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Ilargi Meijer: Assange, Infowars, & The Constitution

Authored by Raul Ilargi Meijer via The Automatic Earth blog,

This morning I woke up, looked around me, and saw a world sinking into a quagmire of voluntary censorship, a world willing to let someone far away choose what it can and cannot see of itself, and about itself. A world that no longer appears to recognize, or care, that this goes directly against its founding principles of liberty, freedom of speech, freedom of the press.

I can think of many reasons why someone would want to ban Infowars and Alex Jones, and I don’t even know them other than from incidental tweets and comments. But I also acknowledge that that is not the point. Just because you would like to ban a person or organization, just because you don’t agree with them, doesn’t mean you can, or should be able to.

And if Facebook, Google, Apple, Spotify and Pinterest -all within hours of each other-, think it’s a good idea to ban Jones regardless, they had better do a lot better than saying something about violating their ‘community standards’. They should identify specific instances where these alleged violations take place, and identify them publicly.

You can’t ban anyone on vague ‘standards’ from media that cover half the planet. Because that’s a danger to the entire planet, and to all of mankind. As Facebook and Google are very busy lobbying Washington, Brussels et al to drop any anti-trust charges against them, and let them continue to be private enterprises, they are shirking ever close to the various intelligence communities.

Politicians and secret agents alike have long recognized the potential Big Tech offers for controlling their populations. Long before those populations themselves have recognized the danger embedded in this potential. The treatment of Julian Assange and Infowars, 180º different as they are, puts all this in very sharp perspective.

How are you going to be informed, and stay informed, of what’s happening in the world, of what your government does and plans, if your media, both old and new, conspire to let you know only what they want you to, and to present a version of the world, of reality, that they invented in order to safeguard their future and that of their sponsors? Who’s going to tell you what happens behind the infinite layers of curtains?

What is most important here is not who Alex Jones is, or what he’s done and said. What’s most important is that he stands up for Julian Assange as the media, across the board, is either silent or actively smearing Assange with impunity. So for once, go to Infowars and sign the petition to Trump to Free Assange.. If anyone can get through to Trump, it’s Alex Jones, and they’re trying to prevent him from doing just that.

You’re being sold out, your rights and freedoms are being sold out, while you’re busy looking at pictures of what your friends had for dinner last night. And if that’s your thing, fine, but not before and until you’ve checked what is happening to your life and liberty, and that of your children, while you’re watching the next photo of a creme brulée or some cute kitten 1000 miles away.

We all know these things. And we’re all overloaded on info, so we’re all tired and developing headaches in echo chambers, and cute kittens are so much easier to deal with than petitions. But pretty soon, if you’re not careful, kittens will be the only thing you’re allowed to look at. Kittens and ‘news’ about evil Russians allegedly plotting to do to you exactly what your own governments already, and actually, do right now.

In one word: you’re being brainwashed. Brainwashed into handing over the liberties your ancestors fought very hard, and often lost their lives, to obtain and guarantee in your constitution. You can’t just give those things away, you have no right to. You owe it to them to protect what they fought for. If and when your government, your House and Senate, refuse to do that, then you will have to do it.

And that starts with protecting and standing up for Julian Assange. You don’t get to pick and choose which part of freedom you would like to protect, you either protect the entire concept or you do not. Freedom doesn’t mean you get to chop freedom into bits and pieces. And if you fail to stand up for the part you don’t like, you also fail to protect what you do like.

You don’t get to cherrypick, And neither should Google, Apple, and Facebook. Check your constitution for that one. Sure, we get it, it’s hard to stand up for Alex Jones. But if he can get chucked out for violating opaque ‘community standards’ of some private enterprise, then so can you. Well, unless you only look at kittens and desserts. But is that what you want your life to look like going forward?

This is about a principle engraved in the Constitution, and not just the American one. And of course there would always be people trying to get of that principle, because it got in the way of their personal power and interests. But that’s exactly why it’s in the Constitution. So it can’t just be eradicated at whim.

New media, social media, have taken the world by storm, and everyone has to scramble to keep up and think about what this means. What it should never ever mean, though, is that some parties get to use the confusion in order to trample on the Constitution. But that is what’s happening today.

