Beijing Agrees to Import More American Goods

[Swordsmyth]

The United States and China issued a joint statement on May 19 saying that Beijing had agreed to "significantly increase" its purchases of American goods and services, AP reported. The statement did not mention a dollar amount.

More at: https://worldview.stratfor.com/situation-report/us-china-beijing-agrees-import-more-american-goods

[enhanced_deficit]

Lib seems to be turning China tarde situation extra-crazy:


https://cdn2.hubspot.net/hubfs/2221756/trump-zte-ban-schiff-response.png?t=1526591645297









Trump helps sanctioned Chinese phone maker after China delivers a big loan to a Trump project

Trump stands to gain from an Indonesian project that got a $500 million loan right before he flip-flopped on ZTE.

May 15, 2018, 3:00pm EDT


https://cdn.vox-cdn.com/thumbor/9shBfV23QPAVFoQBAtbfg8LLmXI=/0x0:3000x2000/1200x800/filters:focal%281006x284:1486x764%29/cdn.vox-cdn.com/uploads/chorus_image/image/59742767/871925570.jpg.0.jpg Thomas Peter-Pool/Getty Images Is the president of the United States revising American trade policy — and possibly jeopardizing national security — because his family received a large cash bribe from the Chinese government?
Under normal political circumstances, it would be an outrageous accusation to level. But under the political circumstances of 2018, there is suggestive evidence that it possibly happened —but the 24/7 din of controversy and scandal meansthat very little attention is being paid to the possibility. The constant tumult of the Trump Show — who’s leaking, who’s being mean to John McCain’s family, why is the president always lying about golfing, etc. — manages to crowd out not just big-picture policy coverage but also genuine malfeasance that has real, negative impacts on people’s lives.
“The controversies,” David Frum warned a week after Election Day 2016 (https://twitter.com/davidfrum/status/799979962224742400?lang=en), “will divert you from the scandals.”
And that’s what seems to be going on this week, when two below-the-radar stories — one about hotel financing in Indonesia and one about low-end smartphone sales in the United States — have a striking and potentially quite disturbing intersection. Here’s what we know so far.
ZTE and Lido City: a chronology

ZTE is a Chinese telecommunications equipment manufacturer that, among other things, manufactures Android smartphones, primarily on the cheaper, lower end of the market. Like most big Chinese companies, ZTE has various ties to the Chinese government, and there have long been questions about the security implications of relying on foreign firms with government links for sensitive communications roles. But separate from that longstanding controversy, ZTE had been in intense trouble lately for a largely unrelated issue pertaining to US sanctions policy.


Back in March 2017, ZTE was hit with a record $1.19 billion fine (https://www.pcmag.com/news/352232/zte-will-pay-record-fine-for-sales-to-iran-north-korea) for violating US law by selling technology products containing US components in North Korea and Iran. The fine set a record both because of the volume of ZTE’s illicit business and because ZTE was found to have tried to deceive US government officials and even its own accounting firm.
About a year later — on March 12, 2018 — the Trump administration prevented a Singaporean company called Broadcom from buying a US company called Qualcomm (https://www.cnbc.com/2018/03/13/trump-blocks-broadcoms-qualcomm-takeover-concerns-about-china-5g.html). Qualcomm makes chips that are used in many smartphones, and the US government said Broadcom’s links to the Chinese government made it too risky to allow the company to purchase a key player in a strategic industry.
Then on April 15, the Commerce Department hit ZTE again (https://www.commerce.gov/sites/commerce.gov/files/zte_denial_order.pdf), saying that despite the earlier fine and settlement, ZTE had continued to violate US sanctions law and lie to the US government. The new order simply barred American companies from selling anything to ZTE.
On May 8, the Trump administration pulled out of the Joint Comprehensive Plan of Action with Iran (https://www.vox.com/world/2018/5/8/17328520/iran-nuclear-deal-trump-withdraw) and began the process of trying to make US sanctions on Iran even more stringent in hopes of crippling the Iranian economy.
On May 9, ZTE announced that it was going to have to shut down its entire smartphone business (https://arstechnica.com/tech-policy/2018/05/the-trump-administration-just-forced-smartphone-maker-zte-to-shut-down/) since it had no viable way to continue operating without Qualcomm chips.
On May 11, a state-owned Chinese construction company called the Metallurgical Corporation of China announced it would float a $500 million loan to Indonesian developers (http://www.scmp.com/news/asia/southeast-asia/article/2145808/trump-indonesia-project-latest-stop-chinas-belt-and-road) to facilitate the construction of a vast “integrated lifestyle resort” called MNC Lido City that includes Trump-branded hotels, residences, and a golf course.
On May 13, Trump tweeted (https://twitter.com/realDonaldTrump/status/995680316458262533): “President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!”
On May 14, Trump tweeted about ZTE again (https://twitter.com/realDonaldTrump/status/996119678551552000): “ZTE, the large Chinese phone company, buys a big percentage of individual parts from U.S. companies. This is also reflective of the larger trade deal we are negotiating with China and my personal relationship with President Xi.”

