4-9-25 - 8am - Let's Talk China and Wold Trade

Episode Transcript

Speaker 1 (00:00):
Anyone with basic economic sense knows that if you raise
the minimum wage, small businesses are going to have to
lay off workers. So in California they take it one
step further. They of course increase the minimum wage. And
then they do a new study that shows that fast

(00:21):
food restaurants are shedding jobs. What's it due to? Oh,
of course the minimum wage increase.

Speaker 2 (00:28):
Idiots don't don't let anybody riding him. Don't play any
talkbacks that refer to people in California as idiots. We're
the idiots. We're better idiots than they are. Good grief,

(00:49):
I can't believe. Come on, get the.

Speaker 3 (00:52):
Beer to California, Colorado goes. Hold my beer to California.

Speaker 2 (00:58):
Before I move on to taxes, I just received an
email from an acquaintance of mine. I don't know him
very well, but he's close friends with another close friend
of mine. So we're once removed or something, we're friends
once removed. How about that? Does that make Does that
make sense?

Speaker 3 (01:18):
But I was just.

Speaker 2 (01:18):
Scanning through what he wrote. President Trump will get the
credit or the blame for whatever happens next. But what's
that rule about, bud? That's right, But it was always
going to happen the administration. President Trump has simply chosen

(01:40):
to have this reckoning and dismantle the post war economic
order here and now instead of later. That's that's that's
that's my point about the entire earlier two hours. He continues, though,
and I think this is very good writing. Historians will
have a pinions about whether waiting would have been better

(02:02):
or worse, and the counterfactua will never be known. But
there is no plausible scenario in which we could have
forestalled it by more than a decade, and there are
clear political reasons for that.

Speaker 3 (02:16):
One.

Speaker 2 (02:18):
The US government, as presently constituted will be insolvent by
twenty thirty five dosee. Notwithstanding the US government burns ten
billion dollars it doesn't have every single day. The costs
of this spending fall upon ordinary Americans but also on
foreign capital markets, and both parties are seeing less and

(02:42):
less reason to keep propping that up. It's, in an
important sense, the money printer is the empire. The money
printer finances the carrier strike groups. The carrier strike groups
provide global security guarantees. The security guarantees keep everyone using dollars.

(03:03):
The global use of dollars allows the money printing and
the cycle it's AOC and the instructions on the shampoo
bottle leather rents repeat. He says, the problem with this
arrangement is that the US government cannot restrain itself from
spending the money on stupid feces. And I mean that technically,

(03:25):
there is no mechanism for the US government to meaningfully
decrease spending short of a coupd'etals. In fact, it is
precisely insulate. It is precisely the installation of the money
printer from the political process that generates this runaway spending.
The short run costs fall on foreigners who don't vote,

(03:47):
while the short run benefits accrue to American political constituencies
who do vote. This creates a constant political pressure gradient,
a sumption toward ever increasing deficit spending, and the hypertrophy
of the domestic constituencies that absorbed the spending, who use

(04:09):
their power to vote for more spending, ad infinitum. It's
a structural phenomenon inherent in the shape of the empire.
Spot on Jamie Diamond was just reported on Fox News
as I looked up at the monitor earlier, and course,

(04:32):
maybe it's like what's his name? And animal House yelling
the crowd to stay calm. But Diamond is basically saying,
why is nobody panic? They're going to negotiate all these
We've had fifty plus countries already say, including the EU,
who is saying they're going to impose retaliatory terroiffs, but
we would like to talk. So they're playing to their

(04:55):
domestic constituents, their EU members and saying yes, yeah, we're
going to retaliate. At the same time they're saying to us, hey,
can we can we have a conversation. Can we sit
down and talk? More than fifty countries have said that,
So yes, Donald Trump has just chosen. Donald Trump knows

(05:18):
he's got this term. And if there was ever gonna
be anybody who had the cajon, he used to say,
you know what, this can't keep going.

Speaker 3 (05:26):
You know what, I just don't care.

