This is it. This is when North Koreas fate gets decided. Something will happen. China has to give them the gears in exchange for something. Like stop their nuclear program, dismantle and allow inspections. If that doesn't happen trump is going to strike the Koreans. And then god knows what happens next. China's move now. It's not enough to install an iron dome. I thought about it. This is about nukes. Not rockets. North Korea won't be allowed to keep their nukes. That's the line trump has drawn. Either way, North Korea won't have nukes. By force or negotiation. China controls North Korea through trade, energy and food exports. Cut that off and Kim is done. So trump wants to lean on china ? Block access to spratly ? Tariffs? Military build up on Taiwan as a negotiating piece ? The Chinese are playing this game too and both sides may just choose to escalate instead of accepting the new negotiating piece. Where's our leverage over china ? What are China's weaknesses right now ? Their corporations are deeply indebted/bankrupt. Major outflows of Chinese yuan/currency crisis and capital controls in china. Chinese millionaires are getting their money out. Turn the screws. When revenues to highly leveraged companies dry up they quickly implode. Trade war and sanctions on china could do nicely. China has major structural, debt, confidence and social/employment problems. If china doesn't play ball and act appropriately now .... then trump has to turn the screws on china economically. See where this is going ? All paths lead to a confrontation with china. China wants us to deal with the North Koreans one on one. China wants to stay out of this as they want to continue the status quo. Trump will not allow. Forcing them to the table... This is setting up for economic warfare against the Chinese. This is what we're going to see next if china doesn't comply. Their economy/social stability is precarious. america is a master of economic warfare. They'll find a nerve and press on it. Hopefully it plays out well. God speed.
Higher rates hurt trump domestically but threaten Heavily indebted Chinese corporations World competes for global capital. USD is still king. Huge inflows into American dollars and indicies since trump election. Major outflows in yuan. This continues, and yellen continues to raise, more investors dump Chinese corporate debt and stack into American fixed income. This hurts Chinese corporates roll over in a big way. Forces many of their teetering corporates into insolvency = mass layoffs etc. Compels china to raise their rates which hurts them domestically, but keeps money inside the country. And guess what. China just raised rates after yellen did this week. Yellen may be on side with trump. Look what yellens doing. More rate hikes this year. Rapid pace. This is a fucking delicate game right now considering the bubble were in ourselves and the national debt. I think what's going on here is rate hikes will hurt china far more then they will hurt America, for the time being ..... China can't handle a 200 basis point hike. I'm not sure America can either. But we've got more powder dry..... more pieces can be thrown on the board obviously. More leverage points created. But interest rates are a huge one. China desperately needs them low and yellen is forcing their hand quickly in a major way ....
Imagine a 200-300 basis point hike in china now. What does that do to their heavily indebted / over leveraged corporate sector? Probably triples or quadruples their carry cost. Throw in some sanctions and tariffs and i think we have a winner Ding ding ding. Trump has options. The whole notion of Chinese invincibility is horseshit. America may be an old and corrupt power definitely on the downstroke. But we have a massive edge both militarily and economically. And we can still turn this around if patriots actually got on board (tariffs).
I don't see how it hurts China tbh. Some of what you're saying is true, but raising the interest rate strengthens the dollar and government bonds, and guess who owns most of that debt?
Global capital moves to yield. America controls the global cost of capital. US treasuries are the global benchmark. If yield on US treasuries is 3% USD, why would you as an investor settle for a 2% yeild on a chinese corporate bond payable in a weaker yuan ?
I read your post and completely understand it. I don't think you read or understood mine. Please answer the question I posted above. That will give you your answer.
Also look No major military buildup against Isis. No major military confrontation. Why? Trump is keeping all military powder dry for china. He's going after the biggest bully in the room first (china). Using North Korean situation as a proxy to ignite situation. Kelly has got the border fairly secure. The Russians have Isis contained along with our special forces. Isis being kept warm on the oven while we deal with the main course. Makes sense. This is serious shit
Right.....China's the biggest bully. Because the US didn't interfere with the politics of a given country anytime in the US's history. @achilles28 Answer your phone, it's some guy called pot calling. He's looking for a kettle.
It also hurts exports, and thus helps China, who is already trying to keep their currency as low as possible when compared to America. Bottom line at the end of the day, China is not run by some insane narcissist like Kim jong un, they know just as much as we do who is in the driver seat here. China relies on us to keep growing, not the other way around, you can say all you want about the amount of our debt they hold but at the end of the day, we can survive without them, they cant survive without us, and i am pretty confident that they realise that, as they seem to be much more pragmatic than us in thier decision making process.