We’ll resolve this eventually. You can’t let companies that have half the world as their clients continue as private enterprises; there’s far too much in the way of monopoly and anti-trust law to allow that to continue. But as long as this is not solved, Google and Facebook will be used as political tools, even while their legal status, and that of their policies, will be increasingly questionable.

So, you know, standing up for Alex Jones today equals standing up for the Constitution. That is harder for people to understand than it is that calling for Julian Assange to be protected and freed is, But it is the same thing. This is proven more than anything by the fact that Jones gets shut down at the very moment he seeks to protect Assange.

Swallow your pride and your disapproval of Alex Jones. Sign the petition to Trump to Free Assange.. It’s much bigger than your pride, or whatever you happen to like or dislike. This is about your future. And the people in the past who gave their lives to make it what it is. Don’t give it away. Prove Orwell wrong.

That we must defend Alex Jones just to stand up for Julian Assange should be all you need to know. You can’t defend Assange without also defending Infowars’ right to speak. And if they say things that go against the Constitution, a bunch of geeks in Silicon Valley should never be the judges of that.

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Michael Cohen Under Investigation For Tax Fraud

Michael Cohen’s troubles are mounting, reports the Wall Street Journal, which claims the former Trump attorney is under investigation in New York over whether he committed tax fraud, according to “people familiar with the investigation.”

Federal authorities are analyzing whether Cohen failed to report all of the income from his taxi-medallion business, which included “hundreds of thousands of dollars received in cash and other payments over the last five years,” according to the Journal. 

Investigators are also probing whether any bank employees improperly extended loans to Cohen without adequate documentation, and whether Cohen made false statements or misrepresentatio9ns on loan applications. 

In particular, federal investigators are looking closely at Mr. Cohen’s relationship with Sterling National Bank—which provided financing for Mr. Cohen’s taxi-medallion business—including whether Mr. Cohen inflated the value of any of his assets as collateral for loans, according to people familiar with the matter.

Convictions for federal tax- and bank-fraud may carry potentially significant prison sentences, which could put additional pressure on Mr. Cohen to cooperate with prosecutors if he is charged with those crimes, according to former federal prosecutors. –WSJ

The feds have subpoenaed Cohen’s former accountant, Jeffrey A. Getzel, who had a direct hand in preparing many of Cohen’s financial statements which were submitted to banks, according to the Journal‘s sources. Getzel was also an accountant for Evgeny “Gene” Freidman, a taxi-medallion manager who worked with Cohen according to public court documents. Friedman is reportedly cooperating with federal prosecutors as part of the investigation, after pleading guilty earlier this year to a count of criminal tax fraud related to the taxi business. 

Mr. Freidman, known as the “Taxi King,” began in around 2012 and 2013 to manage Mr. Cohen’s 32 medallions in New York, paying Mr. Cohen a fixed monthly rate and keeping the profit—or suffering any loss—from each medallion, according to a person familiar with their business relationship. –WSJ

Evgeny Freidman, a taxi-medallion manager who worked with Michael Cohen, in 2009. PHOTO: NEILSON BARNARD/GETTY IMAGES

Cohen’s new layer – longtime Clinton operative Lanny Davis, declined to comment “out of respect for the ongoing investigation” (though Davis has been more than happy to comment on the ongoing Trump investigation).

The FBI and Manhattan US Attorney’s Office have been investigating Cohen for bank fraud, campaign-finance violations and other potential crimes related to his personal business dealings, along with efforts to conceal claims by at least two women who say they had affairs with President Trump. The president has denied having sex with either woman; former Playboy model Karen McDougal, and Stormy Daniels – a former adult film star whose real name is Stephanie Clifford. 

Cohen’s world

While Michael Cohen once described himself as Trump’s “fixer,” Cohen has persued his own ventures – including real estate, taxi medallions and personal loans. 

As of April 2018, Mr. Cohen owned 22 medallions in Chicago, and either he or his wife, Laura, controlled 32 medallions in New York City, some of which were also owned at least partly by family members and others, according to public records.

As recently as 2014, taxi medallions were considered a rock-solid investment. The medallions, issued by a city agency and required for running a taxi, are bought and sold on a secondary market. Some licenses for taxi medallions in New York sold for an average $1.25 million per medallion in 2013 and 2014, according to bankruptcy filings.

