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5 Reasons Why China is Going After Boeing

In our article BoycottUSA and BoycottTrump Does Not Mean Not Buying American, we explain that China is applying there retaliatory tariffs to Donald Trump supporters and no the US as a whole.  That brings up the question of why China would target Boeing.

chicago-2016-presidential-election-results-no-support-trumpBoeing is based in Chicago and Chicago did not support Trump in the 2016 and they certainly don’t support him now:

Boeing’s primary assembly plant, which is the largest building on earth, is in Everett Washington and Washington State did not support Trump in 2016.  In fact Hillary Clinton won all 12 Washington State electoral votes.


Why Did China Target Boeing?

1: Boeing Is Perceived As Trump Friendly

boeing-chinese-targetWhile it is common sense and standard operating procedure for companies to quietly support their political leaders Boeing seems particularly aggressive in this area.  When it looked like Hillary Clinton was going to win the 2016 Presidential Election, Boeing was there to help

Boeing, like many companies, woke up on November 9 to an unexpected political landscape. The company had been preparing for a Clinton presidency. Timothy Keating, its long-time senior VP of government operations, served under President Bill Clinton. There was even internal discussion at Boeing that Keating might join a new Clinton administration. Source: money.cnn.com/2017/02/17/news/companies/boeing-trump-dennis-muilenburg/index.html

Now the Donald J Trump has won the White House, Boeing has not unexpectedly flip flopped but they have taken it further than most, making some believe that they have a genuine support for Trump.  From Presidential visits to photo opportunities to political conversation, Boeing is now tied to President Trump.

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Why Russia Turned Out So Differently From Germany & Japan

After World War 2 the US (and West in general) supported its former enemies.  Rebuilding cities, legal systems, and economies on a massive scale.  Germany and Japan were the primary beneficiaries of that financial aid and guidance and today those two countries are large stable entities that improve the West’s standard of living by providing both solid trading partners and political allies.

Some argue that those countries now take “our” jobs when in fact the evidence is clear that those countries have expanded the global economy for all.   It is true that the US, Canada and the UK have a smaller slice of the global economic pie in 2018 compared to1950, but the pie is many times larger, so the net benefit to those countries is irrefutable.

The rebuilding (not reconstruction) plan was named after then US Secretary of State George Marshall.  Today the Marshall Plan is touted as the cure all for every failing state, from Afghanistan to Mozambique but, as this New Yorker article explains, for a Marshal Plan had a lot more to do with reassurance and a lot less to do with money than most people think.

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The Unintended Consequences of Government Meddling In the Steel Industry

dangerous-steel-worker-jobsIt is well established that even well intentioned government intervention in industry very often ends up causing more problems than it solves.  Today one of the issues facing the United States is a loss of jobs in the steel industry and so President Trump claimed this is a National Security Issue and so used his unilateral power to impose a 25% tariff on imports of steel into the United States.

On its face, this seems like a good idea.  Simplistically, if decrease the ability of other countries to export their steel to the US will result in the creation of more US steel jobs.  However, the world is not a simple place and what actually happened was:

  1. Few new US steel jobs were (or will be) created as steel foundries take time to expand and most of that expansion will be done with… wait for it… automation, not direct jobs
  2. The cost of goods produced in the US has to go up to accommodate that tariff.  That is a particularly ugly reality for US consumers that like things made with lots of steel, like cars
  3. The US has trade agreements with many friendly countries like Canada, Japan and others that preclude such tariffs but cause diplomatic problems as exceptions are carved out
  4. Other industries then get in-line for their protection package causing a never ending tide of companies looking for their handout
  5. Some important civic projects like steel intensive bridges have their costs increase or projects delayed so long (because engineers now spec required US steel that is back-ordered) that they are cancelled outright or don’t get completed in a timely fashion.

The five points above are well documented oft discussed in the media.  The video below however, points out two fascinating unintended consequences that we had not thought of:

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The Dutch Have Reduced Prison Populations 50% AND Crime 39% in a Decade

In the last decade the Dutch have reduced prison inmate populations by 50% and those sentences average to about 90 days in jail.  Many people expected this drastic reduction of inmates to lead to a notable increase in crime because:dutch-prison-refugees-temporary-housing

  1. Dangerous, proven criminals are being quickly released back onto the street
  2. There is virtually no deterrent effect to being jailed in the Netherlands

Contrary to this expectation the fact is that Dutch system has also reduced crime by nearly 40%.

