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China’s Currency Devaluation Will Hurt China
More Than It Hurts The United States
By Helen Raleigh
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Ingraham calls out Dems:
'They are throwing kerosene on a fire'
By Victor Garcia
{foxnews.com} ~ Fox News' Laura Ingraham took on Democrats Tuesday night for what she said is an attempt to capitalize politically on the shooting massacres in El Paso, Texas and Dayton, Ohio last weekend... and said she would not allow "the left" to divide Americans and distract from real solutions to real problems. "We should not, and we will not, allow the political hucksters of the left to separate us or distract us from addressing these real problems that need practical, workable solutions," Ingraham said on "The Ingraham Angle." "Let's not give either an evil racist force or a lunatic left wing nut any satisfaction by turning on one another in the wake of these heinous acts of domestic terror," she said. Ingraham accused Democrats of using the tragedies to silence and marginalize President Trump and his supporters. She also called their attempt to equate Trump's border policies with racism as "obscene." "Now conflating the evil racism of a deranged killer with Trump's reasonable and much-needed call for border security is not just offensive, it's absolutely obscene," Ingraham said. The host said "the left" is now branding "half the population" as racists and making them targets, warning Democrats that their actions will only lead to people getting hurt. "This is a campaign of intimidation. And I'm telling you it's going to end up getting more people hurt," Ingraham said. Ingraham brought up "left-wing" protesters showing up at Senate Majority Leader Mitch McConnell's house and shouting death threats as an example of Democrats inciting their base. "They are throwing kerosene on this fire and the end game is to drive those who disagree with them underground," Ingraham warned..
Puerto Rico’s Supreme Court
Rules New Governor Has To Go
by EVIE FORDHAM
{ dailycaller.com } ~ Puerto Rico’s Supreme Court ruled Wednesday that its new governor, elevated to replace a leader accused of corruption, has got to go... Pedro Pierluisi will have to step down after being promoted from secretary of state because he was never confirmed to that position by both chambers of the island’s legislature, reported CNN. Justice Secretary Wanda Vazquez Garced, an ally of ex-Gov. Ricardo Rosselló, is set to become governor. Two prominent Puerto Rican politicians filed lawsuits to remove Pierluisi after Rosselló resigned Aug. 2. San Juan Mayor Carmen Yulín Cruz and Senate President Thomas Rivera Schatz are behind the suits, NBC News reported Monday. Schatz’s suit maintains that Pierluisi stop acting as governor since he has only been confirmed by the island’s House of Representatives, reported CBS News. Pierluisi became secretary of state after Rosselló’s Secretary of State Luis G. Rivera Marín stepped down as part of the same scandal that brought down the former governor. Thousands of protesters in Puerto Rico demanded Rosselló resign over corruption charges and what many believe are misogynistic private messages he shared with officials. Even U.S. lawmakers weighed in. Vazquez said she didn’t want the governorship on Twitter, reported CNN. She has been justice secretary since January 2017....
Super-Silent Russian Submarines Are
in British Waters, Making Navy Anxious
By Chris Roberts
{ observer.com } ~ Modern military hardware need not be “new” in order to be extremely effective—and to be an ongoing source of anxiety among your rivals for world power... The B-52 bomber—which is slated to be in use for almost a century with the United States Air Force, albeit with significant improvements in engines and avionics over the models you remember from Dr. Strangelove, by the time it is retired—is one example. Another example is the Kilo-class submarine, which entered service with the Soviet Navy in 1980, and—following significant upgrades—is today under the Russian flag harassing British warships and tapping into internet cables on the ocean floor virtually undetected, according to very rattled sources within the UK military. The Telegraph was the first to report the worries, which include the belief that new and improved diesel-powered Kilo-class boats—more accurately referred to as the Varshavyanka class—equipped with stealth technology are stalking British warships undetected, in British territorial waters. And at least one Russian submarine has already successfully demonstrated its potential by cruising nearly undetected along a NATO member-state’s coastline, the newspaper reported. We say almost, because if it were truly undetected, it couldn’t become a threat in the press. The new Kilos, first delivered to the Russian Navy in 2013, have been on Western military observers’ minds for several years in no small part because the Russians have chosen to sink most of their Navy-related investments, post-USSR, into submarines. They are relatively small—238 feet long and 32 feet wide—and have a small crew of 53 sailors. As The National Interest reported, they aren’t fast, they can’t cruise particularly long, and they aren’t very good in the deep ocean....