Why did Trump change course on ZTE?

It’s of course possible to interpret Trump’s rapid turnabout on the ZTE issue as reflecting what Ana Swanson, Mark Landler, and Keith Bradsher of the New York Times (https://www.nytimes.com/2018/05/14/business/china-trump-zte.html) term “another twist in the pitched battle inside the White House between the economic nationalists, who channel Mr. Trump’s protectionist instincts, and more mainstream advisers, who worry about the effects of hard-line policies on the stock market and long-term economic growth.”

https://www.vox.com/policy-and-politics/2018/5/15/17355202/trump-zte-indonesia-lido-city

[Zippyjuan]

China has made the claim before. There are also no numbers as to how much "more" they agree to purchase.

[devil21]

China means collecting on the resources (oil, gold, etc) they were promised as part of playing the Treasury debt/petrodollar recycling game. Creditors always collect the collateral eventually.

[Zippyjuan]

China means collecting on the resources (oil, gold, etc) they were promised as part of playing the Treasury debt/petrodollar recycling game. Creditors always collect the collateral eventually.

US Treasuries are not backed by anything but dollars. There is no collateral behind them. They can't demand anything else (oil, gold, etc) for them though they could sell their Treasuries (lowering the value of them) and use that money to buy those things if they wanted to.

[Zippyjuan]

http://money.cnn.com/2018/05/17/news/economy/china-us-trade-talks/index.html


Did China make a $200 billion trade offer to the US? Beijing says no

China and the United States are offering different accounts of what has been discussed in high-stakes talks this week to avoid a trade war.
US officials on Thursday told CNN that Beijing had proposed boosting Chinese purchases of American goods by around $200 billion in an attempt to reduce the massive trade imbalance between the two countries.

But at a regular news briefing in Beijing on Friday, Chinese Foreign Ministry spokesman Lu Kang denied such an offer had been made.

"These rumors are not true," he said.

Top officials from the two countries held talks in Washington on Thursday aimed at finding a way out of their bitter trade dispute. The United States and China have threatened in recent months to slap tariffs on tens of billions of dollars of each other's products.

Lu declined to provide more details on the negotiations, which are set to continue Friday, other than to describe them as "constructive."

China also said Friday that it's removing a huge import tax it recently imposed on US exports of sorghum, a move likely to help ease trade tensions.

The US officials had said the idea of increasing China's purchases of American goods by $200 billion increase was just a proposal by the Chinese side and no agreements had been reached.

The number reflected one of the US demands presented to the Chinese government during the first round of talks, which took place in Beijing earlier this month. The demand called for China to cut its trade surplus with the United States by $200 billion by the end of 2020.

Experts say China, which bought $130 billion of American goods last year, would struggle to significantly ramp up the amount in a short space of time -- and $200 billion would be a staggering increase.


And whatever it offers the United States, the Chinese government is likely to want something in return.

That could include removing restrictions on the export to China of certain advanced American technologies, according to Larry Hu, an economist at investment bank Macquarie. But the US government "might not be willing to do that," he added.

