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#401 J-CA

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Posted 15 May 2019 - 09:09 PM

I would also add on the rare earth elements side of things it would probably be a good thing for the planet if China stopped producing them, if that mining moved to places that care more about the environment and worker safety great innovations would probably be unlocked, RE's would get cheaper, and the technology would be exported to China itself. (Think SO2 & Sudbury, Falcon Bridge became more profitable after cleaning up their act, it was counter-intuitive but regulation often generates innovation.)
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#402 LFC

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Posted 16 May 2019 - 07:18 AM

View PostJ-CA, on 15 May 2019 - 08:56 PM, said:

Pharma: Certainly if India and China decided to unite in a trade action that ended all exports there would be a big problem and a lot of people would die (although I expect that helpfully a lot of people that are overprescribed lipids they don't need would be better off). But this would be another pyrrhic victory for China if they decided to "punish" the United States by withholding these products, the world would turn away from them in a heartbeat and set up at home to make these things.

I wonder if this becomes the next protected market, much in the way that many countries protect agriculture to a degree. Nobody wants to be overwhelmingly dependent on other nations for a staple like food. (Some are but I doubt they're happy about it.) A shortage of basic medicines would send a bipartisan protectionist shudder through Congress. One thing both parties can agree on is that older people vote.
" 'Individual conscience' means that women only get contraceptives if their employers, their physicians, their pharmacists, their husbands and/or fathers, pastors, and possibly their mayors, Governors, State Secretaries of Health, Congressmen, Senators, and President all agree that in that particular case they're justifiable." --D.C. Sessions

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#403 Bact PhD

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Posted 16 May 2019 - 07:40 AM

View PostLFC, on 16 May 2019 - 07:18 AM, said:



I wonder if this becomes the next protected market, much in the way that many countries protect agriculture to a degree. Nobody wants to be overwhelmingly dependent on other nations for a staple like food. (Some are but I doubt they're happy about it.) A shortage of basic medicines would send a bipartisan protectionist shudder through Congress. One thing both parties can agree on is that older people vote.

There have been isolated reports the last few years of there being shortages of this, that, or the other medication. IIRC the bottleneck tends to be that there are few (sometimes as few as 2-3) GMP-compliant facilities in the entire US that manufacture it, and if one goes down... and that’s with manufacturers outsourcing the production of starting materials/intermediates.

*Crickets*

I don’t hold out much hope for action on the part of Washington on this front.
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#404 J-CA

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Posted 16 May 2019 - 05:08 PM

View PostBact PhD, on 16 May 2019 - 07:40 AM, said:

I don’t hold out much hope for action on the part of Washington on this front.
I have sort of been thinking that Canada and EU will pick up the slack for the Americans on this front, particularly in Canada the next election is going be fought in part on a national pharmacare program and should the Liberals prevail I will expect the government to get directly into the drug production supply chain - this is a government that bought an oil pipeline, they'll buy or build what they need to mitigate external risks to that program and spend like maniacs to do it.
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#405 J-CA

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Posted 16 May 2019 - 05:10 PM

View PostLFC, on 16 May 2019 - 07:18 AM, said:

I wonder if this becomes the next protected market, much in the way that many countries protect agriculture to a degree. Nobody wants to be overwhelmingly dependent on other nations for a staple like food. (Some are but I doubt they're happy about it.) A shortage of basic medicines would send a bipartisan protectionist shudder through Congress. One thing both parties can agree on is that older people vote.
Trump Republicans should be all-in on this. Protected markets are the best vector for corruption and cronyism in any democracy after military contracts.
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#406 George Rowell

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Posted 17 May 2019 - 06:50 AM

I am least gratified that despite increasing demand, China's hold on the Lithium market is getting weaker with new deposits being found in Germany, Sweden, Portugal, Czech Rep,. and of course N.America. Squeeze the market and new resources just pop up. Great!

Then there is this to consider which could disrupt things again. One day ago; "A Chinese government report claims the new process has made the cost of extracting lithium 15,000 yuan (US $2,180) per ton. That’s a huge dropoff from standard international prices for lithium, which often range from $12,000 to $20,000 per ton.
Reports last year saw prices in China hit the low end of that spectrum, but $2,000/ton would be a whole new ballpark." https://electrek.co/...n-breakthrough/
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#407 Traveler

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Posted 17 May 2019 - 07:35 AM

J-CA, great post about China's "new" urbanism. That article describes exactly how I feel in most Chinese cities. No walkability, with nothing but towers and 8 lane roads as far as eye can see. Stand on east side of East Lake in Wuhan, and you can see 45km of towers stretching along the Yangtze. I couldn't wait to leave every visit.