Food Stamp Participation Lowest in 10 Years
by KATHERINE RODRIGUEZ
{ breitbart.com } ~ The number of individuals participating in the nation’s food stamp program has sunk to its lowest level in ten years, according to the latest data from the U.S. Department of Agriculture (USDA)... The most up-to-date enrollment data from the USDA showed that in April 2019, the most recent data from the Supplemental Nutrition Assistance Program (SNAP), 35,993,281 individuals were on food stamps. Ten years ago in July 2009, which was six months into former President Barack scumbag/liar-nObama’s first full year in office, 35,602,939 individuals remained on the food stamp dole, according to the USDA data. Food stamp enrollment spiked in 2013 under the scumbag/liar-nObama administration’s second term, when food stamp participation reached its peak in U.S. history. After 2013, SNAP enrollment plummeted once state legislatures passed laws requiring food stamp recipients to work, attend school, volunteer, or participate in job training for a set number of hours per week to receive benefits. Food stamp participation took a nosedive even further once President Trump took office, as 2.9 million individuals dropped out of the Supplemental Nutrition Assistance Program (SNAP) since his first full month in office.USDA officials said those numbers are “preliminary” due to the government shutdown at the end of 2018, which affected food stamp administration at the beginning of 2019. Trump has signaled that he wants to curb the nation’s dependency on food stamps and wants those coming into the country to be self-sufficient. The president told Breitbart News in an Oval Office interview that he does not want any immigrants coming into the U.S. to be dependent on welfare programs. “I don’t want to have anyone coming in that’s on welfare,” Trump told Breitbart News in March. The USDA also announced in June that it would be putting policies into place that would restrict certain groups from obtaining SNAP benefits....
Is Putin Covering Up A Nuclear Disaster?
By WILL STEWART
{ dailymail.co.uk } ~ Suspicions are growing today that Russia has suffered another nuclear accident after ambulances covered in protective film were seen transporting six people with serious radiation poisoning in a mystery explosion at a military base... Alarming footage also shows men in protective clothing loading casualties into the vehicles in the wake of a blast at the Nyonoksa weapons testing site in the sub-Arctic Arkhangelsk region yesterday. Earlier the clothes of the victims and the medics who first treated them were destroyed, it was reported, before causalities were transferred for treatment at the Burnasyan Federal Medical Biophysical Centre in Moscow. Moscow has thrown a veil of secrecy over the explosion, which killed two and left six injured on Thursday. Radiation levels are said to have temporarily soared 20 times above the normal level in Severodvinsk, a city 18 miles away, sparking 'panic' and 'hysteria' and a rush to buy iodine from pharmacies. Today, reports surfaced in Russia claiming the spike in radiation may have been caused when one of Vladimir Putin's top secret Zircon hypersonic missiles exploded during tests. Meanwhile, in a separate incident, lightning has stuck a Siberian military base and caused a series of explosions just four days after huge blasts previously rocked the same depot in Achinsk....
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China’s Currency Devaluation Will Hurt China
More Than It Hurts The United States
By Helen Raleigh
{ thefederalist.com } ~ President Donald Trump announced last week that the United States will impose 10 percent tariffs on $300 billion of Chinese imports beginning Sept. 1. At the beginning of this week, China retaliated by ordering state enterprises not to purchase U.S. agricultural goods and letting the Chinese yuan fall below the psychologically important rate of 7 yuan against $1.The world hasn’t seen the yuan devalued to this level since 2008. China denies that the devaluation of its currency was a deliberate retaliatory step against Trump’s tariff threat. But no one believes it.
Stock markets worldwide experienced significant losses in reaction to China’s retaliation. The Dow Jones Industrial Average dropped more than 900 points during Monday’s trading hours. According to MarketWatch.com, the U.S. major stock markets’ indices ended the day with “the S&P 500 off 6% from its record close set on July 26, while the Nasdaq is off 7.3% from its all-time closing high set the same day and the Dow has pulled back 6% from its July 15 record finish.”
The steep sell-off reflects investors’ concern that the escalating U.S.-China trade war means more uncertainty ahead, and investors hate uncertainty more than anything. What China did this week is its strongest counteraction so far in its ongoing trade war with the United States. It might have achieved the desired effect of causing panic among U.S. investors and businesses, but its action will end up hurting China more than it hurts the United States.
Devaluing a country’s currency in such a subjective way is a double-edged sword. It’s true that currency devaluation will make Chinese exports cheaper and more competitive, while making U.S. goods more expensive and less competitive. Exports of goods and services make up 20 percent of China’s gross domestic product but only 12 percent of U.S. GDP. So the harm it will do to U.S. exports is limited.
When a country devalues its currency, it will inevitably face capital flight risk. That’s exactly what happened to China back in 2015. It is well known that China controls the value of its currency by setting a daily exchange rate for the yuan versus the U.S. dollar.
In August 2015, the People’s Bank of China (PBOC) arbitrarily devalued the yuan several days in a row. PBOC explained the move was to liberate yuan’s management and bring its value more in line with the market. But many economists point out that economic data in the previous months showed China’s economic growth had slowed down and exports fell. So the bank intentionally weakened China’s currency to boost exports and economic growth.
