[Raev]

China's economy is in tatters:

China's stock market is crashing. It has lost $2 trillion in value already this year. China, which overtook Japan as the second largest stock market in the world only a few years ago, has now officially fallen behind Japan. The losses show no signs of abating.

Meanwhile, back home, China is on pace for a record year in corporate-bond defaults. Chinese companies have reneged on about $2.5 billion of public bond payments so far this year. As the economy downshifts and the threat of US tariffs hangs over everything, Chinese companies increasingly simply cannot pay their debt. "Corporate profits have worsened this year and are unlikely to improve against the backdrop of an economic slowdown," said Li Shi, general manager of the rating and bond-research department at China Chengxin International Credit Rating Company.

Meanwhile a spokesman for the Chinese Supreme People's Court is warning of an impending flood of Chinse bankruptcies and telling the Chinese judiciary to prepare in advance. "It's hard to predict how this trade war will develop and to what extent," the spokesman said. "But one thing is sure: if the US imposes tariffs on Chinese imports following an order of US$60 billion, US$200 billion, or even US$500 billion, many Chinese companies will go bankrupt."

In retrospect none of this should come as a surprise. The result of this confrontation was preordained. The United States is far and away the world's largest market for consumer goods. China, which lives or dies based on exports cannot lose access to the American market and even begin to replace those sales elsewhere.

Unsurprisingly, unemployment in the US is falling. Remember Obama talking about how those jobs aren't coming back? Turns out it was pretty easy for a President who actually puts America first.