Posted on 05/22/2016 10:59:49 PM PDT by Trumpinator
Despite China signaling moves to cut its excess steel production capacity, industry chiefs say the country has declared a metals "war" that has had a "devastating" impact for the rest of the world's industry.
(Excerpt) Read more at cnbc.com ...
Gee. No kidding.
Maybe Japan will make the mistake of attacking one of their naval bases....
Trump has a point
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Now, before you get all flame happy, hear me out. Wouldn't the best way to deal with 'dumping' is to bankrupt the dumper? If I can get a comodity dirt cheap, why not exploit it? And before you preach to me about American jobs, well, the way I see it, you have two entities trying to mess with free markets. Chinese steel producers and American steel worker unions. One wants me to pay more than the market price for steel, and the other, less. What does the steel workers union do for me? Sure, the unions will say, keep the money in America. But if I can buy something made of steel more cheaply, I can keep the money in my pocket
Okay, let the flaming begin!
And then we’ll have no steel factories and the chinese can charge whatever they want. Dumb solution.
Wouldn’t happen. There is a world full of steel producers.
I suppose the concern is that if China subsidizes their steel industry to the point that competition can be destroyed they can raise the price later with impunity.
I do not know how serious a threat that scenario is because I don't know the numbers nor do I have a good feel for how long it takes to tear down or build back up competition.
Not enough money to bankrupt the Chinese. Okay, maybe by printing another trillion US debt notes and buying steel with that ‘money’. But then you still end up with the debt.
No flames here, just logic. You have an interesting premise. Let’s say that there are two animals living in a cage where only enough oxygen can get in to nourish them if they both act the same way. One animal decides to consume all the oxygen. The other animal will quickly die and then there will be just one.
Once there is just one animal, what do you think will happen to the price of steel?
You can’t shut down the steel production in the US and wait for better times. Once shut down the creditors will sell the assets and there will be nothing to restart. What the Chinese are doing is no different than the nineteenth century cartels.
The point is that those other producers are not US. National security demands that we maintain our OWN ability to produce steel. If we end up in a war with China, we obviously cannot expect them to sell us steel to build our weapons with.
The steel industries in England, France, and Germany are also dwindling. If we all take your suggestion and let the steel industries fail in all those countries, they cannot be restarted on short notice. What then happens to our auto industries, appliance industries, etc. if China decides to embargo us over some dispute like territory in the South China Sea or Taiwan or Sea of Japan ? They can reduce their production to just their own needs while all our steel dependent industries fail. That would give them far too much clout politically.
A better solution would be for us to buy the cheap steel and stockpile it and not let it on the market where it can put our producers out of business. Do that at the same time as we expand and modernize our own steel industry so we won’t need imports in the future. Then WE can dump it on the market if China tries to jack up prices later. Allowing the Chinese government (communist country remember) to systematically destroy our industrial base is a bad idea.
Industries that have already been destroyed I think should be restarted by banning imports. Not tariffs, which just drive up prices, but actual bans. TVs and other electronics, toys, textiles, rubber, etc. are all industries we used to dominate yet barely exist anymore. For American companies that are producing overseas, ramp things up so that in the 1st year they need to produce 10% or the products in America, 2nd year 25%, 3rd year 50%, and 4th year 85%.
Competition is great, but if you don’t produce products you CAN’T compete. Letting entire industries die leaves you at the mercy of foreign producers.
Once US industries are back to full market capacity, foreign company imports can resume but be limited to 15% by volume of US consumption. Or maybe disallow imports by percentages that exceed our own exports of that same product. Limiting the availability of imported goods will drive prices up via Demand, but unlike tariffs where the additional cost disappears into the government black hole, price increases based on demand will land in American retailers’ pockets.
Only One-World-Government types believe it is a good idea to be entirely dependent on other nations for your goods.
< sarcasm > Who wants to work in a steel mill anyway? You wouldn't want to, right? So don't be hypocrite. < /sarcasm >
Economic Free Trade radicalism = the road to socialism.
Hey if we get into a war with China will they still sell us steel to make ships and stuff?
Under what circumstance would the world remain full of steel producers if one major competitor continues to dump steel on the market at a price no one can match?
One other parameter that I think you overlooked is that China essentially uses slave labor. Flooding the market with steel that would bankrupt an American is not necessarily a hardship for a Chinese company that pays its workers a few dollars a day.
If the playing field were equal, then the dynamics would be different: any given company would have only a limited ability to flood the market.
But that’s not what we have. China’s ability to flood the market is as expansive as its population.
One other consideration is Chinese quality control: it exists on paper. We get the cheap goods, but that old adage “you get what you pay for” is completely true. When you buy steel that does not meet your specifications, did you really save money?
A third consideration is that our manufacturing base is shrinking, and our economy is only as large as our ability to manufacture products. If no one is manufacturing anything, we have no economy. Sure, we can keep the printing presses rolling, but the money we print is worthless without a GDP to give it value. At some point, the Chinese are not going to be satisfied with receiving money that is worth nothing—they actually do want something of value for the stuff they are dumping on our market.
Do you support antitrust laws?
The Chinese don’t give a rip about anti-trust laws or intellectual laws or unions.
The unions do nothing but increase the prices that people pay for things. Union dues don’t stay in this country anyway - just look at what kind of crap politics that they support.
I thought Chinese steel was far inferior to US steel, so wouldn’t quality win out in the end?
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