Speaker 2 (05:28):
I just I'll be the one, come hell or high water,
come good or bad, We're gonna stop this because it
is not sustainable. Now, you individually may wish you know,
I may wish. I don't, but I could wish that.
Oh gee, you know I'm at that age. Couldn't you

(05:50):
have just waited like well, considering modern medicine, I might
have another thirty years to go, So could you not
just waited thirty more years? Could we not just put
this all but by the same token. For a person
who kind of likes the thrill of living and kind
of loves politics and kind of loves this country, it's

(06:11):
kind of nice to be around seeing it happen. The
one party in all of this China. I'm going to
get to China. China is my next subject. But before
I get to China, there are a lot of parties involved.
But the one party that right now that I have
the most disdained for, the United States Congress. You know

(06:34):
what they're doing. Of course, they're running off for Easter vacation,
which is not unusual. So it's not like they're doing
this because they're scared. They are doing it because they're scared,
but they're doing it also because that's just what they
usually do. You and I'll be You know, you're lucky
if you get good Friday off. Dragon are lucky that
we get sun Easter Sunday off because.

Speaker 3 (06:54):
It falls huh on a Sunday.

Speaker 2 (06:58):
Congress could actually be doing something right now, I know
Grassley has come out and said, hey, we gave the
president too much power. Well maybe you did, maybe you didn't.
But now's not the time to talk about that. Now's
the time to get behind Trump and say how can
we help How can we help you? Uh, well, we'll

(07:23):
support the negotiations. Do you need legislation, do you need what? What? Whatever?
And by the way, we do need their help. Tax cuts.
Keep the Trump tax cuts in place, reduce the corporate
or eliminate the corporate tax rate.

Speaker 3 (07:40):
I don't care.

Speaker 2 (07:40):
I just didn't get rid of it. It's it's it's
a falsehood anyway because you and I are paying it.
So uh cut, keep the keep the current brackets that
the Trump tax cuts put in place, reduce the brackets
and the rates even further, and get us on a
path toward eliminating the income to that that you know what,

(08:04):
that helped the markets. If everybody, if your focus is
the markets. Can you imagine if if the Republicans came out,
if John Thune and Mike Johnson came out today and said,
by the way, we've got one big, beautiful package. We
got a nice reconciliation bill that preserves the tax brackets
and rates under the Trump tax cuts, and we're gonna

(08:25):
cut taxes even further. Trump yesterday, you know, playing well,
I think is really smart politics used the language of
the left and said, oh, you want to you want
to tax the wealthy even more. Okay, well, that's fine
as long as you take care of the middle class
and the people are paying the majority of the bills.
If you want to take the top you know, one

(08:48):
tenth of one percent of taxpayers in this country and
increase their tax rates a little bit, that's fine with me.
But you put these cuts in for everybody else.

Speaker 3 (08:56):
Okay. So he's giving.

Speaker 2 (08:58):
He's like, he's like signaling to them, guys, listen, do
what you need to do, but do something.

Speaker 3 (09:08):
And in all of that, what's the media doing?

Speaker 2 (09:14):
Oh, CNN acting IRS chief resigning over data sharing deal
with the Department of Homeland Security.

Speaker 3 (09:22):
H well, that's why you're resigning. I give you a
lot of other reasons to resign.

Speaker 2 (09:31):
Just how about the incompetence, how about the outdata technology?
How about how about just you know, oh, let's go
to China because I want to talk to China. Why
do I want to talk China? Because China has come
out and of course, let me look at Drudge again.

(09:52):
China slaps USA with eighty four percent tariffs. Well, what
they're doing is they're accusing us a blackmail and they're
claiming their going to fight to the end.

Speaker 3 (10:03):
Now.

Speaker 2 (10:03):
At the same time, Chi Jing Ping, who is a
modern day that I know that we should not use
the term Hitler, but I think and Hitler will always
be the worst of the worst.

Speaker 3 (10:20):
But Shijing Ping.

Speaker 2 (10:21):
Is the modern day Hitler because he's engaged in genocide,
he's engaged in mass murder, he's engaged in an attempt
to take over the world and impose not Nazism, but
to impose Communism on.

Speaker 3 (10:38):
The entire world.

Speaker 2 (10:41):
He is a horrible human being who frankly out are
rotten hell as far as I'm concerned, Well, what's he doing?
And the cabal is going right along with it. He's
presenting himself as this responsible champion, you know, the international
trading system. He's a defender of globalism against Trump, who's

(11:01):
just out there wrecking everything that does not pass scrutiny
at all. The latter this he's the defender of globalization.
That's laughable, since it is Beijing's persistent disregard of international
rules that has fuelled the anger in America in the
first place, at least those of us who are paying attention.