But in recent years, their value has plummeted amid competition from ride-sharing services such as Uber and Lyft. In a filing for a federal bankruptcy case in June 2017, Mr. Freidman said the estimated value of each medallion had dropped to approximately $200,000 to $225,000. –WSJ

Less than two weeks after Cohen’s home, office and hotel was raided by federal prosecutors at the behest of special counsel Robert Mueller, the former Trump attorney pledged his personal residence “through a $9 million mortgage on his apartment at Trump Park Avenue” – as collateral against millions of dollars in loans from Sterling National Bank which were taken out by he and his wife in 2014 against their taxi business. 

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NYC Guarantees Free Phone Calls for Inmates

A bill signed into law yesterday by New York City Mayor Bill de Blasio will allow all inmates in city jails to make free phone calls.

“This piece of legislation will ensure that no incarcerated person will have to pay to reach their loved ones on the phone and maintain crucial connections to the support networks key to their rehabilitation,” de Blasio said in a statement.

In the 2017 fiscal year, 76 percent of NYC Department of Correction (DOC) inmates were pretrial detainees, meaning they had not yet been convicted. But unless they could pay up, their criminal status (or lack thereof) didn’t matter. The New York Time reports:

Currently, calls from Rikers Island cost 50 cents for the first minute and 5 cents for each additional minute to local numbers. There are 26,000 calls from the city’s jails every day that generate more than $20,000 in daily revenue, according to an analysis by the Corrections Accountability Project, which advocated for the bill.

The DOC already allows some inmates to make calls free of charge. But the new law, which was approved by the city council in July and takes effect in nine months, makes New York the nation’s first major city to guarantee free calls for all inmates.

The city estimated that in the 2019 fiscal year, it would collect about $5 million in revenue from inmate telephone fees. The city itself doesn’t manage the phones in its jails. Instead, it contracts with Securus, a private company that rakes in about $2.5 million a year from the deal. According to the Times, NYC “will still likely pay a private company that amount.”

Elias Husamudeen, president of the city’s correction officers’ union, is concerned the bill will allow gang leaders to maintain control even while incarcerated. “This is just one more nail in the coffin of creating safer jails, to be honest with you,” he tells the Times.

But the law has garnered praise from prison reform advocates. “People who are incarcerated, and especially people who are incarcerated pretrial without conviction, should be able to contact lifelines without cost,” Bianca Tylek, director of the Corrections Accountability Project, tells the Times.

City council Speaker Corey Johnson, who sponsored the law, expressed similar sentiments. “No one should have to choose between speaking to their loved ones and paying the bills and I am proud to say that New Yorkers with loved ones who are incarcerated will no longer have to make this decision,” Johnson said in a statement.

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America’s Trade Deficit Is Still Growing

Judging by President Donald Trump’s favorite metric—America’s trade deficit—he is losing his trade war.

Luckily, trade deficits don’t matter too much.

According to data released Friday by the U.S. Census Bureau and the U.S. Bureau of Economic Analysis, America’s trade deficit rose to $46.3 billion in June, up from $43.2 billion in May. A trade deficit is the gap between the amount of goods a country exports and imports—the amount it “sells” versus the amount it “buys”—and June’s increase was driven by a less than 1 percent uptick in imports along with a comparatively small reduction in exports.

Trump worries a lot about the trade deficit. He’s argued that America’s trade deficit is such a threat to domestic manufacturing that it justifies an expensive trade war. In announcing tariffs targeting Chinese goods in March, Trump specifically pointed to America’s trade deficit—”it’s out of control,” he said at the time—as one of the justifications for the bellicose trade actions. Going back to his time as a presidential candidate, Trump has singled out the trade deficit as a serious problem, pointing to it as evidence that China is “killing us” on trade. As president, Trump has made reducing the trade deficit a main policy goal, asking not only Chinese officials but also those from the E.U. and Canada (a country with which America has a trade surplus) to reduce their deficits by buying more American goods.

Politically, Trump has used the trade deficit as an easy way to signal his support for blue collar workers and to justify protectionism. Economically, though, there’s really not much reason to worry.

In fact, a rising trade deficit can be a good thing.

