For those that do not know history, the situation in China has been happening since the 1800s. The Phillipines were a US territory for the longest time and we fought for it just so business could have access to China. So this wanting to get our products into China is not new.

Structurally, we need China and China needs us. China is the factory to the world. They need to be the factories because they have a LOT of uneducated people. They are one generation away from being a generation behind the family in Deliverance. They need it for employment of their citizens. If their citizens are not employed, it's another revolution. We need China because it increases our quality of life. Yes, OUR quality of life. Go back 30 years. How many TV's did you have? Now, you probably have one in every room and don't even think about it. When a VCR in 1984 was $800 and now they are $20 . . . . When I ran apparel companies, when I costed out product, I would put anywhere from zero to 10 cents for labor costs. This is when I learned the true costs of things. In 2003, I would tell people this is how things work. In the US a guy gets about $100 a day, in mexico, a guy gets about $100 a week and in China a guy gets $150 a month. We can't compete on the labor cost. To do that, we would have to lower wages and get into a deflation. China needs our market as well as the world's to put these products in.

Now what China does is somewhat similar to the US but just a little different. If I were Chinese and wanted to employ 1000 people to make widgets, I could get a partner. That partner would be the government. The government would help fund me. The government would help me get the business going. So yes, there could be direct capital infusion from the government. Now, do we do the same? Not really, but close. We give tax incentives. Want to employ 1000, fine, we will give you a tax abatement. We will give you other credits to work with. But our government is involved as well. They are just more soft-dollar issues.

Because of China being involved in the business, people think, and sometimes rightfully so, that they are dumping. This is no different than, say, the Four Queens in Vegas selling shrimp cocktails for 99 cents. It costs them $5, but they get you in the door and it costs them $4. Nowhere do you hear any other american complaining that the Four Queens is dumping shrimp cocktails. Yet, because some other country is doing what we do, we don't like it. Hmm. Wait, think that is a bad analogy? What about the farmers. We as taxpayers subsidize them. We guarantee their profits. That is direct governmental involvement in their business.

So what would we like in an agreement? That's what is interesting. If you look at the details of this first phase what is in it? Political bullshit. Seriously . . . it's political bullshit. It is basically what is known as trade diversion, not trade creation. What does that mean? It means that China is just going to buy some shit from the US that they were buying from someone else. It is not new trade. Does that help the US maker? Kinda. It means they can sell more into China. But it also means that the person that was selling to China now has capacity and goods and will probably dump them somewhere else. That will lower the effective prices. Welcome to capitalism. 3 people making the same good, the one with the lowest price will set the price and put the other two under. Trump's bullshit about AG goods is interesting. First off it's two years and there is NO guarantee. It's a best efforts. So does that mean that Joe Farmer gets to ramp up and sell shit for two years or does it mean he has stability? Again, go back to that $100 a day versus $150 a month.