[devil21]

US Treasuries are not backed by anything but dollars. There is no collateral behind them. They can't demand anything else (oil, gold, etc) for them though they could sell their Treasuries (lowering the value of them) and use that money to buy those things if they wanted to.

LOL, do you ever get tired of lying about what backs Treasuries?

Guess what backs Treasuries? YOUR LITERAL ASS, EVERYTHING YOU POSSESS AND CREATE AND THE RESOURCES OF THE LAND MASS ITSELF.

Treasuries are bundled up future promises to extract taxes and assets from the securitized, via birth certificate trickery, slaves and give those proceeds to the Treasury holders. If necessary, resources are given instead once the future taxability of the slaves comes into question (like now). Treasury auctions are nothing more than modern slave auctions and Treasuries are nothing more than bundled MBS securities but with people being bundled instead of mortgages.

[Zippyjuan]

LOL, do you ever get tired of lying about what backs Treasuries?

Guess what backs Treasuries? YOUR LITERAL ASS, EVERYTHING YOU POSSESS AND CREATE AND THE RESOURCES OF THE LAND MASS ITSELF.

Treasuries are bundled up future promises to extract taxes and assets from the securitized, via birth certificate trickery, slaves and give those proceeds to the Treasury holders. If necessary, resources are given instead once the future taxability of the slaves comes into question (like now). Treasury auctions are nothing more than modern slave auctions and Treasuries are nothing more than bundled MBS securities but with people being bundled instead of mortgages.

So if I buy a US Treasury I can trade it in on people?

If the government ever defaults on Treasuries, you get squat. You can't say "I want that statue from the Smithsonian instead!" Not like a car loan is backed by the value of your car and they can take that if you fail to make payments. If the government decides to stop paying on their borrowing (Treasuries) and you own one or more, you get.... nothing. It is unsecured debt. Your car loan was secured- the government debt is not.

You are kind of right- their value is based on their ability to tax but the are not backed by anything beyond the word of the government.

[devil21]

So if I buy a US Treasury I can trade it in on people? If the government ever defaults on Treasuries, you get squat. You can't say "I want that statue from the Smithsonian instead!" Not like a car loan is backed by the value of your car and they can take that if you fail to make payments. If the government decides to stop paying on their borrowing (Treasuries) and you own one or more, you get.... nothing. It is unsecured debt. Your car loan was secured- the government debt is not.

If you are a country of 1.4 billion people, yes you can demand that statue. And you'd probably get it too. What you fail to understand (or admit) is that no one owns anything in this country (commoners can not own, only rent and use) and therefore any and all of it can be seized for the benefit of the creditors when they foreclose.



You are kind of right- their value is based on their ability to tax but the are not backed by anything beyond the word of the government.

It's easier for you to obfuscate than for me to explain the entire process that makes up what ultimately ends being the "Treasury" so I won't bother. It's a long line of trickery full of pledges, promises, securitizations.

Yes, Treasuries are backed by the ability to tax you and take everything you possess. That means your literal ass, since it is your literal ass that earns the tax money and acquires the possessions that can be seized if the taxation part doesn't work out as planned.

[Zippyjuan]

Russia defaulted on their debt in 1998. Iceland in 2008. Greece in 2012. Mexico in 1994. What assets were seized by creditors in those events?

[spudea]

http://money.cnn.com/2018/05/17/news/economy/china-us-trade-talks/index.html

Your article is many days older. A literal joint statement is in the thread title about China buying more from the US to reduce the deficit.

[enhanced_deficit]

Trade war was supposed to be 'easy to win', what caused this sudden cease fire / halt just few days after this threat from NK?

North Korea threatens to cancel summit with Trump (http://www.ronpaulforums.com/showthread.php?522302-North-Korea-threatens-to-cancel-summit-with-Trump&)

Did North Korea just yank the football — and Trump's Nobel Prize — away? (http://www.ronpaulforums.com/showthread.php?522302-North-Korea-threatens-to-cancel-summit-with-Trump&p=6629671&viewfull=1#post6629671)


In About-Face on Trade, Trump Vows to Protect ZTE Jobs in China

May 13, 2018
President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!