But to the PBOC’s surprise, its yuan devaluation also caused stock markets worldwide to fall, and both domestic and international investors lost confidence in the Chinese economy. Nervous investors began to pull their capital out of China. To stem capital flight, China implemented extreme capital control measures, including:
*Prohibiting outbound investments of U.S. $1 billion or more by state-owned enterprises in a single real estate transaction
*Reviewing outbound money transfers of U.S. $5 million by foreign companies
*Requiring foreign banks operating in China to seek preapproval from authorities to buy foreign exchange for their clients
Setting a personal foreign exchange allowance that permits a Chinese citizen to buy up to U.S. $50,000 worth of foreign exchange a year. In actual practice, the personal allowance is even lower. A former People’s Bank of China adviser confirmed at a conference early this year that he couldn’t even transfer U.S. $20,000 out of China to pay for a trip abroad.
But heavy capital controls only inspired people and businesses to find creative ways to move capital out of China, including creating fake invoices, false trade records, and customs forms. One Chinese national reportedly “used the US$50,000 annual foreign exchange purchase quotas of 84 people to remit US$4.35 million to his own accounts in Australia and Hong Kong.”
This is why, despite the strict capital control, China still saw more than U.S. $500 billion capital outflow in 2015. Capital flight out of China continued in 2016, mainly due to the concern of currency devaluation and Chinese President Xi Jinping’s aggressive anti-graft campaign.
Capital flight is a huge problem in China because it reduces the country’s tax base and thus reduces the government’s revenue. It negatively affects the Chinese government’s ability to cover domestic and foreign expenditures.
No wonder China reportedly has spent U.S. $1 trillion in foreign reserves to fight capital flight since 2015. But this week’s devaluation of the yuan stirred up fresh concerns that China may see another massive capital flight, which harms China more than anyone else.
Devaluation not only causes capital flight, but also worsens China’s debt problem. China’s official debt to GDP ratio is at 47.6 percent. But few believe that’s true. The Bank for International Settlements records China’s debt to GDP ratio at 255.7 percent and corporate debt to GDP ratio at 160.3 percent. The Institute of International Finance estimates China’s debt to GDP at 300 percent.
Last year, S&P Global Rating issued a warning to China about its growing debt problem. Devaluation of the yuan will amplify the debt burden of U.S. dollar-denominated debt and add to the risk of defaults by over leveraged Chinese corporations and local governments.
Besides risks of capital flight and its debt burden, China’s deliberate devaluation of its currency will cause more retaliation from the United States. Through a tweet, Trump called China’s action a “currency manipulation” and demanded a response from the Federal Reserve.
U.S. Treasury Secretary Steven Mnuchin followed the president’s tweet by officially designating China as a currency manipulator, stating the U.S. will work with the International Monetary Fund to “eliminate any unfair competitive advantage gained by China.” Many previous administrations made noise about officially designating China a “currency manipulator,” but shied away from it since 1994. Such a designation will justify any further retaliation against China by the Trump administration.
Even China recognizes the many downsides of devaluating its currency. On Tuesday, the People’s Bank of China took steps to prevent the yuan from devaluating too much, too soon. What we learned from China’s latest retaliation is this: China has little interest in compromising and meeting the U.S. demand on thorny trade-related issues such as forced technology transfer.
The several rounds of trade negotiations between the United States and China from last year to this year appear more like China’s delay tactic. What is China waiting for? Xi is a president for life, and he doesn’t face reelection. As the head of an authoritarian state, Xi has little trouble silencing any dissent.
But Trump has to face an election. China is willing to endure economic pain to certain level as long as it can inflict sufficient pain on the U.S. economy and possibly influence the outcome of the U.S. election in 2020. Xi is probably waiting Trump out so he can negotiate with someone new in the White House.
The economy has been a bright spot in Trump’s first term. Monday’s stock market sell-offs show that even though China is hurting more than the United States in this ongoing trade war, China still has tools to harm the U.S. economy and public psyche. Stock market performance doesn’t necessarily correspond to the underlying health of our economy, but a steep sell-off does harm the general public’s perception of and confidence in the U.S. economy.
In the past, Trump avoided bringing up China’s human rights violation and flattered Xi openly on social media, probably hoping to bring China to a trade deal he wants. So far, that approach hasn’t yielded any desired outcome.
When the proposed tariffs on Chinese goods go into effect on Sept. 1, American consumers and businesses will suffer. If Trump wants to win in 2020, he needs to do a better job convincing the American people what he hopes to achieve though the trade war and why the economic price American businesses and people are about to pay is worth it.
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