As you can see in the image to the right, the Dutch now use their old prisons as temporary housing for some refugees.

How can that be?  In simple terms, it turns out that after thousands of years of trying different forms of incarceration and punishment that Europeans have figured out:

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Donald Trump’s Heaven Clock

donald-trump-in-heavenA man died and went to Heaven. As he stood in front of St. Peter at the Pearly Gates, he saw a huge wall of clocks behind him.

He asked, ‘What are all those clocks?’

St. Peter answered, ‘Those are Lie-Clocks. Everyone who has ever been on earth has a Lie-Clock. Every time you lie, the hands on your clock move.’

‘Oh’, said the man. ‘Whose clock is that?’

‘That’s Mother Teresa’s’, replied St. Peter. ‘The hands have never moved, indicating that she never told a lie.

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Bankruptcy of Gun Maker Remington Signifies Nothing For the Anti-Gun Lobby

remington-firearmsToday the United States oldest gun maker Remington Outdoor Company Inc, which owns Remington Arms, filed for Bankruptcy protection.  The anti-gun lobby has taken this as a sign that the guns and gun companies are finally starting to decline.  Unfortunately, Remington’s collapse is only a sign of bad management and will do nothing to stem the tide of easy to find, cheap guns.

Remington expanded production several in the Obama era, especially after Sandy Hook, as Americans feared their misunderstood second amendment rights were going to be taken away, resulting in spiking gun sales.  Then after the flip flopping sometimes NRA supporter Donald Trump became President, all gun manufacturers including Remington found that sales declined because there was little fear of new gun restrictions.

In 2007 high profile private equity firm Cerberus bought Remington and started loading up the debt.  In the end Remington took on nearly 1 Billion (yes, that is a “B”) in debt and was stuck with huge inventories they could not sell to service that debt.

timeline-of-gun-sales-in-america-2000-2017

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North Korea’s Kim Jong Un Sends Donald Trump a Cryptic Message

confused-donald-trumpAfter numerous rounds of, “We don’t know if Kim Jong Un is still alive,” Kim Jong Un himself decided to send Donald Trump a letter in his own handwriting to let him know he was still in the game.

The Donald opened the letter which appeared to contain a single line of coded message, 370HSSV-0773H.

The Donald was baffled, so he e-mailed it to the Secretary of State and his aides who had no clue either, (so that’s why Rex was fired!)

So they sent it to the FBI but none could solve it.

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US Government Again Reduces Bank Oversight, 10 Years After The 2008 Global Financial Collapse

After limited debate the US Senate overwhelmingly approved a further reduction in “Dodd-Frank” banking regulations introduced in 2010 to avoid another 2008 style bank generated economic collapse.

Dodd-Frank‘s primary mechanism for doing this was to require financial institutions that were “too big to fail” to withstand stress tests.  The idea being that if your bank was going to need a government bail out in the event of failure, effectively making you and me the banks insurance company, that such banks need to prove that they can withstand large economic downturns by keeping enough cash (and near cash) on hand to cover their immediate debts.

If banks pass the stress test, and ALL did in June 2017, they can issue dividends and buy back their own stock (financial engineering to raise their own stock price).  If they fail, they can’t.  The results and some key details are published so both the markets and individual investors know which banks are stable and which ones are not.

The principle Dodd-Frank change passed in March 2018, was to increase the threshold needed to be included in the stress test, from $50B to $250B.

Banks and other large financial institutions are not evil corporations but they are run by greedy people just like you and me.  When those people are given massive incentives to bring in large amounts of income to the banks, they are likely to take risks that are absurd in retrospect, just likely they did in the 2000’s.

When the money that is risked belongs only to shareholder, employees, and board members, there is not public issue with those risks; even ‘crazy’ ones.  The problem occurs when the company (bank) in question is so large that if it fails it will bring down the countries (globe’s?) economy.  This is also called “systemic risk“.  Such a failure cannot be allowed to occur, so governments step and transfer your tax money to those companies.

Put simply, if you are ‘too big to fail’, the public has a right to validate your stability.

While laws must be periodically updated to keep up with the products offered for sale and global political / financial environment, the problem with the March 2018 changes is that they are all reductions:

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