— Donald J. Trump (@realDonaldTrump) May 13, 2018

https://www.nytimes.com/2018/05/13/business/trump-vows-to-save-jobs-at-chinas-zte-lost-after-us-sanctions.html


US and China call a ceasefire in trade dispute

Trump is ceding too much to China on trade
President Trump's tough-guy persona is taking a beating from China, judging from the reaction of some of his allies on Capitol Hill and in the trenches of the ...
The Washington Post
today

Many see Trump softening on China | News | Journal Gazette
WASHINGTON
today


Update 2

GOP Senator: China is winning (http://www.ronpaulforums.com/showthread.php?522484-GOP-Senator-China-is-winning&)

US-China trade agreements are ‘face-saving’ and ‘lose-lose,’ says Moody’s chief economist (http://www.ronpaulforums.com/showthread.php?522446-US-China-trade-agreements-are-%E2%80%98face-saving%E2%80%99-and-%E2%80%98lose-lose-%E2%80%99-says-Moody%E2%80%99s-chief-economist&)

[Zippyjuan]

Your article is many days older. A literal joint statement is in the thread title about China buying more from the US to reduce the deficit.

The new statement avoids any mention of amounts. That is because they can't get to $200 billion. The China denial was in response to White House statement that China had agreed to buy $200 million more from us. http://fortune.com/2018/05/17/china-trump-trade-dispute-deficit-cut/ The only specific agricultural concession mentioned is that China will cut a tariff on sorghum- China only buys about $1 billion worth of that a year so it won't have any impact on the trade deficit (they are starting to use it to replace corn imports to feed livestock). http://www.latimes.com/business/la-fi-sorghum-china-20180418-story.html


A $200 billion reduction in the U.S. trade gap with China by 2020 was on a list of demands the Trump administration made earlier this month as Treasury Secretary Steven Mnuchin led a delegation to Beijing. The U.S. merchandise trade deficit with China hit a record $375 billion last year.

The U.S. had earlier made additional demands, including a halt to subsidies and other government support for the Made in China 2025 plan that targets strategic industries from robotics to new-energy vehicles. China had made its own demands, including giving equal treatment to its investment, and warned U.S. companies may be excluded from measures to open its economy.

998553122179084290

To get to Trump's goal of $200 billion increase in exports to China on agriculture alone, China would have to buy every ounce we currently export to the entire world plus another $60 billion worth (about 50% more) we consume domestically. US exports about $140 billion a year in agricultural products. https://www.statista.com/statistics/220767/total-value-of-us-agricultural-exports-since-2000/

China currently imports $20 billion worth so they would need to buy ten times what they currently do.

In terms of crops, we produce about $175 billion so we could not supply $200 billion to China. If you add livestock, you get up to about $375 billion.

https://www.ers.usda.gov/webdocs/charts/58326/commodity_fig04_450px.png?v=42571

[devil21]

Russia defaulted on their debt in 1998. Iceland in 2008. Greece in 2012. Mexico in 1994. What assets were seized by creditors in those events?

I don't know, I'm not talking about Russia or Iceland, since neither issued the global reserve currency that was tied to their bonds. Gee....that word 'bond'. Kinda sounds like the word 'bondage', no? Who is in bondage when a bond is issued? Trump?

[Zippyjuan]

I don't know, I'm not talking about Russia or Iceland, since neither issued the global reserve currency that was tied to their bonds. Gee....that word 'bond'. Kinda sounds like the word 'bondage', no? Who is in bondage when a bond is issued? Trump?

Like us, their debt was in unsecured bonds. And no assets seized by creditors who lost $billions.

[devil21]

Like us, their debt was in unsecured bonds. And no assets seized by creditors who lost $billions.

I recall Iceland specifically jailing bankers. I'm sure that makes a tad bit of difference to the outcome.

Look, keep claiming there's no security in Treasuries but I know that's not that case. Even talked about it with a state Secretary of State candidate a few years ago. They are integral to the process of creating the foundation that eventually becomes the Treasury issue.

