“Things sure are getting exciting again, ain’t they?”  The remark was made by a colleague on Tuesday morning, as we stepped off the elevator to grab a cup of coffee.

“One moment markets are gorging on financial slop like fat pigs in mud.  The next they’re collectively vomiting on themselves.

“I’ll tell you one thing.  President Trump’s trade war with China won’t end well.  I mean, come on.  China’s outplayed the U.S. at this game for over a quarter century.  They have the upper hand.

“Besides, what’s the point?  If we no longer buy stuff from China, then how will China buy Uncle Sam’s debt?  And the timing for all this couldn’t be worse.  Deficits are spiraling out of control.  We’re talking $1 trillion or more a year for the next decade.  I don’t see any way out of this quagmire, do you?

“Printing money to buy government debt is no solution at all.  And a trade war will just hasten America’s insolvency.  What is it that Trump thinks he’ll accomplish, anyway?

“I’ve also heard that China’s tickled the debt poodle way more than we have.  So they may be worse off at absorbing an economic shock than us.  But I wouldn’t bet my life on it. Continue reading →