During the legendary 1998 wrestling match known as ‘Hell in a Cell’, two professional wrestlers faced off: ‘The Undertaker’ and Mick Foley, aka ‘Mankind’.
The idea was for the two to do their usual stunts — poking, whacking, tossing, and grappling with each other — in a metal cage.
And in a crescendo of allegro fortissimo, they were supposed to climb on top of the cage and continue their antics there.
Then, the script called for the ‘Undertaker’ to throw Foley down onto a ringside table that had been specially rigged to break the fall.
But something went wrong. Foley hit the mat so hard, the fans nearby thought he had died. There was blood coming from the side of his mouth. His eyes were fixed, staring blankly, like a dead man. The announcer said:
‘Good God almighty! Good God almighty! That killed him! As God is my witness, he is broken in half!’
Also unscripted was the announcer’s follow up: ‘Stop the match!’ He thought Foley was severely injured…and possibly dead.
It wasn’t acting. Foley had a concussion, a dislocated jaw, a dislocated shoulder, a bruised kidney, a cut lip, one tooth knocked out, and another broken.
Yes, Dear Reader, even scripted, phony battles sometimes go bad.
When we left off yesterday, we were about to tell you why the Great Economic Boom from 1979 to 2018 was doomed from the outset…why it was largely bogus…how it is bound to blow up…and why the trade war might be the thing that sets off the explosion.
But to help us understand the absurdity of what is going on, we turn back to WWE. Yes…to professional wraslin’.
It’s make-believe. It’s ridiculous. But it is a good model to help us understand Swamp Wars. They, too, are staged. And like professional WWE wrestling, they are partly scripted, partly improvised…and often, unintentionally funny.
But there’s a big difference between WWE and the US government.
Professional wrestling is win-win. The fans pay for the entertainment with their own money, the wrestlers participate willingly, and WWE turns a profit.
The feds’ make-believe, on the other hand, is win-lose. The yahoos may love the excitement of the phony wars, and the Deep State may gain power and money, but nobody pays for the wars without a gun to his head.
Yesterday, we saw that periods of prosperity are generally marked by win-win deals. Free trade is win-win. Merchants and consumers decide for themselves with whom they will truck…and on what terms.
They may not like the way Canada treats its baby seals, for example, and decide not to buy Canadian plywood. Or they may think Chinese companies steal intellectual property…and choose to work with the Japanese instead.
It’s up to them!
It’s ‘free trade’ because the feds don’t stick their big noses into the deal.
But wait…’They do it, too!’ say some dear readers. Yes, of course they do. The Chinese have big noses, too. They have their bayous. And their cronies. They protect their pals. They wallop their adversaries. They hobble their economy and punish their own citizens. But that’s their problem.
The Omaha cattleman doesn’t say, ‘Hey, I’m not going to sell my beef to you because your government stinks.’ Nope. He takes the best deal he can get. So does his Chinese counterpart.
Crony trade is different from free trade. The feds — whether they are in the backwaters of Beijing or the swamp of Washington — play favourites.
They impose their own scripts…rewarding their campaign contributors with special protections…punishing their enemies with price hikes…whacking voters in Sichuan and helping the party bosses in Shenzhen.
In short, they turn win-win deals into ‘us versus them’ win-losers.
But politics is always ‘us versus them’. And always win-lose. Like professional wraslin’. It lulls the lumpen into thinking that the government is fighting for ‘us’ against ‘them’. ‘They’ find it useful too — distracting the public from its many failures with a phony battle.
But action begets reaction. Soon, you’ve got a ‘trade war’. Then, things can get out of hand.
Body-slammed with tariffs
Donald J. Trump, citing phony national security issues, and egged on by steel speculator Wilbur Ross and his crackpot economist Peter Navarro, put a headlock tariff on steel and aluminium.
Then, he followed up with a $50 billion ‘brainbuster’ levy aimed directly at China. China, of course, said it wouldn’t take that lying on the mat, proposing its own tariffs on US exports of food and energy.
Last Thursday evening, the former reality TV star now performing in the West Wing, bounced off the ropes, asking his trade representative to consider body-slamming China with $100 billion more in tariffs.
Hours later, China let it be known that two could play this game. China’s Global Times revealed its position:
‘If the trade war happens, China will show that it has just as many reserve plans as the U.S., if not more. Chinese experts suggest that China could even take actions to weaken the strength of its currency. Since China is the world’s largest trading economy and the largest buyer of commodities like oil products, China could use its influence to push its own currency, the renminbi (RMB), in global markets to reduce the dominance of the U.S. dollar. That would be a heavy blow to Washington.
‘If this trade war comes to pass, it will be an evenly matched total war between China and the U.S. economies, and not some small scuffle. It would be delusional for the U.S. to think it will be victorious at the end of this trade war.’
Delusional is what it would be. And delusional is what it is.
But fantasies are what keep the cash flowing on both sides of the Pacific…which is why Scott Minerd, who runs the massive Guggenheim investment fund, says the economy is ‘on a collision course with disaster’.
He says he expects equities to lose 40% of their value…mostly in 2019.
He’s an optimist.
More to come…
For Markets & Money