Answer my question about who is in bondage when a Treasury BOND is issued.

[Zippyjuan]

Answer my question about who is in bondage when a Treasury BOND is issued.

"Bondage" includes "Bond". They must be British Spies! "Bond. James Bond."


I recall Iceland specifically jailing bankers. I'm sure that makes a tad bit of difference to the outcome.

Look, keep claiming there's no security in Treasuries but I know that's not that case.

Since you "know" it is true, surely you have documentation to support your claim.


Even talked about it with a state Secretary of State candidate a few years ago. They are integral to the process of creating the foundation that eventually becomes the Treasury issue.

State Secretaries of State have nothing to do with US Treasuries. How are they issued? Congress determines they have a budget shortfall and notify the US Treasury how much they need to borrow. The Treasury then decides how to raise the money- what time terms of debt they want to issue. Two month Treasuries? Ten year notes? A mixture?

Once that is decided, the Treasury announces how much in Treasury noted they intend to sell and seek bids for them. They have a face value at maturity- usually $10,000 each. Each would be buyer says how many they want to buy and what price they are willing to pay for them. The Treasury looks at the bids and the selling price is the lowest price which allows them to sell all of the bonds the need to get rid of. If a bidder offered a higher bid, they still get the same price which could be lower than their offer- they get a better deal. If they bid too low, they get left out. The interest rate is determined by taking the face value minus the selling price and dividing that amount by the selling price. More demand= higher prices which means lower interest yields.

[devil21]

"Bondage" includes "Bond". They must be British Spies! "Bond. James Bond."

Deflection. Obviously a "bond" being issued means someone is on the hook for the bond, thus placed in bondage. Who is on the hook for Treasury bonds? Simple question.



Since you "know" it is true, surely you have documentation to support your claim.

Gee, I seemed to have misplaced the online link to the internal Treasury and Federal Reserve operations manuals. Maybe you could provide for us?



State Secretaries of State have nothing to do with US Treasuries. How are they issued?

Birth certificates are turned over to the state SecStates, who then turn the names into corporate entities for use in commerce. The ALL CAPS NAME on the ID, tax bills, etc. Same as how all businesses in a state are registered with the SecState. Then, SecState turns a copy of the BC over to the US Commerce Department. The SecState is the liaison between the state government and the federal government but they'll NEVER speak publicly about that part of their office's job (and how they use it also for state and local debt issuance). Commerce Dept hands a copy over to the Treasury Dept. Treasury Dept then determines what the "value" of the future brainwashed slave is and how much future tax revenue the slave is likely to produce, according to actuarial tables. It's no different than insurance risk actuarial tables. Treasury then bundles up those particular slaves into various Treasury issues and sells them to buyers with a guarantee of future payments from tax revenues from the slaves. When buyers start to question the viability of those future tax revenues (again, it's the same as MBS process), they stop buying, then the primary dealers end up with most of the bonds and if it starts getting real bad, the Fed does QE and buys them.

That's the cliff notes version. You're welcome.



Congress determines they have a budget shortfall and notify the US Treasury how much they need to borrow. The Treasury then decides how to raise the money- what time terms of debt they want to issue. Two month Treasuries? Ten year notes? A mixture?

Once that is decided, the Treasury announces how much in Treasury noted they intend to sell and seek bids for them. They have a face value at maturity- usually $10,000 each. Each would be buyer says how many they want to buy and what price they are willing to pay for them. The Treasury looks at the bids and the selling price is the lowest price which allows them to sell all of the bonds the need to get rid of. If a bidder offered a higher bid, they still get the same price which could be lower than their offer- they get a better deal. If they bid too low, they get left out. The interest rate is determined by taking the face value minus the selling price and dividing that amount by the selling price. More demand= higher prices which means lower interest yields.