“Despite the false narrative of rising trade deficits leading to U.S. job losses, the exact opposite has been true for nearly the last half-century,” says Mark Perry, an economist at the American Enterprise Institute and editor of the think tank’s Carpe Diem blog. “Increases in the U.S. trade deficit are associated with rising, not falling, employment levels in the U.S.”

It’s also worth keeping in mind that the trade deficit isn’t something that the leaders of two countries can really negotiate. Sure, governments can impose policies that favor or disfavor trade, but the existence of a trade surplus or deficit is the result of millions of individual decisions made by businesses and consumers in the United States and China.

“People typically forget that the imports that make up the U.S. trade deficit are, like all American imports, goods and services that Americans voluntarily purchase—meaning, goods and services each of which is judged by its American buyer to be worth more than the money paid for it,” writes Don Boudreaux, an economist at the Mercatus Center, a free market think tank based at Virginia’s George Mason University.

None of those exchanges are forced. American consumers and businesses voluntarily trade their dollars for imported goods. Cutting off that trade, Trump has argued, would “save us a hell of a lot of money,” but that really misses the point. You’d save a hell of a lot of money if you didn’t buy groceries every month, but you probably wouldn’t be better off.

As long as the national economy remains strong, America will likely continue to run a trade deficit and an investment surplus—the result of personal consumption being high and the United States remaining an attractive place for investments. Indeed, the trade deficit essentially disappears if you also consider foreign investment in America as a form of trade, which it really is.

Trump’s continued obsession with the trade deficit remains a bit of a mystery. It could be, as Reason editor-in-chief Katherine Mangu-Ward speculated on yesterday’s edition of the Reason Podcast, that Trump fails to understand the distinction between the budget deficit and the trade deficit. This actually makes a lot of sense, particularly in light of the president’s bizarre tweet over the weekend suggesting that tariff revenue could be used to pay down the national debt. After all, tariffs generate tax revenue and tax revenue is what you need to reduce the deficit—the budget deficit.

But economists mostly agree that tariffs won’t do much of anything to reduce the trade deficit—though tariffs could have a secondhand effect on the trade deficit if they become severe enough to slow the economy as a whole and reduce consumer spending, which is the thing that really drives the trade deficit.

“A country is far more likely to run a trade deficit when its economy is booming and personal consumption is high,” writes Daniel Drezner, a professor of international politics at Tufts University, in The Washington Post. “If Trump really wanted to shrink the trade deficit, he would push to revoke his own tax bill. But he really does not want to do this.”

Unfortunately, a widening trade deficit combined with Trump’s apparently faulty understanding of what’s driving the trade deficit could be a formula for an escalating trade war—a war that could do a lot of damage without accomplishing what the president wrongly thinks it will.

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US Abandons Oil Sanctions To Avoid Owning Venezuela’s Collapse

Authored by Brian Scheid via Platts’ “The Barrel” blog,

Just more than a year ago, it was not a question of ‘if’, but ‘when.’

As Venezuela’s leftist leader Nicolas Maduro consolidated power in an election derided as a fraud by the international community, the Trump administration readied exacting sanctions on the South American nation’s oil sector.

“All options are on the table,” said a senior administration official during a July 2017 briefing with reporters, adding that sanctions could be imposed in a matter of days. “All options are being discussed and debated.”

Analysts widely expected sanctions on diluent the US was exporting to Venezuelan refineries first, followed by a prohibition, perhaps phased in over a matter of months, on imports of Venezuelan crude into the US. It was unclear if US refiners, who had long imported Venezuelan crude, would be allowed to continue under an interim “grandfathered” arrangement, but analysts mostly agreed that sanctions were coming.

At the time, the US was importing about 800,000 b/d of Venezuelan crude and the administration was mostly concerned about the impact an import embargo would have on US Gulf Coast refineries, which would need to look for new sources of heavy crude.

Oil sector sanctions from the US seemed so likely that then-US Secretary of State Rex Tillerson told reporters that the administration was looking at ways to soften the impact of the sanctions once they were imposed.

“We’re going to undertake a very quick study to see: Are there some things that the US could easily do with our rich energy endowment, with the infrastructure that we already have available – what could we do to perhaps soften any impact of that?” Tillerson, the former CEO of ExxonMobil, said.

