage of the market it isn't. The market has been over-inflated for a long time. It would have to be down well over a thousand to be of any significance. However the significance of this downer is in what it is response to, which is the raising of tariffs on imported goods from China. This mini-market crash is caused by the concern of every major importer and retailer that it will raise the price of everything to the consumer and threaten our fragile recovery.

I have been following the World's economy for years. I got interested about fifty years ago and have been paying attention with various intensity ever since.

American/ Chinese economy is tricky. It is hard to see who benefits most from any changes. When Nixon 'opened' China the greatest resource China had were a billion underemployed people [at least in the capitalistic sense]. American companies salivated and fell over each other to establish factories there. American companies thought there was too big a percentage of their profits going to labor; which created our middle class. At first it looked like a win/win situation as the prices of all those goods made in China were much less. However, it didn't take long for the tuned in folks to know this was at the cost of the middle class. From the late 1970's on the the financial health of the working and middle class got worse, stagnant in many cases.

The powers that be were reluctant to accept they had any blame for the stagnation of the middle class. They pointed to this new service economy which would save us. Never mind that in the early seventies one person could support a large family and send their kids to college. Soon two fully employed parents couldn't keep up. And it got worse and is getting worse. All those supposedly healthy statistics of our present economy are bogus. I can easily punch holes in their claims but that is a different subject.

For the last twenty years there have been attempts to alter our economic relations with China so we could get a better deal. What do you do when they make virtually everything we buy? We forget that it was American companies that started it and are still heavily involved. Any punishment of China therefore is also a loss of money to American corporation and the moneyed class itself. So there was continuous tinkering by the past administrations but great caution to avoid the cliff.

I think the real reason this administration got its undies in a bunch is that there is evidence that the China is winning the war for global control of the economy. The World is tired of the American style of economic bullying and many countries are paying attention to the promise of closer relations with China.

The administration thinks it can force a better deal with China by unleashing the bully. I don't see what side of the bed these folks get up on, but there is no chance we can win an economic war with China. China could concede to save the World economy, but if this is what the administration wants they need to use cookies and cream not bullying.

China is holding all the cards. We better start playing nice or our economy will be in the crapper.

Friday we will have a better picture.

Readers of this blog know that if we eschew all fear and continue to love in the moment we will be okay. More than Okay! Appropriate leadership will arise to steer us to sanity.

Love and Peace, Gregg