I have direct experience with different versions of these superblocks. The average size was 200m by 400m (20 acres). Earlier (<2015) buildings were ~30m tall, newest just completed was 100m tall. I mapped literally every downspount in 7 of these blocks, which entailed me walking around every building and trying to find places we could fingerprint rain gardens. Except for the block just built, the earlier blocks built 2005-2015 were already decaying, with facades peeling, cracks in the walls, sewer leaders disconnected and dumping shit onto the ground and such like. Interestingly, the community in the oldest and most decrepit (2005) block was most vibrant. A LOT of old people (no workers during the day). Even though each block had underground garages dispersed throughout, just about everyone parked their cars right on the "lawn" next to the tower door. Talk about a mess. It was straight out of Bladerunner. The new tower block was the first decent building I have seen up close in China. It also had nice landscaped parks. But there was nobody there. At night, I would look at the newer towers from my hotel, and see maybe two rooms on each floor actually occupied. Even the older towers had a lot of dark rooms.

A couple of articles for folks about Chinese construction and planning:
Why is quality so poor?
Half the houses built will be demolished in 20 years.
Even though many cities shrink, the planners double down.
And of course, my favorite, Chabuduo.

Since 80% of China private savings are invested in these types of buildings, I see a major problem when folks try to cash in to cover their retirement costs. This is a big reason why China's savings wont be very effective. Nobody seems to be paying attention to this. John Authers will be looking into this. He is pretty knowledgeable. (I comment at length in that article, and he responded.

Quote

It's not really on the topic I was covering, but yes I agree the issue that is truly worrying, and that seems to have moved the market over the last few years, is whether China can avoid its own Lehman-style "Minsky Moment" when investors lose confidence in credit. I find it hard to see some serious financial crisis can be avoided; but then I would also have told you ten years ago that such a crisis would have happened by now, and it hasn't.

It's too big a topic to go into now - it deserves far more space than a post in a comment thread - but I certainly agree that it's very important.

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#408 Traveler

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Posted 17 May 2019 - 08:07 AM

Another pretty dismal view of China's prognosis in a full trade war.

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“Both foreign multi-national companies and Chinese private enterprises are more actively seeking alternative manufacturing bases,” said Klaus Baader, global chief economist at Societe Generale. “A lower trend growth in investment, coupled with more restricted access to foreign know-how, would mean permanent damage to long-term productivity growth.”

Restrictions on Chinese investment in the U.S., especially in technology-related areas, risk stalling the transfer of technologies and foreign know-how, slowing China’s move up the value chain, said Zhuang Bo, chief China economist in Beijing at research firm TS Lombard.

Even worse may await should Trump add export tariffs or ban shipments of key technology components to China, especially semi-conductors, said Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis SA in Hong Kong. That would strangle the Chinese economy, she says.

Altogether, an economic war with the U.S. “blows China up,” said Michael Every, head of Asia financial markets research at Rabobank in Hong Kong. “China would be cut off from Western markets, ideas, technology, and U.S. dollar-flow long, long before it’s ready to replace the U.S. for real.”
Seems like that is exactly where we are heading. Xi miscalculated badly. He built up the jingoism, and now he cannot back down. Bummer.
"Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing had happened."-- Winston Churchill
"Anyone who has the power to make you believe absurdities has the power to make you commit injustices" Voltaire

#409 D. C. Sessions

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Posted 17 May 2019 - 11:59 AM

View PostJ-CA, on 15 May 2019 - 09:09 PM, said:

I would also add on the rare earth elements side of things it would probably be a good thing for the planet if China stopped producing them, if that mining moved to places that care more about the environment and worker safety great innovations would probably be unlocked, RE's would get cheaper, and the technology would be exported to China itself. (Think SO2 & Sudbury, Falcon Bridge became more profitable after cleaning up their act, it was counter-intuitive but regulation often generates innovation.)

That story goes a long way back. The mining&refining town of Globe, AZ, used to be so choked with sulfur oxides in the air that cars' paint peeled. One of $HERSELF's high school classmates [1] fresh out of law school represented a public-interest firm in going after the mining companies with a clean air suit. They screamed that scrubbing their emissions would run them out of business [2] but they lost and lost big. So they scrubbed the emissions, which produced a vast amount of sulfuric acid. Sulfuric acid is fair-to-middling expensive to make from sulfur (which the USA imports) and since it was a byproduct of their refining copper they took what they could get -- which turned out to be a significant profit center, worth much more than the cost.

