The Donkey of Guizhou

13+

Every morning, we run the Narrative Machine on the past 24 hours worth of financial media to find the most on-narrative (i.e. interconnected and central) stories in financial media. It’s not a list of best articles or articles we think are most interesting … often far from it. But for whatever reason these are articles that are representative of some chord that has been struck in Narrative-world. And whenever we think there’s a story behind the narrative connectivity of an article … we write about it. That’s The Zeitgeist. Our narrative analysis of the day’s financial media in bite-size form.

To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.


Yes, this is an actual photograph from an actual Chinese zoo, where a live donkey was dropped into a tiger pen.


A Forever Trade War Looms as Trump Deepens Battle With China  [Bloomberg]

China Takes On Trump by Weakening Yuan, Halting Crop Imports  [Bloomberg]


“There were no donkeys in Guizhou until an eccentric took one there by boat; but finding no use for it he set it loose in the hills. A tiger who saw this monstrous-looking beast thought it must be divine. It first surveyed the donkey from under cover, then ventured a little nearer, still keeping a respectful distance.

One day the donkey brayed, and the tiger took flight and fled, for fear of being bitten. It was utterly terrified. But it came back for another look, and decided this creature was not so formidable after all. Then, growing used to the braying, it drew nearer, though it still dared not attack. Coming nearer still, it began to take liberties, shoving, jostling, and charging roughly, till the donkey lost its temper and kicked out.

“So that is all it can do!” thought the tiger, greatly pleased.

Then it leaped on the donkey and sank its teeth into it, severing its throat and devouring it before going on its way.

Poor donkey! Its size made it look powerful, and its bray made it sound redoubtable. Had it not shown all it could do, even the fierce tiger might not have dared to attack.

– Liu Zongyuan (773-819 AD)

The fable of the Donkey of Guizhou is as well known in China as any of Aesop’s fables are known in the West, even to the point of reenacting the tiger murder scene for the “entertainment” of visitors to certain zoos. It’s a fable that every Chinese Politburo member knows just as surely as every American Cabinet member knows the fable of the Ant and the Grasshopper.

My point in relating the fable of the Donkey of Guizhou is not that I believe China is the tiger and the United States is the donkey in our current trade-war-going-to-currency-war.

My point in relating the fable of the Donkey of Guizhou is not that I believe the current United States president is a braying donkey in his “easy to win” trade-war-going-to-currency-war.

I mean … I do, but that’s not my point.

My point is that Chinese political leadership believes that they are the tiger and the current United States president is a braying donkey.

This sort of fabular narrative – this sort of meme – is every bit as strong and “real” as our fabular narratives and memes.

Our political leadership believes they have “leverage” and are playing the stronger hand. Chinese political leadership believes that, too.

That’s what makes a Game of Chicken. That’s what makes a game that is decided by political will, not by resources or starting positions.

This will get worse before it gets better.

This is the Second Horseman.


13+

To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You'll get two or three of these emails every week, and your email will not be shared with anyone. Ever. It's our effort to spread the word about what we're doing, and allow you to read more Epsilon Theory!

Notify of
7 Comments
oldest
newest
Inline Feedbacks
View all comments
cartoox
cartoox
11 months ago

Interesting……increasingly, as we protest here in HK, and the government responds by condemning the public, its evolving into an ‘in your face’ challenge to the authorities….. “you think you intimidate us ? go ahead, lets see what you got”…..
Younger Chinese here are wise to their culture, and the traditional ‘ death by a thousand cuts’ of the Communist party’s slow takeover/corruption of our institutions.…..
The youngsters want to force the issue…..

Bob
Bob
10 months ago
Reply to  cartoox

I think the CIA/fill in the blank is helping to stir up the good people of HK, as part of the Donkey-in-Chief’s policy,so to speak. They will be crushed and there’s nothing anybody can or will do see, e.g., Crimea. The ambassador from the PRC was visiting France while it was still France, Under Pompidou, and was asked: “What do you think of the French Revolution?” The answer? “Too soon to tell…” They play the long game and the government can force much more hardship than the US could ever bear. Of course, I know about the Middle-class and their Oligarchs like”Jack” Ma. They differ from people like Mikhail Khodorkovsky, once worth $15 billion, in that Ma and his ilk know not to buck the political system and the regime depends on them for generating jobs and lots of payola. As opposed to say Bo Xilai. PRC will win by crushing their own people and economy if need be. This IS a game of chicken. Thelma and Louise style

Peter
Peter
11 months ago

New meaning to…”don’t be an ass”!