Speaker 3 (11:26):
I can't tell you, you know.

Speaker 2 (11:28):
What, And I know I have a personal bias here,
having dealt with Russia, which is a communist country, having
dealt with Russia up close and personal, I know that
while Vladimir Putin is a horrible dictator who is just

(11:49):
mass murdering his youth in that war in Ukraine, all
trying to re establish the old Soviet Empire, I get
how bad he is, but I will know that he
is a pragmatist. And Putin really would, and at one
time really did, want to be a part of Western civilization.

(12:09):
Maybe he's never going to give up communism. Don't get
me wrong, He's not giving up communism. But Putin did
want to at least say, hey, look, you know what,
if you'll just kind of let us live the way
we live in our country, we'd like to be a
part of, you know, the the global trade organizations we'd
like to be a part of, you know, maybe even

(12:30):
join NATO. We'd like to be a part of all
of that, and we'll all kind of live peacefully. You
just have your system and we'll have our system. That's
not she jing Ping at all. Gijing Ping is determined
to dominate the world and impose communism on the entire world.
So as part of the Chinese Communist Party strategy, they're

(12:53):
going to downplay the impact on the on its so
called super economy. That's the way the People's Daily describes it,
insisting that their country is strong and resilient. Zero Hedge
just tweeted out, which I just reposted, asking Goldman Sachs,
is the Chinese Communist Party putting pressure on you to

(13:18):
report favorably the Chinese gross domestic product in order for
you to continue to have access to their markets. That's
how the Chinese Communist Party plays games. That's how the
exercise power, you know. So go back to the People's Daily.
The People's Daily, the official paper of the Chinese Communist Party,

(13:41):
describes the Chinese economy as a super economy. Well more sympathetic.
Foreign journalists, not American journalists. Foreign journalists have actually gone
through tours of the high tech facilities. Here's what Thomas Friedman,

(14:04):
not a foreign journalist, but an American journalist. I saw
the future. It was not America he went to Walwai's
Shanghai campus. He was credulous. He praised China's spending splurge
after the two thousand and eight financial crisis, and then asked,

(14:27):
what if we could just beat China for a day.
That's the cabal. They're fellow travelers, they're useful idiots. There is,
as one person wrote, there is more than a touch
of the Potempkin about this. Since China's economy is in

(14:48):
a bad way. It is suffering the lingering effects of
a property collapse, responsible for a quarter of their economy,
heavily indebted and saddled with massive overcapacity, few companies are
making money, and She's efforts to export his way out
of trouble, with heavily subsidized renewable energy tech leading the way.
Is especially vulnerable to tariffs, so Beijing has been preparing

(15:14):
for trade hostilities. They knew this day was coming. They
weren't quite sure when, but they knew it was coming.
But they're probably surprised at the scale of the tariffs
that Trump is doing now. One tactic has been to
shift investment and trade away from the United States. In fact,

(15:35):
China's direct shipments of goods to this country as a
share of their total experts experts exports shrank from about
nineteen percent in twenty eighteen to just under fifteen percent
last year. Now that's according to Chinese customs data, So
just take it with a grain of salt. Yet a

(15:55):
lot of that was achieved by doing something that I've
tried to explaining before, and even people Larry Kudlow and
others have tried to explain this. How did they achieve that?
How did they drop that number? First of all, let's
ask why would they want to drop that number? Because
they want the world to think that they're not that
dependent upon exports to this country. They and they want

(16:20):
to convince you that, oh, you don't get that much
stuff from us. So how did they get that dropped
from about nineteen percent in twenty eighteen to fifteen percent
in twenty twenty four? Will they tranship their goods Vietnam, Thailand,
Cambodi in other parts of Southeast Asia? In other words,

(16:42):
they manufacture the crap in China, they then ship it
to Vietnam, Thailand, Cambodi in other Southeast Asian countries, and
then they either just slap a maiden China sticker on it,
or they'll you know, tighten a couple of screws and
then put maiden China's on it. But then they ship
them out of Vietnam, Thailand, Cambodia, and other Southeast Asian

(17:06):
countries and therefore claimed that, oh, that's not from us,
that's from Vietnam. Chinese investment in that part of the
country has dramatically increased, and they've been heavily putting together
assembly plants, bolting together Chinese components, or just simply rebadging
the goods has made somewhere else other than China and

(17:28):
then shipping them to US. And I think Trump knows
exactly that that's what's going on, particularly Vietnam. Now there
are signs that these countries are growing kind of tired
of Beijing's investment and the dubbing of Chinese made goods.
More broadly, why let's.

