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I agree with you 100% on your analysis but not your prescription. Raising food prices during a labor shortage, when people can literally walk across the street to get a pay raise? The central committee has pulled the trigger on a gun in their waist band and blew off something important with this action. I say again it is time to pop some corn.I wanted to double check some facts before posting:
Argentina is planting soybeans for export to China and the price that the farmers get make the production of domestic chicken or cattle feed counterproductive in fact the Argentine cattle herd and chicken flock is shrinking fast.
Brazil likewise is planting soybeans as cattle/chicken feed and to a lesser degree direct exports to the Far East.
In addition to the 10 to 1 increase in shipping costs in switching from packaged/processed meat to feed imports the alternative of buying chicken from Brazil could trigger ecological tariffs by the EU.
This is a truly stupid time to pull this stunt given the weather disasters in Pakistan and Russia because US farmers have plenty of places to export as charitable organizations buy up the food China doesn't.
So let's see urban food riots and strikes over food prices China, little damage to the US and the answer is pop some corn.
Well Willie I think the Chinese picked this moment for a reason. To preempt any action by Congress to impose sanctions on China by firing a shot over their bow.
So we will see if Congress and Obama have balls.
Personally I think sanctions are a horrible idea, I prefer to collaborate with the EU and Japan and multilaterally engage in wholesale currency debasement.
The other idea I had months back was for the US to begin immediately to break the dollars role as a world reserve currency and as a commodity exchange currency. If we did it the world would be awash in dollars and we alone would benefit from that one time debasement.
That would really pull the wool out from under China's reserves strategy.
But I am FOR economic war with China until they break the peg. Multilaterally as much as possible, using means other than tariffs. If they don't like us dumping chicken, fine, dump dollars.
Fuck China.
But I doubt Obama or congress have balls on the eve of the election....
What's really going on here is that Beijing is trying to send President Obama and Congress a message about trade policy. The Administration is discovering the flaw of its "exports for me, but not for thee" trade strategy: Other countries won't keep their borders open to American products if Washington is simultaneously closing America's own ports to foreign products.
This antidumping case was filed within days of Mr. Obama's imposition last September of a discretionary 35% tariff on Chinese tire imports and amid American antidumping and antisubsidy duties on Chinese exports worth billions of dollars. This case also came after years of Chinese frustration with an unrelated move on Capitol Hill to block imports of cooked Chinese chicken over misguided safety concerns. Chinese chicken producers had complained about U.S. practices for a long time. In the face of mounting American protectionism, Beijing simply couldn't say no to its own domestic lobby anymore.
This trade revenge might taste sweet for now, but the danger for Beijing is that it will sour pretty quickly. Most immediately, Chinese consumers will see the effects of these duties in the form of higher prices at the supermarket—which ought to be of concern in Beijing, where officials live in terror of food-price inflation. There's also the increasing political concern that the U.S. Congress will retaliate against China's retaliation.
China's Commerce Ministry Sunday unveiled its final order in an antidumping investigation against U.S. poultry. Effective yesterday, Beijing is levying duties ranging from 50% to 104%, depending on the producer, on imports of products such as chicken feet. The Chinese government claims U.S. companies sell in the Chinese market at a price less than their cost of production. In a separate case in August, Beijing slapped countervailing duties of between 4% and 31% on the imports, claiming U.S. agricultural policies unfairly subsidize chicken production in America.
These moves must be about politics because the economics of the cases make no sense. Far from dumping, U.S. poultry producers can sell chicken products in China at a premium over the American market because Chinese consumers prefer parts of the bird that Americans don't like—especially the feet, a delicacy known as "phoenix claw."
The U.S. imposed dumping duties on copper pipes and tubes from China and Mexico, acting on a complaint from Memphis, Tennessee-based Mueller Industries Inc. and Cerro Flow Products LLC in St. Louis.
The duties will be as much as 60.85 percent on $233 million of imports from China and as much as 31.43 percent on $130 million of imports from Mexico for the products, used in plumbing and for carrying liquids or gases in heating systems, the Commerce Department said in an e-mailed statement.
Zhejiang Hailiang Co., China’s largest publicly traded copper-tube maker, had its duties raised to 60.85 percent from 58.69 percent. Golden Dragon Precise Copper Tube Group Inc. faces an 11.25 percent duty, and other major Chinese makers will pay an additional 36.05 percent, according to the statement.
The decision, announced today by the Commerce Department, is the third of four needed to make the tariffs final. Chinese and Mexican copper tube makers will have to deposit duties for products shipped to the U.S. while the case is pending. The final ruling is scheduled for Nov. 8.
No politician ever uttered more honest words than Guido Mantega, Brazil’s finance minister, when he argued central banks were engaged in an “international currency war.”
Every country is trying to export its way out of trouble. And the chosen road to net exports is–largely–through devaluation.
Both the U.S. and the U.K. have used quantitative easing to that end. Japan has launched direct intervention, with similar moves either done or promised by Colombia, Thailand, Singapore, South Korea and Taiwan. Others, notably China, have stuck to the simple expedient of a currency peg.
Mantega’s comments were in response to the Brazilian real’s relentless appreciation against the dollar, leaving it, according to Goldman Sachs estimates, the most overvalued currency in the world.
Surely, a direct response by Brazil can’t be too far away.
....But some savers will resist. Like China.
China will try to keep its dollar peg in place, which will keep its exports flowing and maintain the value of its hoarded reserves.
The only response the U.S. will be able to make, before it is entirely sucked dry by what it increasingly sees as a parasitic state, will be to launch a trade war. Tariffs and embargoes are a near certainty. U.S. consumers will be hurt, but not as much as Chinese producers.
The financial crisis was never going to end neatly. It could finish very messily indeed.