In case anyone wonders why I am so disrespectful of Randian "captains of industry."

[1] The whole story is a hoot, but maybe someday
[2] That's original
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#410 Traveler

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Posted 17 May 2019 - 01:07 PM

That article I posted on rare earth processing was instructive. Takes up to a hundred separate acid extractions if processing straight from raw ores. China gets them out of iron ores, so extraction is covered, as is initial processing. Shudder to think what they do about the wasted acids though.
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#411 LFC

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Posted 17 May 2019 - 04:34 PM

An author at TAC pretty much makes the case that China is on the weak side of this fight. I found this analysis of China retaliating by selling off its U.S. Treasury holdings to be interesting. I don't have the background to fully agree or disagree but it seems to make sense.

Quote

Another aspect of the trade dispute is the idea of a “nuclear option,” whereby China would sell its holdings of U.S. Treasury and agency securities to cause a “collapse” of the dollar. Economists and global pundits have spent weeks waxing effusive on the potential impact this would have on interest rates and the economy, yet few serious analysts see a Chinese move out of dollars for its official reserves as a practical possibility.

“China currently owns $1.13 trillion in Treasurys, a fraction of the total $22 trillion in U.S. debt outstanding but 17.7% of the various securities held by foreign governments, according to data from the Treasury and the Securities Industry and Financial Markets Association. Should the Chinese decide to walk away or reduce their role in the market, that, at least in theory, could create a substantial dislocation for a country such as the United States that relies so much on sovereign entities to buy its paper,” reports Jeff Cox of CNBC.

But is this right? Treasury securities are essentially a substitute for cash. If the Bank of China decided to hold its surplus funds in cash, it would be difficult to move into other currencies because of size constraints. The dollar is the world’s means of exchange because it is a very large currency that can easily accommodate significant transactions such as oil and other commodities, investments, and global debt payments.

Central banks around the world hold dollars and Treasury securities as liquid reserves, especially nations that have weak currencies or external account deficits. Moreover, were the Bank of China to sell its Treasury paper, there is a long list of central banks and governments that would be happy to purchase it from them.

“China would struggle to diversify their foreign-exchange reserves away from the U.S. bond market, with its depth and liquidity making it prized among foreign central bankers looking to stock up on haven assets that can be quickly sold if they need to stabilize their own currencies,” MarketWatch reports.

If the Bank of China were to hold its dollar surplus in cash, where would it deposit the funds to earn a return? Major global banks. And what would the major global banks do with the new dollar deposits from the Bank of China? Buy Treasury bonds and other low-risk dollar securities. Indeed, asset-hungry nations such as Japan and the EU could probably absorb China’s entire portfolio and would be glad to do so.


On a side note this discussion on the only way tariffs and taxes aren't a drag on consumption sounds like Republican heresy.

Quote

“The only form of taxation that avoids the sales reducing dynamic of tariffs is a properly adjusted progressive tax on each citizen’s ‘net’ income,” notes author and attorney Fred Feldkamp. “Each participant’s marginal propensity to consume assures the capacity for continuous economic growth that is consistent with government fiscal responsibility. The United States even amended the Constitution in 1913 because only a tax on net income allows for truly fair taxation that does not restrain growth.”

" 'Individual conscience' means that women only get contraceptives if their employers, their physicians, their pharmacists, their husbands and/or fathers, pastors, and possibly their mayors, Governors, State Secretaries of Health, Congressmen, Senators, and President all agree that in that particular case they're justifiable." --D.C. Sessions

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#412 J-CA

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Posted 17 May 2019 - 08:17 PM

View PostD. C. Sessions, on 17 May 2019 - 11:59 AM, said:

That story goes a long way back. The mining&refining town of Globe, AZ, used to be so choked with sulfur oxides in the air that cars' paint peeled. One of $HERSELF's high school classmates [1] fresh out of law school represented a public-interest firm in going after the mining companies with a clean air suit. They screamed that scrubbing their emissions would run them out of business [2] but they lost and lost big. So they scrubbed the emissions, which produced a vast amount of sulfuric acid. Sulfuric acid is fair-to-middling expensive to make from sulfur (which the USA imports) and since it was a byproduct of their refining copper they took what they could get -- which turned out to be a significant profit center, worth much more than the cost.