Speaker 1 (17:47):
Go to the wt oh dragon and Michael, no, no,
it's not hold my beer, California, it's holed my six pack.
And on the verge of hold my twelve pack or
case of beer. Good Lord, Colorado, stop trying to be
the metropolis of Dumbassy, have a great day.

Speaker 2 (18:06):
The capital of dumbassery Colorado. Welcome to dumbass Colorado. Change
the sign Welcome to commed Colorado's the best one I've
seen so far. What would you change the signs to?
At the state lines? Welcome to COMMI Colorado. Welcome to
dumbass Colorado.

Speaker 3 (18:27):
What would you do? World Trade Organization?

Speaker 2 (18:32):
There were sixty six anti dumping investigations initiated against China
in the first half of twenty twenty four, more than
all of twenty twenty three. Even Russia got in on
the act. They even initiated a anti dumping complaint against

(18:52):
the flow of cheap Chinese cars into Russia. So I
don't think there's much mood anymore for accepting cheap imports
that might be redirected from our own markets. So Trump's
threat to impose these tariffs now and I think at
one hundred and four percent, if China doesn't retract a

(19:16):
thirty four percent, which I think today is now at
eighty four percent. Uh, what's going to happen? Well, Beijing
has announced further restrictions on the export of rare earth, which,
of course you know we need to you know, use
for to I was going to say to using the
manufacturing of things like batteries and evs and you know,

(19:39):
other high tech goods. But wait a minute, do we
need that? Yeah, our companies need those, but we don't
actually do then manufacturing. So think about that little conundrum.
We need rare earth minerals to manufacture for us to
enjoy this iPhone in this lap and whatever's in your EV,

(20:03):
but other than Tesla, we don't really make those things.
So China is threatening to withhold those things. So they're
really kind of shooting themselves on the foot. Putting America
first over international rules is a form of unilateralism, is

(20:24):
a form of protectionism, and yet you can even call
it economic bullying according to Chinese spokespeople, And they say
that with a straight face, because the reality is that
since it joined the World Trade Organization in two thousand
and one, Beijing has been gaming the system ever since.

(20:46):
They totally ignore their obligations as part of this global
trade world.

Speaker 3 (20:51):
That we live in. Even Obama.

Speaker 2 (20:56):
Obama, in one of his memoirs, you know he wrote
by the Brazilian memoirs autobiographies because we all care about it,
talked about how China's rise was facilitated by systematically evading,
bending and breaking just about every agreed about rule of
international commerce. And of course we had Nancy Pelosi, we
had Chuck Schumer. Everybody talking back in nineteen whenever it

(21:19):
was nineteen ninety six, I think was Nancy Pelosi. Chuck
Schumer was just you know, like eight years ago, all
talking about, yeah, we need to be doing these things.
But now that we're doing these things, they're all running
for the hills. So in the past couple of weeks,
Chijiking has been reaching out to international businesses Goldman Sacks,

(21:41):
JP Morgan businesses all over Europe South America, trying to
assure them that China is a welcoming place to invest. Now,
if you've got if you have to look, you don't
think that Goldman's let's pick on Goldman's Sacks from them.

(22:02):
You don't think that Goldman Sachs has floors and floors
and floors of analysts trying to figure out where's the
best place to invest. Does Chi Jinping really need to
reach out to someone like Goldman Sachs and say, hey,
come see us, We're a great place to invest. They

(22:22):
already know whether it's good or bad, and they also
know that whatever analysis they come up with. They've got
to find their own data points because they know they
cannot rely upon the data points that are provided by
the Chinese Communist Party about the Chinese GDP. So we

(22:43):
know that they're in bad shape. Any of the big banks,
any of the large brokerage firms, investment houses will tell
investment banks will tell you that the g the Chinese
GDP is not what they claim it is. There are
stories that I find all over the place. You know

(23:04):
how we have day laborers that show up at home depot.
They've got day laborers showing up at manufacturing plants, lines
of people around the block getting openings today. They're in
bad shape. She gene Pen has also sought to boost
the role of so called air quotes here private companies