A year later, the US is importing less crude from Venezuela (about 530,300 b/d in July, according to preliminary US Customs data), but Gulf Coast refiners, particularly Valero, continue to rely on these imports.

In fact, US refiners may be importing even more, if Venezuela’s oil sector was not seemingly in a death spiral. Roughly one if every five barrels of oil imported by US Gulf Coast refiners comes from Venezuela.

The EIA forecasts Venezuelan oil production to fall below 1 million b/d by the end of this year, down from 2.3 million b/d in January 2016 as joint ventures fall apart and PDVSA, the state-owned oil company, struggles to feed, let alone pay, its workers. PDVSA has notified international customers than it cannot fully meet crude supply commitments and the country’s active rig count has fallen below 30, according to Baker Hughes International Rig Counts.

By the end of 2019, Venezuelan crude oil output is expected to plummet to 700,000 b/d, making it likely that it will produce less than the US state of New Mexico.

“We’ve never seen an industry or a country collapse this fast and this hard,” said EIA analyst Lejla Villar in a recent interview with the S&P Global Platts Capitol Crude podcast. “We’ve never seen anything like this.”

Industry collapse

The downfall of Venezuela’s chief industry, coupled with International Monetary Fund predictions that inflation in the country will skyrocket to 1 million percent by the end of this year, have created an unusual scenario, in which Maduro may even welcome US sanctions on its oil sector. As Venezuela’s economy continues to unravel, leading to surging prices and rampant hunger, Maduro could try to pin the blame on sanctions.

“If you break it, you buy it,” said George David Banks, a former international energy and environment adviser to President Trump. “The White House doesn’t want to own this crisis.”

The US has sanctioned individuals in Venezuela, including Maduro; prohibited the purchase and sale of any Venezuelan government debt, including any bonds issued by PDVSA; and banned the use of the Venezuela-issued digital currency known as the petro. But oil sector sanctions are viewed as the most powerful penalty remaining and one the Trump administration is more hesitant than ever to use.

“There’s already a humanitarian crisis, but we don’t own that, the Maduro government owns that,” Banks said. “We don’t want to lose the people of Venezuela and you don’t want to pursue a policy that jeopardizes that.”

David Goldwyn, president of Goldwyn Global Strategies and a former special envoy and coordinator for international energy affairs at the US State Department, speculated that it would take extreme action, such as a military assault on a civilian rebellion, for the US to now impose oil sector sanctions. “The system is collapsing and this administration does not want to own the collapse,” Goldwyn said.

The path ahead for Venezuela’s oil sector has, likely, never been less certain. And it remains to be seen what a full collapse of an economy looks like. It is clear, however, that the US wants to avoid blame for accelerating that collapse and has abandoned, at least for now, consideration of oil sanctions.

When Venezuela’s oil sector hits rock bottom, the US does not want to be accused of dragging it there.

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3Y Note Yields Most Since May 2007 In Ugly, Tailing Auction As Foreign Buyers Flee

After yesterday’s two-fer shocker, when the Treasury sold 3 and 6-month bills at the lowest Bid to Cover in a decade as demand for papers suddenly pulled away, today’s 3Y coupon auction was no better, and moments ago some $34BN in 3 year paper was sold at a high yield of 2.765%, tailing the When Issued 2.763% by 0.2bps (the 5th consecutive tail in a row for this tenor), and the highest yield since May 2007.

The yield, however, was not enough to generate interest, and while the Bid to Cover rose from 2.51 last month to 2.65, but well below the 6 month average of 2.814, the internals were downright ugly, as Indirects took down just 42.7%, the lowest since December 2016, and with Directs taking 12.1%, it left Dealers taking down 45.2% of the auction, the highest share going back also to December 2016.

Overall, a very ugly auction, which better not be a harbinger of what to expect from tomorrow’s benchmark 10Y sale or else the bond market may be facing a major hanogver very soon.

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Watch: Millennials Try To Explain The First Amendment

Authored by Cabot Phillips via Campus Reform,

This month, a new study was released analyzing Americans’ perception of the First Amendment, as well as their knowledge of what it entails. As many would expect, the results were bleak. 