Barry Rose
Barry Rose
11 months ago
Reply to  Peter

“Pride goes before destruction, a haughty spirit before a fall.” ~ Proverbs 16:18

chudson
chudson
10 months ago

The question is how long can the CCP allow the insurrection in HK to go on before they would begin to lose face and it would start to spread? Surely they’d want to act decisively before that happens. Red team this out a bit. Can Beijing wait for the US election and risk the spirit of insurrection to spread? Or do they make a military incursion into HK maybe? What would be the NATO response to that? I’m betting Beijing thinks that’s unlikely, as Crimea/Ukraine was a big tell. US direct military response? Does the US draw the line at HK or Taiwan? Maybe the US abandons HK, and stages troops at Taiwan for negotiating leverage to negotiate a better trade deal in exchange for the abandonment of both? Interesting times!

cartoox
cartoox
10 months ago
Reply to  chudson

The issues in HK have been on the boil for a while, it’s a classic case of what Ben calls the Nudging oligarchy in collusion with the Government. Slowly the government has given in to increasing encroachment by the communists…..
The extradition bill was the trigger.
For China, HK is one of the two key conduits to convert soft currency RMB into hard currency [the other being parking their dollars from export sales overseas, without remitting to China]
Communists do not know how to make money
They are brilliant, and quite ruthless, at taking your money.
So the dilemma for the communists is this : a lot of the money they get comes from HK.
With the US trade and further sanctions coming, HK is the only conduit to the outer world of trade and finance. Shanghai is nowhere close, and with the communist resurgence, isn’t likely to get there anytime in the foreseeable future either.
A military incursion into HK would destroy its value as this conduit. It would also put the final nail in the coffin to attempt any reunification with Taiwan under the “one China two systems” policy.
As an example, Alibaba’s hurried attempts to create a 2nd listing in HK is a part of this. With the Trump war set to expand, they can no longer count on not being messed up in some future sanctions activity against Chinese ADRs on Wall St .

Michael
10 months ago

DB did some analysis on market reaction to last couple of spats. US market fell more than the Chinese market (though it was seen to be due to official Chinese support). The difference is not statistically significant in my opinion, but it lends some credence to Ben’s who is the donkey and who is the tiger…

The Daily Zeitgeist

The Lystrosaurus

By Rusty Guinn | June 17, 2020 | 12 Comments

There is practically no information in knowing that everybody is talking about something. There is some information in knowing that everybody is using the same language to talk about something.

But there is a lot of value in knowing that people and publications with no underlying connection are simultaneously inspired to use the same language to talk about different angles of the same issue.

Read more

No Country for Old Men

By Ben Hunt | June 12, 2020 | 12 Comments

We all know someone who is in urgent-but-not-emergency need of some medical procedure that can’t be scheduled while Covid-19 is storming the hospital ramparts.

I’m one of them.

Read more

Misfortune vs. Carelessness

By Ben Hunt | June 9, 2020 | 6 Comments

What’s happening with the Bureau of Labor Statistics with recent employment data reports is an intentional, political carelessness that supports status quo cartoons of control.

It’s not a Democrat thing and it’s not a Republican thing.

It’s a power thing.

Read more

The Zeitgeist | 2.15.2019

By Rusty Guinn | February 15, 2019 | 0 Comments

Lots of ‘playing’, ditching New York, and a piece of hard-hitting analysis demonstrating that sitting at the crossroads of government and business can be personally profitable.

Read more

The Zeitgeist | 2.14.2019

By Rusty Guinn | February 14, 2019 | 0 Comments

Today’s Zeitgeist poses a riddle: what is noxious, may not be a catalyst, extends a rally and awaits cues all at the exact same time?

Read more

The Zeitgeist | 2.13.2019

By Rusty Guinn | February 13, 2019 | 0 Comments

In the 8th or extra innings (what about the 9th?), allocations to alternatives, fixed income ETFs, offensive hacking and “markets up on trade deal hopes” (again).

Read more

DISCLOSURES

This commentary is being provided to you as general information only and should not be taken as investment advice. The opinions expressed in these materials represent the personal views of the author(s). It is not investment research or a research recommendation, as it does not constitute substantive research or analysis. Any action that you take as a result of information contained in this document is ultimately your responsibility. Epsilon Theory will not accept liability for any loss or damage, including without limitation to any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Consult your investment advisor before making any investment decisions. It must be noted, that no one can accurately predict the future of the market with certainty or guarantee future investment performance. Past performance is not a guarantee of future results.

Statements in this communication are forward-looking statements. The forward-looking statements and other views expressed herein are as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements, and there is no guarantee that any predictions will come to pass. The views expressed herein are subject to change at any time, due to numerous market and other factors. Epsilon Theory disclaims any obligation to update publicly or revise any forward-looking statements or views expressed herein. This information is neither an offer to sell nor a solicitation of any offer to buy any securities. This commentary has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Epsilon Theory recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.