Meng Wanzhou, CFO of the second best smartphone company in the world, is being held in a jail in Canada. She apparently will be charged with fraud, in  fooling banks in America to get them to fund technology transfers to Iran. 

We do not yet know if there are peripheral charges in addition to potential charges related to Iran. But if those charges are the meat of the matter, the big issue then, of course is, are we in violation of the treaty that governs transfers of technology to Iran. If we are in violation of the international framework, and apparently we are, our sanctions should have no significance, internationally, unless the rule of law means nothing.

More and more, the desperation of the United States is showing. Meng's company is Huawei. In the current ranking of smartphones for 2018 we see this:

1.SAMSUNG GALAXY NOTE 9

2.HUAWEI MATE 20 PRO

3.GOOGLE PIXEL 3 XL AND PIXEL 3

4.APPLE IPHONE XS MAX/XS

5.ONEPLUS 6T

6.HUAWEI P20 PRO

7.APPLE IPHONE XR

8.LG V40 THINQ

9.SONY XPERIA XZ3

10.SAMSUNG GALAXY S9/S9 PLUS

The company is discouraged from doing business in the USA. And it is being discouraged, supposedly because of espionage, but I believe it is because the company is just superior. It creates better products. Two of the 10 best smartphones in the world are Huawei's phones!

And it has 5 G superiority, and a head start, with a phone due out in 2019. I think the US is simply afraid of superior technology, the Rule of Law be damned. The phone likely will not be sold in the USA. And why not? Well, because clearly the US views 5G race as being necessary to win. But we are not up and running. When the Russians beat us to space with Sputnik, we didn't try to blow up all of Russia's rockets. We competed. Is the will to compete gone? Must we resort to underhanded behavior?

Most of us who were allowed to study history know about the murder of the Austrian Archduke:

The first world war began in August 1914. It was directly triggered by the assassination of the Austrian archduke, Franz Ferdinand and his wife, on 28th June 1914 by Bosnian revolutionary, Gavrilo Princip.

But the causes of WWI were already present. That brings us back to this time. Clearly, the United States wants China tech, and Huawei, specifically, to fail. There is a cold war, if not against China, certainly against this superior high tech company. It is impossible to separate the company, Huawei, from China. It is the pride of China, the hope of a high tech future.

The United States floated a story through Bloomberg that China had attached spychips to Apple and Amazon servers. Well, Apple demanded a retraction.

While Apple did not get a retraction from Bloomberg, the Department of Homeland Security and British Cyber Security both rejected the claims in the Bloomberg story and sided with Apple and Amazon:

The Department of Homeland Security also released a statement, saying on Oct. 6 “we have no reason to doubt the statements from the companies named in the story.” The British national cyber security agency also backed Apple and Amazon’s statement.

The veracity of the American reputation is being challenged by this sort of behavior. This dirty pool is indication of weakness. Does the government of the United States fear China so much as to disregard the rule of law?

Now we have the Pentagon banning sale of Huawei phones from military bases. And what is this based on? Well, the Pentagon and intelligence agencies say China might use the phones as backdoors for spying. But it has never happened! 

US government officials have said that China could order its manufacturers to create backdoors for spying in their devices, although both Huawei and ZTE have denied the possibility. An anonymous source told the WSJ that military leaders are wary that Beijing could use ZTE and Huawei devices to locate soldiers’ exact coordinates and track their movements.

Well, Apple and every American multinational could do this or that. Is that grounds for banning them all over the world? The United States government is on really shaky ground. If it doesn't stop, perhaps it is time for the world to pass this old fossil of a nation by. It is time for them to move on. And if you don't think they are moving on, at least in some capacity, see what this Israeli has said:

We believe the future of Israeli technology is in the East.  Already today we see that both India and China are becoming important go-to markets for Israeli entrepreneurs.

That's right. Yair Shamir, Catalyst-CEL spokesman, made that astonishing statement. The future of Israeli technology is in the East! The Catalyst-CEL fund is the first dedicated Israeli/Chinese private equity fund.

The world is looking east. The USA is looking to make trouble with the east. Pretty soon the world will throw up its hands and look at the USA as an old Edsel. Not very pretty or very useful.

We have the seeds of a cold war with China. We have Meng, the princess of Huawei Technologies, Ltd., the daughter of the founder, under arrest and facing 30 years in prison. This could escalate quickly, very quickly, if cooler heads do not prevail.

The United States really needs to look in the mirror. What it will see is not MAGA. What it will see is an Uncle Sam who is turning dark, very dark, as if this century was not already a prediction of it.

Richard Cheney's book, Exceptional, was reviewed by Huffington Post a year ago and this was the conclusion:

Exceptional, the new book from former Vice President Dick Cheney and his daughter, Liz, is not. It is nothing more than an unhinged rant that smacks of sedition.

“The children need to know the truth about who we are, what we’ve done, and why it is uniquely America’s duty to be freedom’s defender,” the prologue proclaims. The book, however, is not about who we are but who Cheney wants us to become. It is a call for Americans to reject constitutional government and those values that have guided our nation for 227 years and replace it with imperial rule in the name of “freedom” — even when that rule includes wars of choice, intrusive violations of our privacy and civil liberties, and of course, an aggressive regime of torture.

We can see that Cheney and Trump do not get along. We saw that at HW's funeral. But certainly, the disdain for the rule of law at the expense of sheer power runs deep in the psyches of both men. Both men view economics as a means to power, not as a means to prosperity. That is the direction that must be reversed if the USA is to be really great again.

Economies are fragile things. There are three results from shocks that can be isolated. The World Economic Forum isolates them quite clearly:

Firstly, if QE worked through a wealth effect on asset prices and consumption, falling markets could reverse it. In the US, the top 10% of income earners account for a quarter of national consumer spending, according to the Bureau of Labor Statistics. This is also the group of people who saw their net wealth grow 24% from 2010-2016, thanks to rising asset prices, while the bottom 40% of earners experienced a decline in net wealth in the same period. In other words, income and wealth distribution has become increasingly polarized, which makes domestic consumption vulnerable to a financial market slump.

Secondly, easy monetary policy has reduced funding costs for corporates but has also kept “zombie companies” alive, instead of having them restructured. This weak tail of corporates are susceptible to a sharp rise in bond yields: default risks would increase materially if the five-year Treasury yield is near 3% and high-yield spreads are above 500bp, according to UBS research.

Thirdly, tighter and more volatile financial conditions tend to discourage investments and dampen sales, which, in turn, hurts growth. As research by the St Louis Fed suggests, corporate investment in 1990-2015 on average dropped by more than 10% when financial conditions were bad, while sales growth also stagnated. The deterioration in investment and sales is especially pronounced for companies with high dependence on external financing.

Trade wars, even without arresting a key player like Meng, can contribute to all three results of economic shocks. Being at the end of the business cycle, with high government deficits because of tax cuts to the wealthy, coupled with trade wars, are powerful destructive forces for fragile economies. The US government must stop playing fast and loose with the prosperity of the nation. Sell and wait for this trouble to blow over.