All you do is scratch the surface with dumbed down versions that don't look at all into the nuts and bolts of the process. You're really suggesting that people/corporations/governments around the world would really commit their capital to buy a single piece of paper without anything whatsoever securing it? Get real. One part you forgot was that when they need to increase issuance they have to figure out how to get more bodies to securitize. This is where IMMIGRATION comes in, especially when the established slaves are not breeding enough. It's why we have anchor babies and naturalization and all that. Fresh "citizen" bodies to securitize against the fresh debt. People wonder why immigrants have been allowed to migrate here in such huge numbers unchecked. THAT IS WHY.

[NorthCarolinaLiberty]

Since you "know" it is true, surely you have documentation to support your claim.






Why would he do that? You have zero interest in discussion here. You post simply to be contrary. The minute someone actually does post evidence--you are off to the next big thread.

[Zippyjuan]

Deflection. Obviously a "bond" being issued means someone is on the hook for the bond, thus placed in bondage. Who is on the hook for Treasury bonds? Simple question.

The funds to pay Treasuries come from taxes collected by the Government. But if the government decides they are unwilling or unable to pay for the bonds, then nobody is on the hook for them. Owners of the bonds can't seize any property or garnish any wages.


Gee, I seemed to have misplaced the online link to the internal Treasury and Federal Reserve operations manuals. Maybe you could provide for us?

I see. You don't have any link. Thanks for trying. Try this one:

https://www.money-zine.com/investing/investing/secured-and-unsecured-bonds/


Unsecured Bonds

An unsecured bond, also referred to as a debenture, is not backed by an asset of any kind. If bankruptcy occurs, repayment is not guaranteed by a future revenue stream, equipment, or property. An unsecured bond is only backed by the full faith and credit of the issuing institution.

Unsecured Bond Examples

U.S. Treasury securities such as bills, notes, and bonds are good examples of unsecured debt. The only guarantee of repayment is the trust that investors have in the federal government. Although unpopular with taxpayers, the federal government always has the option of raising income taxes to meet its financial obligations.

An income bond is another example of an unsecured bond. These securities are issued by large corporations, and the payment of interest is contingent upon sufficient earnings. Also known as an adjustment bond, this last type of security is frequently issued by companies attempting to maintain their operations while seeking bankruptcy protection.

[TheCount]

http://2.bp.blogspot.com/-FQeLXVFdLwQ/Vgkt2cIPSqI/AAAAAAAANis/qKJcz1PVPEU/s1600/Nothing.gif

[devil21]

The funds to pay Treasuries come from taxes collected by the Government. But if the government decides they are unwilling or unable to pay for the bonds, then nobody is on the hook for them. Owners of the bonds can't seize any property or garnish any wages.

No, you're right, because they don't need to. We have nice guys like Wilbur Ross, Steve Mnuchin and others to make sure it never gets to the point where a creditor like China has to forcibly seize American assets. Hence why this thread exists and my original post in it.



I see. You don't have any link. Thanks for trying. Try this one:

https://www.money-zine.com/investing/investing/secured-and-unsecured-bonds/

Awww, that's cute. Posting info from similarly ignorant sources. Honestly, do you think any mainstream publication, even if they knew how the debt creation bond system actually works, would publish it for mass consumption??

[Swordsmyth]

