Trade War with China


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Equation

Lieutenant General
The banks are companies with the same rules like every other for profit enterprise.

They have owners, and the efficiency of a bank is depending on its capability to evaluate the risk of loans.

Means if there is no transparency / institutions etc. then the spread between borrowing ( deposits) and loans will be huge.
So what happen back in 2008 when the tax payers have to shell out TRILLIONS of dollars to bail out those "too big to fail" banks? o_O
 

Anlsvrthng

Senior Member
Registered Member
So what happen back in 2008 when the tax payers have to shell out TRILLIONS of dollars to bail out those "too big to fail" banks? o_O


This.

The economy will be smaller than it should be.

To save inefficient institutions trash the economy.

Like in the case of Japan inc., the CCCP , SK , China and so on
 

Equation

Lieutenant General


This.

The economy will be smaller than it should be.

To save inefficient institutions trash the economy.

Like in the case of Japan inc., the CCCP , SK , China and so on
Bottom line is why help out a continue incompetent banking institution that keeps on failing? This is far worse than an SOE. Things may be rising for now but the institutional cancer is still there.

The world isn't ready for the next financial crisis

Illustration: Sarah Grillo/Axios
Ten years ago, hubristic Wall Street geniuses came this close to destroying the global economy, saved largely by the Fed feeding trillions of dollars into banks in the U.S. and around the world.

Why it matters: This time, unlike in 2008 and 2009, it may be that no one comes to the rescue, given new U.S.-China tensions, frayed trans-Atlantic relations, and Trump Administration hostility to multi-lateral actions.

The 2008 financial crisis is not really over: Even as
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made history today, the crash continues to reverberate in the form of still-recovering economies and massive global distrust in institutions.

  • The memory and residue of the crash are primary reasons why economists and policymakers are on the lookout for the next big financial crisis.
  • If a new crisis is brewing, it's in emerging markets, says Adam Tooze, a Columbia university professor and author of
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    , a history of the 2008 financial crisis. Emerging economy stock markets are already down about 10% this year in aggregate.
The background: The financial crisis was triggered by U.S. mortgage defaults, which exposed the folly of trillions of dollars in exotic financial instruments packaged, sold and resold to investors and banks around the world. But even banks with no mortgage exposure ended up in trouble when global interbank lending dried up.

  • What makes the story chilling and gives it continued relevance is the degree to which global banking was and continues to be hugely intermeshed — and how it relies to even a greater degree on the U.S. and the dollar.
I caught up with Tooze by phone on his U.K. book tour. The new problem is China, which just by 2015 had borrowed $1.7 trillion in foreign currency, mostly in dollars, to finance its investments.

Tooze called China "the hub of a complex of emerging market economies," with connected manufacturing and other supply lines, commodity and product sales, and countless other businesses relying on the yuan.

  • A big danger is movements in the yuan, he said. "One of the nightmares is that China would allow its currency to move dramatically and bring down all of the emerging markets," he said.
  • Emerging market economies, he said, do not have the same cash reserves as China to tide them through a devaluation crisis, he said.
  • Already, the yuan has devalued by about 10% against the dollar this year. "We are probably testing the limits and the world is watching anxiously," he said.
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The banks are companies with the same rules like every other for profit enterprise.

They have owners, and the efficiency of a bank is depending on its capability to evaluate the risk of loans.

Means if there is no transparency / institutions etc. then the spread between borrowing ( deposits) and loans will be huge.
Thereby the existence of "high" finance and instruments such as derivatives to decouple accountability for those who stand to profit from them by pawning them off to others.



This.

The economy will be smaller than it should be.

To save inefficient institutions trash the economy.

Like in the case of Japan inc., the CCCP , SK , China and so on
You forgot to list the USA and the UK, lead actors of the 2008 financial crisis.
 

Anlsvrthng

Senior Member
Registered Member
Thereby the existence of "high" finance and instruments such as derivatives to decouple accountability for those who stand to profit from them by pawning them off to others.
Doesn't need "sophisticated" instrument to miss-price risk.
All that happened is the "new" instruments done nothing else just a workaround of the banking regulations.

But similar crisis happened with old style, deposit and loan banking.

again, all that it takes is to underestimate the borrowers risk.
You forgot to list the USA and the UK, lead actors of the 2008 financial crisis.
The graph is about the USA. I didn't considered it necessary to show it in the list.
 

Anlsvrthng

Senior Member
Registered Member
Bottom line is why help out a continue incompetent banking institution that keeps on failing? This is far worse than an SOE. Things may be rising for now but the institutional cancer is still there.
They let the bear and the lehman go down.
The lehman triggered the meltdown in 2008.

The USA regulators realised that the banking system simply distributed the miss-priced risk into the book of every bank and financial company, so they had the option to wipe out the shareholders/junior creditors,and do a quick and painful adjustment, or liming along and hope the best.


China doing the limping as well.

But actually the chosen strategy bu the US (and China) transfer the burden to the household sector.
 
Doesn't need "sophisticated" instrument to miss-price risk.
All that happened is the "new" instruments done nothing else just a workaround of the banking regulations.

But similar crisis happened with old style, deposit and loan banking.

again, all that it takes is to underestimate the borrowers risk.

The graph is about the USA. I didn't considered it necessary to show it in the list.
There is a difference in both intent and effect between simply underestimating risk versus knowingly masking underestimated risk to be pawned off to others especially in a systemic way.
 

Equation

Lieutenant General
They let the bear and the lehman go down.
The lehman triggered the meltdown in 2008.

The USA regulators realised that the banking system simply distributed the miss-priced risk into the book of every bank and financial company, so they had the option to wipe out the shareholders/junior creditors,and do a quick and painful adjustment, or liming along and hope the best.


China doing the limping as well.

But actually the chosen strategy bu the US (and China) transfer the burden to the household sector.
What China limping? It's the US that suffered the 2008 economic bank meltdown not China. I don't know why you bring this up? China is doing fine no matter what the naysayers said.
 
Aug 8, 2018
now I read
China decides to impose additional tariffs on 16 bln USD of U.S. imports
Xinhua| 2018-08-08 22:19:52
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and
China’s retaliatory tariffs on US goods worth $16 bln take effect
Updated 2018-08-23 12:47 GMT+8
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China’ s tariffs on 16 billion US dollars' worth of US goods took effect at 12:01 pm BJT simultaneously with the US initiating additional 25 percent tariffs on a similar amount of Chinese goods at 12:01 am EDT (0401 GMT) on Thursday, according to Customs Tariff Commission of the State Council.

The US tariff list includes commodities such as semiconductors, electronics, plastics, chemicals and railway equipment, while China’s tariff list covers automobiles, energy, and chemical raw materials.

China strongly opposes the US move of imposing additional tariffs on Chinese goods and is forced to fight back, according to a statement by China's Ministry of Commerce on Thursday.

Trade talks between China and the US are currently underway in Washington, with delegations led by China's Vice Minister of Commerce Wang Shouwen and senior US Treasury official David Malpass, respectively.
 
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