August 15, 2019
Freedom vs. Authoritarianism
By Buck Sexton, Executive Editor
Are we about to see a second coming of China’s 1989 Tiananmen Square crackdown, this time in Hong Kong?
There’s certainly cause for concern.
In recent days, protestors in Hong Kong have shut down that city’s airport – one of the world’s busiest – and police in riot gear are getting increasingly aggressive in response.
Ominous photos of a massive column of troop transports just across the border from Hong Kong in Shenzhen have been circulating in the press.
This all started as a fight over a new extradition law, but it has morphed into a wider conflict over freedom and the future of Hong Kong.
Will the government of mainland China – the Chinese Communist Party – decide to crush this resistance in a show of President Xi Jinping’s iron will?
Or will it allow tensions to subside – and continue a long-term strategy of slowly suffocating the “one country, two systems” freedom that inhabitants of Hong Kong have come to expect?
We’ll have to wait and see.
But right now, the showdown between Hong Kong’s protestors and the government of mainland China is the most visible flashpoint of freedom versus authoritarianism in the world.
Surprisingly, President Donald Trump has taken a somewhat neutral stance on the crisis. We can’t know what kind of diplomatic pressure is being brought to bear behind the scenes. So far, the Trump administration hasn’t thrown its full-throated support behind the protestors.
Even one good tweet of protestor solidarity from the Donald would be a step in the right direction.
It’s certainly a better use of his megaphone than the “Fredo Cuomo” debacle.
In fairness, Trump is in the midst of ongoing, high-stakes negotiations with China.
Trade with China is the signature foreign policy issue of his first term in office. And when you consider nuclear negotiations with North Korea are very much also tied into our relationship with China, it’s clear that Trump’s single most important arena of foreign policy success – or failure – will be in East Asia.
So far, it’s a mixed bag for Trump. Regardless of how the Hong Kong standoff ends, there’s going to be a lot more back and forth over the trade issue. The inescapable truth is that China doesn’t want to give in on some core concessions the U.S. is demanding. Intellectual property theft is a big one, as are forced technology transfers from U.S. firms to Chinese companies.
Neither side has gotten what it wants and is unlikely to anytime soon.
Earlier this week, the White House announced a delay for a planned escalation of a 10% tariff on a range of consumer products from China. Instead of the initial September escalation, it will be pushed back to December 15.
China may be playing for time. Nobody on this side of the Pacific really knows what the Central Committee is thinking in Beijing, but it’s likely they view the possibility of an incoming Democratic administration in the U.S. as a way to end this whole trade war without caving.
It would not be hard to convince a future President Biden (or Harris or Warren, etc.) to undo the single biggest foreign policy move of the Trump era.
Despite all this, the U.S. economy is still humming along. The markets have been choppy recently. Lots of experts are going on TV to talk about “volatility” and “uncertainty,” tying much of it to the trade war.
If this concerns you, you might be interested in owning gold. It’s traditionally been a safe haven in volatile times. And next week, my friends at financial publisher Stansberry Research are holding a free 2019 Gold Rush event with gold authority John Doody. He says:
I have never seen a “perfect storm” like this for gold in my 50-year career. But there’s a right way and a wrong way to play gold right now, with gold now in a bull market.
I plan to tune in. If you’re interested in joining me, RSVP to hold your seat by clicking here.
Now here are some of the stories we’re reading…
This kind of slowing growth might give China “a greater incentive to make larger comprises [sic]” in any trade deal with the United States… China’s central bank might also be pressured to cut interest rates, as other global central banks have done.
Many years of unconventional and easy monetary policy from the world’s central banks has resulted in a shortage of “safe assets” and that’s “evident by the fast growing pile of negative yielding debt, which is ultimately leading to a growing appetite for precious metals.”
These major central-bank policy changes don’t happen often. But when they do, they affect the markets in a big way.
The yield on the benchmark 10-year Treasury note on Wednesday broke below the 2-year rate, an odd bond market phenomenon that has been a reliable, albeit early, indicator for economic recessions.
“I know they keep trying to tie Trump to this, but Trump is the only person who is ever named in the Jeffrey Epstein debacle who stood up to Epstein and said that he was a dirtbag and a bad guy and banned him from his club,” said conservative talk-show host Buck Sexton on his podcast. “Clinton is the one who was flying on his jet all the time.”
And let us know what you’re reading at [email protected].
Executive Editor, American Consequences
With P.J. O’Rourke and the Editorial Staff
August 15, 2019