In case anyone wonders why I am so disrespectful of Randian "captains of industry."

[1] The whole story is a hoot, but maybe someday
[2] That's original
It is notable that Incco took the opposite approach in Sudbury, the CEO said, "we made this mess when we didn't know what we were doing and now we know better and need to clean it up" - mind you I don't know if he said that before or after the acid-rain cap-and-trade system came into effect!

That regulation generated bigger margins and more innovation is a good reminder of just how inefficiently capital is allocated in general. I think about how this pertains to Facebook, Google, and Twitter all the time.
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#413 Traveler

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Posted 19 May 2019 - 01:27 PM

Another big issue facing China, and prognosis don't look very good

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China’s notoriously lax local government officials and polluting companies are finding creative ways to fudge their environmental responsibilities and outsmart Beijing’s pollution inspectors, despite stern warnings and tough penalties.

Recent audit reports covering the past two years released by the environment ministry showed its inspectors were frequently presented with fake data and fabricated documents, as local officials – sometimes working in league with companies – have devised multiple ways to cheat and cover up their lack of action.

Local governments have been under pressure to meet environmental protection targets since Chinese President Xi Jinping made it one of his top three policy pledges in late 2017. The performance of leading local officials is now partly assessed by how good a job they have done in cleaning up China’s much depleted environment.

According to the reports released this month by the Ministry of Ecology and Environment, pollution inspectors have found evidence in a number of city environmental protection bureaus of made-up meeting notes and even instructions to local companies to forge materials.
So is that winning?
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#414 George Rowell

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Posted 19 May 2019 - 10:39 PM

Major cities in China may not now self-certify in some instances. Beijing inspectors now perform regulatory inspections in Shanghai because, well self inspection did not work! Where else have I heard that cry. I live in the heart of the red light area - not by choice I might add, most desirable areas in Shanghai were serviced by a plethora sauna, massage and just plain outright brothels with hordes of ladies looking out the windows - I counted 30 dubious establishments within a radius of 500m of my home. Now all gone save a few that were very respectable. Luckily mine was respectable and remains. I could not live without a good foot massage.

On another tack wiki has just been banned in all languages. My VPN works about 1/5 of the time. Still, if you don't like the heat ---

http://time.com/5589...ine-censorship/
A doctor knows a little about a lot. A specialist knows a lot about a little. In time the doctor knows less and less about more and more and the specialist knows more and more about less and less until ultimately the doctor knows nothing about everything and the specialist knows everything about nothing.

#415 Traveler

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Posted 20 May 2019 - 01:14 PM

Huawei just got the nuclear option.

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In its struggle with China over trade and national security, the U.S. has many legitimate grievances, and a variety of weapons for seeking redress. That doesn’t mean it should use all of them.

The nuclear missile the U.S. just launched at Huawei Technologies Co. Ltd. is a case in point. Last week, the Commerce Department placed Huawei and nearly 70 of its affiliates on an “Entity List,” which means that U.S. suppliers may now need a license to do business with them. Both Huawei’s mobile phones and its network equipment rely on American components, including advanced semiconductors. If the ban is applied stringently, it could drive one of China’s most high-profile companies — employing more than 180,000 people — out of business.
Good move. Shows China how much it depends on good relations with the US. The pain here would be temporary. Some other outfit in China will take over Huawei's portfolio, and we will resume sending the chips. But to a far less effective company.
"Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing had happened."-- Winston Churchill
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#416 Traveler

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Posted 21 May 2019 - 07:58 AM

Today's news is about Chinese pension funding. In 3 images.
Posted Image



Posted Image
Posted Image

Quote


By the end of 2018, 17.9 per cent of China’s population, or 250 million people, were 60 years or older, an increase of 8.6 million from a year earlier, according to figures from the National Bureau of Statistics published in January. Some 11.9 per cent, or 167 million people, were above 65. Based on a forecast made in 2015 by the China National Committee on Ageing, the number of people above 60 will peak at 487 million in 2053, accounting for 34.8 per cent of the total population.

“Each of us young people has to now provide, on average, for 0.41 of an elderly person and a child, besides for ourselves,” wrote Liang Zhonghua, chief macro researcher for Zhongtai Securities, who is 31 years old, in a recent research report.

“But by 2030, each young person will have to provide for an average of 0.5 elderly and child. By 2050, the ratio will increase to 0.8, double the rate now,” he said.

“The burden will become heavier and heavier.”
Peak worker happened in 2013-2016, now declining.