(23:28):
particulating the tech center, which under his rule have faced
a horrible crackdown. Their own entrepreneurs get purged from the
companies they set up, or they just simply get disappeared.
And then there's also the option of a sharp devaluation
of China's currency. Now, why would they do that? Because

(23:50):
that will help prop up exports by making them even cheaper. Now,
doing that is likely simply to further inflame the anger
among all these countries around the world that are already
annoyed by Chinese dumping and Chinese currency manipulation, and it
all smacks when you step back and look at it,

(24:12):
it really all smacks the desperation. It's not the super
economy everybody thinks that it is. Ki Jingping is unlikely
to remove the thirty four percent retaliatory tariffs. I don't
know whether he'll remove the eighty four percent the announced overnight.

Speaker 3 (24:26):
I don't know.

Speaker 2 (24:27):
I don't really care, because here's what I want Trump
to do. Here's what Trump I think Trump will do.
Trump the Treasury secretary, the trade representative, maybe even Rubio,
I don't know. He'll get the entire economic team and
the diplomatic team together, and they'll start lining up meetings

(24:49):
and they'll all start negotiating. Now that Yahoo's already shown up,
they're already negotiating. They've already pretty much agreed, Hey, we'll
just go to zero zero, We'll just you know, we'll
just show the rest of the world, Europe, the EU,
while again, as I said earlier while announcing for their

(25:11):
domestic audience, that yeah, we're going to retaliate the head
of the EU has already said, well, you know what,
hang on a minute. In fact, I think I may
even have a SoundBite of her saying that she's already
come out and said, well, you know what, Yeah, we
got some problems, but maybe we can maybe we can

(25:32):
figure out something to do. Now that's not necessarily for
domestic consumption, that's for our consumption. And I understand why
she would do it, because now she's between a rock
and a hard place, and she knows that she too
is going to have to negotiate. So the more that
these negotiations and ultimately agreements that Trump can get under

(25:57):
his belt, say between now and I don't know what
the day would be May versus too early, but let's
say by June first, if he could get fifty agreements
between US and foreign countries about either zero zero zero,
or we'll just be reciprocal. Whatever you do, we'll do
exactly the same thing, and we announce those What does

(26:20):
that do? That further isolates China? China can't win this
game by doing what they've been doing with the Belton
Road initiative. And then I mean they are mafia. They
are exactly like the mafia. So go in off of
the Belton Road initiative. Build whatever it is, a substation,

(26:41):
a bridge, a highway, an electrical grid, whatever it is
you might build. And then you start trying to collect
and get the debt service started. And these countries can't
afford it. They should have known going in, but they're
third World crapoole country, so I'm not surprised they wouldn't know.
Starts happening. China realizes that, uh, oh, that project is

(27:05):
crumbling literally and figuratively, and they can't afford. And oh,
by the way, that same country has reached either a
zero zero or a reciprocal trade agreement with the United States,
and they get further and further isolated. So for all
of this bravado coming from Beijing, never forget their economy

(27:29):
is highly vulnerable and will come off worse from the
slugfest that is now gathering pace. So whatever the cabal
tells you, don't, I don't have Drudge up again. But
whatever Drudge has up me pull it up real quickly
and see. You know, you may ask why do I
use Drudge so much? Because for me, Drudge personifies the cabal.

(27:55):
It wasn't always that way, but it's become the aggregator
for the ball everything negative, everything anti Trump that any
little pissant newspaper or website or anything publishes. Boom, the
Drudge Report's going to put it up, and of course
there it is. Yeah, China slaps USA with eighty four
percent tariffs, the EU green lights retaliatory duties. China can't

(28:21):
win this. China won't win the fight to end, the
fight to the end against Donald Trump. It's just not
going to happen.

Speaker 1 (28:31):
Interesting, Kevin O'Leary is calling for a four hundred percent
tariff on China goods. He says that they cheat and
they still and he's had enough. What do you think
is the approach, Michael danger Brown?

Speaker 2 (28:47):
I would agree if they if they want to keep escalating,
just keep escalating, because what needs to occur simultaneously is
the continued negotiations with these other countries who have indicated
the willingness to negotiate with US.

Speaker 3 (29:05):
For example, I guess it was it last week. What
is today?