For example, 40 percent of those surveyed were unable to list any of the five freedoms guaranteed by the First Amendment, while another 36 percent could list just one.

Wanting to know if millennials at an Ivy League School would fare better, I headed to Columbia University to talk with young people about their knowledge of the First Amendment. 

Offering $20 to any person who could tell me the five freedoms guaranteed under the amendment (Speech, Religion, Assembly, Press, and Petition), it quickly became clear no one would be going home with the money. 

“No, I have no idea,” said one student when asked if he could name any of the five, while another asked if “the right to bear arms” was found under the First Amendment.

One student, after failing to name more than one freedom listed, conceded, “now I feel like I need to go home and just read.” 

Throughout the afternoon, the majority of the students were able to identify 1-2 freedoms guaranteed under the First Amendment, but no one was able to list more than three.

What else did they have to say, and where did they think the First Amendment should be limited? Watch the full video to find out!

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Baltimore City Council Approves Water Privatization Ban

Baltimore just took a big step toward becoming the nation’s first major city to ban the privatization of its water and sewer system.

The Baltimore City Council overwhelmingly approved a charter amendment yesterday that makes the sale or lease of its water system illegal, The Baltimore Sun reports. The measure ensures that the public owns and controls the water system.

Baltimore Mayor Catherine Pugh, who supports the measure, has until August 13 to sign it. Then, it will be put on the ballot for voters to approve or reject in November.

City council President Jack Young, who proposed the amendment, thinks voters will approve it. “I think overwhelmingly the citizens of Baltimore are going to vote to keep a system that’s an asset to them,” he said, according to WBAL. “I think they’re smart enough to realize that this belongs to them. It doesn’t belong to me, personally, it belongs to the citizens of Baltimore. I want to make sure that it stays that way.”

For years, companies have been making the case for privatization. The French company Suez Environment, for instance, has proposed what seems like a mutually beneficial deal. The Sun reports:

Suez—a descendant of the company that built Egypt’s Suez Canal—has pitched city officials on a lease agreement in which the company would pay the city upfront to take control of operating Baltimore’s water system and then collect the money charged from water bills. The company has said it would hire current Department of Public Works employees, honor union contracts, and pledge to raise water rates only minimally.

Proponents of a ban on privatization say it would raise rates and generally hurt customers. “Communities that have privatized their water systems see skyrocketing rates, lost jobs and declined quality of service, because when corporations come in to run water and sewer systems, they have one goal and one goal only, and that is profit, not the public good,” Rianna Eckel, a state organizer for the advocacy group Food and Water Watch, tells WBAL.

But private companies’ concerns about making a profit may actually help consumers. As Reason‘s Adrian Moore noted in 2016:

Private utilities simply borrow the money to build new water supply pipelines or treatment plants when they need them, and they have every incentive to build them fast and keep costs down. In contrast, for a municipal utility it is a long and painful political process, fighting against other agencies and political priorities, to get approval to borrow money to build new facilities.

Plus, privatizing water systems and other utlities means less long-term risk for cities. “Sales and leases,” says Reason Foundation policy analyst Austill Stuart, “allow cities to transfer risks of deferred maintenance to the private sector.”

According to the National Association of Water Companies, private water companies serve nearly 73 million people on a daily basis. These private utilities are accountable to their customers, and that accountability motivates them to provide better service. Unfortunately, Baltimore residents may never get the chance to experience such benefits.

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Tesla Jumps As Saudis Reveal $2 Billion Stake

Did we just find the latest greater fool?

The FT reports that Saudi Arabia’s sovereign wealth fund has built a significant stake in Tesla – the latest bold bet by the state fund overseen by powerful crown prince Mohammed bin Salman.

Saudi’s Public Investment Fund (PIF) built the undisclosed stake of between 3 and 5 per cent of the electric vehicle maker’s shares this year, according to people with direct knowledge of the matter.

Interestingly, The FT reports that PIF initially approached Musk about purchasing newly issued shares but Musk reportedly rebuffed the offer – perhaps anxious of the perception of further dilution and the promises he made of  the need for more capital.

Note, however, that Tesla gets $0 from this secondary market investment – at a time when the carmaker is losing a record amount of money.