ETA: It's a little different here.

Quote

As the population ages, the ratio of older adults to working-age adults, also known as the old-age dependency ratio, is projected to rise. By 2020, there will be about three-and-a-half working-age adults for every retirement-age person. By 2060, that ratio will fall to just two-and-a-half working-age adults for every retirement-age person.
. So that is 1.25:1 in 2050 there, vs. 2.5:1 in 2060 here. Adjusting for the years, that is over twice as many oldsters.
"Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing had happened."-- Winston Churchill
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#417 George Rowell

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Posted 25 May 2019 - 02:08 AM

I am not sure who said that Xi Ji Ping's arrogance had set himself up for a fall, most likely Traveler, but it looks spot on. Well said that person. I have never seen their diplomats look so scared or out of their depth.
A doctor knows a little about a lot. A specialist knows a lot about a little. In time the doctor knows less and less about more and more and the specialist knows more and more about less and less until ultimately the doctor knows nothing about everything and the specialist knows everything about nothing.

#418 J-CA

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Posted 26 May 2019 - 10:06 PM

View PostTraveler, on 20 May 2019 - 01:14 PM, said:

Huawei just got the nuclear option.
Good move. Shows China how much it depends on good relations with the US. The pain here would be temporary. Some other outfit in China will take over Huawei's portfolio, and we will resume sending the chips. But to a far less effective company.
What is the good move here? Creating a whack-a-mole situation with respect to these technologies instead of having just one large Chinese company to gather intelligence against?
If you look at what is going to happen with the Android ecosystem the US government has essentially just ordered the Chinese government to build parallel Google services for the baseline Android platform, 12 months from now every Chinese phone in the world will be far more vulnerable than it was before these sanctions.

The United States has been, again and again, letting the world know that it is an irrational actor. All this crap is just going to make the US less competitive and make US consumers pay more for things.

And remember, in the end ZTE was cleared after facing a ban just like this and was literally going to dissolve itself. So when push comes to shove either the Chinese know how to bribe/flatter/blackmail Trump to get him to back down or the US government realized that shutting down ZTE was a pointless exercise in punishing US suppliers and purchasers anyway.
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#419 LFC

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Posted 05 June 2019 - 12:45 PM

China is foregoing more sanctions action (if there's even much more they can do) and opting for direct attacks on American companies doing business in their country.

Quote

China on Wednesday imposed a $23.6 million fine on US auto giant Ford’s joint venture with Changan Automobile for “price fixing” in the latest incident of Beijing targeting an American company amid a festering trade war.

The fine, amounting to four percent of Changan Ford Automobile’s sales in the southwestern city of Chongqing, was levied over violations of China’s anti-monopoly laws.

Changan Ford “set a minimum resale price” since 2013 for vehicles sold in Chongqing that “deprived dealers of pricing autonomy… and damaged fair competition and legitimate interests of consumers”, the State Administration for Market Regulation said in a statement.

Over the weekend Chinese authorities also targeted US courier and logistics firm FedEx, with state media announcing an investigation into the company over misdelivered packages.

FedEx had earlier apologised for misrouteing some parcels of Chinese telecom giant Huawei — which was added to the US commerce department blacklist last month, cutting it off from American-made components it needs for its products.

Beijing fired back on Friday, announcing its own list of “unreliable entities” that break their commercial contracts and stop supplying Chinese firms.

A Chinese expert writing in state media Saturday said the new list will function like the US entity list and ban Chinese companies from selling or cooperating with listed firms.

Analysts expect US firms to be among the first added to the list, which Beijing has pledged to release soon.

" 'Individual conscience' means that women only get contraceptives if their employers, their physicians, their pharmacists, their husbands and/or fathers, pastors, and possibly their mayors, Governors, State Secretaries of Health, Congressmen, Senators, and President all agree that in that particular case they're justifiable." --D.C. Sessions

"That's the problem with being implacable foes - no one has any incentive to treat you as anything more than an obstacle to be overcome."

"The 'Road to Serfdom' is really all right turns." --Progressive Whisperer

""The GOP ... where every accusation is also a confession." --Progressive Whisperer

#420 Traveler

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Posted 06 June 2019 - 07:41 AM

Funny, targeting a company half owned by the state. China is withholding its fire for now. They are still trying to cut a deal behind the scenes, but apparently trump is taking no prisoners.
"Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing had happened."-- Winston Churchill
"Anyone who has the power to make you believe absurdities has the power to make you commit injustices" Voltaire





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