Speaker 2 (29:08):
Yeah, it was last week that Israel responded by announcing
their cancelation of their remaining tariffs on US imports. And
I think that was a really smart, deft move it
was a symbolic de escalation that was designed to leave
them room for substantive dialogue. And so that decision, both

(29:30):
pragmatic and principled, I think, underscores the extent to which
Israel values its access to the American market. Now, if Israel,
if the tiny, yet highly productive nation of Israel, values
our market, think about how dependent when almost a quarter
of all your production of your GDP is dependent upon

(29:52):
American consumers buying and American companies buying your stuff. Think
about how much more dependent China is on us. Israel
showed the and I think it was I mean, I'm
not trying to be conspiratorialist here, but it seems to
me that I would guess that Net and Yahoo and

(30:15):
Trump probably planned that they orchestrated that entire thing. Hey, listen,
I'm going to start announcing these tariffs, and I'm going
to impose you know, seventeen percent on you or whatever
the number was, And I want you to immediately and
yawoge will let me be the first, because that signaled

(30:38):
to the entire world, not just the economic relationship between
the United States and Israel, which is absolutely key to
maintaining stability in the Middle East, but also signaled that hey,
this tiny little country that does a lot of manufacturing,
has a lot of high tech industry, has a lot

(30:59):
of pharmaceuticals, is willing to Hey, you know what, We'll
drop hours if you drop yours, and that show each
other what we got, and then let's sit down and
negotiate either zero or whatever we think is an appropriate tariff. Well,
so call China's bluff and say sure, we'll go four

(31:21):
hundred percent. Well, somebody asks, and I think it's a
pertinct question on the text line, what happens? Serious question?
As we continue to win the tariff battle, what happens
if China attacks Taiwan? I think that How can I
succinctly describe this? Chijing Ping's control over the Chinese Communist

(31:46):
Party is solid and complete. However, his control over the
country is solely dependent upon the military, and the military
has a lot of disagreement with Chijing Ping over the
invasion of Taiwan. They don't want to invade Taiwan because

(32:07):
they know that will lead to a.

Speaker 3 (32:09):
Global war that will lead to World.

Speaker 2 (32:11):
War three, and Chinese military leaders don't want to fight
that battle. So Chijing Ping is in the process of
disappearing some of his generals. They're having heart attacks, they're incapacitated,
they can't be found. So he's busy trying to maintain
control of the military and so that he can invade

(32:34):
Taiwan because he believes, he sincerely believes that he can
win a.

Speaker 3 (32:39):
World war, and that winning a world war is.

Speaker 2 (32:42):
Just a accelerated way to world domination. That's why I
compare him to Hitler. Hilar thought the same thing. Why
if I can just you know, once I get Czechoslovakia
and then I can take over Russia, I can take
over France, jump over the Channel, take to take the Brits,
and then you know what, we'll draw the Americans into

(33:05):
a world war and we'll invade, will invade the United States.

Speaker 3 (33:10):
And I mean it was delusional, absolutely delusional.

Speaker 2 (33:14):
And I think Eugene Ping is delusional because the practical
effect of him invading Taiwan is that instantly Japan and
South Korea know that they're next, so we in defense up.
We've got troops in both countries. His next move would
be on South Korea Japan, or the next move would

(33:36):
be South Korean Japan moved to defend Taiwan, which they're
obligated to do by treaty. We have troops involved, we
have in essence, boots in that area of operations. So
now we've got to respond, and we should respond. This
diplomatic policy of ambiguity is stupid. It's just it's just

(34:02):
a fiction that you know, you don't invade Taiwan and
we won't talk about Taiwan's independence. You know, first of all,
the Chinese Communist Party, which is the ruling party of China,
was never on Formosa. Chiang Kaishek escaping. The Communists went

(34:24):
to Formosa, which became Taiwan. So they've never had any
legitimate historical claim to the island. They just wanted because
it's part of their world domination. And if they make
that move, it'll destroy TSMC and it'll invoke Australia, the Philippines,

(34:47):
New Zealand, South Korea, Japan, and then US and now
you got a global conflagration. That's what happened. I don't
think I think winning the tear war is m it's
all tiny. It could actually stave off an invasion of Taiwan,

(35:09):
but Trump's got to move quickly to get negotiated agreements
with other commons,