Tesla shares are jumping on the news…

And TSLA bonds are up but remain considerable “cheaper” than stocks…

And all this coming just weeks after Aramco suddenly decides to raise billions in debt instead of IPOing?

A skeptic might wonder whether, since Tesla can’t buyback stock directly using debt-issuance (WACC too high), it is using US bond investors as a source of funds (via Aramco’s bond issue) and Saudis as the proxy buyer to achieve the same effect.

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China Threatens Apple With “Anger And Nationalist Sentiment” If It Doesn’t Share The Wealth

With China having effectively exhausted the amount of US imports on which it can impose tariffs following the $50BN in tariffs slapped in June, and announcing last Friday that it is considering an additional $60BN in retaliation to Trump’s $200BN in incremental Chinese tariffs, the focus has shifted to how else China can hurt the US, aside from simply cranking up the tariff rate.

Of course, China has previously hinted at what it could do, first in March…

… and then again in April.

However until now, a Chinese retaliation against the world’s most valuable company was merely floated in big picture terms and these were simply veiled threats, with China refusing to stray too far from the hypothetical.

That changed today, when an article in the state-run People’s Daily set its sights squarely on Apple, which it said has benefited from cheap labor and a strong supply chain in China and needs to share more of its profit with the Chinese people or face “anger and nationalist sentiment” amid the ongoing trade war.

The article notes that Apple recently reported that in the quarter ended June 30, sales to the greater China region rose by 19% to $9.6 billion and summarizes that “amid escalating trade friction, the company’s better-than-expected quarterly result in China was a major reason for the surge in its shares.”

However, in a tongue-in-cheek rhetorical question that is really a hint to the public, the Daily said that “the eye-catching success achieved in the Chinese market may provoke nationalist sentiment if US President Donald Trump’s recently adopted protectionist measures hit Chinese companies hard.“

As a result, should the trade war between the U.S. and China continue, it would leave Apple and other U.S. firms with substantial Chinese revenues vulnerable as “bargaining chips” for Beijing.

Th Daily then doubled down on its worst-case “hint”, warning once again that China is by far the most important overseas market for the US-based Apple, “leaving it exposed if Chinese people make it a target of anger and nationalist sentiment” and while it claims that China doesn’t want to close its doors to Apple despite the trade conflict, “but if the US company wants to earn good money in China, its needs to share its development dividends with the Chinese people.”

The suggestion is that Apple will have to either hike domestic wages, invest more in China, or – best of all – share its technology with Beijing. If it refuses, China’s population has a green light to “make it a target of anger and nationalist sentiment.”

While Apple has so far escaped unscathed by the escalating trade war, and contrary to our expectations, nationalist sentiment has not emerged pushing the local consumers again purchases of US goods, today’s Op-Ed may be a turning point, because for the first time China hints it is time to spread the wealth. Specifically the People’s Daily author writes,  the “in an increasingly interconnected world, Apple is a particularly good example of global manufacturing.” And the role of China is critical “as it serves as a key production and processing base for Apple.”

Many Chinese companies have been included in Apple’s production chain to provide parts and components or assembly work. This has allowed Apple to benefit from China’s ample supply of cheap labor.

And now, it’s time to give back because “in the case of the iPhone” the article claims, “Chinese processors only get 1.8 percent of the total profits created by the device.“

Hint: it’s time for Apple to give more if it doesn’t want something unfortunate to happen to its record profits.

Apple’s contribution to job creation in China is notable, but the company enjoys most of the profits created from its Chinese business. It is impractical and unreasonable to kick the company out of China, but if Apple wants to continue raking in enormous profits from the Chinese markets amid trade tensions, the company needs to do more to share the economic cake with local Chinese people.

And finally, it appears that China has figured out that the best way to retaliate against Trump’s trade wars is not a tit-for-tat escalation in tariffs, but to hit America where it really hurts: the shareholders’ bottom line and the stock market.

The trade conflict initiated by Trump administration reminds China to re-examine China-US trade. It seems US companies doing business in China are the biggest winners from China-US trade. The Chinese market is vital for many top US brands, giving Beijing more leeway to play hardball in the trade conflict.

And just like that, China became a Democrat’s best friend, and an honorary foreign leader of the #Resistance.

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