One of the most pervasive myths about the United States is that the federal government has never defaulted on its debts. Every time the debt ceiling is debated in Congress, politicians and journalists dust off a common trope: the US doesn’t stiff its creditors (https://www.cnbc.com/id/43140915).
There’s just one problem: it’s not true.
There was a time, decades ago, when the US behaved more like a “banana republic (https://www.economist.com/blogs/economist-explains/2013/11/economist-explains-16)” than an advanced economy, restructuring debts unilaterally and retroactively.
And, while few people remember this critical period in economic history, it holds valuable lessons for leaders today.
In April 1933, in an effort to help the US escape the Great Depression, President Franklin Roosevelt announced plans to take the US off the gold standard and devalue the dollar. But this would not be as easy as FDR calculated. Most debt contracts at the time included a “gold clause,” which stated that the debtor must pay in “gold coin” or “gold equivalent.” These clauses were introduced during the Civil War as a way to protect investors against a possible inflationary surge.
For FDR, however, the gold clause was an obstacle to devaluation. If the currency were devalued without addressing the contractual issue, the dollar value of debts would automatically increase to offset the weaker exchange rate, resulting in massive bankruptcies and huge increases in public debt.
To solve this problem, Congress passed a joint resolution (https://freedom-school.com/h-j-r-192.pdf) on June 5, 1933, annulling all gold clauses in past and future contracts. The door was opened for devaluation – and for a political fight. Republicans were dismayed that the country’s reputation was being put at risk, while the Roosevelt administration argued that the resolution didn’t amount to “a repudiation of contracts.”
On January 30, 1934, the dollar was officially devalued (https://www.federalreservehistory.org/essays/gold_reserve_act). The price of gold went from $20.67 an ounce – a price in effect since 1834 – to $35 an ounce. Not surprisingly, those holding securities protected by the gold clause claimed that the abrogation was unconstitutional. Lawsuits were filed, and four of them eventually reached the Supreme Court; in January 1935, justices heard two cases that referred to private debts, and two concerning government obligations.
The underlying question in each case was essentially the same: did Congress have the authority to alter contracts retroactively?
On February 18, 1935, the Supreme Court announced its decisions. In each case, justices ruled 5-4 in favor of the government – and against investors seeking compensation. According to the majority opinion (https://supreme.justia.com/cases/federal/us/294/330/case.html), the Roosevelt administration could invoke “necessity” as a justification for annulling contracts if it would help free the economy from the Great Depression.
Justice James Clark McReynolds, a southern lawyer who was US Attorney General during President Woodrow Wilson’s first term, wrote the dissenting opinion – one for all four cases. In a brief speech, he talked about the sanctity of contracts, government obligations, and repudiation under the guise of law. He ended his presentation with strong words: “Shame and humiliation are upon us now. Moral and financial chaos may be confidently expected.”
Most Americans have forgotten this episode, as collective amnesia has papered over an event that contradicts the image of a country where the rule of law prevails and contracts are sacred.
But good lawyers still remember it; today, the 1935 ruling is invoked when attorneys are defending countries in default (like Venezuela (https://www.forbes.com/sites/francescoppola/2017/11/14/venezuela-defaults/#2a8b292a2755)). And, as more governments face down new debt-related dangers – such as unfunded liabilities associated with pension and health-care obligations – we may see the argument surface even more frequently.
According to recent estimates (https://www.scoperatings.com/ScopeRatingsApi/api/downloadstudy?id=d11d3e49-8161-405d-be43-f397233ad8ea), the US government’s unfunded liabilities are a staggering 260% of GDP – and that does not include conventional federal debt and unfunded state and local government liabilities. Nor is this a problem only for America; in many countries, pension and health-related liabilities are increasing, while the ability to cover them is diminishing.
A key question, then, is whether governments seeking to adjust contracts retroactively may once again invoke the legal argument of “necessity.” The 1933 abrogation of the gold clause provides abundant legal and economic reasons to consider this possibility. The US Supreme Court agreed with the “necessity” argument once before. It is not far-fetched to think that it may happen again.


https://www.zerohedge.com/news/2018-05-21/learning-americas-forgotten-default

[Swordsmyth]

In an unexpected, but notable, victory for President Trump's aggressive trade agenda and exporters of cars around the globe, China's Ministry of Finance announced Tuesday morning that it would slash passenger car duties to 15%, further opening up the market that’s been a key target of the U.S. in its trade fight with Beijing. This comes less than a month after China decided to ease restrictions on foreign competition in its auto sector and also address some of the US's concerns about intellectual property theft.

China's President Xi Jinping and his Vice Premier Liu He both advised that China would start implementing market liberalizations particularly in its automobile market in the coming months. The decision also comes after China announced over the weekend that China would end its anti-dumping investigation into sorghum. It has also signaled that there might be a review of Qualcomm's bid to acquire NXP Semiconductors, which would be tantamount to another olive branch.

More at: https://www.zerohedge.com/news/2018-05-22/china-unexpectedly-slashes-auto-tariffs-after-trump-trade-truce